Seeing The Downside Of The Housing Boom
The Philadelphia Inquirer reports from Pennsylvania. “With the spring real estate market more than halfway to its traditional end-of-June close, many agents are saying that they - and the buyers and sellers they deal with - have finally adjusted to post-housing-boom conditions.”
“In the suburbs, ’sellers are more educated about the realities of the market than they were six months or a year ago,’ said John Duffy of Duffy Real Estate. ‘Most know what ‘pricing properly’ means, although there are a few exceptions.’”
“With so many houses for sale, Duffy said, ‘buyers are spending more time, and aren’t just looking at a property once, but coming back two or three times for each listing.’ More than 60,000 units are on the market.”
“Although sellers in other regions of the country appear to be panicking, agents and brokers said they see no evidence of that here.”
“‘Today’s sellers are more educated than they were in the 1980s, so they hear these reports of doom on the national media and take them with a grain of salt, because they know this area is different,’ said Diane Williams, an agent in Montgomery County.”
“But Williams said some sellers still cling ‘to last year’s comps’ of sale prices.”
“Agent Bari Shor suggested that the sellers who would be tough to deal with in any market climate ‘are still getting angry at the messenger.’ ‘I just tell them the truth,’ she said. ‘Most believe it, because I’m still getting referrals.’”
“Wider choice for buyers means that every house has to look its best, Shor said. That’s another sea change from two or three years ago, when, unless a house was just a pile of bricks and dust, someone would make an offer.”
The Democrat and Chronicle from New York. “Despite free-falling real estate prices in some parts of the country, the Rochester area is holding steady. Area home buyers had retreated during the second half of 2006 but have come back this year, real estate professionals say.”
“‘They were scared,’ said Jeff Scofield, an agent in Brighton. ‘Now Rochesterians are saying the sky is not falling. It’s not 2005 (a strong year), but it’s a lot better than 2006.’”
“In the Rochester area, the market has cooled a bit after being hot from 2001 through 2005. During those years, it was common for buyers to pay above the asking price and for sellers to receive multiple offers within days of putting up a for-sale sign.”
“Now ‘it’s a balanced market’ between buyers and sellers, said Armand D’Alfonso, president of Nothnagle Realtors.”
“Agents say the business has gotten back to the basics, meaning that homes appropriately priced and in good condition don’t stay on the market for long.”
The Asbury Park Press. “New Jersey lost 3,600 jobs and its unemployment rate remained at 4.3 percent in April, signs that the slow housing market and the state’s high costs took a toll on the economy, experts said.”
“‘Usually this time of year we’re really, really busy,’ said Ralph Sabatino, a Toms River builder that has four employees, down from six a year ago. ‘Now, people are extremely price-conscious.’”
“‘The No. 1 reason (for the slowing job market) is the winding down of the housing boom,’ said Mark Vitner, an economist for Wachovia Corp. ‘Anything tied to residential (real estate) or construction of new homes is seeing the downside of the housing boom.’”
The Frederick News Post from Maryland. “Although one local builder said he is looking at his best year yet, home construction is down in Frederick County.”
“Mark Lancaster, of Lancaster Craftsman Builders, said it has been especially hard on larger building firms. ‘The smaller builders are what is keeping them going,’ he said of subcontractors who do plumbing, electrical, heating, air conditioning and other work on homes.”
“‘The subcontractors are the real barometer of the industry,’ he said.”
“‘Talking with the people I know at the Frederick and Washington counties permits offices, they say it is down from two years ago,’ Lancaster said. ‘Permits for decks or remodeling are pretty constant, but housing construction permits are down.’”
“The number of foreclosures in Frederick County, 801 during a 12-month period ending in March, increased by 26 in April.”
“‘It’s due to the unique loan products that caught a lot of consumers unaware,’ said Terry Fox, president of the Frederick County Association of Realtors. ‘We do handle foreclosures and have a few right now.’”
“‘Work it out with the lender, an (real estate) agent or an attorney. If you have enough equity you can get the home sold,’ said Stephen Mackintosh, of Mackintosh Inc. Realtors.”
“‘A lot of buyers, because of the negative news in the media, have jumped back on the fence,’ Mackintosh said.”
Also from the Inquirer:
‘When you’ve covered as many real estate upturns and downturns as I have, it isn’t all that difficult to figure out changes in the market. Buyers, sellers, builders, and real estate professionals behave a certain way in a down market and a certain way in an up market.’
‘If supply is abundant, the typical buyer will bring an electron microscope to inspect for dust mites and leave the checkbook in his desk drawer. When the listing agent calls the next day, the buyer will say, ‘Yes, I guess it was a nice house, but we still have 200 more on our list to look at.’
‘Because our market is the way it is, the number of people who have decided to hold lotteries to unload their houses is few this time. There also appear to be few ’short sales.’
‘Looking at the surplus on the market today, should you be hesitating to list your house for sale? The answer is no. Should you keep the asking price to what your real estate agent, and most importantly, the market, is dictating? The answer is yes.’
OK, gang. Bear with me here. I live in Philly since coming to college in 1983, but I grew up in Brooklyn and spend a lot of time in NYC. I’m going to give my view of Philly, which I hope is balanced.
Is Philly different? In some ways, yes. In other ways, no.
Center City Philly through the 1980’s and mid-90’s was a ghost town at night. There was little night life or retail worth mentioning. This town was as close to dead as they come. I was a rare exception: someone who was born outside of Philly who actually lived here! However, in the past 10 years, the influx of out-of-towners who have moved here is amazing. This town has come alive in way that I never thought possible. There is a real “scene” here now, with not only 20-somethings out partying, but people in their 30’s-50’s enjoying all the new quality-of-life Philly has to offer.
The shootings? ALL of them are isolated in the crappy parts of Philly and have no effect on the real estate values in the desirable areas. Philly is really two towns: one is crime-ridden and poor, the other is middle to upper-middle class.
I bought my house in 1998 for $190K. It’s 1300 sq. ft. with a yard and a garage. It’s also adjacent to a nice park. (26th and Pine for those of you familiar with the area.) It would fetch at least $550K right now. Is $425/sq. ft. for my house ridiculously overpriced? Perhaps it is somewhat overpriced, but you need to keep in mind that Philly truly is a different place than it used to be.
OK, now for the bad news. The condo market here is getting silly. Not Miami-silly, but silly nonetheless. And there ARE condo flippers in this town, and they are getting burned. Many are trying rent there $450K condos for less than $2000/month until the condo market rises again. Makes no financial sense.
Also, there is a ton of single-family-home construction in the recently-undesirable areas. That’s a lot of spec housing.
The huge rise in values in the suburbs? Please. The rise in values there makes little sense because when the city of Philadelphia was a ghost town, the suburbs were VERY strong since the suburbs were the only place anyone wanted to live anyway. The Philly suburbs are no more desirable now than they were in years past (arguably less so because of the popularity of the city), so the run-up in prices in the suburbs also makes little sense.
So in many areas, Philly is a bubble market. Yet in others, it may be not be very bubbly at all.
Let me ask a couple of questions…
1. In Philly is there a regional specific lendor that is still providing no doc no income required loans? If your answer is no then even Philly is being affected by the subprime shakeout and lendor tightening.
2. In Philly is the media only talking about how great it is to own a home? In other areas this ended about 6 months ago.
3. In Philly are houses standing on the market higher and are owners less likely to lower prices?
4. In Philly are you starting to see auctions appear for selling houses.
If you’ve answered yes to any of the above then Philly is just like everywhere else.
1. In Philly is there a regional specific lendor that is still providing no doc no income required loans? If your answer is no then even Philly is being affected by the subprime shakeout and lendor tightening.
I do not know of any specific lenders’ practices. That said, there are DEFINITELY subprime problems in the working-class areas. But in the urban areas where homes sell for $700K and up, down payments (if not straight cash deals) are the norm. I’ve spoken to a number of agents whom I know about this. The higher-end housing is not being sold to people buying with 0%down.
2. In Philly is the media only talking about how great it is to own a home? In other areas this ended about 6 months ago.
The two major Philly newspapers are now owned by one of the Toll brothers. Therefore, the local newspaper coverage is meaningless. I don’t watch local TV news.
3. In Philly are houses standing on the market higher and are owners less likely to lower prices?
Not at all. Through 2006, sellers were stubborn here. But now homes are starting to sell quickly because sellers are pricing them to match what people are willing pay.
4. In Philly are you starting to see auctions appear for selling houses.
No auctions yet. But condo auctions in the next couple of years wouldn’t surprise me one bit. Also, auctions on spec houses in “changing” neighborhoods wouldn’t surprise me.
But that was the point of my original post. Many areas of Philly are bubbly. But in some areas (especially the nicer ones), the downturn may be mitigated by the true increased demand for housing that has occurred.
I’ll bet you a Philly Cheese Steak sandwich that it isn’t different in Philly. Let me know when you are ready to pay up.
I agree with you for the most part. RE prices will drop in many places. The condo market will get hit the worst.
My point is that Philly cannot be lumped into one general “market” because of the changes in many parts of this area.
Nearly every city has a good and bad part of town.
Man, are you guys thick-headed today!
The “good part” of Philly has expanded significantly. That’s the difference compared to how it used to be here.
In Philly do people make 225,000 dollars a year? 2x the salary. Even at 3x which would be pushing it would be 150,000 dollars a year. How many buyers are making that a year?
A recent issue of Philadelphia Magazine reported that there are 100,000 millionaires living in the Philadelphia area (including the burbs). Their net worth does NOT include their primary residences, btw.
http://www.phillymag.com/articles/the_have_mores/
Salaries? Philly is flooded with lawyers, many of who make at least $300K a year. Tons of physicians as well. Lot’s of financial professionals (not like NYC, but still more than you’d expect). Many married couples make at least $150K/each.
There is also a large tech (bio and otherwise) industry here where many people are doing very well.
Of course, a recession could change all that…
And there are a lot who do NOT earn nearly that kind of money. To make it seem like Philly is full of rich people is ridiculous. Is there wealth? Of course. Show me a city where there is none. Is it primarily wealthy? Absolutely not.
I did grow up here and I disagree that Philly was dead in the 80’s to mid-90’s. I worked and partied downtown during that time - no lack of shopping or nightlife. In fact, one of the most famous nightlife spots in the city - South Street - was FAR better back then than it is now.
I preferred the old Philly.
Yes, there are a lot of people who do not earn that kind of money. And they don’t buy homes in Center City anymore. That’s life.
If you think that there aren’t a whole lot more rich people in Philly than there used to be, you are in a serious state of denial. Sorry to be so harsh, but when valet parking is $18 and you can’t get a reservation on a weekend at many top restaurants for weeks, there are a LOT of people with a lot of money in their pockets.
South Street in the 80’s and 90’s? Yeah, that and some really cheesy clubs on the Delaware. And maybe Polo Bay at 17th and Locust. Maybe Philly wasn’t dead then, but it desperately lacked variety. South Street was better then because there was not much else to do. Same with Manayunk. That area because hot in the mid-90’s until Center City made a remarkable comeback. Now Manayunk is ho-hum in comparison to Center City.
Try walking the streets of Center City at midnight on a Friday. Tons of people going to the many restaurants and clubs. Same with Old City. 15 years ago, NONE of that was happening. Heck, 5 years ago it wasn’t as hot as it is now.
I’m not saying that this change in Philly’s popularity substantiates all of the run-up in housing prices. (Far from it, as my condo-collapse prediction shows.) But when I see someone who’s been in Philly this long write as if it’s the same as it ever was, I have to wonder how often you leave your neighborhood.
Center City Philly through the 1980’s and mid-90’s was a ghost town at night.
I have to agree with eastcoaster on this one. That’s when I lived in the city and I did a lot of partying…too much maybe. Do you remember Vagabond?
I have to wonder why you only went to the common hangouts like Polo Bay and Delaware Avenue. There was definitely a lot of variety back then. Just following the Philly music scene back then was enough to keep one busy every weekend.
Lots of music for sure. Jazz, blues, rock, hip-hop -anything that moved you to shake yo thang. I only referred to Vagabond because it was a floating nightclub. There was a “spot” to go to every night of the week except Monday, so one of the career DJs came up with the idea to have a floating nightclub on Mondays, that some out-of-the loop boite hosted. Fun times.
Silk City at 5th and Spring Garden was raucous. I also agree with eastcoaster that Old Philly party world was a lot more fun. Now there’s a lot of S & M going on (S&M = Standing and Modeling), and all the trendy clubs are way pricey.
phillygal, my comment re: Polo Bay was to tl.
Were you a fan of Beru Revue? My absolute all-time favorite local band. Amazing talent. They’re doing reunion gigs now (Two shows at Grape Street - which I, unfortunately, couldn’t get tickets to; the TLA for Pierre Robert’s 25th anniversary bash; and most recently the Media Theater in Media. Next up will probably be World Cafe - or a similar venue - in the fall.). It’s so cool to see them again after nearly two decades.
Also, remember the Cabarets? Chestnut, 23 East, Ambler? Talk about seeing some great talent in those joints.
Yeah, give me Old Philly any day. Keep those stupid, overpriced, snooty martini bars up in NYC.
I’m with you when it comes to those martini bars. People actually pay $350 for a bottle of vodka and some mixers just to sit at a table at some of these places. It’s ALL preening (and networking, to some degree). But a lot of these people have been making a lot of money. These uber-trendy places wouldn’t be thriving if the people who can spend that kind of money weren’t around.
I think that a lot of households are making $225K, easy out here. Especially in the 2-income families, although, in the “real money” families the women stay “at home,” meaning they go to the club, spa, etc….
Lawyers, doctors, pharmaceutical industry, insurance, finance, all these jobs are paying high wages out here.
Yes, I forgot about the big pharma. Lots of that in Philly.
although, in the “real money” families the women stay “at home,” meaning they go to the club, spa, etc….
would that I could live the life of one of those biatches for 30 days only. big phillygal sigh
It’s not as great of a life as you think. I get hit on by those bored “at home” women all the time.
Also, keep in mind that the 3x rule does not apply to people who make, say, $150K+ year. People who earn that kind of money have much more disposable income and can spend it on housing if they wish. Basic living expenses (food, clothes, car) could be the same for two people who make $80K and $150K respectively. But the guy making the $150K has a lot of extra money left over, so his putting an extra $2k/month to a mortgage payment over what the 3x-rule would dictate is not a stretch for him at all. And that $2K/month extra can get him another $300+K in a 30-year-fixed mortgage.
how about saving that money for, say, retirement, if there is so much extra?
“But the guy making the $150K has a lot of extra money left over, so his putting an extra $2k/month to a mortgage payment over what the 3x-rule would dictate is not a stretch for him at all. And that $2K/month extra can get him another $300+K in a 30-year-fixed mortgage.”
I’ve got news for you as we are in that income range. No I don’t have an extra $2000 a month for a mortgage but I do have extra for a retirement account, savings, vacation, etc. Why should I pay a premium to live in the same area of the country, neighborhood, etc. I want a comfortable house in a safe neighborhood and then I want to enjoy the hell out of life. Perhaps my view stems from working in a Coroner’s Office and hospital where you see just how tenuous health is to life and being tied to a heafty mortgage just doesn’t fit into my life plans.
Keep in mind that those people making 150 are being hit by AMT and are losing their deduction bad. There is no Bush tax cut for them- to the contrary. They are seeing approaching 50% of their gross eaten by taxes, all told. Much of their alleged additional disposable income is at the disposal of the government.
All true. I’m not agreeing with people who spend all their extra income on housing. (I certainly could afford to pay way more than the $1600/month I do.) I think their nuts and probably more are keeping-up-with-the-Joneses than anything else. I’m just trying to give an explanation of where all the money in Philly is going.
As for retirement, a lot of people believe that they should pour their retirement money into buying a bigger home instead of just “sitting on” the money. They figure that they might as well enjoy the retirement money by living in it. Of course, if the appreciation on their home is outpaced by what they would have made if they invested their retirement money conservatively, they may come up way short when they get older and actually need the money. But today they still think RE is a great investment.
In NYC news:
Support Voiced for a Giveaway of Public Apartments
“A Nobel-prize-winning economist, three former officials of the federal Department of Housing and Urban Development, the head of one of the city’s largest social-service agencies, and the chairman of the tenants council of a Harlem public housing project are among those offering at least guarded support for the idea of turning apartments in the city’s public housing projects over to the tenants to own or sell.
“The concept, floated on May 15 in a New York Sun editorial, “Paupers to Millionaires,” envisions giving about 200,000 residents of the city’s low-income public housing units ownership of their apartments, which often sit on high-priced land. The tenants, who average a 17.7-year stay, could then decide whether to keep or to sell their apartments, some of which could fetch as much as $1 million.”
First of all, who wants to spend $1 million dollars on an apartment in the projects? It’s like those condo conversions in apartment building that are now half-condos, half-apartments, only worse. Much worse.
Second, why should someone live in tax-payer subsided housing and then be the sole beneficiary when the unit is sold? That just seems ludicrous.
It’s even worse. Developers would swoop in and buy out everyone. The tenants would take the money and, for the most part, spend it very quickly (like the poor people who win lotteries do). Then all these people will be looking for subsidized housing again. But they wouldn’t find any.
tl, what if they barred developers, would anyone else be willing to buy? As someone who’s been inside NYC projects, I don’t think that there would be much demand from individual property owners.
If they bar developers, then the first people to buy would be the smartest. It would take some time, but ultimately most (if not all) of the building would sell out. Then the property would get inmproved top to bottom.
Of course, not all of these housing projects are in nice neighbohoods. Not all of them will sell out quickly, if at all.
All these years of working and paying taxes and those leeches become millionaires thanks to my taxes? What is this country coming to? So if 200,000 People in this country are given a million dollars after 18 years on welfare, how will the other 300 million people feel? Why bother going to work if you can sit on your arse for a few decades and be given a million dollars? This is your Welfare Society at work and that is why I say the Democrats are no better than the Republicans.
and of course “no one is panicing here”
roflow
“With so many houses for sale, Duffy said, ‘buyers are spending more time, and aren’t just looking at a property once, but coming back two or three times for each listing.’ More than 60,000 units are on the market.”
Gee, Philadelphia must be different. I’ve heard about listings in other areas that have been on the market for months without anyone looking at them.
Its always different. Lets be honest, if the media wants truth about the market, the media will have to interview someone that is not trying to sell a house and is not part of the RE machine. Until then, we will always be told it ‘different’.
Every day in Philadelphia someone is getting shot. Philadelphia has broken their record from last year in as littles as 3 0r 4 months. Now I see why its different.
The killings are occurring mostly in the ‘hood. Nothing is going to be done about it until some Delancey Place yuppie gets shot while ordering a double shot mochaccino from their local barista. No drive-bys at Starbucks, (so far).
I live around the corner from Delancey Place. A drive-by wouldn’t hurt. Just warn me ahead of time. ; )
Reality will hit you, eventually.
philly is different - there’s a bum pissing & begging on EVERY corner
I call BS. That’s not at all true.
Actually, Philly is looking pretty decent these days. I guess the bums all got 100% financing and bought homes.
Duffy’s listings are on the Main Line, home of the extraordinarily wealthy of old and new money. Big money. Sprawling mansions. Lots of them are the recipients of the Bush Tax breaks. Yeah, it’s different there, but to use this as the baseline for what’s going on in the Philadelphia is misleading. I’ve mentioned the wealth divide and its impact on housing - this is the classic example.
I posted in reply to eastcoaster before I saw your comment.
I agree that it’s misleading to use Main Line communities as the baseline for the PHL market. The fringe areas around Philly have been sliding for over a year. But there still is strength in Center City and some of the money areas. That said, every area declines during a bust, Rittenhouse Square and Villanova included.
Our region has been propped up by re-los from other parts of the country to whom our prices look reasonable! I just heard about a brownstone on South Broad Street - around Broad and Tasker, that went for $1.4 million. And rowhomes in the neighborhood behind that brownstone have been selling for $400k. Stunningly high prices. Ridiculously high prices. Sold by a New Yorker - to other NYers? I asked my friend who told me about these sales to try and get the details.
Those two homes would have gone for around $400k (brownstone) and $60k (row home) ten years ago. Actually, the sellers would have been Powerball winner lucky to have received those prices.
Those in the business do think it’s different here. Case in point, this quote from the article… “‘Today’s sellers are more educated than they were in the 1980s, so they hear these reports of doom on the national media and take them with a grain of salt, because they know this area is different,’ said Diane Williams, an agent in Montgomery County.”
Thus, my complete frustration (I live in Mont. Co.)
Remember, part of Montco covers the Main Line, and those people just think they are special any way you slice the cake.
When I worked in the REIC, my office was located in what traditionally was the western end of the Main Line. Every one of my firm’s offices on route 30 going east into the city was populated with agents, buyers, and sellers who thought they were God’s gift to the planet because they were transacting business or residing on the storied and vaunted Main Line.
Ben has recently posted articles about softness in the RE markets of the Hamptons and Westchester Co., also supposedly bulletproof areas. The Main Line is not immune, neither is the part of Montco where you are located. I’ve posted the NCC link that shows a 40 point spread between the highest high and the lowest low of the last PHL boom and bust cycle. That translates to a lot of cabbage, if you get caught on the peak of the rollercoaster.
Regarding the Philly area, the 40-yr. old 5-bedroom somewhat updated home four doors down in my western Main Line neighborhood just sold in less than two weeks and it was listed for $815,000. Things are slow around this neighborhood if you’re selling something for more than $1,000,000, especially the huge new homes built on the teardown lots. Some of those have been sitting for more than a year.
Malvern is western main line. Is that where you are? Some great bungalow and cottage style well built homes there. I guess $815K is a bargain now in Malvern (Paoli/Wayne) where you at anyway?
“Last week, I went to Philadelphia, but it was closed.”
W.C. Fields
I thought you stayed away from the east coast because you were afraid of aggressive black ladies.
terms of my parole and such…
“Never try and impress a woman, because if you do, she’ll expect you to keep up the standard for the rest of your life.”
W.C. Fields
Who stays together for their whole life anymore…..that’s old school.
Welcome back to the future.
W.C. Fields has been dead for how long?
A long time.
Wisdom never dies, however.
Just remember most Legal construction workers will get 6 months of unemployment, so I think xmas 2007 will not be a good one for anybody.
- from New York. “Despite free-falling real estate prices in some parts of the country, the Rochester area is holding steady ‘Now Rochesterians are saying the sky is not falling.
- “New Jersey lost 3,600 jobs and its unemployment rate remained at 4.3 percent in April, signs that the slow housing market and the state’s high costs took a toll on the economy, experts said.”
I did not realize that New York and New Jersey could be so different.
Rochester housing has lagged inflation for 20 years
how low can you go ?
Every block I’ve surpassed there’s always a for sale sign dangling for life to disappear. But it remains in the same position for 8-12 months. Taxes, insurance and the high rate of gang population has everyone running to DE, VA and NC.
Referring to NJ
Comparing NJ and Rochester? Rochester might as well be on the other side of the country. You’ve got the NY metro area, and then you’ve got the rest of NJ and NY. Heck, it’s difficult to even try to compare North Jersey (anywhere within 1hr of NYC) with the rest of the state.
jb
“It’s a lot better than 2006″ [in Rochester]. Although I was inclined to disbelieve this, I see in the full news article that prices rose 5% from 1Q06 to 1Q07 in Rochester. The median now is $49,900. FORTY NINE THOUSAND nine hundred. Okay! That is a price that real people can pay. Maybe even on upstate wages.
I have family in Rochester. You can get a nice (older) house in a decent neighborhood for 2.5x income, even with a single bread winner. Of course you have to contend with all the snow, cold, and overcast-ness.
It’s been many, many years since I lived there, but for Rochester, NY, to be a “hot” housing market in today’s day and age is ludicrous. The factories are closed, Kodak has laid off thousands of people, and the area exports nothing but people. To say nothing of the fact that the brutal winters likely spawned the first wave of antidepressant research.
funny - I grew up there and all my mom ever talked about was the damn weather.
CAUTION : shocking news
WASHINGTON (Reuters) - Troubles in the U.S. housing market will weigh on economic growth this year even more than earlier estimated, according to a forecast of economists released on Monday.
I apologize if everyone has already seen this. It is so funny!
Mr. and Mrs. Too Much Home buyer:
http://www.youtube.com/watch?v=TxylHPnoloI&mode=related&search
that be funny!
Never saw it; very funny! Thanks! My favorite part is the Ramen Noodles and the vocalist’s reference to “five flavors.” The others in the series ar funny too: The impulse buyer -”89 easy payments” LOL
That’s been around for about a year now.
and the singer’s blond wig!
The eight-county Philadelphia metropolitan area was not as overwhelmed by investors as Florida, Nevada, Arizona and California, so median prices here were not driven up to artificial levels - nor has the bottom dropped out of the market.
I agree that this area was not as overwhelmed by investors as Florida, Nevada, Arizona and California - however, prices have nearly tripled since the very late 90s so does that not qualify as a huge problem? I’m so tired of everyone comparing to those other states as if they are the only areas that have a market issue.
We were not as overwhelmed, but the post 9/11 New Yorker money that came in certainly drove up the prices - in the kinds of neighborhoods that Manhattanites would prefer. We also had a huge component of McTrump wannabe speculators and “investors” - homegrown. (A local guy Jim Canaly started a RE seminar in Philadelphia and has branched out to Houston TX, last time I checked his website.)
I was stunned during a recent visit to Center City to see plates from California, Connecticut, Maryland, and of all places - Texas. Three of the states I mentioned have a more inflated bubble than ours, so think about it. They come to Phila, and they think they’re getting bargains, at prices that hometowners know are extreme.
In my recent visits to Center City, I’ve noticed lots of well-dressed, young, exotic-looking folks, and overheard some foreign languages being spoken. Not sure if these were tourists or residents, but there’s a certain je-ne-sais-quoi about Philly, a “hip-ness” in the finer establishments. We moved out 5 years ago with the intention of moving back after the kids grow up. But, I think there has been a real change that might prohibit us from ever being able to afford to move back. Fortunately, we live near the train!
They come to Phila, and they think they’re getting bargains, at prices that hometowners know are extreme.
You could be talking about any large city in Texas as well.
Are you trying to get in on the Philly Chease Steak bet also????
There’s a down home philly cheese steak joint on Lincoln, in Santa Monica…
Recommended~
dougie, I don’t believe it’s different here (in the respect that we won’t be touched by a major correction). So I don’t know if I can get in on the bet…however, I’m always down for a Jim’s steak, one whiz wit.
Yes, Yes - Jim’s!!! You are a-ok in my book phillygal!
Stay away from Pat’s and Geno’s! (Unless you’re a tourist.)
“I’m so tired of everyone comparing to those other states as if they are the only areas that have a market issue.”
I’m getting a bit fatigued with all the blah-blah myself. This is looking like Japan’s loooong, sloooow, agonizing drift to the bottom and I don’t think I can take years of inane pronouncements from the REIC. Everybody has been boned by this stupid bubble, even prudent folks, one way or another. I don’t know if anyone else sees this, but I see a massive destabilization of the US through things like the bubble, illegal immigration, Iraq war, rising gas prices, etc. Anyone remember the cartoon of the two vultures sitting on a tree limb where one says to the other “Patience, hell, I’m gonna kill something.”?
The Japan comparison is a good one. What mister cheese steak is arguing is that Tokyo, Yokohama, Osaka, Nagoya, Sapporo, Kobe, Kyoto, and all the other major Japanese cities saw exactly the same thing over the last fifteen years or so. In reality, there are extremely interesting and revealing differences between these areas. To pick some extremes, the Japanese expansion and contraction had very different impacts in Osaka than in Tokyo. While it is true that the bubble was all over Japan, especially anywhere with a golf course or near one or enough room for one, the trajectories followed by different areas were quite different. If one includes rural areas then even more differences show up.
In the last major downturn from 1988 to 1995 there were also major differences between areas. For example, Boston was almost entirely turned around and starting to recover nicely in a visible way when the San Francisco Bay Area was just starting to really feel the burn and see prominent properties float their way onto the market.
It is true that no one will was immune to this bubble, nor will anyone be immune to the downturn. It is allso true that this insistance that no area has any kind if difference from any other is based on ignorance and contempt for inquiry.
If the recovery in Philly is off by a single percentage point or even one single day then no cheese steaks can come out of that bet.
You may now return to the same kind of rampant trivialization that led to this bubble.
“Patience, hell, I’m gonna kill something.”
lol
We may not have been overwhelmed by investors but we certainly have been overwhelmed by new construction of Mc Mansions on every piece of open space avavilabe. Chester county is beyond overbuilt and what’s worse is we don’t have the roads to supposrt the influx of people.
“‘Today’s sellers are more educated than they were in the 1980s, so they hear these reports of doom on the national media and take them with a grain of salt, because they know this area is different,’ said Diane Williams, an agent in Montgomery County.”
Classic!
Chicken Little, A.R.M.’d and dangerous…
“‘They were scared,’ said Jeff Scofield, an agent in Brighton. ‘Now Rochesterians are saying the sky is not falling. It’s not 2005 (a strong year), but it’s a lot better than 2006.’”
“‘A lot of buyers, because of the negative news in the media, have jumped back on the fence,’ Mackintosh said.”
Sucks, when it’s a chain link kind, or worse yet, concertina wire…
chain linked rastavarians
Let them eat mistake
We have ways of making you understand it’s a “balanced market”, ya see…
“Now ‘it’s a balanced market’ between buyers and sellers, said Armand D’Alfonso, president of Nothnagle Realtors.”
Yawn. Usual spin from realtorwhores. (1)”Good time to buy.” (2)”The downturn doesn’t seem to be happening here.” (3)”Now it’s a balanced market.” (4)”Sellers have woken up and realized this isn’t 2005.”
Wake me up in 2010 when we might, underline the word might, be somewhere near, underline somewhere near, the end of this bust and prices will be back to 1999/2000 prices……If the sellers are lucky. Only one thing applies here. DO NOT CONSIDER BUYING FOR AT LEAST 2 YEARS and think twice about becoming a state and federal government cash cow. Zzzzzzzzz.
So right. Am going camping for the next two years, thanks for all your insights, and thanks especially to Ben. Will be back…
Throughout the entire US, stupidity, greed, fraud, easy, money schemes and REIC MSM KEPT these housing MANIA pipelines flowing from coast to coast and everywhere in between.
NOW, the easy money and appreciation spigots feeding these speculation pipelines are being TURNED OFF Everywhere.
The only “difference” IS, WHICH cities, towns or states WILL FEEL the Crippling Economic PAIN First.
The RESULTS will be the SAME….They ALL WILL SUFFER ….EVENTUALLY!
Yes, Mikey, and it will be Dirty Thirties kind of sufferin’….do not think the fat and happy American public in front of American Idle will comprehend or understand what is happening to them even in the end.
Some of my more rock ribbed conservative friends and relatives aghast at gasoline prices are demanding oil companies cut the prices or else….
Bad times a’comin’.
Oh man, spin control spin control! You gotta be kidding me, this is all so freaking laughable the death throws of the market and they are just saying “oh it is all corrected and good to go”, reminds me of the end of Animal House movie and the ROTC guy in the middle of the riot with people screaming saying “stay calm all is well”.
In the end, it all revolves back to Kevin Bacon, somehow.
Mark Lancaster, “the smaller builders are what keeps them going”, “He is looking for his best year yet”. My experinence has been that most small builders and sub contractors don’t want to face up to reality. They will keep building untill they get stiffed by a general, or the bank won’t finance them anymore. The “larger builder” have a lot more finance sense, at least they know when to bail out. Actually this story is just ignorant drivile. A story by a reporter who has no clue how the building industry works. You could get the same quotes by wander around the local bar at quiting time and talking to any constuction worker.
A story by a reporter who has no clue how the building industry works
How about, who has no clue about how *any* industry works. I hate to rag on that little paper from a nice town, but it is pretty lame when it comes to good, sharp reporting. I get the impression their reporters are fresh out of high school, and they overlook a lot in their stories (and sometimes get things all wrong). Maybe the FredNewsPost is a training league for the WashPost.
Bu back to the topic: Lancaster has a *very* good reputation up there, and so when a shakeout comes, that firm will no doubt do OK compared to the cookie-cutter box-building firms with crap construction. The shakeout will see to that.
Now I doubt that Mr. Lancaster will get his best year even but then again, if the quote was accurate, he didn’t say he was “looking at” his best year ever; he said he was “looking for” his best year ever! But aren’t we all.
I used to wonder if the comments on this blog came from paid contributors, but now since the discussion’s turned to Philly and I see the usual nothing is wrong here and it’s getting better all the time denials, I can tell that this site is legit.
Six people where shot up over the weekend—one, blocks from me in the very tony Queen Village neighborhood. (not to mention, my apt was burgled).This is not a tale of two cities, much as some would like to believe so that they can pretend there’s a distance between them and the criminal element. It is the story of one crime-infested burg that’s going to get even nastier in the sweltering summer months.
As for the influx of new people and attitudes, the old people and attitudes will drive them out soon enough. Despite its aspirations, Philadelphia is nowhere near as cosmopolitan as it would like outsiders to believe. Many natives are conniving, poorly educated, vulgar, and fully content with that. Few large cities are this doggedly lowbrow. And do not think for an instant that the depravity stops at the borders of Rittenhouse, QV, Art Museum, and all the other places boosters like to tout as indicative of the Philadelphia renaissance. Sorry to say, but Center City is not swathed in body armor.
In sum, when the word gets around that the new and improved Philadelphia is a Potemkin village and every undesirable here is strapped, there goes the property values. Friends, Philadelphia really is different. This bubble won’t burst because of sub-prime loans and foreclosures. A bullet will pop this one.
(Oh, and for the Philly boosters who go ballistic when anyone talks realistically about this hole, spare me the exhortations about Philly’s parks, history, dining, etc. All of that is so beside the point. Not to mention, the food is mediocre at best. Gaudy décor, insane prices, mediocre food.)
I used to wonder if the comments on this blog came from paid contributors, but now since the discussion’s turned to Philly and I see the usual nothing is wrong here and it’s getting better all the time denials, I can tell that this site is legit.
Six people where shot up over the weekend—one, blocks from me in the very tony Queen Village neighborhood. (not to mention, my apt was burgled).This is not a tale of two cities, much as some would like to believe so that they can pretend there’s a distance between them and the criminal element. It is the story of one crime-infested burg that’s going to get even nastier in the sweltering summer months.
As for the influx of new people and attitudes, the old people and attitudes will drive them out soon enough. Despite its aspirations, Philadelphia is nowhere near as cosmopolitan as it would like outsiders to believe. Many natives are conniving, poorly educated, vulgar, and fully content with that. Few large cities are this doggedly lowbrow. And do not think for an instant that the depravity stops at the borders of Rittenhouse, QV, Art Museum, and all the other places boosters like to tout as indicative of the Philadelphia renaissance. Sorry to say, but Center City is not swathed in body armor.
In sum, when the word gets around that the new and improved Philadelphia is a Potemkin village and every undesirable here is strapped, there goes the property values. Friends, Philadelphia really is different. This bubble won’t burst because of sub-prime loans and foreclosures. A bullet will pop this one.
I’m a lifelong resident of this area. I’ve said it before, Phila. always rebounds in spite of itself. (Probably due to its location smack in the middle of the Northeastern megalopolis). If you’re construing my comments as that of a RE cheerleader, re-read my posts. I’ve been in and out of RE my whole life. When I was working in the REIC during the height of the boom I knew something was out-of-whack, in all opposition to the constant cheerleading and kool-aid pronouncements to which I was subjected.
Where in tony Queen Village do you reside? As you well know, the fringes of QV border some rough ‘hoods. The current crime wave is deplorable and without precedent. Did you vote for John Street? Do you recall his boast as to who was “running the city”?
Well take a look at who is running the city and you’ll get a clue as to why the crime is rampant. Hopefully the next mayor will be able to restore some order to Philadelphia.
Despite its aspirations, Philadelphia is nowhere near as cosmopolitan as it would like outsiders to believe. Many natives are conniving, poorly educated, vulgar, and fully content with that. Few large cities are this doggedly lowbrow.
I actually agree with you on the attributes of some natives of this town. While you’re at it, add “neanderthal” to the list of pejoratives. There certainly is an old-school dinosaur mentality at play within the city limits. That’s why it took an outsider - Ed Rendell - to get the city back on its feet during his tenure as mayor.
But obviously , there’s enough to here to get re-los to come in and invest, and revitalize the town. Will it last? In the tried-and-true neighborhoods, of course. Some of the fringe gentrification, not so much.
there’s enough
to herepositive here to get…etc.Thanks for your insights, Phillygal. I think you’re on the money. I’ll just add that Street was a colossal wash and his statement about the brothers and sisters running the show was incredibly off-putting. The mind-boggling racial discord in this town–from both sides, by the way– is equalled only by the high-octane, unapologetic corruption.
But do you believe that it’ll take a white outsider to make this place whole? I’m optimistic about a Nutter administration. Not that I think I’ll wait for the improvements to occur. Life’s too short to live in fear and anxiety.
Actually, I have to say that what is happening in terms of crime is not concentrated in Philadelphia. There is a countrywide increase in violent crime. I just read an article that blamed the increase on the reduction in crime fighting funding as more focus has turned to the war on terror and the war in iraq. The article said that Bill Clinton’s signature COPS Program that put thousands of police on the streets has been steadily reduced in recent years. Its funding fell to $102 million in fiscal 2007 from $487 million in 2004 and $1.5 billion in 1998, according to the U.S. Conference of Mayors.
That’s all well and good, guess who’s, but there’s still the murder rate to consider. To date, there have been 159 homicides in the city of Philadelphia. No one here draws any comfort from hearing that crime is bad all over. And most of us believe–with cause–that whatever else is going on in the country, things are particularly bad in the city of brotherly love.
I’m from Philadelphia, so this topic is close to me. I grew up very near to Will Smith in one of these crappy neighborhoods (actually it wasn’t so crappy. I had a wonderful childhood.) that someone mentioned earlier. My point is that regardless of who the mayor is, if fighting crime in the cities is not also a priority at a state and federal level, I don’t see much changing. If we are moving federal funds from fighting in Boston to fighting in Baghdad without a clear strategy, we have to accept the consequences…possibly more crime. I am not a huge fan of large governments. After all, I really like Ron Paul. I just say that you can’t stop funding things without a clear strategy.
In sum, when the word gets around that the new and improved Philadelphia is a Potemkin village and every undesirable here is strapped, there goes the property values.
But the undesirables have ALWAYS been strapped here. That’s nothing new. Yet somehow Philly has finally attracted people to move here from other cities. Something is different here (though the RE values are still, for the most part, not rational.)
BTW, Queen Village is “very tony”? Then what do you call Society Hill — “Uber tony”? Every neighborhood just south of South Street borders a ghetto, so it’s shouldn’t be a surprise that shootings will occasionally spill over into your neighborhood. It was just as bad in the mid-90’s, if not worse.
S**t!!! How do you turn off italics???
Maybe you’re missing my point, tl. Oldtimers know that undesirables usually have guns here and aren’t afraid to use them, but newcomers, maybe not. Not all the world is rage- and crime-fueled. And when they discover that gun violence problem that so many oldtimers think is somehow normal, and the panoply of other social problems here that don’t exist or don’t exist with the same intensity in other places, what do you think they’ll do, hang around? No, those people who were initially attracted pack up and move away.
Seems obvious to me. Maybe I’m missing your point?
And while the QV of your memory may have been less on the ritzy side, places on my block sell for at least 500k. That qualifies as tony pretty much anywhere in the country, apart from showplace cities like NYC, SF, Boston, etc.
The author of the Phila Inquirer article (Alan Heavens) has a weekly column in the Sunday paper. I’ve been reading it as long as I’ve been reading this blog, and he’s never written a negative word about the local housing market. You certainly wouldn’t know he’s covered any downturns by his reporting: he is Bruce Toll’s Chief of Propaganda.
Agreed.
My feeling is, the bubble popping will definitely have some negative effect - most certainly on the Philadelphia neighborhoods, probably on the ‘burbs, maybe on CC as well. I hope it’s not as bad as I think it will be.
I remember how nice Art Museum became during the last long boom in housing - and how bad it got after. It’s ALMOST as nice as it was, now. Remember New Market? What the hell happened there.
We’re DROWNING in inventory over here. Chester County is going to be really ugly - there are a lot of resales sitting here. There’s too much new construction! People would prefer that. And without a bubble, no one’s going to bother buying 20-30 year old ugly colonials and ranchers to even tear down.
People out here talk very casually about their home equity lines - I think I’m the only one in my circle who doesn’t use home equity to do stuff (or for anything).
Maybe I’m just old, but I remember how horrible things got out here AND in the city during the last bust, and this one is going to be WAY worse!
But I hope a lot of the positive changes downtown stick, I really do.
Anecdotally a contempo with 5 bd/3 baths has just gone for sale near me - 20 years old, decent shape, 1 acre, $450K. Which is around the 2003 pricing from what I could gather digging around online! Another nearby Colonial just was put up for exactly what the guy paid for it in 2003. We’ll see how long they sit, or if they sell quickly. So already there’s been quite a bit of reality sinking in for sellers, at least out here.
I’m curious, BlackOrchid, just where are you–in the city proper or in the ‘burbs? Where are you drowning in inventory?
Sorry I didn’t reply in the right place (I’m in the burbs, in West Chester, but work in CC and used to live in South Philly, then CC then Roxy) - anyway there was already a lot of unoccupied housing in desirable neighborhoods like Roxy and Manayunk during the height of the boom - that will only get worse now. There’s been lots of (pretty shoddy) new construction in Roxy and Manayunk during the boom.
Point being, we’re not different here. I hope the progress in CC stays somewhat tho. The neighborhoods, especially East Falls, Chestnut Hill, Queen Village - the ones near bad neighborhoods - are toast if things get bad. It’s way too easy for criminals to get in and out. I used to live in Logan Square and the car and house theft was incredible - it was just so easy to get there via the Expressway and quickly get out. Roxy and Manayunk and the upper Northeast are somewhat isolated from problem areas. But when things get bad (and they will), desperadoes will make their way into CC even. Hopefully Mike Nutter will have a good plan!
I like Nutter, but am I the only one who has noticed that when he talks, Nutter sounds like Billy Crystal imitating Sammy Davis, Jr.???
No, you din’ int!
ROFL
Yes, I did!! If anyone is curious, listen to this: http://youtube.com/watch?v=8J9fGSnIx7A
I’m in West Chester in the boro. There are several new townhouse developments around the boro, plus a 700-unit new development about to break ground up a bit north on Rte 100. You don’t think Chester County has enough inventory?
I know a lot of people who want to sell their “used homes” who are “waiting this out.” They know that it’s hard to compete with all the new construction. Around here practically every bit of open space has been developed during this boom. I remember looking at maps of the county back when I worked at the Planning Commission - and crying because save for the demarked wetlands and two privately-owned farms, everything was developer-owned. (fortunately since then one of those farms sold to the Brandywine Conservancy and the other will do so if they ever have to sell)
I’d love to chat offline, BO, if that’s okay with you. Give me a ping? thatgirl2k4@yahoo.com
All this talk of Rochester makes me want to fly back and eat a Garbage Plate- I like mine with a Burger, a White Hot, Fries, Mac Salad, Hot Sauce and Mustard- hold the Onions. Great after about 10-15 GL’s…