According to the latest round of predictions and forecasts for the Philadelphia real estate market, home-price appreciation is expected to continue through the end of 2017 and into 2018. With that said, price growth is expected to slow down a bit over the coming month, following a couple of years of above-average growth.
Here are the latest trends and forecasts for the Philadelphia housing market, extending through the fall of 2018.
Philadelphia Housing Market Forecasts for 2018
According to the real estate information company Zillow, the median home value for Philadelphia was around $140,000 as of October 2017. That’s within the city itself. Within the broader metro area, the median house value was $218,000 in October.
Home prices within the Philadelphia housing market rose by around 6.8% during the 12-month period ending in October 2017. We consider this to be above-average growth, based on historical trends. Looking back several decades, home values in the U.S. tend to rise somewhere between 3% and 4% annually. Philadelphia’s gains over the last year or two have exceeded this historical average.
But things might be getting back to “normal” within the local housing market, according to at least one real estate forecast. The economists at Zillow anticipate that prices in the city will rise by around 3.1% over the next 12 months (through October 2018).
Zillow’s senior economist Aaron Terrazas recently told Curbed.com that Philadelphia home prices are rising much faster than the surrounding suburban areas. According to that report:
“Zillow data shows that home values in Philadelphia have increased by 22% since 2014. Suburban homes [in the surrounding area] are up just 9% over that same period.”
Home-price forecasts for the Philadelphia real estate market, extending through 2018, largely mirror the predictions being made for other cities across the U.S. The general consensus among economists and housing analysts is that house values will continue to rise in most parts of the country, but at a slower pace than what we’ve seen over the last couple of years. This is expected for Philadelphia as well.
In some cases, housing markets are beginning to strike a better balance between supply and demand, and that is slowing price growth. Additionally, affordability issues are becoming a problem for home buyers in many cities, and this too is taking some of the steam out of home-price appreciation. These and other trends could result in lower year-over-year price gains over the coming months, within the Philadelphia housing market and also nationwide.
Will Home Buyers See Higher Mortgage Rates in 2018?
Another set of housing forecasts suggest that home buyers in New Jersey could see higher mortgage rates in 2018, compared to this year.
During the first week of October 2017, the average rate for a 30-year fixed mortgage loan was 3.85%. This is based on the weekly industry survey conducted by Freddie Mac. But there is no telling how long rates will stay at this low level.
Economists with Freddie Mac and the Mortgage Bankers Association expect rates to rise gradually over the coming months, due to policy changes by the Federal Reserve and other influencing factors.
In September 2017, the Mortgage Bankers Association predicted that the average rate for a 30-year mortgage loan would climb to 4.5% sometime during the first quarter of 2018. That would be a significant jump from where we are right now, in the fall of 2017. Looking further out, they expect 30-year loan rates to average 4.9% by the fourth quarter of next year.
Freddie Mac’s latest mortgage and housing market forecast also predicts a rise in interest rates. They do not offer a quarterly forecast like the MBA. Instead, they issue predictions for average rates over an entire year. Freddie Mac’s analysts expect that 30-year mortgage rates will end up averaging 4.0% for 2017, and will rise to an average of 4.4% during 2018.
But let’s not get too wrapped up in these specific numbers. It’s the big picture that’s important. And the big picture is that most economists expect mortgage rates to be higher in 2018 than they are right now.
When you combine this with the forecast for continued home-price appreciation in Philadelphia, a strong case could be made for buying a house sooner rather than later. Those who postpone their purchases until later next year could encounter higher housing and borrowing costs.
Disclaimer: This article includes various predictions and forecasts for the Philadelphia housing market through 2018. These projections were issued by third-party experts not associated with our company. We have gathered and compiled them here as an educational service to our readers.