Post on 29-Nov-2014
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© 2013 Fels Institute at U. Penn.| gillenk@upenn.edu
State of the Philadelphia Housing Market
KEVIN C. GILLEN, Ph.D.
gillenk@upenn.edu
Disclaimers and Acknowledgments: The Fels Institute of Government at the University of Pennsylvania provides this report free of charge to the public. The report is produced by Fels Senior Research Consultant Kevin Gillen, in association with the University of Pennsylvania Institute for Urban Research. The author thanks Azavea.com, the Philadelphia Office of Property Assessment, the Federal Housing Finance Agency, Case-Shiller MacroMarkets LLC, RealtyTrac, Zillow.com, Trulia.com and the NAHB for making their data publicly available.
© 2013, Fels Institute of Government, All Rights Reserved.
September 17, 2014
© 2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Recovery is here, but uneven and sluggish
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House Price Indices 1980-2014: 1980Q1=100Philadelphia County v. Philadelphia MSA and U.S. Average
Phila. County*
Phila. MSA**
U.S. Avg.**
Q2
7% increase after 20% decline
© 2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Our recovery lags most other cities:
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House Price Appreciation 1987-2014: Philadelphia v. 10-City Composite
10-City Composite*
Philadelphia
% Change 10-City Philadelphia1998 to Peak: +173% +136%From Peak: -19% -13%
© 2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Philadelphia got off rather easy during the downturn:
-20%-17%
-7%
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-10% -8%
-21% -21%-18%
-21%-16%
-26%-23% -24%
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-18%-21% -19%
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-17%-23%
-13% -18% -19%
-11%
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-35%-42%
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Housing's Road to Recovery: %Lost v. %Recovered
%Remaining
%Recovered
Now that the housing market's recovery appears to have arrived, this chart shows how much house prices need to rise in each city in order to erase the cumulative losses from the bust. The total rebound (to date) in house prices is shown by the blue bars, while the remaining losses are shown by the red bars. For example, Philadelphia county's average house prices fell by a cumulative 20% from peak to trough. To date, they have rebounded by 7%, which implies they need to rise another 13% in order to return to their pre-bust peak levels. Source: Kevin C. Gillen, Ph.D. All other cities courtesy S&P/Case-Shiller.
© 2013 Fels Institute at U. Penn.| gillenk@upenn.edu
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Number of Philadelphia House Sales* per Quarter: 1980-2014
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Qtly. Average
62% decline from peak, but are now trending up.
© 2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Million dollar-plus home sales remain strong:
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Number of Philadelphia Home Sales* per Quarter with Price>=$1 Million: 1997-2014
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Qtly. Average
© 2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Recovery skewed towards higher-priced homes:
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Median Philadelphia House Price v. Indexed Philadelphia House Price1980-2014
Median Price
Indexed Price*
Q2
© 2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Sales skewed towards higher-priced homes:
© 2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Note encroachment of higher-priced homes:
© 2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Rent appreciation skewed as well:
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-10% 0% 10% 20% 30% 40% 50% 60% 70%
Cedarbrook
Oxford Circle
Lawncrest
Wissinoming
Mount Airy
West Oak Lane
Tacony
East Germantown
East Oak Lane
Holmesburg-Torresdale
Point Breeze
East Passyunk
Queen Village-Pennsport
Center City West
Fairmount-Spring Garden
Fishtown
Bella Vista
Powelton
Cedar Park
University City
Top 10 v. Bottom 10: Changes in Average House Rents by Philadelphia Neighborhood, 2010-2014
© 2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Rents up significantly, even as house prices down:
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Philadelphia Rents v. House Prices: 2010-2014
Median Rent
Median House Price
Rents up 16% House Prices down -1.5%
© 2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Price-Rent Ratio at 10-year low
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Average House Price-to-Rent Ratios*: 1980-2014Philadelphia v. U.S.
U.S.
Philadelphia
*Computed by taking the ratio of average house price to the average annual rent of a comparable housing unit. The P/R ratio is to real estate what the P/E ratio is to other assets. Contact gillenk@upenn.edu for further details.
© 2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Inventories beginning to uptick again?
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Philadelphia Houses Listed For Sale: Inventory v. Absorption Rate
# Houses Listed For Sale
% Absorbed
# H
om
es L
iste
d "
Fo
r S
ale
" %A
bso
rbed
= (#
Sale
s/#
Lis
ting
s)
© 2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Homes are moving at a faster pace:
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Average Days-on-Market* for Philadelphia Homes
*Days-on-Market (DOM) is the average number of days it takes for a listed house to sell.
# o
f D
ays
© 2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Economy still sluggishly recovering:
© 2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Unemployment slow to decline:
© 2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Interest rates are heading up again:
© 2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Homebuilders feeling more optimistic:
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Index of Homebuilder Sentiment: 1985-2014(Seasonally Adjusted)
National
Northeast
The Index represents the current sentiment of U.S. homebuilders. The index is computed via a regular monthly survey of homebuilders. An index value above 50 indicates that more builder are optimistic than pessimistic, while an index value below 50 indicates that more builders are pessimistic than optimistic.
© 2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Markets more bullish on housing:
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Philadelphia Stock Exchange Housing Sector Index: 2002-2014
The PHLX Housing Sector Index is a modified cap-weighted index composed of 20 companies whose primary lines of business are directly associated with the U.S. housing construction market. The index composition encompasses residential builders, suppliers of aggregate, lumber and other construction materials, manufactured housing and mortgage insurers.
Note: the index underwent a significant rebalancing in January of 2006.
© 2013 Fels Institute at U. Penn.| gillenk@upenn.edu
What to Expect Going Forward?
• The Good: The recovery continues, and is very strong in some (higher-income) markets.
• The Bad: Remains very uneven, sluggish GDP and income growth, and slow declines in unemployment unemployment. And: rising interest rates while credit still remains relatively tight credit.
• The Uncertain: When will true, widespread recovery take hold? And, what about local policy?