Delaware County PA Multifamily Trends
Hey fellow Philly area investors, Happy New Year! With 2017 coming to a close I took a look at market data on Multiunit transactions in Delco for the year and also previous years for reference. I originally started to look at just the past 10 years but things got interesting in the data in 2007 (surprise surprise) so I went back a few years farther.
I analyzed Units (Transaction Units), Median Sale Price, Total Volume each year and Median Days on Market. This was strictly for multiunit properties in Delaware County. As you can see, there was quite a bit of activity leading up to 2007/2008 in terms of Units and Volume and DOM was at its lowest. All data came straight from our local MLS. I chose to limit the data to Delaware county to keep my data relatively tight and similar.
In graphic form
# of Units Settled was at its lowest point in 2011, at 102 total units settled. To clarify, this is 102 multiunit properties transacted, not 51 duplexes for example. 2017 showed over twice the number of transactions as the 2011 low point and the trendline suggests that we will see a steady increase in 2018 units compared to 2017.
Median sale price peaked in 2007 at 167k, and decreased gradually for the next 7 years before reversing itself back in the upward direction slowly.
Volume is the total sum of transacted unit purchase prices. in 2005 nearly 54 million dollars in multifamily property was transacted, compared to just 33 million in 2017. Volume tracks # of Units settled closely due to the similarity (low standard deviation) between Median Sale Price and Average Sale Price. In a market where median and average sale price are identical, # of Units * Median Sale Price = Volume. If my analysis looked at a larger and more numerically diverse dataset (such as Delaware, Chester, Montgomery, Philly and Bucks counties combined) Volume and # of Units may not correlate as closely due to outliers. Philadelphia county had an almost 90k difference in median sale price and average sale price for 2017 multiunits. A much higher standard deviation in comparison.
Last but not least, Days on Market (DOM) shows how quickly inventory is "flying off the shelf" and is usually a good indicator of how hot the market is. Note how the low data point for this was in 2005 at 18 DOM, and a sharp spike in 2008 up to 58 DOM. We are trending back down towards 2007 levels for median DOM, suggesting that the market is heating up again!
Its interesting to see the trends in the data and try to draw conclusions about what 2018 will bring. Everyone loves to ask the question about when the "next crash" will occur or if it is a "good time to invest". My question for the forum: What do you see in store for 2018 and beyond in our local market? Are you making any strategic changes in your investing strategies based on these data trends?
Would love to hear everyone's thoughts!
