Residential real estate in the Philadelphia region saw falling prices and modestly rising sales in 2014's fourth quarter, according to an analysis released Thursday by Kevin Gillen of Drexel University and chief economist at Meyers Research.
Gillen's analysis of sales data from Trend Multiple Listing Service for single-family homes (condos are not included) showed that the typical house in the Philadelphia area fell in value by 1.6 percent in the fourth quarter from the third, but that quarterly year-over-year sales volume was up about 7 percent.
Because Gillen did the analysis for Berkshire Hathaway Home Services Fox & Roach Realtors, which sells in 10 suburban counties as well as Philadelphia, it includes MLS data from New Castle County, Del., and Mercer and Salem Counties, N.J. Philadelphia data came from the Recorder of Deeds Office.
Regionally, Gillen said, prices are weakening. While prices from quarter to quarter were up 0.8 percent in Philadelphia, they were down 2.4 percent in the suburbs.
Philadelphia's gains mirror a national trend, said Jed Kolko, chief economist at real estate search engine Trulia, though he said the phenomenon is likely temporary.
As reasons, Kolko cited higher urban building costs, the desire of suburbanites to remain in suburbs, and the likelihood that millennials, who are now at "peak age" for city dwelling, will move out faster than baby boomers will move in over time.
The small gain in Philadelphia prices was the result of an influx of more lower-income buyers into a market that had been dominated during the credit-starved real estate downturn by higher-priced Center City homes, Gillen said in an earlier analysis.
Yet numbered among the fourth-quarter sales were 157 houses in the region priced at $1 million or more, he said, 1 percent of the total.
The drop in suburban prices resulted from a sharp increase in foreclosures, especially in South Jersey, owing to a backlog in the court system used to process filings, Gillen said.
David Marcantuno, an agent in Keller Williams Realty's Sewell office, said short sales - those in which the lenders agree to accept less than the mortgage balance - still comprise from 10 percent to 15 percent of listings.
Though foreclosure filings have declined nationwide from their 2010 peak, "the stream of foreclosures through my office has been fairly steady for as long as I can remember, dating back to nearly 15 years ago," said William D. Schroeder Jr., a Colmar bankruptcy lawyer.
"The surge in foreclosures began years before September 2008," Schroeder said, adding, "That date is the date that the country acknowledged there was a systemic problem."
Donald Sepety, a BHHS Fox & Roach Realtors agent in Collegeville, said he had six bank-owned listings and just sold one of them, the most "I've ever had in three months."
With the latest price changes, the typical area home has recovered 7 percent of the 23 percent in value it lost when the housing bubble burst in 2007, Gillen said.
Sales volume, however, reached its highest level in five years, he said, and is close to being back to "normal" - about 60,000 transactions annually.
Robert Acuff of Re/Max Services, in Blue Bell, a director on the Trend board, said the Philadelphia region tended "to trend below the national market because we had a less dramatic decline."
He said Trend board members expect an 8 percent sales increase in 2015 and a 3.5 percent rise in prices.
Despite the "uneven pace of recovery," Gillen said, a decline in the number of homes for sale in the fourth quarter would "tip" the market in "favor of sellers" and push prices upward.
Monthly absorption of houses already is up, with 16 percent of listings going to settlement, compared with 5 percent in the recession.
Days on market, while slightly higher in the fourth quarter at 87, are down from 132 three years ago - all "a positive pattern," Gillen said.