Although metropolitan Philadelphia has a surplus of houses for sale, and time on market has doubled over the last year, just about every study and survey over the last nine months had indicated that this region is not in as bad shape as many others.
The PMI survey confirms that. Rankings of risk run from 1 to 5, with 1 the highest. Metropolitan Philadelphia gets a 4, the second-lowest category, which is "characterized by low to moderate levels of price volatility and acceleration, moderately high levels of housing affordability, and relatively weaker labor markets," according to Mark F. Milner, PMI's chief risk officer.
High-risk areas include the usual suspects - Riverside, Calif.; Phoenix; Las Vegas; and West Palm Beach, Fla. - with Phoenix and Las Vegas experiencing a slowing of appreciation that puts them at the top of the list.
The lowest-risk areas are in the industrial Midwest, which has shown continued stress, including the highest mortgage-delinquency and foreclosure rates, because of loss of high-paying factory jobs and little or no economic growth or housing appreciation.
When Milner says Philadelphia has a relatively weaker labor market, he doesn't mean there's an employment problem here. In fact, economists consider the diversity of employment a plus for this region.
Rather, PMI measures employment by a "demeaned" rate, which means that the current rate for this metropolitan statistical area is compared with Philadelphia's average rate for the previous five years.
A negative value for the demeaned rate would show that the current rate is below the historical average, meaning a strong labor market. A positive value would indicate a weak labor market. Philadelphia's value is minus 0.68 - not bad, but not great.
Affordability is measured using a baseline score of 100 established in 1995. If the score is above 100, houses have become more affordable; below, they are less so.
Though the PMI index (and a lot of other statistics) show that home prices in this region are continuing to appreciate, they are not rising as fast as they were in the last few years.
So the affordability score for Philadelphia in the first quarter of 2007 was 93.4. In the fourth quarter of 2006, it was 97.0, which means that houses here have become less affordable in the last six months.
That could be good news for sellers (good and bad being relative terms), but it is not for marginal buyers who have waited for median prices to drop into their range. Factor in, too, that the subprime mess has forced many lenders to tighten underwriting standards, so lower-income buyers who might have been able to obtain a mortgage a year ago are shut out of the market now.
An economist told me a few months ago that even though prices in this region had not climbed in the same frenzied way as they did in Las Vegas, Phoenix, California and Florida, they still needed to come down so that more buyers could get into the market.
This makes perfect sense, yet it's very hard for a real estate agent to bring that message to a seller who's still using as a price benchmark what his neighbor's house brought two years ago.
For the first quarter of 2007, prices in this region appreciated 5.63 percent, close to the national historical annual average of 5.5 percent. In the first quarter of 2006, they appreciated 13.72 percent.
These are only numbers, based on computerized statistical models. All real estate is local, right down to the street or block, and a lot of things - even how the house looks in the light of day - can determine how fast a house sells and for how much.
So far, however, the numbers still look pretty good.
"On the House" appears Sundays in The Inquirer. Contact Alan J. Heavens at 215-854-2472 or email@example.com.