Philly ‘Burbs: A Buyer’s Market, Through and Through

It wasn’t the best of years, but it wasn’t the worst either.

That’s the summation of the Philadelphia suburbs, where home prices saw a rebound in December after falling for three straight months prior to that. Home prices in 2006 actually rose 6.4 percent from 2005 — not bad for a market in the midst of what’s widely considered to be a slump.

Some homeowners continue to do nicely. Marianne and Chris Zoto ended up selling their Doylestown townhouse in June for $475,000 — or a whopping $200,000 more than they paid in 2003 — and moved up to a new single-family home in nearby Fountainville for $510,000.

The Zotos doubled their living space for a slight increase in the size of their Pennsylvania mortgage.

“Every day we say we got lucky,” said Marianne Zoto.

The Zotos may have caught the tail end of the housing price wave that drove values higher throughout the area in recent years. Houses in the same Doylestown neighborhood are now going for as little as $375,000.

Others looking to sell as the 2007 home-selling season is set to begin believe the Pennsylvania housing market has definitively turned against them.

“It’s a buyer’s market right now, not a seller’s market,” Stacy Gallagher, who has been trying to sell her Warwick townhouse for three months, and has cut her asking price for the three bedroom house from $229,000 to $219,000, and is close to accepting an offer for $206,000, said.

It’s hard to characterize the housing market in the entire area as good, bad or flat. Success or failure in any real estate sale is entirely a function of the situation of an individual homeowner.

The Zotos, for instance, could be perceived as having done well in selling their house whether they received $475,000 — a $200,000 gain — or “only” $375,000, which would still have been a $100,000 gain.

If Gallagher gets $206,000, that’s still a sizable 37 percent gain over the $150,000 she paid five years ago, and a big deal as far as her mortgage loan payments are concerned.

“If you’ve been in the market for a while, you’ve seen the benefits of (price) appreciation,” said Ryan Sweet, Pennsylvania analyst for Moody’s Economy.com in West Chester.

But first, sellers have to find a buyer. And it’s clear that at the moment — as through much of 2006 — that is taking longer.

“Now, it’s almost like a stalemate … in the game of real estate chess,” said Herman Petrecca, a real estate agent with ReMax Associates in Warminster.

The number of days on market in the 43 municipalities of Central and Upper Bucks and Eastern Montgomery counties rose 32 percent in the last year, to 53 days, according to multiple listing service data provided by Prudential Fox & Roach. In December alone, the average jumped to 70 days from 43 days in December 2005 — a 63 percent increase.

The number of homes sold in the area fell 14 percent in 2006, to about 5,000. In December, the number of sales was off 8 percent, to 344. In contrast, the state’s home prices held up, despite weakness late in the year.

Average prices fell in September, October and November when compared to the same months in 2005. But prices rebounded and rose 4.3 percent in December to $315,000 — near the area’s all-time average high of $320,000 reached in several summer months in 2005 and 2006.

December’s strong price performance joined with price increases in the first eight months of the year to boost the year’s average prices 6.4 percent to $309,000, up from an average of $290,000 in 2005.

The area’s strength in pricing supports the view of experts that the Philadelphia region, unlike other parts of the country, did not experience the home price bubble sparked by massive amounts of bad credit mortgage deals and record-shattering home sales.

“The Philadelphia area isn’t nearly as vulnerable” as other regions, said Tim Schiller, senior economic analyst at the Philadelphia Federal Reserve Bank. “The concept of a housing bubble, that’s a myth in our area.”

To a large measure, whether a particular house will appreciate — and by how much — has a lot to do with how much it cost in the first place. Homes in the “middle” market, priced from $350,000-700,000, did best in the past year, rising an average of 1.9 percent in price.

Homes priced at less than $350,000 rose 0.6 percent, on average, while homes priced above $700,000 fell in price by nine-tenths of a percent.

Again, within any price range, whether a sale is seen as successful really depends on each seller’s specific situation. The factors that separate housing market winners from losers include:

• When you bought. “Anyone who bought in the 1-2 years and needs to sell, might find themselves taking a hit to the home equity,” Schiller said. People who have owned for a while will likely make money selling, even in a slow market.
• How you financed. “Clearly, anyone who’s got an (adjustable rate mortgage) has some tough times coming up,” said Schiller. That’s because mortgage rates have risen from their record lows earlier in the decade.
• How quickly you must sell. “People who want to sell fast are probably most subject to the whims of the market,” he said. Homeowners who can hold out for a while have a much better chance of fetching a good price.