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Why 1 in 6 Philadelphia homes sold above asking price in 2017

A new Zillow analysis of home sales in Philadelphia shows that 16.8 percent of homes sold above list price in 2017. That number has steadily increased since 2012 when only 6.1 percent of homes sold above asking. In 2017, the median price above list was $5,100, a $100 increase over the previous year.

If you’re looking to buy or sell real estate in Philadelphia, this trend is a good sign for your investment. Here are the four main factors driving the competitive market.

1. Limited supply and high demand

As first-time homebuyers make the shift from renting to owning, housing inventory dwindles. While Philadelphia is expecting to see a lot of new construction in 2018, high demand means prices will continue to rise.

2. Demographic shifts

Millennials were once again the top home-buying group on the market, but Baby Boomers remain the top group of homeowners. Trulia estimates people 55 and older own 53 percent of U.S. owner-occupied houses. And because they are not keen on selling, they are making the market even more competitive.

3. A strong economy

The unemployment rate in the U.S. held steady at 4.1 percent for the entire last quarter of 2017 — the lowest it’s been in 10 years. With a more promising future in the workforce, homebuyers are willing to spend more on their desired home.

4. Favorable financing conditions

The latest Freddie Mac Economic & Housing Research Outlook predicts economic growth of about two percent annually, strong job growth and low mortgage interest rates that will continue into 2018.

As each of these factors plays a role in the housing market, it puts the seller in the driver’s seat in prime parts of the country, including the Philadelphia metro area. On average, a home for sale in the U.S. sold in less than 80 days in 2017.

The fierce competition means buyers may not close on a home with their initial bid but will need to decide if they’re willing to pay higher than asking price for the home of their dreams.