Philly Housing Market Tilts Toward Buyers as Demand Slumps - MyChesCo

PHILADELPHIA, PA — In September, the Philadelphia metropolitan area witnessed a significant shift in the housing market, with sellers outnumbering buyers by 56.4%. This trend has positioned the region firmly in a buyer’s market, as a nationwide downturn in housing demand has given buyers more leverage, according to a report released by real estate brokerage Redfin on October 14.

This local imbalance reflects a broader national trend, where the difference between the number of sellers and buyers reached a record 62.6%, the largest gap since Redfin began tracking this data in 2013. This disparity increased from 56.9% in August, marking the fourth consecutive month of record seller surpluses.

Redfin reported that there were approximately 928,892 active buyers across the country in September, the lowest figure recorded, representing a 2.4% decrease from August. This decline marks the fifth month in a row of decreasing buyer activity. Conversely, the estimated number of sellers rose by 1.2% to 1,510,784, the highest level since March 2020. Analysts suggest that this shift in negotiating power is primarily due to a weakening demand rather than an influx of new listings.

“This is a buyer’s market born out of caution, not strength,” stated Asad Khan, a senior economist at Redfin. “Buyers have tremendous negotiating power in most of the country because so many other would-be buyers have been priced out of the market, or scared off by economic uncertainty.”

According to Redfin's classification, a market is considered to favor buyers when there are more sellers than buyers by over 10%. In September, 41 out of the 50 major metropolitan areas analyzed fell into this category, the highest number recorded by the brokerage to date.

The Philadelphia area’s 56.4% surplus of sellers positions it among these buyer-favorable markets, although the situation varies within the region. Montgomery County, PA, stands out as one of the only five seller’s markets nationwide, with 22.7% fewer sellers than buyers, highlighting the uneven distribution of housing supply and demand in southeastern Pennsylvania. In some local communities, buyers are facing significantly more competition than the overall regional figures would suggest.

Montgomery County, along with Nassau County, NY; Newark, NJ; Milwaukee; and San Francisco, are the only markets classified as seller’s markets among the 50 areas observed. Nassau County reported the tightest market conditions, with 28.6% fewer sellers than buyers, followed by Newark with an 18.5% deficit, Milwaukee at 16.1%, and San Francisco at 10.6%. These markets also maintained seller’s market status from August.

The most pronounced buyer’s markets were primarily found in the Sun Belt, where extensive home construction has increased inventory even with declining demand. Miami experienced a staggering 158.9% surplus of sellers compared to buyers in September, an increase from 134.5% in August, marking it as the metropolitan area with the largest seller surplus. Nashville and Houston also ranked high in terms of buyer-favorable conditions.

In the 13 metropolitan areas that were most favorable to buyers, sellers outnumbered buyers by more than two to one. All of these areas were located in the Sun Belt, including four in Texas and four in Florida. Tampa saw its seller surplus rise to 103.7% from 82.2% in August, while Warren, MI, increased to 47.1% from 27.3%.

Most markets that were already favorable to buyers saw their seller surplus widen, with St. Louis and Detroit being the only exceptions, although both still had significantly more sellers than buyers. Four metropolitan areas were classified as balanced, including Boston, where sellers exceeded buyers by 7.4%, and Providence, RI, which had a 2.4% surplus.

Redfin attributes the overall market imbalance to high housing costs and economic uncertainty that have deterred potential buyers. Homes remaining on the market for longer periods have contributed to an increase in listings, while some homeowners are opting to sell after waiting for mortgage rates to decrease or for buyer demand to rebound. Others are selling due to changes in employment, family situations, divorce, or retirement.

Despite the shift towards a more buyer-friendly market, price declines have not been uniform. In the five seller’s markets, home sale prices rose by an average of 6.4% year over year in August, compared to a 1% increase in markets favoring buyers. This disparity suggests that limited housing supply continues to support stronger price growth in certain metropolitan areas, despite the national slowdown.

For qualified buyers, the increased inventory presents more opportunities to negotiate prices and terms, or to pass on properties that do not meet their financial needs. However, Redfin cautioned that enhanced negotiating power does not necessarily equate to improved affordability. “The irony is that in terms of supply, these are some of the best conditions for buyers in many years—but they have arrived at a time when costs are so high that fewer people can afford to take advantage of them,” Khan added.

Redfin's estimates of buyer activity were derived from proprietary data on the duration between a buyer’s initial property tour and closing of purchase, alongside multiple listing service data concerning active listings and pending sales. Seller estimates were based on active listings and are seasonally adjusted and subject to revision. The findings from September highlight a divided housing market: while buyers are gaining leverage across much of the Philadelphia region and nationally, limited inventory continues to favor sellers in Montgomery County and a few other metropolitan areas.