November 30, 2015
Home prices in the greater Philadelphia region may have stayed flat this summer, but the total number of sales increased, showing that the region is well on the road to recovery from the burst housing bubble.
"Philadelphia’s market finally appears to be gaining some sustainable momentum," wrote economist Kevin Gillen, who published a report on the state of the region's housing market from Drexel University and Meyers Research LLC last week.
Analyzing the real estate market in Philadelphia and 10 surrounding counties for Quarter 3 of 2015, Gillen found that home values in the region increased by a "statistically negligible" 0.3 percent. In comparison, the quarter before home prices had increased by 5.8 percent.
However, the volume of total home sales was at its highest level since 2008. There were 20,351 sales in the region over the summer, of which 4,655 were in Philadelphia. Compare that to 18,335 in sales a year earlier.
Related story: Philadelphia shatters records for million-dollar home sales
In fact, Gillen thinks that the fact that average home prices aren't going up "should be taken as positive news, as the housing recovery has become more equitable and widespread."
In other words, there were more sales in lower-priced neighborhoods. That trend brings down average house prices, but it means that recovery isn't limited to elite, expensive enclaves.
"The fact that sales surged but prices remained flat in Q3 is attributable to a broadening of the housing market’s recovery that is now including more lower-priced segments of the market and more purchases by modest-income homebuyers," wrote Gillen.
House prices in the city continued to grow faster than the suburbs, bucking a trend that had persisted since the '80s. Philadelphia's housing index lagged behind the surrounding region from 1986 to 2014, but since then, the city has been beating the 'burbs when it comes to price appreciation.
Overall, prices in the region have gained back a little less than half of the value they lost since the peak of the housing bubble. Prices plummeted 23 percent when the bubble burst, but the region has gotten around 10 of those percentage points back.
These were the average changes in house prices in the 11 regional counties: Camden (-3 percent), Delaware (-2.2), Bucks (-0.6), Montgomery (no change), Chester (+0.1), New Castle (+0.2), Salem (+0.5), Gloucester (+0.6), Philadelphia (+1.3), Burlington (+1.6) and Mercer (+4.4).
Also notable: The region broke an all-time record for the sale of million-dollar homes -- 263 ultra-pricey estates got sold this summer, shattering the previous record of 240 million-plus home sales.
