Home prices rise slightly, but not in the Philadelphia area

Posted: August 08, 2012

Home prices in 151 of the nation's 384 metropolitan areas rose in the first quarter from the same period a year ago, Fiserv Inc. said Monday.

The Philadelphia region's prices fell 3.2 percent year-over-year, however, according to the Fiserv Case-Shiller Indices, which track area numbers quarterly.

According to Fiserv, Philadelphia-area home prices declined 8.1 percent between the first quarters of 2009 and 2012. Fiserv and Moody's Analytics projects that prices will decline an additional 3.9 percent by the first quarter of 2013.

Econsult Inc. vice president and economist Kevin Gillen's own home-price index showed the city's prices falling 6.1 percent between the first quarters of 2011 and 2012.

In the second quarter of 2012, prices were 0.3 percent higher in the city than in March to June 2011, he said.

Gillen, who will compile his home-price index for the suburbs this week, said Fiserv's prediction of a further 3.9 percent decline by the first quarter of 2013 "seems rather pessimistic to me."

Michael Feder, CEO of RadarLogic, a New York firm that provides data analysis for real estate, said that although the data exhibited more strength to date in 2012 than they have over the same period in the preceding three years, "this does not necessarily indicate that home prices have hit a bottom."

Feder and other experts said the mild winter weather temporarily boosted demand.

"Assuming that these buyers would have entered the market later in the buying season under more typical circumstances, the early uptick in housing demand will have come at the expense of weakness in demand later on," Feder said.

Home prices are not likely to appreciate on a sustained and meaningful basis, Feder said.

"Rather, short-term appreciation will paradoxically short-circuit long-term appreciation and perhaps trigger further declines," he said.

While average U.S. homes prices declined 1.9 percent on a year-over-year basis, and are forecast to decline an additional 1 percent in the next 12 months, Fiserv Case-Shiller projects a 5 percent increase between the first quarters of 2013 and 2014.

"Inventories of single-family homes have dropped below 2.5 million units, the lowest levels since 2004," said David Stiff, Fiserv's chief economist. "This shrinking supply of unsold homes is nudging home prices upward in selected markets."

Negative equity remains a factor constraining supply in some markets, however, since many underwater homeowners cannot come up with the cash to cover the difference between their outstanding mortgage balances and the current market value of their homes, he said.

Many positive equity homeowners are also keeping their houses off of the market, waiting for price increases to boost their selling profits.

"Continuing housing affordability and demand from first-time buyers will help put a floor under home prices, ending the nearly seven-year collapse of the housing bubble," Stiff said.


Contact Alan J. Heavens at 215-854-2472, aheavens@phillynews.com or @alheavens at Twitter.

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