Kevin Gillen Philadelphia Real Estate Q3 2010 Commentary
Kevin Gillen Philadelphia Real Estate Q3 2010 Commentary
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By Kevin Gillen
Philadelphia House Values and Sales Drop Sharply in Q3
Price declines in Q3 erase the price gains from Q2.
November 3, 2010: After a busy spring in which both home sales and prices saw a sharp uptick,
the Philadelphia-area housing market turned downwards again this past summer.
The typical Philadelphia home fell in value by an average of 4.6% on a quality- and seasonally-
adjusted basis this past summer, according to the latest data from the City’s Recorder of Deeds.
This most recent decline more than eliminates the gains from the previous quarter, in which
prices rose 3.8% as homebuyers sought to take advantage of the Federal homebuyer tax credit
before its expiration in June. With this most recent decrease, the average Philadelphia home has
now fallen in value by a total of 11% since the bursting of the national housing bubble several
years ago.
The decrease in house prices were citywide, with some price declines near double-digits in some
areas. From largest to smallest, the average decline in house prices by neighborhood were:
University City (-10.9%), South Philadelphia (-8.9%), Kensington/Frankford (-5.6%), Center
City/Fairmount (-3.4%), Lower Northeast Philadelphia (-2.2%), Upper Northeast Philadelphia
(-1.3%), Northwest Philadelphia (-1.3%), North Philadelphia (-0.9%) and West Philadelphia
(-0.1%).
The news was equally negative for sales activity. 3,300 homes changed hands in Q3; a 21%
decrease from Q2 and an 18% decrease from the same time last year. Although sales activity
typically shows a seasonal decline from spring to summer, this was the lowest level of Q3 home
sales activity since 1996.
While Philadelphia’s housing market is weathering the current downturn better than most other
major U.S. cities, these latest numbers have caused it to drop in the rankings. According to
Case-Shiller MacroMarkets’ composite house price index, house prices have fallen by an
average of 28% in the ten largest U.S. cities since the bursting of the housing bubble, compared
to only 11% in Philadelphia. Previously, only one city—Dallas—had experienced a smaller total
decline in average house values than Philadelphia. But with these quarter’s declines,
Philadelphia has dropped to third place, behind both Dallas (-6%) and Denver (-8%).
The fact that most large U.S. cities experienced a resumption in house price declines this past
quarter points out that Philadelphia’s housing problems are part of a national—rather than
local—trend. In particular, most analysts point to the recent elimination of the Federal
homebuyer tax credit as removing significant, and critical, government support for the housing
market. While the tax credit was intended to stabilize house prices, this latest data seems to
indicate that it provided a brief reprieve from falling house prices rather than a stabilization of
them. Whether the support that the tax credit provided for the housing market was indeed
temporary rather than permanent will be confirmed in the data from the next few quarters.
Email for Kevin Gillen: [email protected]
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Blog post compliments of CenterCityTeam’s Philadelphia Real Estate Blog
Frank L. DeFazio, Esquire
Prudential Fox & Roach Realtors – Society Hill
530 Walnut Street, Suite 260
Philadelphia, PA 19106
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