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I am an agent and moved to Philadelphia a year ago.
What is interesting to me is how little prices in center city Philadelphia have declined - less than 1% according to most statistics - in fact in some locations prices are still climbing.
If you've read any of my other posts on this forum you will know that I am bearish on real estate at the moment. We would eventually like to buy ourselves, but held off until I understood this market better, and to see what the longer term trends would be.
What I have noticed is that some homes are on the market a very significant amount of time, but when they sell, they sell closeish to asking.
Don't get me wrong - the past year has been slooooow. Mounting inventory, but no price declines. Now the inventory is being cleared out in spring buyer activity, so the stalemate seems to have broken in the seller's favor - a fact which greatly surprises me I must admit.
Other agents here like to say that Philadelphia did not experience the same run up as other areas. This may be true to some extent, but when I review listings I can very clearly see that price increases from 2001 to 2006 were really quite signficant - perhaps 50 - 70% in many cases.
We made an offer on a home recently that sold in 2006 for $915,000. It was listed at $1,100,000. We offered $900,000. They ended up with a full price offer (not from us!).
This is not as unusual as you might think. Another house we are interested in sold in 2007 for $912,750. The current asking price is $959,000. They'll probably get close to that although we would not pay more than $875,000.
This confuses me - I am surprised that the market here keeps proving me wrong.
Is our area just late to the real estate party and declines are coming? Or, are we for some inexplicable reason; immune? Is this spring selling season an indication of a bottom, or is it just a blip?
Homes in center city have been selling fast this past month, at prices which surprise me.
Many of the agents in my office are sighing with relief and declaring the end of the pain. I am less optimistic, as I just don't see things as 'historically affordable' yet. Texas prices they are not (Philadelphia as a whole has very cheap housing stock, but center city does not).
So would anyone care to hazard a guess? Will some areas come out of this thing unscathed, or are areas which have previously held firm on pricing destined for the large price decreases too? Any thoughts?
Lack of buyers is a DIFFERENT PROBLEM than inflated/bubble/unrealistic pricing!!!
If the buyers are flat out "not to be found" cutting prices is fruitless, and the "waiting game" is what sellers HAD to do.
Basically, if selling prices are a decent percentage of list (greater than 80% is a nice target for me, but others have different standards) then their is little reason to go along with the price cuts UNLESS you are distressed seller.
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Lack of distressed sellers is a bummer for buyers, but the reality is there are way more people that are "normal" sellers in most markets.
Some ares will have average selling prices INCREASE, as the really did not participate in the "run up" at all.
Right now, there is a classic illiquid market -- a large gap between what buyers offer and sellers ask for. This leads to very low sales volume. It also makes it much harder to correctly identify what the prices actually are, especially at the high end of the market (too few transactions taking place)
Also, a 50-70% run-up is substantial, but not as extreme as other places.
I think the nominal prices will stay put (real prices may fall as inflation sets in) because as long as the buyer doesn't have to sell, these tend to be sticky.
Right now, there is a classic illiquid market -- a large gap between what buyers offer and sellers ask for. This leads to very low sales volume. It also makes it much harder to correctly identify what the prices actually are, especially at the high end of the market (too few transactions taking place)
Also, a 50-70% run-up is substantial, but not as extreme as other places.
I think the nominal prices will stay put (real prices may fall as inflation sets in) because as long as the buyer doesn't have to sell, these tend to be sticky.
Along with great credit, secure employment, and liquid savings, I wonder how many of these type buyers exist.
Would these particular buyers be the exception rather than the rule?
Along with great credit, secure employment, and liquid savings, I wonder how many of these type buyers exist.
Would these particular buyers be the exception rather than the rule?
In general, yes. But the issue is with a shortage of forced sales, not a shortage of buyers.
It's true that buyers with good quality were in short supply during the boom, but it's possible that most of the owners in some areas bought before the bubble, and therefore met pre-bubble lending standards.
Along with great credit, secure employment, and liquid savings, I wonder how many of these type buyers exist.
I put myself in the category above but my liquid savings isn't enough to cover the DP, closing costs and a cushion of living expenses. If I won $50k in the lottery I'd be set since the DP is the only thing shutting us out.
Found this link that seems like it might have good info for you. Wiped out from a high school reunion, so I didn't look at any of the data posted, but the summary looks like it's from a solid source with hard facts.
(Edit: After posting, I see the title leads to a perception of a drop. I think the title is from a year ago, but the reference is to reports updated quarterly, so ignore this title and see what the current numbers say.)
The Black Hills in South Dakota have seen steady value increases thru the recession. Our increases have tapered off, but we are still seeing them. Don't get me wrong it's not all roses, but the foreclosure rate is low and homes are still moving. There are many major economic development projects going on, and banks are lending, even for large scale commercial stuff. It irritates me when the media brings in the experts that only refer to areas where banks aren't lending, and then ignore the areas where things are plugging right along. It misleads the general public into thinking there are no solid markets which lowers consumer confidence despite the fact there are still great places to invest. Why is it the solid economies are so often ignored? Do people want doom and gloom?
We relocated to the Philadelphia area as well last year and have also been trying to figure out the perplexing market. We are looking outside the city. What we are seeing is that further out (outskirts of Montgomery County) homes are starting to see the drops. Especially in the higher end properties. Homes under $300,000 are still selling very well.
I have been watching two homes, both purchased in 2008/2007 and both are listed at the price they purchased at or slightly above. Both are sitting on the market (one 9 months and the other 4 months) and neither have lowered the price.
I'm waiting - just not willing to take the risk of buying a depreciating asset - the one I sold last year is enough for me!
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