Philadelphia House Price Indices, 2011 Q1
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Philadelphia House Price Indices, 2011 Q1 Philadelphia’s Decline in House Values Slows Significantly in Q1 . . . House prices decline 1.3% in 2011 Q1. Following several consecutive quarters of sharp price declines, the Philadelphia housing market appeared to have tapped the brakes this past winter. The typical Philadelphia home fell in value by an average of 1.3% on a quality- and seasonally- adjusted basis this past winter, according to the latest data from the City’s Recorder of Deeds. This comes after several consecutive quarters in which price declines totaled nearly 9% following the expiration of the Federal homebuyer tax credit last spring. And, while the winter season is normally a down period for both home sales and prices, this winter’s price decline is the smallest since 2007. With this most recent decrease, the average Philadelphia home has now fallen in value by a cumulative total of 16% since the bursting of the national housing bubble several years ago. Philadelphia’s house values have now reverted back to 2005 levels. (April 25, 2011)
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Philadelphia House Price Indices, 2011 Q1
- 1. PHILADELPHIA HOUSE PRICE INDICES April 25, 2011 Kevin C. Gillen, PhD gillen@econsult.com Disclaimers and Acknowledgments: Econsult Corporation provides these house prices indices free of charge to the public. The indices are produced by Econsult Vice President Kevin Gillen in association with the University of Pennsylvania Institute for Urban Research where Dr. Gillen is a Research Fellow. Econsult thanks the Federal Housing Finance Agency, Case-Shiller MacroMarkets LLC, RealtyTrac, IHS Global Insight and the NAHB for making their data publicly available, and to Realtor Tim Krug for sharing MLS data. Special thanks to Daniel Miles for his expert research assistance. © 2011, Econsult Corporation, All Rights Reserved.
- 2. House Price Indices 1980-2011: 1980Q1=100 Philadelphia County v. Philadelphia MSA and U.S. Average 550.0 500.0 Phila. County* Phila. MSA** 450.0 U.S. Avg.** 400.0 350.0 300.0 250.0 200.0 150.0 Q1 100.0 * Empirically estimated by Kevin C. Gillen, PhD **Courtesy of the Federal Housing Finance Agency (FHFA). HPIs are available through 2010Q3 only. © 2011 Econsult Corporation | gillen@econsult.com “MSA”=Metropolitan Statistical Area, which is the entire 9-county region.
- 3. Total House Price Appreciation Rates by Geographic Market Philadelphia Philadelphia Period U.S.A.** County* MSA** 30-Year 141.0% 156.2% 114.9% 10-Year 59.1% 55.7% 26.9% 1-Year -6.5% -4.6% -4.0% 1-Quarter -1.3% -0.6% -0.8% *Empirically estimated by Kevin C. Gillen PhD **Source: U.S. Federal Housing Finance Agency (FHFA). These numbers are through 2010Q4 only. “MSA”=“Metropolitan Statistical Area”, which is the entire 9-county region. © 2011 Econsult Corporation | gillen@econsult.com
- 4. House Price Appreciation 1987-2011: Philadelphia v. 10-City Composite 390.0 340.0 10-City Composite* Philadelphia 290.0 240.0 % Change 10-City Philadelphia 1998 to Peak: +172% +143% 190.0 From Peak: -31% -16% 140.0 90.0 1987 1987 1988 1989 1990 1990 1991 1992 1993 1993 1994 1995 1996 1996 1997 1998 1999 1999 2000 2001 2002 2002 2003 2004 2005 2005 2006 2007 2008 2008 2009 2010 2011 *Source: Case-Shiller MacroMarkets LLC. The 10-City Composite index includes Boston, Chicago, Denver, Las Vegas, Los Angeles, Miami, New York, San Diego, San Francisco, and Washington, DC. It does not include Philadelphia. © 2011 Econsult Corporation | gillen@econsult.com
- 5. Philadelphia House Price Indices by Neighborhood: 1980-2011 1980Q1=100 800.0 CtrCity/Fairmount 700.0 Kensington/Frankford Lower NE Phila. North Phila. 600.0 NW Phila. South Phila. Univ. City 500.0 Upper NE Phila. West Phila. 400.0 300.0 200.0 Q1 100.0 * All indices empirically estimated by Kevin C. Gillen, PhD © 2011 Econsult Corporation | gillen@econsult.com
- 6. Philadelphia House Price Appreciation Rates by Neighborhood Upper Center City/ Kensington Lower NE North NW South Univ. NE West Period Fairmount /Frankford Phila. Phila. Phila. Phila. City Phila. Phila. 30-year 147.8% 151.9% 130.5% 163.8% 174.8% 178.9% 150.9% 164.1% 160.0% 10-year 50.5% 73.0% 64.5% 68.9% 68.5% 101.5% 53.6% 69.3% 75.4% 1-Year -0.4% -7.2% -10.9% -11.0% -7.5% -5.2% -4.5% -5.9% -9.3% 1-Quarter 5.4% 7.2% -1.9% 1.2% -5.0% 8.8% 11.1% -1.4% 8.3% This table gives the total % change in house prices by neighborhood, through 2011Q1, from different starting points in time. © 2011 Econsult Corporation | gillen@econsult.com
- 7. Philadelphia Submarket Boundaries © 2011 Econsult Corporation | gillen@econsult.com
- 8. Median Philadelphia House Price v. Indexed Philadelphia House Price 1980-2011 $120,000 $100,000 Median Price Indexed Price* $80,000 $60,000 $40,000 $20,000 Q1 $0 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 * Empirically estimated by Kevin C. Gillen, PhD © 2011 Econsult Corporation | gillen@econsult.com
- 9. Average House Price Minus Median House Price: 1980-2011 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 © 2011 Econsult Corporation | gillen@econsult.com
- 10. Number of House Sales* per Quarter: 1995-2011 8,000 Q1 7,000 Q2 Q3 6,000 Q4 5,000 Qtly. Average 4,000 3,000 2,000 1,000 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 *Only arms-length transactions between private sector entities were included in this analysis. © 2011 Econsult Corporation | gillen@econsult.com
- 11. Number of Philadelphia Home Sales* with Price>=$1 Million 30 Q1 25 Q2 Q3 20 Q4 15 10 Qtly. Average 5 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 *Only arms-length transactions between private sector entities were included in this analysis. © 2011 Econsult Corporation | gillen@econsult.com
- 12. Philadelphia House Sales in 2011 Q1 Sales are color-coded by quintiles of the Sales are color-coded by quintiles of the distribution of $Price/SqFt. Hence, each of distribution of $Price/SqFt. Hence, each of the five categories covers exactly 20% of the five categories covers exactly 20% of all sales. all sales. © 2011 Econsult Corporation | gillen@econsult.com
- 13. Center City House Sales in 2011 Q1 © 2011 Econsult Corporation | gillen@econsult.com
- 14. South Philadelphia House Sales in 2011 Q1 © 2011 Econsult Corporation | gillen@econsult.com
- 15. West Philadelphia House Sales in 2011 Q1 © 2011 Econsult Corporation | gillen@econsult.com
- 16. North Philadelphia House Sales in 2011 Q1 © 2011 Econsult Corporation | gillen@econsult.com
- 17. Northwest Philadelphia House Sales in 2011 Q1 © 2011 Econsult Corporation | gillen@econsult.com
- 18. Northeast Philadelphia House Sales in 2011 Q1 © 2011 Econsult Corporation | gillen@econsult.com
- 19. Kensington/Frankford House Sales in 2011 Q1 © 2011 Econsult Corporation | gillen@econsult.com
- 20. 2011 Q1 House Price Rate of Change by Neighborhood Upper NE Phila: -1.4% North Phila: +1.2% NW Phila: -5.0% Univ. City: +11.1% Lower NE Phila: -1.9% Kensington/Frankford: +7.2% West Phila: +8.3% Center City/Fairmount: +5.4% South Phila: +8.8% Note: Each neighborhood is extruded by its average change in house values during 2011 Q1 in order to reflect its growth (or depreciation) rate relative to other neighborhoods. © 2011 Econsult Corporation | gillen@econsult.com
- 21. Philadelphia House Price Diffusion Index 600.0 200% Philadelphia HPI Diffusion Index 150% 500.0 100% 400.0 50% HPI: 1980Q1=100 300.0 0% -50% 200.0 -100% The diffusion index measures how varied the direction of house price changes are across 100.0 Philadelphia neighborhoods. It is computed as the percent difference between the number of nieghborhoods in which prices rose in a give quarter, and the number of neighborhoods in which prices fell. A value of -100% indicates that prices fell citywide in a given quarter, while a value of -150% +100% indicates that prices rose citywide. A value of 0% indicates that house price changes were evenly split between increases and decreases, across neighborhoods. Diffusion indexes are commonly used in financial economics as a leading indicator of turning points in a market's direction. 0.0 -200% 1980 1980 1981 1982 1983 1983 1984 1985 1986 1986 1987 1988 1989 1989 1990 1991 1992 1992 1993 1994 1995 1995 1996 1997 1998 1998 1999 2000 2001 2001 2002 2003 2004 2004 2005 2006 2007 2007 2008 2009 2010 2010 © 2011 Econsult Corporation | gillen@econsult.com
- 22. Philadelphia Housing Affordability* Index: 1980-2011 3.50 3.25 3.00 2.75 2.50 2.25 2.00 1.75 1.50 1.25 1.00 *Affordability is measured as the ratio of the medianPhiladelphia house price to the to the median Philadelphia household income. High values 0.75 of the index mean that housing has become less affordable to the average Philadelphian. Contact gillen@econsult.com for details. 0.50 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: US Census, BEA © 2011 Econsult Corporation | gillen@econsult.com
- 23. Average House Price-to-Rent Ratios*: 1980-2011 Philadelphia v. U.S. 15.0 14.0 13.0 U.S. 12.0 Philadelphia 11.0 10.0 9.0 8.0 7.0 6.0 *Computed by taking the ratio of average house price to the average annual rent of a comparable housing 5.0 unit. The P/R ratio is to real estate what the P/E ratio is to other assets. Sources: US Census, US BLS. Contact gillen@econsult.com for f urther details. 4.0 © 2011 Econsult Corporation | gillen@econsult.com
- 24. Inflation-Adjusted* Philadelphia House Price Index 1980-2011 1980Q1=100 200.0 180.0 160.0 140.0 120.0 100.0 80.0 Linear Trendline 60.0 40.0 *The empirically estimated house price index is def lated by the rate of inf lation over time, using the national Consumer Price Index as the proxy f or the national rate 20.0 of inf lation. This procedure converts the house price index f rom "nominal" to "real" terms, and thus shows house price changes net of general inf lation. 0.0 Source: US Bureau of Labor Statistics © 2011 Econsult Corporation | gillen@econsult.com
- 25. Philadelphia Houses Listed For Sale: Inventory v. Sales Rate 14,000 30% # Houses Listed For Sale % Sold 12,000 25% # Homes Listed "For Sale" %Sold = (#Sales/#Listings) 10,000 20% 8,000 15% 6,000 10% 4,000 5% 2,000 0 0% © 2011 Econsult Corporation | gillen@econsult.com Source: Trend MLS, courtesy of www.developphilly.com
- 26. Average Days-on-Market* for Philadelphia Homes 100 90 80 # of Days 70 60 50 40 *Days-on-Market (DOM) is the average number of days it takes f or a listed house to sell. 30 © 2011 Econsult Corporation | gillen@econsult.com Source: Trend MLS, courtesy of www.developphilly.com
- 27. Index of National Homebuilder Sentiment: 1985-2011 (Seasonally Adjusted) 90 National 80 Northeast 70 60 50 40 30 The Index represents the current sentiment of 20 U.S. homebuilders. The index is computed via a regular monthly survey of homebuilders. An index value above 50 indicates that more 10 builder are optimistic than pessimistic, while an index value below 50 indicates that more builders are pessimistic than optimistic. 0 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: National Assoc. of Homebuilders (NAHB)/Wells Fargo © 2011 Econsult Corporation | gillen@econsult.com
- 28. Philadelphia Stock Exchange Housing Sector Index $300 $250 $200 $150 $100 The PHLX Housing Sector Index is a modif ied cap- $50 weighted index composed of 20 companies whose primary lines of business are directly associated with the U.S. housing construction market. The index composition Note: the index underwent a encompasses residential builders, suppliers of aggregate, signif icant rebalancing in January lumber and other construction materials, manuf actured of 2006. housing and mortgage insurers. $0 2002 2002 2002 2003 2003 2003 2003 2003 2004 2004 2004 2004 2004 2005 2005 2005 2005 2005 2006 2006 2006 2006 2006 2007 2007 2007 2007 2007 2008 2008 2008 2008 2008 2009 2009 2009 2009 2009 2010 2010 2010 2010 2010 2011 2011 Source: www.nasdaq.com and finance.yahoo.com © 2011 Econsult Corporation | gillen@econsult.com
- 29. Cumulative %Decline in House Prices from Peak 0.0% -10.0% -7% -10% -15% -16% -16% -20.0% -18% -23% -26% -26% -26% -30.0% -28% -31% -34% -37% -38% -40.0% -38% -46% -50.0% -48% -50% This chart shows the total decline, to date, in the average -55% -60.0% house price in each city since the bursting of the housing -58% bubble. Philadelphia's decline is empirically estimated by Kevin C. Gillen, PhD. All other cities courtesy Case-Shiller MacroMarkets LLC. -70.0% © 2011 Econsult Corporation | gillen@econsult.com
- 30. Courtesy http://www.dilbert.com/ © 2011 Econsult Corporation | gillen@econsult.com