Everything You Know About Philly Real Estate Is Wrong

What it may mean to you: House-hunting. “The best opportunity to buy is when people think it’s the darkest,” Domb says. “Right now, people probably think it’s close to the darkest.”


PERCEPTION 6.
So what if house prices are low? It’s too hard to get a decent mortgage nowadays.

The Philly reality: The perception of mortgage difficulty, says Jason Schaeffer, president of South Jersey builder Tim Schaeffer Communities, stems from an affordability problem — the exact thing that kicked off the sub-prime mess.

“For the past few years, people were getting these crazy mortgages that they couldn’t afford,” he says. “Now, that’s stopped, and the pendulum has swung the other way, and underwriters are erring on the side of conservatism. In the end, people who can afford homes are getting them, no problem, and people who can’t, or who are on the cusp, aren’t.”

So while, yes, lenders have raised their standards when it comes to who gets money, the process remains case-by-case. Many of the people having problems are “the ones who have been late with mortgage payments, or people with high credit-card debt that they’re not on time paying,” Iezzi says. For most conventional buyers, he adds, there is money available, including jumbo mortgages (loans exceeding $417,000) and loans for second and third homes.

And another thing: Current interest rates are the lowest they’ve been in years. “I remember, growing up, that if the mortgage rates would drop just below eight percent, my parents would say it was a good time to buy,” Smerconish says. The rate for a 30-year fixed mortgage at press time was 5.67 percent. “Now seems to be a magic witching time to buy.”

What it may mean to you: The loan you want, with a super-low interest rate to boot. Seriously. 


PERCEPTION 7.
The Shore: One big hot mess.

The reality: This perception grows from a deep-rooted truth: The rules that dictate the Philly market don’t apply at the Shore, which is heavily influenced by investor buying and largely made up of secondary homes. (In Cape May County, about 80 percent of the homes are classified as vacation homes — compared to 30 percent for Atlantic County, and 15 percent for the national average. Ocean City has more investor — as opposed to resident — share than anywhere in the nation, says Sean Maher, associate economist with Moody’s Economy.com.) And like most areas that experienced rapid increases in home prices and rampant building, parts of the Shore fell hard — with house prices dropping almost twice the national average.

Another key difference at play is the Shore’s relatively stagnant market. “I personally think that even though prices are down a bit already, it’s not a bad idea to sell now, if you plan to sell anytime soon,” Maher says. “In the 1990s, when prices everywhere were dropping, the prices on the Shore stayed flat for a decade. After they bottom out in the next year or so, it will likely be a similar pattern. If investors try to ride it out, it might be a long wait.”