Everything You Know About Philly Real Estate Is Wrong

PERCEPTION 5.
Now is clearly not the time to invest in real estate.

The Philly reality: Almost across the board, prices are lower than they’ve been in years. Even if 2008 brings the predicted two percent decrease in house prices for the area, if you’re buying a home in which you plan to live for a while (as opposed to buying an investment to turn around quickly), it’s smart to take advantage of the inventory. Translation: For many Philadelphians, now is the time to buy.

“A lot of people are waiting to see when the market’s going to hit bottom,” Domb says. “But you can’t pick the bottom.” The bottom, he notes, is only determined in retrospect, after prices have risen — after it’s gone. Already, he says, first-time buyers are “suddenly coming out of the woodwork” — prompted by low interest rates — and will likely set off a chain reaction as those sellers look to upgrade.

“People with an inclination to buy now who are waiting for lower prices are going to kick themselves,” echoes Toll. “The market will reverse, and they’ll be sorry they missed the opportunity. It’s like Bernard Baruch said: ‘You shouldn’t try to hit the high or hit the low. Just get somewhere close, and you’ll be rich.’ Okay, well, actually, that’s some Baruch, mostly Toll.”

Sure, it’s realtors talking again. But Center City is a fairly large exception to the rule of dropping prices — many properties are still appreciating, and show promise of continued appreciation, making for good buys as well. Wachovia mortgage consultant Anthony Iezzi, who has worked with buyers purchasing Center City condos, points to the recent purchase of a Liberty Court townhome in Society Hill. “The starting price four years ago was $960,000,” he says. “But when it sold and settled in November, it went for $1.4 million — and that’s in a supposedly declining market. Another one in the same development started at $1.5 and resold for over $1.9 million,” he says. “I could go on.”

Success stories are beginning to trickle out of the ’burbs, too. “I see smart people living in $600,000-to-$1.5 million houses who are selling now, and trading up,” Smerconish says. “That bracket — $600,000 to $1.5 million — is still hot; it’s hard to get into the Main Line on those prices. And these people are trading up to the $2 million to $2.7 million range and getting good deals.”

But, Smerconish says, there are people who should resist the urge to buy a new place right now, to avoid that bitter pill of a net loss: the downsizers. “When you trade up, you enjoy the deficit in the market,” she says — you may take less for your current home than you’d like, but you make up the difference with the home you’re buying. “But when you’re downsizing, you’re a victim of the market. These are difficult people to counsel, because I’m there to add value to a transaction, not just stick a sign in the ground and get them out. And we’re talking about smart, successful people. For them, the idea of 20 percent coming off a major investment is terrible.”