Realtors: Put Greater Philadelphia Home Sales Decline in Context
The real estate blitz that blazed through Chester County, Pa., over the last few years has really cooled off.
In its place is not a disaster zone, but a more balanced market, say real estate industry veterans in Chester County, which so far in 2006 has posted an average median home price increase of just 1.7 percent to $305,000, the smallest increase in the greater Philadelphia area.
Over the same period, the county saw 4,939 sales, down 7.8 percent, compared with 5,359 homes sold in 2005. Realtors say an 7.8 percent drop in sales should be put in context.
“2005 was the best year ever in Chester County, 2004 was the second-best year ever in real estate in Chester County and 2003 was the third-best year ever in real estate in Chester County. This year will end up between 2003 and 2004 at the end of the day,” Alan Reburn, senior vice president at Prudential Fox and Roach, said.
Houses are still selling, they just will take a little longer.
Sellers have to be careful of their asking price and be careful of staging the house to make it look its best. Whichever house is perceived by the buyer to be the best value for the dollar will be the home that will sell.
Reburn started in the real estate industry in 1990, when the average time on the market was 150-180 days for a home and prices did not appreciate 20-40 percent in a year. The market cannot sustain that type of appreciation year after year, and the agent warned people treating homes as if they were investors.
“Up until 2000, a home was not an investment vehicle. It was never meant to be an investment vehicle. A principle residence is a shelter for the family and some great tax deductions,” Reburn said.
The slowdown will result in a market that is more balanced.
The monthly average inventory for the period was 4,258 homes, compared with 3,386 for the first nine months of 2005 and the average number of days a home remained on the market increased from 45 days in 2005 to 54 days in 2006.
It’s a slowdown, but not a crash. The picture is very different in Florida and in the volatile California housing market, along with other places across the county, where serious declines may be on the way.
Despite discouraging numbers in some categories, Chester County led southeastern Pennsylvania in median sale price through September 2006 at $305,000, followed by Bucks County at $300,000, Montgomery County at $270,000, Delaware County at $204,900 and Philadelphia at $137,500.
Ryan Sweet, an economist at Moody’s Economy.com, thinks real estate in Chester County is still in a pretty good place to be.
“I do not think the sky is falling. Nationwide, there is a downturn this year into 2007 and the Philadelphia metro (market) continues to slow but I don’t expect housing prices to drop in the suburban area of Philadelphia. That’s pretty stable,” Sweet said.
Home prices in the region are affordable and the local real estate industry can ride on those coattails for a very long time.
Not so on the national front where there is slow job growth and population growth, higher mortgage interest rates and other factors are going to slow things down considerably.
Like nearby Delaware, mortgage demand in Pennsylvania may not be what it was a year ago, and buyers are definitely going to see some openings that were not there recently. But the market will ride this slump out without the mass hysteria that may ensue in some of the more inflated markets.