Philadelphia real estate sales, prices fall after tax credit expiration

The end of the federal home buyers' tax credit pulled the rug out from under Philadelphia real estate sales and prices in the third quarter, data gleaned from city records show.

From July through September, the typical home sold in Philadelphia fell in value by an average 4.6 percent from second-quarter levels and was down 3.3 percent from 2009's third quarter, economist Kevin Gillen, vice president of Econsult Corp. in Philadelphia, said Wednesday.

"This most recent decline more than eliminates the gains from the previous quarter, in which prices rose 3.8 percent as buyers sought to take advantage of the federal tax credit before its expiration in June," he said.

The value of a typical single-family house in the city has fallen 11 percent since regional prices began declining in the third quarter of 2007.

In the eight-county region, according to Federal Housing Finance Agency data, home values fell 0.1 percent from the second quarter and 1 percent year over year.

Consider, however, that over the last decade prices citywide increased 68.4 percent, while the increase was 60.7 percent regionally and 31.3 percent nationally.

In the third quarter, prices slipped in every part of the city: University City had a drop of 10.9 percent; South Philadelphia, 8.9 percent; Center City/Fairmount, 3.4 percent; and the lower Northeast, 2.2 percent.

Sales volume fell, as well. Just 3,300 houses changed hands in the third quarter, down 21 percent from the second quarter and 18 percent from third quarter 2009.

"Although sales activity typically shows a seasonal decline from spring to summer, this was the lowest level of third-quarter home-sales activity since 1996," Gillen said.

According to the S&P/Case-Shiller MacroMarkets composite home-price index, prices have fallen an average 28 percent in the 10 largest U.S. cities since the housing bubble burst, Gillen said.

That compares with only 11 percent for Philadelphia, he noted. Of those large cities, only Dallas and Denver have seen smaller declines.

Price declines resumed in most big cities in the third quarter, Gillen said, which shows that "Philadelphia's housing problems are part of a national, rather than local, trend."

Instead of stabilizing prices, the tax credit appears to have provided only "a brief reprieve," he said.