Update on the Housing Market
FixItPhilly Coalition/BIA Government Affairs
Econsult Vice President Kevin Gillen presented an overview of the state of the region’s housing market based on indices the company publishes each quarter that measure the percent change in local house prices and sales in relation to other major U.S. cities. Although the latest report continues to show declines, Mr. Gillen says that losses in the Philadelphia region are modest compared to other U.S. cities and the foreclosure rate remains low.
According to Gillen’s latest analysis, the typical Philadelphia-area home value declined an average of 1.7 percent in the last quarter of 2010, ranging from 4.2 percent in the city to 0.8 percent in the 10 surrounding counties in Pennsylvania, New Jersey, and Delaware. While declines have slowed in recent months, regional house prices dropped 7.2 percent since the homebuyer tax credit expired last year and 16 percent from the beginning of the economic downturn. The report also shows that regional housing sales continued to decline this quarter, dropping 40 percent since the expiration of the homebuyer tax credit to near all-time lows.
Gillen says that although the data show that Philadelphia’s housing market is “in relatively good shape” compared to the 10 largest U.S. cities, the indicators suggest declines will continue in the near future. According to Gillen, because of historically low levels of sales and high levels of inventory, the time it takes to sell a home has reached a high of nearly 18 months. More sellers, therefore, are reducing their list prices. In the last quarter, 32 percent of homes were reduced in price an average of 10 percent. And 1.54 percent of households are currently in foreclosure, increasing slightly in recent months.
Mr. Gillen described Philadelphia’s problems as structural. “The region doesn’t boom as much, so it doesn’t drop as much,” he said, “but still, Philadelphia-area home values dropped half as much as other major cities and foreclosure activity is low here as well.”
The full report, along with commentary, technical FAQ, and documentation may be viewed at http://www.econsult.com/rhi_2010_Q4.htm