Monday, July 10, 2006


As a matter of public policy, I favor the city deferring taxes for low-income senior citizens caught in this dilemma until their death or until the house is put up for sale, whichever occurs first. I believe the City of Philadelphia should be compassionate to people who feel unable to leave a neighborhood which has gradually or suddenly become above their means as poperty owners.

June 3, 2007


The number of homes and condos being listed for sale continue to rise dramatically, while the actual number of sales for both homes and condos are rising only slowly. A continuation of these trends would seem to lead to reductions in home prices and a glut in the market, at least in the short run. At the very least, they should discourage short-term real estate speculation.On the other hand, the figures of Kevin C. Gillen, PhD, at, offer reason for optimism for the strength of home ownership as an investment, coupled with caution as to affordablity for moderate income folks. More homes were sold in the first quarter of 2006 than at all but one first quarter (2005) in the last decade, including an all-time first quarter high of homes sold at $1million or more.The only neighborhood in Philadelphia to suffer price declines in the first quarter of 2006 was the overheated University City neighborhood, where prices have already risen 587% since the first quarter of 1980 and 322.5% since the first quarter of 1996.Philadelphia's House Price to Rent Ratio, equal to the U.S. average in 1980, has outpaced the U.S. average since 2005 after falling behind it in 1992. Philadelphia's change in housing inventories from April 2005 to April 2006 (39%) has risen more slowly than that of Phoenix (282%), Miami (236%), Washington, D.C. (230%), Los Angeles(149%), San Diego (91%), Boston (91%), New York (70%), San Francisco (65%), Detroit (46%), and Minneapolis (43%). We are higher though than Chicago (28%), Las Vegas (24%), Denver (19%), Atlanta (15%), Seattle (5%), Dallas (0%), and Houston (-3%).Further 10% of the homes purchased in Philadelphia in 2005 were not owner-occupied, lower than at least 10 other cities. Only 7% of the mortgage originations permitted negative amortization, also lower than at least ten other cities. Only 19% of 2005 Mortgage Originations in Philadelphia required interest-only payments, lower than at least 14 other cities. PMI Mortage Insurance Company was quoted in the April 10, 2006 Business Week, as saying that there was only a 12% chance of house price declines in Philadelphia over the next two years, a lower figure than in at least 10 other cities. The only bad news that Dr. Gillen offers is the decline in affordability of Philadelphia housing. As late as 2003, Philadelphia houses cost less than 1.5 times the average annual Philadelphia income, as was true in 1980. Since then however, Philadelphia houses have risen to costing 2.3 times the average annual Philadelphia income. Dr. Gillen does not report this, but in the last year that income figures were available (I think it was 2005, but it could have been 2004), average income fell while prices skyrocketed. Both trends cannot continue indefinitely; I suspect income stagnation is a cause of increasing inventory of houses and condos that TimK is reporting.I am greatful to Dr. Gillen, Ed Goppelt, and TimK for making all this information so readily available.

May 25, 2006


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