Azavea’s Brown Bag Lunch program provides a unique monthly opportunity for Azavea staff to talk about projects they are pursuing inside/outside of work as well as hear from community leaders in the Greater Philadelphia region.
Many people are wondering if this is a good time to purchase a home in the Philadelphia region. Have home prices stabilized, or is there concern about continuing decline? Azavea’s Brown Bag Lunch speaker for May was Kevin Gillen, Vice President of Econsult Corporation, who is involved in an ongoing analysis of real estate markets that can help answer some of these questions. Econsult Corporation is a Philadelphia firm that offers a vast number of consulting services ranging from economic impact analyses to geospatial solutions to economic development and real estate analytics. Mr. Gillen’s talk focused on his work preparing comprehensive Quarterly House Price Indices that provide information about home sales for four local geographic regions: the City of Philadelphia, the Greater Philadelphia region, the Jersey Shore, and the Lehigh Valley. These quarterly indices measure the percent increase or decrease in local house prices and sales, on both a quality-adjusted and seasonally-adjusted basis. In addition, the indices provide comparisons between local markets and other major U.S. cities. Since they are publicly available on the Econsult website, these indices are not only helpful to urban planners, regional business coalitions and environmental firms, but also to current and prospective homeowners in the Philadelphia region that want to learn more about the latest real estate trends.
According to Econsult’s report for the fourth quarter of 2011, the local housing market resumed its decline at the end of 2011 after several consecutive quarters of exhibiting some signs of stabilization. The typical home in the Philadelphia area lost 3.7% of its value during that period, which was the largest quarterly decline since the third quarter of 2010. Since their peak value in 2007, house prices in the city have fallen by an average of 18%, whereas house prices in the suburbs have fallen by 22%. This trend is contrary to past housing downturns, when suburban house values generally held up better than those in the city.
How does Philadelphia compare to other real estate markets around the country? Among the ten largest U.S cities, the average house price has declined by 34% since 2007, compared to the average of 18% to 22% in the Greater Philadelphia region. When compared to the top twenty largest U.S. cities,Philadelphia ranks fifth in terms of the lowest levels of price declines since 2007, behind only Dallas,Denver,Charlotte and Boston.
Kevin concluded his presentation by indicating that these and other combined analyses seem to point to the local real estate market finally nearing its bottom. The number of foreclosures in Philadelphia was down from 1 in every 1,108 households in September 2011 to 1 in every 875 households at the end of December. The surplus in housing inventory is beginning to decline again as well. Overall, housing prices are expected to fall another 1.7% later this year before giving way to more positive movement. That is certainly great news for anyone considering a shift from renting to homeownership in the Philadelphia area during the next few years.