The Philly-area luxury housing market sees bidding wars, strong demand, and fast sales

The roughly 3,000-square-foot house in Berwyn with a large yard and within walking distance of schools, parks, and transit was listed for sale at $925,000. Then came a bidding war.

Just three days after it went on the market this month, it sold for more than $1.1 million.

That’s not unusual at that price point in this area, said Sue Fitzgerald, principal agent and team lead of the Susan Fitzgerald Team at Compass Real Estate, which sold the property.

In Philadelphia’s collar counties, the luxury-home market is most competitive in and around the $1 million to $1.5 million range, which has the lowest amount of supply compared to demand, the fastest sales, and the highest amounts that buyers end up paying over the asking price, she said.

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“It’s very, very difficult for buyers in that market,” Fitzgerald said.

This spring, luxury-home buyers faced strong competition across the Philadelphia metropolitan area, which includes counties in Pennsylvania, New Jersey, and Delaware. The typical home for sale priced in the top 5% of the market sold fast, and just over half of the luxury homes that sold went for more than the listing price, according to a report by the multiple listing service Bright MLS.

Usually, luxury homes take longer to sell than homes in lower-priced tiers of the market, because the luxury buyer pool is smaller. And that’s still true of the highest priced homes. But since the pandemic, luxury homes in general “are selling just as fast if not faster” than the rest of the market, said Lisa Sturtevant, chief economist at Bright MLS.

This spring, half of the luxury homes sold in the Philadelphia metro area went under contract in fewer than eight days.

Overall, home sales in the Philadelphia area were down about 2% this spring compared to the same time last year. But over the same period, the number of luxury sales, although a much smaller segment of the market, rose by almost 20%, according to Bright MLS.

Bright MLS defined luxury homes as those in the top 5% of the market. The price of that threshold varies widely depending on whether analyses happen on the regional, metropolitan, town, or neighborhood level.

Across the Philadelphia metropolitan area, homes were considered luxury if they cost $899,900 or more in the second quarter of the year. Wayne was one of the top 10 markets for luxury-home sales this spring in the Mid-Atlantic area, defined by Bright MLS as Washington, Maryland, and Delaware and parts of Pennsylvania, New Jersey, Virginia, and West Virginia.

The luxury thresholds in two Mid-Atlantic metro areas — Washington and a group of counties just west of Chester and Montgomery Counties — differed by more than $1 million this spring.

In the Washington metro area, homes had to cost at least $1.6 million to classify as luxury — a threshold that was 77% higher than in the Philadelphia and Baltimore metros. But in the counties just west of the Philadelphia region, a home price of at least $579,000 was enough to classify as the top 5% of the market.

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Bright MLS classified the top 1% of the market as ultra-luxury. A Philadelphia zip code — 19103 — was one of the Mid-Atlantic’s top four ultra-luxury markets for sales this spring. The Center City zip code includes areas around Rittenhouse Square, Logan Square, and Fitler Square. The 19355 zip code in the Malvern area came in at No. 5.

When it comes to geographies as hyper-local as zip codes, “some markets are just very unique,” Sturtevant said.

While high home prices have sidelined some buyers searching in middle and lower tiers of the market, luxury buyers are active. They generally feel more financially secure and are more likely to pay cash for homes.

Buyers at the high end of the market tend not to care as much about mortgage interest rates, or they can reduce interest payments with more cash up front.

That’s why, across the Mid-Atlantic and in the Philadelphia metro area, the luxury housing market outperformed the market overall this spring.

“We in the Philadelphia area are very lucky to have an extraordinarily diversified economic base, plus terrific schools, terrific health care, et cetera,” said Fitzgerald of the Susan Fitzgerald Team. “All contribute to a very stable and robust luxury market.”

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Across the Mid-Atlantic, luxury sales were held back last year not by a lack of luxury buyers but by a lack of luxury homes listed for sale, Sturtevant of Bright MLS said. In the Philadelphia area, more homes were available for sale this spring than at the same time last year.

“You list it, and they will come,” Sturtevant said.

That is if the home is priced for the market, in good condition, and in a desirable location.

Forty-three luxury home sales in the 19087 zip code made the Wayne area one of the top 10 luxury markets in the Mid-Atlantic this spring.

Fitzgerald, whose team is based in Wayne and primarily works in Chester, Delaware, and Montgomery Counties, said this spring and early summer have been “very, very busy” in the luxury-home market.

“I’m just getting a little bit of a breather here in August,” she said.

Not every home sale is represented in Bright MLS’s data, which the service estimates covers 90% of sales overall. Some luxury-home sales, especially in the higher price tiers, are not publicly listed and require buyers to work with real estate professionals who can see these exclusive listings.

Lack of supply of luxury homes and competition among buyers are keeping prices high.

In the second quarter of the year, the median price of a luxury home sold in the Philadelphia metro area was $1,168,479. That’s slightly higher than the median price at the same time last year.

Just over half of all luxury homes sold this spring closed above the listing price — by an average of 2%, which translates to about $24,500 for the median-priced home.

And roughly 37% of luxury homes in the Philadelphia area that sold last quarter were purchased with cash, slightly more than last spring.