Although the national economy has slowed significantly in the last 18 months and most major metropolitan areas have been hit hard by the subprime mortgage crisis, the Philadelphia real estate market closed 2008 in better shape than nearly every other major metropolitan area in the country. Below are market statistics provided by Trend MLS, updated December 31, 2008.
Download Dr. Kevin Gillen’s quarterly research paper, Philadelphia House Price Indices, for more details. Dr. Gillen is an economist at the Real Estate Department of the Wharton School.
It is definitely a buyer's market because of the historically low mortgage rates and vast home inventory. Buyers’ confidence has slightly improved with the release of the new, remarkably low interest rates. If you have good credit and were just waiting for the right opportunity to buy, this is a very favorable time to do it!
Interestingly enough, Philadelphia is also a good market for sellers. Currently, sellers are getting approximately 94.7% of the asking price, only 1.0% lower than what they were getting in early 2007. Sellers just need to be patient and understand that due to the large inventory buyers are taking more time to shop around. Fairly priced homes, particularly those that have been recently renovated, can sell in 40 days or less if well exposed to the buyer pool.
Prices in the entire region have gone down approximately 3.8% and for real estate investors on the fence this means: time to buy! It is all about finding bargain homes and knowing how to negotiate the best possible loan that will cover both the mortgage and renovation costs. Whether the intent is to “flip” the property or put it on the rental market, even first-time investors can benefit if following all of the critical steps.
Why haven't the real estate prices in Philly gone down 20-30% like other areas of the country?
Simply stated, Philly did not follow the national real estate market boom. This means housing values in the entire metro area kept pace with a more consistent market valuation. There has been a decline in the number of homes sold through the MLS in 2008, but all of the statistics provided by the National Association of Realtors and other related sources show stability in price.
Another interesting fact about Philadelphia: most of the reported foreclosures were filed for either loss of job or illness, and NOT because people were in trouble with subprime mortgages. The state of Pennsylvania and the City of Philadelphia are known for having the nation’s most customer-friendly foreclosure laws. This is particularly good news for sellers since they don’t have to compete with a large number of foreclosed properties being sold for much lower prices than average.
What makes Philly a good place to invest in real estate today — particularly when it comes to rundown properties?
Like the stock exchange, the real estate market is cyclical and investors anywhere in the country who are in it for the long haul very rarely experience loss. If the local rental market is a strong one, you could have two or more investment properties rented and very little headache associated with them. Many people feel more comfortable investing on a second home because a hard asset is often more secure than most financial investments.
In a nutshell, Philly is a unique real estate market on the East Coast and finding a great deal is just a matter of looking in the right places. Just make sure you do your homework before diving in head first. You will find some tips on our Resources page, but please contact us if you would like to learn more or check out any of our listings.