Home sales, prices continue to decline
Sales of previously owned homes in the Philadelphia area continued to decline in May, falling 19.5 percent from the same month in 2008, Prudential Fox & Roach's HomExpert Market Report says.
Only 3,825 single-family homes, including condominiums, went to closing in May, HomExpert reported, using data from Trend Multiple Listing Service. In May 2008, 4,749 homes went to closing.
Median prices fell 4.5 percent in the eight-county region, to $225,000 from $230,000, reflecting this market's dearth of foreclosed homes and short sales (in which a lender accepts less than the mortgage's value). Distressed properties have propelled sales in the West, Upper Midwest and Florida.
Regional numbers continued to contrast starkly with the national figures: Single-family home sales were up 1.9 percent year over year, the National Association of Realtors reported, and condo sales were 6.1 percent higher, for a total drop of 2.4 percent nationally.
First-time buyers accounted for 29 percent of single-family home sales nationally in May, compared with 40 percent in April. Foreclosures and short sales accounted for 33 percent of the total properties that went to settlement in May and 45 percent in April.
"Stalemate" is how Patrick Newport, an economist with IHS Global Insight, described the state of the market.
"Distressed sales and improved affordability are driving sales up. Weak demand is driving sales down," Newport said. "Sales have been flat the past seven months."
First-time buyers likely are entering the market because of the $8,000 tax credit to those who qualify, yet other prospective buyers appear to be holding back because of the promise of still more aid.
Results of an online survey of more than 500 buyers released yesterday by Weichert Realtors, one of this region's major players, indicated that increasing the tax credit to $15,000, as proposed in the Senate two weeks ago, "would provide high motivation to buy for another 37 percent of those who don't currently own a home."
"Perhaps the greatest stimulus to the housing sector would be realized through the offering of a tax credit to existing homeowners as well," said the brokerage's president, James Weichert.
"Four out of five current homeowners said they would be somewhat to highly motivated to buy if they received a tax credit of $8,000 for purchasing a home," Weichert said. "If the tax credit were increased to $15,000, the number of existing homeowners motivated to buy would grow to 94 percent."
Sales also have been stymied by a spike in interest rates, despite predictions that federal intervention would result in rates as low as 4.5 percent by midsummer.
The rise in the 30-year fixed rate to 5.46 percent, from 4.75 percent just six weeks ago, prompted the Mortgage Bankers Association to reduce its forecast of mortgage originations for 2009 by nearly $700 billion.
Still, there are positive signs locally. Some suburban real estate agents reported an increase in pending sales - agreements signed and expected to close in 60 days - in May and June.
And despite a virtual halt in construction of low- and mid-rise condos in Center City recently, work has resumed on Old City Mercantile Condos on North Front Street, though the units will likely be rentals until the market recovers.
In Camden, groundbreaking is set today for a 25-unit condo project at South Seventh and New Streets, near Cooper Medical Center, probably the first high-end market-rate housing for sale there in recent history.
Contact real estate writer Alan J. Heavens at 215-854-2472 or firstname.lastname@example.org.