Among 25 major metropolitan areas, Philadelphia ranked eighth in maintaining its year-over-year price per sf, according to New York City-based Radar Logic's newly released RPX Monthly Housing Market Report for March. The metro area's PPSF of $149.13, for singlefamily and condominium units, was off 5.3% from March 2007, and up 0.5% from Feb. 2008. The five lowest-ranked metro areas, all with year-over-year declines of 22% or more, were all in the West. Only one metro area's PPSF saw an increase: Milwaukee, up 2.8% year over year. Michael Feder, CEO of Radar Logic, was not available for additional comment by deadline.
In the eight-county Philadelphia region, Q1 '08 home prices were about 4.1% above what they should be, according to Global Insight, an economic forecasting service based in Lexington, MA. By contrast, prices in the metro area were considered overvalued by 10.1% in Q1 '07, according to Global Insight's "House Prices in America," which looks at housing valuation in 330 markets across the US. Currently, average singlefamily home prices in the Philadelphia region are $235,200, compared to $236,300 in Q1 '07. A Global Insight spokesman declines to comment further.
In a prepared release from the Pennsylvania Association of Realtors headquartered here, Austin Jaffe, Ph.D., chair of the Department of Insurance and Real Estate at the Smeal College of Business at Penn State University, comments, "The era of easy money and exotic mortgages never took hold among homebuyers in the commonwealth, so prices in Pennsylvania never increased as much or as quickly in other markets. There's no reason to expect that prices will fall as much or as rapidly here."
On the other hand, there has been a leveling off lately of residential prices across the commonwealth, with steeper declines to come, say researchers at the Keystone Research Center in Harrisburg. They say price declines coupled with rising unemployment raise the risk of additional mortgage delinquencies and home foreclosures in Pennsylvania.
Analyzing national and state-level housing data by Freddie Mac, Stephen Herzenberg, an economist with the Keystone Research Center, says in a prepared release that the Freddie Mac index for Pennsylvania reveals the first actual decline in housing prices over a 12-month period since 1995. Pennsylvania housing prices fell 1.3% year over year from Q1 '07, although Herzenberg says that's a smaller decline than was experienced in 37 states, including five of Pennsylvania's nearest neighbors.
"While housing prices have declined less here than in other states, the trends we're seeing over time are following the national trend," says Herzenberg in the release. "Based on national projections, this implies that larger price declines are in Pennsylvania's future."
Herzenberg's Keystone Research colleague Mark Price, a labor economist with the center, cites a summary of current housing market research delivered by Federal Reserve chair Ben Bernanke last month. "Bernanke argued that rising unemployment and falling home prices are important factors influencing the prevalence of mortgage delinquency and foreclosure," says Price in the release. Data from RealtyTrac ranks Pennsylvania 34th among the 50 states in the number of foreclosures, although foreclosures in Philadelphia itself are on the rise.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
