Despite posting its best third quarter results in 10 years, Philadelphia’s condo market is still struggling to play catch-up to the city’s hot single-family housing market.
That’s according to the latest data from local researcher Kevin Gillen, who just crunched Q3 numbers specifically for Philly condos. According to his report, 642 condos sold in the third quarter, which is the best performance for condo sales in Q3 since 2007.
However, condo price appreciation remains steady, if not sluggish: Philly’s condo prices increased 2.8 percent in the last year. Compare that to single-family homes, whose median price jumped 10.6 percent.
Gillen points to one possible explanation for this discrepancy between strong condo sales and weaker condo price growth: Inventory, i.e. the number of condos for sale at the moment. A five- to seven-month supply of properties for sale is considered a balanced market.
At their current pace of sales, the total inventory of homes for sale would be depleted within just 3.5 months, which is well below the 5-month threshold. The inventory of condos listed for sale would have 5.3 months before being fully drawn down, which is above the 5-month threshold; even if only by a slight margin.
Location is also at play here, Gillen continues. Most of Philly’s condos, both old and new, are centrally located within the city’s Greater Center City neighborhoods, from Rittenhouse Square to Washington Square to Society Hill.
While Center City condo prices have jumped by 26 percent since 2012, outlying neighborhoods have not experienced the same price appreciation, thus keeping overall condo price growth down compared to single-family homes, whose home values are appreciating all over the city.