Real Estate 2005: Will The Bubble Burst?
Want the good news first?
Prices still up! Rates still low! In fact, the average house-price in the Philadelphia area in 2004 increased by a hefty 19 percent. (Get the scoop on your neighborhood’s price jump on below.) The number of new listings in Philly was up by the same percent, according to Prudential Fox & Roach, and the number of new local listings of million-dollar-plus homes in particular jumped by 43 percent. Now for the just-okay news: After more than two years of escalating prices, the National Association of Realtors (NAR), among others, is predicting "a bit of a breather" for the coming year. House prices across the country, the thinking goes, will cool slightly as the all-important interest rate is expected to finally make that slow climb north.
Not that there’s any cause for panic. We’re still on the sunny side of this street. In fact, experts say real estate here is a better investment than in almost any other Northeast city — in part, thanks to our doldrums of a decade ago. "Our market here has been playing something of a catch-up for the weak appreciation that occurred in the ’90s," says Celia Chen, of economy.com. Unlike Boston, Washington or even Baltimore, her figures show, our city has a positive "house-price balance," a measure that weighs home prices against things like employment growth and demographics. Lawrence Yun, an economist at the NAR, offers similar assurance: "This catch-up effect gives a little buffer to any falling prices or slower appreciation. We’re anticipating a five percent appreciation in home prices for next year nationally — and Philadelphia could easily beat that."
Which means real estate here is still a good investment — a good one indeed if you’re able to stay in it for the long haul. But since the frenzy may be finished, it pays to do your research. We’ve made that easy, rounding up the best places to buy now (below) whether you’re just starting out or ready to retire. And if you’re thinking of selling, read our 20-plus tips (below) for getting the most for your house now.