Feature Article

Everything You Know About Philly Real Estate Is Wrong

So, we’re having the kind of housing swoon we haven’t seen in decades? Uh, not exactly. From the city to the suburbs to the Shore, here’s why the Philly market is better than you’re being told — and what it means for you

By Christine Speer

Illustration by Headcase Design

Page 1 of 9

THE STATE OF REAL ESTATE. You hear a lot about it these days — most of it bad. Sub-prime disasters. Spiraling prices. Stagnant sales. But take heart, Philly. Because there’s one thing you may not have heard, yet: that real estate, like politics, is local. And our industry insiders actually have good news for you about buying, selling, owning, borrowing, wheeling and dealing, in Philadelphia … and beyond. On the following pages, we address the most common perceptions out there about the region’s housing market, and present you with the truth about real estate, right here, right now — including the inside scoop on best-bet neighborhoods, a detailed look at local home prices, and (free!) real estate advice from the pros.

Plus: What your million bucks buys these days, how to sell your place faster than your neighbors sell theirs, and why you should ignore everything Katie Couric says about the housing market.


PERCEPTION 1.
The real estate market is just crappy right now — everywhere.

The Philly reality: It’s Bernanke-affirmed: The downturn in the American housing market has been huge. Home prices have dropped, sales of new homes have fallen, and there are more homes for sale than there are buyers — all classic indicators of a down market. And even, some economists think, of a recession.

But you, Philly, get a pass — at least in part. Metropolitan Philadelphia, historically a stable market, continues to fare far better than the rest of the country.

“Over the holidays, I traveled to Arizona and California,” says Allan Domb, president of Allan Domb Real Estate and king of the Center City condo scene. “In those local newspapers, I saw ads from realtors who showed 12 listings, eight of which were bank repos, foreclosures. And we’re not talking inexpensive prices; one was $977,000, in a beautiful area. You don’t open the paper here and see 66 percent of houses for sale as foreclosures. You just don’t.” Of course, realtors have a vested interest in painting a pretty market picture. But that doesn’t mean Domb’s insight isn’t on target.

Here’s why: First to feel the pinch in a down market tend to be the secondary and tertiary housing markets — a.k.a. vacation homes. (When interest rates shoot up, these are the first on the chopping block.) Greater Philly is a region of primary residences, with owners who live where they work and contribute to the local economy. That economy is based on industries that go beyond new construction and tourism (and into manufacturing, government, health, education, financial services). These are key factors in a stable market. So while “we’re definitely going to come away from this cycle bruised,” economist Ryan Sweet, of Moody’s Economy.com, notes, “we’re not going to have the black eye other markets have.”


 

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User comments

It's different here!
Posted by Anonymous | Mar. 2, 2008 at 8:08 AM
COMMENT:
And the disconnect and denial continues. The favorite realtor mantra "It's different here!" is even tried on a derelict city like Philly.
Thanks for the article PhillyMag!
Posted by Remax | Mar. 4, 2008 at 11:15 AM
COMMENT:
We'll be asking all of our nervous clients who have fallen prey to Mr. Lauer's bubble bursting charms to pick up a copy of the March Issue.
Finally, the truth and numbers are in writing!
Posted by Ryan | Mar. 5, 2008 at 8:27 PM
COMMENT:
I want to thank the Philadelphia Magazine for doing this article and letting the home owners of Philadelphia know what's going on in our specific market. These are the things that I've been saying for quite sometime. THANKS!
Reversal of Fortune?
Posted by Sandy | Mar. 6, 2008 at 5:23 AM
COMMENT:
Interesting but highly-expected tactic by Ms. Smerconish and her ilk. Now who, among the well-heeled, BMW-driving realtors, will explain to the Philly area populace just how logical it is to see the obscene increase in prices over the last 6 years? Game time over. Better start looking to lease a Volkswagon, Ms. S.
Well, Of Course....
Posted by Herb | Mar. 8, 2008 at 9:39 PM
COMMENT:
Let us not forget that Lavinia Smerconish (How Matt Lauer Is Wrecking the Philly Real Estate Market, March 2008) has a couple of very good reasons to "talk up the real estate market". For one, the more homes that sell the more she is likely to pocket. And, likewise, the more they sell for, the more she makes. Of course, she wants to paint as bullish a picture of the real estate landscape as she possibly can. Have you ever heard a Real Estate Agent paint a negative picture?
and....
Posted by ben | Mar. 9, 2008 at 9:05 AM
COMMENT:
recession is local too, right?
Reality at its best
Posted by Thea | Mar. 9, 2008 at 3:51 PM
COMMENT:
It is wonderful to finaly have the facts about the current real estate market published for the the public to see. Media is doing a good job with scaring people out of making a good investment in real estate. Thank you for writing this article. I hope it gets people to call their local Realtor for information about the market in their area. Realtors have the facts.
^^^Facts?^^^
Posted by Anonymous | Mar. 10, 2008 at 8:29 AM
COMMENT:
There was hardly anything factual about this article. "Realtors have the facts" - are you on crack? Realtors have the same incentive as any other salesperson does - making money and generating business. What a load of BS. On a side note to the editor, will you please rename this magazine Main Line Today, because really, it's the same thing.
Thea Stinnett is a Bucks Cty. Realtor
Posted by Anonymous | Mar. 10, 2008 at 8:45 AM
COMMENT:
Realtors obviously do know best when it comes to marketing themselves.
Real Estate Article Backs Right on to Gay Sex Parlors Article
Posted by Anonymous | Mar. 14, 2008 at 9:19 AM
COMMENT:
Got the March Issue because of the Philly Real Estate article - wanted to pull out the article and tables of home prices to discuss with others, just right up until I realized a photo of a half naked man with a provokative headline about gay sex parlors was on the back of the last page of tables. You couldn't have separated those articles by an advertisement? And since I live in one of the towns on that last page of tables, the part that pertains to me was unusable and could not be shared. Thanks for being so sensitive to that part of the population who isn't on the edge of their seats regarding sex parlor real estate. Most of us are only interested in the real estate that our sofa sits on!
transaction costs
Posted by Jamalogist | Mar. 16, 2008 at 12:09 PM
COMMENT:
Don't forget, prices here don't actually have to drop at all, for someone to lose when it comes time to sell. Thanks to the 2% buy / 2% sell transfer tax, you will lose 4% even if prices remain completely flat. Combined with 6% broker fee, 1% title insurance, that's 11% right there, even if you sell exactly for the same price. Still think it's a rosy picture?
Rosey Picture
Posted by Savannah | Apr. 28, 2008 at 9:00 AM
COMMENT:
Its 2% total transfer tax (1% to buyer, 1% seller), not 4%. Also, if you are smart, you won't pay 6% in commissions. Some realtors are dropping their commissions to 5% in order to compete with discount brokers like Assist.2.Sell who will sell for as low as 4% or 1.5%. Buyers are saving money now that mortgage rates are under 6%. And many companies also offer seller and buyer rebates, saving their clients $1,000s more! Its not a rosey picture, but it sure isn't the slippery slope that some people are portraying. And another note: not all realtors are money sucking fact distortors, expecially in this market. I care about my clients and my reputation. If all I cared about was money, I would switch to something like car sales.
Hi
Posted by NashG | Mar. 6, 2009 at 12:02 AM
COMMENT:
Thanks for the information.Real Estate Search
It Is 4% in the City of Philadelphia
Posted by DAX | Mar. 9, 2009 at 12:31 PM
COMMENT:
Savannah I think we are talking about Philadelphia Real Estate, so it is a 4% transfer of tax which is way too high. I think the insecurity of Philadelphia being located btwn New York & D.C. helped spike prices as well as the twisted sub-prime market. As a Realtor I hope prices do come down so that decent Realtors who genuinely want to help people don't continue to get a bad name.

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