On the House: Brighter outlook for city condos

Posted: September 16, 2012

Every other Monday at noon, I host a live chat on Philly.com called "Ask Al."

It isn't particularly well-attended. But from those who do join in, the questions I have been getting lately have tended to focus on the same topics: the direction of interest rates; the Center City condo market; and the postponed actual-value initiative, or AVI, in Philadelphia.

I'll tackle the "Philacentric" issues first.

The Center City condo market has had its ups and downs since the economy took a turn downward.

Condos in Rittenhouse and Washington Squares appear to have held their value, and in most cases resales have been slower, but likely.

For many newer projects elsewhere in the city, it has been tougher, with auctions taking place to accelerate sales, for example.

As with any questions about sales and prices, I turn to economist Kevin Gillen, vice president of Econsult Corp. of Philadelphia, who keeps the situation under his microscope.

Gillen notes that condominium inventories continue to decrease significantly regionwide. From a peak of just over 4,000 several years ago, the number of condos listed for sale has fallen to 2,738, a 32 percent drop.

Since most of the condo development is in the city, I would think that improvement in the climate for condo sales is centered here, as well.

An online-chat questioner cited a few buildings in whose fortunes he was interested.

I am a reporter, not a speculator, and I will continue to decline to offer opinions on individual projects. Information on sales and prices is available from a growing number of sources, and that's where you need to go.

Now to AVI, about which I have no opinion.

If you asked me privately about taxes in my South Jersey community, you would be greeted by, first, a string of expletives, then an apology for my language.

AVI is intended to assess the current market value of all Philadelphia properties, and then levy a uniform property tax on those updated values.

In June, implementation was delayed a year. It appears that those who run the city have some concerns they need to work out. So city residents will have to wait.

My mortgage payment is rising another $40 Oct. 1.

Expletive deleted.

And finally, let's take on interest rates, since where they are and where they're going affects readers inside and outside the city.

Why are interest rates in general, and thus for 30-year fixed mortgages, so low?

This is what John Makin, a resident fellow of the American Enterprise Institute, had to say in January:

Actual inflation has been coming down.

Lower-than-expected economic growth leaves investors who are seeking the safety of, say, a 2 percent return with moderating inflation risks, more favorably disposed to bond purchases.

Many investors persist in risk aversion. As inflation risks abate, the safe haven represented by high-grade government bonds looks even safer.

How long will this go on?

That's the $64,000 question, if you don't mind my showing my age. As with the track of tropical storms and hurricanes, timing is not predictable.

The direction is, of course, up, but to where?

I am almost certain of one thing: Fixed interest rates will never climb to where they were when I bought my first house in 1982, which was 18 percent.

Nor will they reach the 11 percent when I bought my second house in 1987.

If they do?

Expletive deleted.


"On the House" appears Sundays in The Inquirer. Contact Alan J. Heavens at 215-854-2472 or aheavens@phillynews.com, or follow on Twitter @alheavens.

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