Kevin Gillen Philadelphia Real Estate Q2 2011 Commentary
Kevin Gillen Philadelphia Real Estate Q2 2011 Commentary
Philadelphia’s House Prices Hit the Brakes This Spring. House prices effectively unchanged in 2011 Q2.
July 25, 2011: It may not be often that flat house prices may be greeted as good news, but after several
years of declining prices and falling sales, the definition of “good news” for housing has become relative.
The typical Philadelphia home increased in value by a scant 0.2% on a quality- and seasonally- adjusted
basis this past spring, according to the latest data from the City’s Recorder of Deeds. This comes after
several consecutive quarters in which price declines totaled just over 10% following the expiration of the
Federal homebuyer tax credit last spring. And, even though this spring’s average price increase is barely
greater than zero, it nonetheless represents the first natural increase in house prices since prices peaked in
2007. With this most recent change, the average Philadelphia home has now fallen in value by a
cumulative total of 16% since the bursting of the national housing bubble several years ago.
Philadelphia’s house values are now at 2005 levels.
While the average change in value may have been close to zero, house price changes showed great
variation across Philadelphia’s neighborhoods. From smallest to largest, the average change in house
prices by neighborhood were: Kensington/Frankford (-7.6%), West Philadelphia (-6.2%), Center
City/Fairmount (-3.7%), North Philadelphia (-2.1%), South Philadelphia (-2.0%), Upper Northeast
Philadelphia (+0.7%), Lower Northeast Philadelphia (+1.7%), Northwest Philadelphia (+3.5%), and
University City (+6.1%).
With these changes, the Philadelphia House Price Diffusion Index increased to nearly 0% from -100%,
indicating that the city has moved from a situation where house prices were falling citywide as recently as
6 months ago, to the current situation, where house price changes are now evenly split between increases
and decreases across the city. Such an increase in diffusion is often taken as a leading indicator of a
turning point in a market, which in this case would be the housing market’s bottom.
The news for home sales activity was also positive. This spring, 3,433 homes changed hands; a 37%
increase from this past winter, but an 18% decrease from the same time last year when the homebuyer tax
credit was still in effect. While this most recent data may represent an increase from the previous
quarter’s numbers, home sales are still at levels approximately 30% below what they would be during
ordinary market conditions.
While this spring’s price increase may have been tiny, it was enough to cause Philadelphia to make a
significant leap in the rankings of cities that have experienced price declines from their pre-bubble peak.
Just last quarter, Philadelphia was in fifth place in having experienced the least house price declines of the
twenty largest U.S. cities, according to Case-Shiller MacroMarkets’. But, with this most recent quarter’s
modest increase, combined with continued price declines in many other cities, Philadelphia has jumped to
third place, behind only Dallas and Denver. According to Case-Shiller’s 20-city composite house price
index, house prices have fallen by an average of 32% in the twenty largest U.S. cities since the bursting of
the housing bubble, compared to only 16% in Philadelphia.
While these most recent numbers are welcome news for a sector that has been battered for years, they
should be balanced against leading indicators that suggest significant challenges still remain. Although
foreclosure activity here remains well below the national average, the significant inventory of homes
listed for same remains quite high, at nearly 11,000 units. Until this supply of homes is brought back
down to its historic average of 6,000 units, house values will likely continue to struggle to find stable
footing before they can begin to truly recover.
Email for Kevin Gillen: [email protected]
To search Philadelphia Real Estate listings for condos, homes and apartments click here.
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
215.521.1623 Direct
610.636.4364 Cellular
888.308.1148 Fax
[email protected]
www.CenterCityTeam.com
