Philadelphia’s Decline in House Values Slows Significantly in Q1 . . . House prices decline 1.3% in 2011 Q1.
Following several consecutive quarters of sharp price declines, the Philadelphia housing market appeared to have tapped the brakes this past winter.
The typical Philadelphia home fell in value by an average of 1.3% on a quality- and seasonally- adjusted basis this past winter, according to the latest data from the City’s Recorder of Deeds. This comes after several consecutive quarters in which price declines totaled nearly 9% following the expiration of the Federal homebuyer tax credit last spring. And, while the winter season is normally a down period for both home sales and prices, this winter’s price decline is the smallest since 2007. With this most recent decrease, the average Philadelphia home has now fallen in value by a cumulative total of 16% since the bursting of the national housing bubble several years ago. Philadelphia’s house values have now reverted back to 2005 levels. (April 25, 2011)
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“MSA”=Metropolitan Statistical Area, which is the entire 9-county region.
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House Price Indices 1980-2011: 1980Q1=100Philadelphia County v. Philadelphia MSA and U.S. Average
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Philadelphia MSA** U.S.A.**
30-Year 141.0% 156.2% 114.9%
10-Year 59.1% 55.7% 26.9%
1-Year -6.5% -4.6% -4.0%
1-Quarter -1.3% -0.6% -0.8%
*Empirically estimated by Kevin C. Gillen PhD
**Source: U.S. Federal Housing Finance Agency (FHFA). These numbers are through 2010Q4 only.“MSA”=“Metropolitan Statistical Area”, which is the entire 9-county region.
Total House Price Appreciation Rates by Geographic Market
*Source: Case-Shiller MacroMarkets LLC. The 10-City Composite index includes Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco, and Washington, DC. It does not include Philadelphia.
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House Price Appreciation 1987-2011: Philadelphia v. 10-City Composite
Note: Each neighborhood is extruded by its average change in house values during 2011 Q1 in order to reflect its growth (or depreciation) rate relative to other neighborhoods.
2011 Q1 House Price Rate of Change by Neighborhood
The diffusion index measures how varied the direction of house price changes are across Philadelphia neighborhoods. It is computed as the percent difference between the number of nieghborhoods in which prices rose in a give quarter, and the number of neighborhoods in which prices fell. A value of -100% indicates that prices fell citywide in a given quarter, while a value of +100% indicates that prices rose citywide. A value of 0% indicates that house price changes were evenly split between increases and decreases, across neighborhoods. Diffusion indexes are commonly used in financial economics as a leading indicator of turning points in a market's direction.
Philadelphia Housing Affordability* Index: 1980-2011
*Affordability is measured as the ratio of the medianPhiladelphia house price to the to the median Philadelphia household income. High values of the index mean that housing has become less affordable to the average Philadelphian. Contact [email protected] for details.
Average House Price-to-Rent Ratios*: 1980-2011Philadelphia v. U.S.
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Philadelphia
*Computed by taking the ratio of average house price to the average annual rent of a comparable housing unit. The P/R ratio is to real estate what the P/E ratio is to other assets. Sources: US Census, US BLS.Contact [email protected] for further details.
Inflation-Adjusted* Philadelphia House Price Index 1980-20111980Q1=100
*The empirically estimated house price index is def lated by the rate of inf lation over time, using the national Consumer Price Index as the proxy for the national rate of inf lation. This procedure converts the house price index f rom "nominal" to "real" terms, and thus shows house price changes net of general inf lation.
Source: National Assoc. of Homebuilders (NAHB)/Wells Fargo
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Index of National Homebuilder Sentiment: 1985-2011(Seasonally Adjusted)
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The Index represents the current sentiment of U.S. homebuilders. The index is computed via a regular monthly survey of homebuilders. An index value above 50 indicates that more builder are optimistic than pessimistic, while an index value below 50 indicates that more builders are pessimistic than optimistic.
The PHLX Housing Sector Index is a modif ied cap-weighted index composed of 20 companies whose primary lines of business are directly associated with the U.S. housing construction market. The index composition encompasses residential builders, suppliers of aggregate, lumber and other construction materials, manufactured housing and mortgage insurers.
Note: the index underwent a signif icant rebalancing in January of 2006.
This chart shows the total decline, to date, in the average house price in each city since the bursting of the housing bubble. Philadelphia's decline is empirically estimated by Kevin C. Gillen, PhD. All other cities courtesy Case-Shiller MacroMarkets LLC.