Kevin Gillen's Q1 Housing Report for the Lindy Institute is out today, and the results are a bit of a mixed bag.

While prices dipped in most submarkets, inventory is still unusually low, and sales volume was strong—factors that would tend to push prices in the other direction. So there's not a straightforward story about more inventory coming on the market and causing prices to moderate.

The winter months tend to see a moderation in both sales activity and price growth. But, strong sales and moderating prices in combination with very low inventories is not only unusual, it is contradictory. Conventional wisdom would seem to indicate that, after six years of expansion, Philadelphia’s housing market should be nearing its peak (if it hasn’t already passed it).

While it would be tempting to interpret the recent consecutive quarters of price deceleration as an indicator that the market is turning, it should be remembered that the data showed a similar pattern last year, only to go on to have one of the strongest years in living memory.



Typically, it would be reasonable to expect the next quarter’s numbers to indicate what will be the case, but the fact that this winter’s weather has extended into the middle of April may delay when we’ll know whether the market has indeed turned, or is just taking a normal seasonal pause.

Here's what's happening in the different city regions. South Philly, will your home prices ever go down?







(Images: Lindy Institute)

The other part of this report that's always worth tracking is the inventory section, showing where things stand on the Buyer's Market vs. Seller's Market spectrum. If we're concerned about the affordability of starter homes for middle-income households, then we want to see Philly's housing market start spending some more time in Buyer's Market territory—something we haven't seen since mid-2014. In fact, inventory is just now starting to creep back up toward Balanced Market territory after three banner years for home sellers.







Even so, these results are a reminder that, unlike the coastal superstar cities like NYC and San Francisco where prices only ever go up at an increasing velocity, Philadelphia is a place where home prices still sometimes go down, or at least mellow out for periods of time, and it wouldn't even take very radical public policy shifts to tip the scales toward greater affordability in the market-rate part of the housing market that most people are shopping in.



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