The last few years have been tough on the Philadelphia region's housing market. Not as grimace-provoking as the pain inflicted on some metropolitan areas across the country, but painful just the same for those with homes to sell and mortgages to maintain.
It's the worst market since the Great Depression, weighed down by the ongoing push-pull between hesitant buyers and stubborn sellers, frustrated appraisers and wary lenders reluctant to loan money to any but the most likely to repay. Few homes are moving, and on average it takes 94 days for one to sell from the time it is listed.
"I cannot remember a market anything like this one in the 42 years I have been in the real estate business," said Noelle Barbone, who manages the Weichert Realtors office in Media.
What individual homes are worth today, compared with the start of the local real estate boom in 2005 or its peak in 2007, is a question that real estate professionals struggle with daily. But an analysis of 376,257 sales from April 1, 2005, through June 30, 2011, in the eight-county Philadelphia region, as well as from 13 selected Shore towns in Atlantic and Cape May Counties, revealed key trends.
Among them, said Kevin Gillen, vice president of Econsult Corp. in Philadelphia, who compiled and analyzed the sales data for The Inquirer: "The true measure of change in house values is not what are house prices now versus then, but what would your house sell for now versus what would your house have sold for then?"
The analysis showed that not all parts of the region took the same hit:
South Jersey (Burlington, Camden and Gloucester Counties), with its higher unemployment and greater exposure to subprime and exotic mortgages, saw its overall median price plunge 29 percent since 2005. In towns such as Lindenwold, Magnolia and Willingboro, the median price dropped by roughly half. (Median is the middle value; half the homes sold for more, half sold for less.)
In the Pennsylvania suburbs (Bucks, Chester, Delaware and Montgomery Counties), the overall median price was down 18.7 percent, with places as diverse as Colwyn (minus 64 percent) and Radnor (minus 2 percent) on the downside.
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Philadelphia's overall median fell 15.8 percent, yet the city posted price increases in such diverse neighborhoods as Chestnut Hill (up 57 percent) and Kensington (up 16 percent).
In general, median-price drops were greatest in the less-developed suburbs farther from the city, such as Upper Oxford (down 20 percent) and West Caln (down 27 percent) in Chester County and Springfield, Bucks County (down 30 percent), and were the smallest in Center City (Society Hill, down 8 percent; Washington Square West, down 1 percent), even as Philadelphia's core absorbed 11,000 units - mostly condominiums - built since the last housing downturn ended in 1998.
As mortgage money became harder to get, there were fewer first-time and lower-income buyers, and the preponderance of more well-to-do buyers skewed median prices higher.
After adjusting for the shift to more-affluent buyers, which benefited towns such as Chadds Ford and Solebury, the overall median price for the eight-county region actually dropped 10 percent between second quarter 2005 and second quarter 2011.
Without a doubt, this is the biggest housing bust since the 1930s, said Joel L. Naroff, of Naroff Economic Advisers in Holland, Bucks County.
"Housing starts are at their lowest levels since 1959 and have remained there well beyond what would be considered a normal even in a 'new normal' environment - typically, home construction picks up early in the recovery," Naroff said. "This is also the largest price decline in 50 years."
The still-struggling national economy, with unemployment at 9.1 percent, has many homeowners in this region facing foreclosure. Many cannot sell houses that are too expensive for them, or even refinance themselves out of trouble and into today's record-low interest rates. Large numbers of such distressed properties on the market are depressing prices.
But sometimes, even pricing can't predict what sells and what doesn't.
For example, said Weichert Realtors agent Diane Williams, based in Blue Bell, Montgomery County, over the last three years 75 townhouses in the $250,000-to-$280,000 range have sold in Montgomery Township, with prices staying stable. Yet in Skippack, where townhouse prices have fallen $2,000 to $8,000 in the last eight months, demand seems low.
In analyzing the sales data, Gillen said, he created a "regression" index based on the houses' "physical characteristics, locational attributes, time since last sale, tax treatment - abated or not - season of the year in which they sold, and the year and quarter in which they sold."
"So, after controlling for the differences in house types, size, condition and location, the regression identifies the true, underlying movements in house values."
At the start of the period used in his analysis - the second quarter (April, May and June) of the very hot selling year 2005 - the region's median price was $173,000.
Because higher-end sales predominated as the analysis period progressed, the regionwide median pushed upward to $201,950 by second quarter 2011, resulting in the apparent 15 percent increase. But Gillen's regression index showed a 10 percent drop in the region's median price, from $173,000 to $155,972.
The "inner ring" - municipalities closer to the center of Philadelphia - appear to be performing better than more rural communities at the region's edges, the analysis showed.
That's the reverse of what happened in the last housing downturn, between 1987 and 1994, when Center City and Philadelphia as a whole took the bigger loss.
Reasons why are complex, but the slowdown in new-home construction, which tends to increase the prices of nearby homes, is a factor.
Among other reasons for the flip, Gillen said, were the higher energy costs that have prevailed in this downturn, which "make heating and cooling a large home that has a long commute to downtown much more expensive than in the past," and a renewed desire "to live in a more urban environment, especially by younger households, that is walkable and in homes with a smaller ecological footprint."
Finally, he said, Center City's revitalization was especially key to attracting more affluent households.
These days, fewer houses priced above $1 million are changing hands compared with the boom years, but that has less to do with means to buy than with perceived value.
"There have been and are buyers in the $1 million-plus price range, but they are very selective, and we have to prove to them that the value is there and the depreciation of the last few years has been taken into consideration," said John Duffy, of Duffy Real Estate on the Main Line.
During the boom years, market observers said, too many buyers saw their houses as investments rather than shelter, and believed that whatever they paid would be returned, and then some.
Now, everyone wants a bargain, and many sellers won't budge on price. The more open-minded "will listen to the marketing plan, bite the bullet and move forward," said Weichert's Barbone.
"If a potential seller's property is worth less than they paid, waiting is a personal choice based on their circumstances. If they can afford to buy something now and hold on to their property for a time, they could possibly overcome the price issue," she said.
It's a given that the market will recover. It's just that no one can predict when. Factors such as job and credit availability will influence the timing.
Plus, the crystal ball has been somewhat foggy since the second half of 2009, when the federal government began to intervene in the downward-spiraling housing market - either through Fannie Mae and Freddie Mac purchases of mortgages to avert their default or tax-credit programs for home buyers.
The tax credits succeeded in pushing through a year's worth of home purchases between November 2009 and June 2010. What followed was more than a year of diminishing sales volume because the pool of creditworthy buyers had been emptied.
Some recent months have been better than others, but none suggests that the recovery has begun.
The fact that the U.S. economy continues to sit perched at the edge of recession led economist Patrick Newport, of IHS Global Insight in Lexington, Mass., to predict that prices will likely fall 5 percent to 10 percent more this year before healing begins.
The wounds go deep, though, with the foreclosure crisis the deepest. This region's foreclosure-filing rate has been lower than the massive defaults experienced in the Southwest and Florida, but the region has not escaped.
"If there are foreclosure homes in your neighborhood, it will be harder to get full-price offers on non-foreclosure homes," said Rick Sharga, executive vice president of Carrington Mortgage Holdings and former chief economist at RealtyTrac, which tracks foreclosure activity.
A glut of distressed properties prevents the construction and sale of new homes, which typically helps drive up home prices, Sharga said - thus also hurting prices for previously owned homes nearby.
Which leaves real estate agents and builders, buyers and sellers, borrowers facing foreclosure and lenders trying to minimize potential loss all looking for that light at the end of the tunnel.
It will shine, many believe, only when someone is finally willing to take a risk again.
Said Mark Wade, an associate broker with Prudential Fox & Roach Real Estate in Center City: "We live in a monkey-see, monkey-do kind of world. People buy when they see others buying. Developers build when they see other developers building."
Contact real estate writer Alan J. Heavens at 215-854-2472, email@example.com, or @alheavens at Twitter.