On the House: Regarding real estate, it's all local

Posted: June 16, 2013

I'm constantly bombarded by e-mail from out-of-town experts regarding this region's real estate market.

A recent missive was from CoreLogic Case-Shiller, which had been two separate animals until the first acquired the second.

According to the e-mail, average home prices in metropolitan Philadelphia fell 1.3 percent in fourth quarter 2012 from the same period in 2011.

By the end of 2013, it said, home prices are expected to rise 2.7 percent.

A third factoid: Home prices in this region fell 8.2 percent from fourth quarter 2009 to the same period of 2012.

What was more interesting about the data had nothing to do with Philadelphia, though. More about that in a minute.

I tend to be very wary of West Coast numbers-crunching, preferring to deal with the experts, economists and otherwise, from around here. There's Kevin Gillen and Mark Zandi and Joel Naroff, and the cadre of agents, brokers and builders I've dealt with for 25 years.

All real estate is local. So does it really make any sense for someone in Doylestown to base his or her opinions about the housing market on West Deptford or West Chester?

Every week, my reporting for Town by Town in the Sunday Business section shows me that even individual houses can be their own markets, with sales experiences that differ from the houses on either side.

No, what was interesting (I won't go as far as saying useful) about the CoreLogic Case-Shiller data is how some of worst markets in the housing downturn are faring now.

Take Phoenix. When I was there in January 2008, the communities on the eastern side of the metro area that had pushed aside potato and cotton fields for homes were in dire straits. Every other house had an auction sign on it. People walked away from their mortgages, taking air-conditioning ducts, cabinets and countertops with them to stick it to the lenders they blamed for their troubles.

Empty building lots were piled with trash. Streets devoid of housing led to unfinished intersections.

CoreLogic Case-Shiller says Phoenix prices rebounded 12 percent from the fourth quarter of 2009 to the same period of 2012.

Much of that rebound occurred between the end of 2011 and 2012, 23 percent.

During that same year, Las Vegas prices rose 13.4 percent, the data show.

You must understand, of course, that prices dropped like an anchor in both markets during the downturn.

Prices in those towns declined by as much as 60 percent after 2006. In the same period, Gillen says, sale prices in the city of Philadelphia dropped 19 percent and in its suburbs by 25 percent.

And neither city nor suburbs here experienced the inflation-adjusted 80-plus percent increase in prices that Phoenix, Las Vegas, and areas of Southern California and Florida did between 2001 and 2006.

Someone once told me that a house is worth only what a buyer is willing to pay for it.

As rules of thumb go, that's a pretty good one.

On the House: Town by Town

In the Sunday Business section, Alan J. Heavens takes a look at real estate and life throughout the region. This week's focus: New Hope.

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

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