Thursday, February 20, 2014

Philadelphia Marketwatch Report - December 2013

Click to Enlarge

First off, my apologies for the lateness of the Q4 Trend Marketwatch Report.

The MWR from Trend (or the MLS as most people call it), focuses specifically on real estate in/around Greater Philadelphia. There are individual reports available for the entire 5 county area in Southeastern PA (and also in Berks County, so let's call it 6), as well as in Southern NJ and Northern DE.

My focus is always on the Philadelphia report specifically, as that is the center of our local real estate market.

The report for Q4 2013 (aka December 2013) is still moving in a positive direction, as was the Q3 2013 report I posted in October. The chart's key metrics show that Philadelphia's Average Sales Price is up, Closed Sales are up, Homes for Sale (aka Supply) are down, and the Average Property Marketing Period (aka Marketing Time) is down.

Please note that these stats are based on year-over-year changes, to help compare the real estate market in Q4 2013 to Q4 2012. I wanted to reiterate this just so people don't assume these statistics are month-over-month, which is a hard comparison to make in real estate (due to weather changes, school calendars, etc).

So, let's break these down one-by-one:

1. Average Sales Price: $198,756, up 3.8% from Q4 2012. Why do real estate prices go up? Simply put, supply and demand. If supply is low, demand is high; and vice-versa. That is what's happening here, and that is also what allows homeowners to build equity; a prime reason why people decide to buy real estate in the first place.

2. Closed Sales: 2,793, up 4.3% from Q4 2012. That's a nice increase, especially in a still-tight lending environment. It means that homes are selling in larger quantities today as compared to the same time period in 2012, which means we are slowly transitioning from a Buyer's Market into a Seller's Market. To add to that, these buyers are typically more qualified (because lending guidelines haven't loosened up yet), and they can still afford to buy. Which is great news for the local real estate market.

3. Homes for Sale & Months Supply: Down 12.5% and 23% from Q4 2012. As stated before, if supply is low, demand is high. If demand is high, prices go up. If prices go up, there is more competition to buy real estate. If there is more competition, there are more bids for each property. And so on, and so forth. Low supply is good for sellers.

4. Average Property Marketing Period: 91 days, down 11% from Q4 2012. This means the average seller requires less time to accept an offer on his/her home. When sellers have to wait for long periods of time to sell, what typically happens? They lower their listing price to attract more buyers and buyer agents. When sellers don't have to wait as long to sell, what typically happens? Prices remain stable, and may go up.

Most of these metrics may seem self-explanatory, but I personally find that it helps to break each one down individually and explain what it means to the local Philadelphia real estate market.

If anyone would like the most recent MWR report (for your specific area), please don't hesitate to reach out via phone/email/text.

I can then email you a customized PDF.

Thursday, February 13, 2014

Is Washington Avenue West the key to South Philadelphia's growth?

One of the new businesses along Wash Ave West | Kermit's

In short, yes.

There has been significant residential growth, both north/south of Wash Ave West, over the last 10 years. So much so that the buyer demand to live in Graduate Hospital has literally spilled over into the northern part of Point Breeze. Which in turn, seems to slowly be heading west toward Grays Ferry.

That is a story for a different day, and one that I have blogged about before; so feel free to check out some past posts (here and here) before moving forward with this one.

If you read regularly, you know that I like to break things down to keep it simple. So, here's how I would look at all of this:

1. The Missing Link: That's what I classify Wash Ave West as, the commercial presence needed to properly join NoWa (North of Washington Ave, aka Graduate Hospital) and SoWa (South of Washington Ave, aka Point Breeze and Grays Ferry). When Graduate Hospital really started to come into its own as a neighborhood reborn, what happened? South Street West took off. So much so, that South Street West has the same, if not more, energy as South Street East. It has literally connected Rittenhouse Square & Fitler Square with Graduate Hospital; forming one cohesive, consistent part of Philadelphia.

2. Spruce It Up: Easier said than done, but as this article states, plans are already being discussed. The dilemma for an area like Wash Ave West is nothing new for historic commercial corridors in Philadelphia; long-time residents and business owners are typically resistant to change. And for good reason, it's their livelihood. Who would want that taken from them; answer ... nobody. But resisting change, just because, is not a good strategy. There are lots of new businesses moving in, whether long-timers like it or not, and those businesses mostly cater to the area's new residents. In order for this corridor to grow and move in the right direction, the boulevard needs to be cleaned up (i.e. trash, sidewalks, street configuration, etc.) so that both businesses and patrons can thrive with it. If done right, it can help both long-timers and newbies alike; slippery, but doable.

3. Embrace The Culture: In order to make Wash Ave West new, some of the "old" needs to be recognized. One idea in this article is to turn the area into a Design District. Keep all of the mom-and-pop home improvement shops, and fill in the gaps with new commercial and residential. With the changes that have already taken place both in NoWa and in SoWa, there is too much commercial as it stands today; which means a mixed-use approach should do the trick. Think large residential anchor projects, surrounded by the existing businesses and smaller/new businesses.

Anyway, that's my take.

When faced with a situation like this, I don't think the goal should be to just go in and change everything. On the flip side, not doing anything and resisting the changing demographic won't help either.

No matter how this all plays out, you can be rest assured that Wash Ave West will look different in the years to come.

Friday, February 7, 2014

Architecture, apartments, and a power plant ... really?

All images courtesy of Fast Company

I'm a big proponent of smart development. Call it green ... sustainable ... sensible.

And why not?

If you can build something that is eco-friendly, costs less to maintain, lasts longer, and can survive on its own (instead of being connected to the power grid), I'm sure most of you would be all for it; as I would be myself. The problem is, most of these kinds of projects cost more to build than traditional building styles.

In other words, upfront costs are typically higher.

Here's what I find cool about this project:

1. It's located in a great spot (on the ever-changing Delaware River Waterfront)
2. It has a unique design (probably more unique than anything Philadelphia currently has, or is proposed to have)
3. It has 2 important purposes (provide housing to Philadelphians, and establish a waste-to-energy trash incineration plant).

Here's what I don't find cool about this project:

1. No one has agreed to develop it yet (most likely, because it looks complicated)
2. Who knows how long it would take to build (again ... because it looks complicated)
3. My guess is that it would be super-expensive, to construct and to live in (last time, I promise ... because it looks complicated)

What I will say after reading about the project, and browsing through the well-done graphics, is that a project like this would attract global attention. Not because of the cool factor, or because of its proposed location, but because it is a forward-thinking concept for a large US city that will save energy, save money, and save the environment.

What are your thoughts?