Post on 02-Jun-2018
8/11/2019 National Realty Investment Advisors Shares Philadelphia Housing Market Report
1/20
2013 Fels Institute at U. Penn.| gillenk@upenn.edu
State of the Philadelphia
Housing Market
KEVIN C. GILLEN, Ph.D.
gillenk@upenn.edu
Discla imers and Acknow ledgments: 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
8/11/2019 National Realty Investment Advisors Shares Philadelphia Housing Market Report
2/20
2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Recovery is here, but uneven and sluggish
100.0
150.0
200.0
250.0
300.0
350.0
400.0
450.0
500.0
550.0
600.0
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
8/11/2019 National Realty Investment Advisors Shares Philadelphia Housing Market Report
3/20
2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Our recovery lags most other cities:
90.0
140.0
190.0
240.0
290.0
340.0
390.0
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House Price Appreciation 1987-2014:Philadelphia v. 10-City Composite
10-City Composite*
Philadelphia
% Change 10-City Philadelphia
1998 to Peak: +173% +136%
From Peak: -19% -13%
8/11/2019 National Realty Investment Advisors Shares Philadelphia Housing Market Report
4/20
2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Philadelphia got off rather easy during the downturn:
-20% -17%
-7%
-14%-22%
-10% -8%
-21% -21%-18%
-21%-16%
-26%-23% -24%
-36%
-16%
-26%
-18% -21% -19%
11%
-3%
-13%
-6%
10%
-14% -19%
-9% -12%-16%
-17%-23%
-13% -18% -19%
-11%
-32%
-23%
-34%
-35%
-42%
-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
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.
8/11/2019 National Realty Investment Advisors Shares Philadelphia Housing Market Report
5/20
2013 Fels Institute at U. Penn.| gillenk@upenn.edu
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
1980
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2012
2013
2014
Number of Philadelphia House Sales* per Quarter: 1980-2014
Q1Q2
Q3
Q4
Qtly. Average
62% decline from peak,
but are now trending up.
8/11/2019 National Realty Investment Advisors Shares Philadelphia Housing Market Report
6/20
2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Million dollar-plus home sales remain strong:
0
5
10
15
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25
30
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Number of Philadelphia Home Sales* per Quarterwith Price>=$1 Million: 1997-2014
Q1
Q2
Q3
Q4
Qtly. Average
8/11/2019 National Realty Investment Advisors Shares Philadelphia Housing Market Report
7/20 2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Recovery skewed towards higher-priced homes:
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
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Median Philadelphia House Price v. Indexed Philadelphia House Price1980-2014
Median Price
Indexed Price*
Q2
8/11/2019 National Realty Investment Advisors Shares Philadelphia Housing Market Report
8/20 2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Sales skewed towards higher-priced homes:
8/11/2019 National Realty Investment Advisors Shares Philadelphia Housing Market Report
9/20 2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Note encroachment of higher-priced homes:
8/11/2019 National Realty Investment Advisors Shares Philadelphia Housing Market Report
10/20 2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Rent appreciation skewed as well:
-4%
1%
2%
3%
6%
6%
7%
7%
7%
8%
25%
25%
28%
28%
30%
41%
46%
49%
60%
62%
-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
8/11/2019 National Realty Investment Advisors Shares Philadelphia Housing Market Report
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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%
8/11/2019 National Realty Investment Advisors Shares Philadelphia Housing Market Report
12/20 2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Price-Rent Ratio at 10-year low
4.0
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8.0
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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 houseprice to the average annual rent of a comparablehousing unit. The P/R ratio is to real estate whatthe P/E ratio is to other assets. Contactgillenk@upenn.edu for further details.
8/11/2019 National Realty Investment Advisors Shares Philadelphia Housing Market Report
13/20 2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Inventories beginning to uptick again?
0%
5%
10%
15%
20%
25%
30%
0
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Philadelphia Houses Listed For Sale: Inventory v. Absorption Rate
# Houses Listed For Sale
% Absorbed
#HomesListed"ForSale" %
Absorbed=(#Sales/#Listings)
8/11/2019 National Realty Investment Advisors Shares Philadelphia Housing Market Report
14/20 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 theaverage number of days it takesfor a listed house to sell.
#ofD
ays
8/11/2019 National Realty Investment Advisors Shares Philadelphia Housing Market Report
15/20 2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Economy still sluggishly recovering:
8/11/2019 National Realty Investment Advisors Shares Philadelphia Housing Market Report
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Unemployment slow to decline:
8/11/2019 National Realty Investment Advisors Shares Philadelphia Housing Market Report
17/20 2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Interest rates are heading up again:
8/11/2019 National Realty Investment Advisors Shares Philadelphia Housing Market Report
18/20 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 ofU.S. homebuilders. The index is computedvia a regular monthly survey of homebuilders.
An index value above 50 indicates that morebuilder are optimistic than pessimistic, whilean index value below 50 indicates that morebuilders are pessimistic than optimistic.
8/11/2019 National Realty Investment Advisors Shares Philadelphia Housing Market Report
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2013 Fels Institute at U. Penn.| gillenk@upenn.edu
Markets more bullish on housing:
$0
$50
$100
$150
$200
$250
$300
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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 whoseprimary lines of business are directly associated with theU.S. housing construction market. The index compositionencompasses residential builders, suppliers of aggregate,lumber and other construction materials, manufacturedhousing and mortgage insurers.
Note: the index underwent asignificant rebalancing inJanuary of 2006.
8/11/2019 National Realty Investment Advisors Shares Philadelphia Housing Market Report
20/20
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 GDPand income growth, and slow declines in
unemployment unemployment. And: risinginterest rates while credit still remains relativelytight credit.
The Uncertain:When will true, widespreadrecovery take hold? And, what about local policy?