The Philly Pretzel

Make no mistake we still are in a buyers market in Philadelphia and probably will be for some time. The housing market took a much needed correction after a number of years of unwise purchasing but unlike what the media would have us believe, a correction in the housing market doesn’t equate to a crash. Unfortunately, the ongoing negative news about the troubled areas in the U.S. has caused a ripple effect, with home buyers and sellers on a national level exercising caution before making a decision. This has caused an overall slowdown in the marketplace.

The National Association of Realtors says the US housing market showed signs of stability in February and existing home sales rose 2.8% nationally and up 11.3% in the Northeast, up for the first time in 7 months.

True, the numbers of homes sold in 2007 have dropped from the year before, but 2007 is still among the highest years on record, with numbers of sales for 2008 projected to be even higher than the levels seen in 2002. Inventory in the Philadelphia region still remains high but is moving in the right direction. This equates to good news for buyers who have more homes at more price ranges from which to choose.

Philly Median Home Prices:

        • The median sold price for 2006 was $180,503
        • The median sold price for 2007 was $185,204
        • This represents a 2.5 % increase in price (nationally there was a decrease of
           8.2%)

Philly Sales Volume of Houses Sold:

        • There were 17,667 homes sold in 2006 for a sold volume of $3,188,950,036
        • There were 15,735 homes sold in 2007 for a sold volume of $2,914,195,066
        • There were 1,932 fewer homes sold which equates to a decrease in sold volume
          of 8.6% (nationally 23.8%)

Summary:

        • Philly has faired much better than the national average both in median sold home
           prices and in volume of homes sold
        • Housing demand in the Philadelphia region is down from 2006 but still relatively
           strong
        • There is a smaller percentage of supply in Philly than there is in the majority of
           the country

Houses that are priced consistent with market guidelines are attractive to buyers 

        • Attractive listings increase Buyer demand
        • Increased demand reduces supply
        • Fact-based pricing creates a healthy real estate market

Potentially related website:
Search All Philadelphia Homes For Sale

Technorati: Philadelphia real estate, Philadelphia median home price, Philadelphia home sellers, Philadelphia home buyers

posted by janice

What are absorption rates… and why are they the best indicators of Market Performance?

Absorption rate is the average number of homes sold per month over a particular period of time and how long it will take the homes that are on the market to sell. Absorption rates are a great means of tracking market performance and predicting trends. Although they are usually used to indicate overall market performance they can be just as powerful when tracking sales by price range or by neighborhood.

Buyers market, sellers market or neutral market?

The amount of inventory determines which way the market swings. A neutral market is 6 months of inventory and anything less than that is a sellers market. Conversely, an inventory of more than 6 months is a buyers market.

What do absorption rates mean to a buyer?

Absorption rates can help a buyer to understand market supply and demand and this can be helpful when crafting his/her offering strategy. The longer a home has been on the market and the more competition that it has in its price range, suggests a lower offering strategy and a greater possibility of increased reduction off asking price.

What do absorption rates mean to a seller?

Absorption rates help a seller understand how long it might take a home to sell. They can also assist the seller in determining their pricing strategy. The most desirable home in a price range always sells first. If a seller wants to sell quicker, they want to have the most desirable home in a price range… even if that is one price range lower.

Disclaimer:

Absorption rates are a great tool that can be used by either a buyer or seller to understand the real estate market and to be in a better position for success. But they tend to fluctuate dramatically by neighborhood and by price range. Absorption rates are more accurate if calculated in smaller segments. A good example is the rate for Fishtown is 6.23 weeks and the rate in Queen Village-Pennsport is 4.33 weeks but the above rate for all of Philadelphia is 11 months! If you would like to know the absorption rate for your neighborhood, send me an email and I will publish the rate.

Potentially Related Posts:
The State of Philadelphia Real Estate
Philadelphia Forclosure Rate

Technorati: Philadelphia real estate, absorption rate, Philadelphia real estate trends, market conditions

posted by janice

By now, you’ve likely heard that mortgage delinquency and foreclosure rates are rising rapidly but Philadelphia foreclosures are far fewer. Foreclosures in the Philadelphia area dropped by 32 percent last year, according to RealtyTrac. The California company, which tracks foreclosures, released its Year-End 2007 Metropolitan Foreclosure Report, ranking the nation’s 100 largest metro areas by percentage of total households entering some stage of foreclosure. Philadelphia was 79th, with a foreclosure rate of 0.492 percent of households.

The scenario is not one of doom and gloom as buyers are out there and properties that show well and are priced correctly are moving. Days on market are down slightly at 67 days average for the month of February and should shorten as spring approaches.

Technorati: Philadelphia homes, foreclosure, mortgage

posted by janice

Interpreting housing statistics.

Sure, you know it. But you forget. So let me remind you that numbers can lie sometimes, and words can lie all the time, so please don’t take every housing statistic you read at face value.

Let’s say, for instance, that you’ve just read that “housing prices in this neighborhood have plunged 2%, the greatest drop since 2001.” Before you go hiding under the bed, ask yourself : is 2% really a plunge? If a 150-pound woman lost 3 pounds, would she shriek, “Yay! My weight is plunging!”? No, she would not. But reporters happy to hype up a story use the ol’ plunge-and-soar verbs all the time.

And that’s another thing. What area are those statistics talking about? National home prices are less meaningful if all you care about is that one townhouse at the corner of 3rd and Market. Figures that include both condos and single family homes, when all you’d ever want is a condo, aren’t so relevant to you. It’s also wise not to over-react to the “since such-and-such-a-date” part of a statistic. It adds some dimension to the numbers, but it can also be stretched to the point of absurdity, as in “Mom, I’m starving, it’s 1:30 and I haven’t eaten since lunch.”

Keep your sense of humor. Hang on to your perspective. Yes, these are challenging times in the housing market, but they’re made worse by media slants, twists, turns and melodrama. Seen a good example of it lately? I’d like to hear.

Technorati: philly real estate, market statistics, housing statistics
posted by carolyn

Philadelphia home values ended the year slightly down, the first year-on-year citywide price decline since 2002. House prices declined citywide by an average of 4.4% in the fourth quarter of 2007 after season and quality are taken into account according to the latest analysis by Wharton economist Kevin Gillen.

Dr. Kevin Gillen is an economist at the Real Estate Department of the Wharton School and Fellow of the University of Pennsylvania. He analyzes the Philadelphia real estate market using the city’s real estate database through Hallwatch, a watchdog group. The results are published in a research paper called Philadelphia House Price Indices each quarter as a public service to the Philadelphia real estate community.

Download the full report [pdf]

Read the Hallwatch article: Philadelphia Home Prices Down for the Year

OVERVIEW:

*Although prices were still rising as recently as last spring, house values fell by total of 0.6% compared to a year ago.No single neighborhood was spared from declining prices.

*Only 4,725 homes changed hands under arms-length conditions in Q4; the lowest level of transactions since the spring of 2003.

*Nearly 11,000 homes are listed for sale in Philadelphia, which is nearly double the amount in 2004As prices have remained persistently high while supply continued to rise, buyers have become increasingly reluctant to commit to a purchase. Also making the market more difficult are the tighter mortgage lending conditions attributable to the subprime fallout.

*This gap between buyers’ willingness and sellers’ expectations is also revealed in the latest data. The median list price in Philadelphia is currently $180,000, while the median transaction price is only $110,500. That represents a difference of nearly $70,000 between what sellers want and what buyers are actually willing to pay.

*These conditions will likely continue until the current level of inventory begins to decline and restore more balanced conditions between buyers and sellers.

*On the optimistic side, this actually did happen this past quarter, when the total inventory of listed homes fell by about 1,500 units.

**Hallwatch.org is a private and independently maintained watchdog website that does a lot of in-depth, independent and investigative pieces on city politics, as well as real estate.

Technorati: philadelphia real estate, market conditions, homes for sale

posted by janice