Local real estate market shows strength

Sell 'em if you got 'em.

Six words that sum up today's newly reinvigorated residential real estate market in the eight-county Philadelphia region.

Sales volume is up, and desirable houses are attracting multiple offers, local brokers and agents report. In many municipalities and certain city neighborhoods, low supply of available homes is driving prices up.

All of which signals a strength, here and across the country, not seen since the U.S. housing market went bust nearly seven years ago, taking the wider economy down with it.

Houses are suddenly selling so quickly, there is a shortage, said Kit Anstey, of Prudential Fox & Roach in West Chester. If homes were to stop going on the market, he said, those available now would be sold in three months.

Over Memorial Day weekend alone, he said, three houses sold for 5 percent to 7 percent over asking price. "I hadn't seen a multiple offer in six years," said Anstey, an agent for 31. "I just saw 10 in 10 days."

New Hope-based broker Lisa James Otto said her boutique company, which handles many higher-end properties, closed on 28 in May, almost unprecedented activity for a small firm.

Said Beth English, of Century 21, Hughes-Riggs in Mullica Hill: "As long as it is priced right and in good condition, it is flying off market."

At the Jersey Shore, things are heating up as well. Keller Williams agent Ed Kershbaumer presided at a bidding "war" over an Ocean City house that put the property under agreement at 18 percent above appraised value.

That alone led him to relist a new duplex already on the market at 7 percent more, Kershbaumer said.

Power is clearly shifting to the seller in many places, said John Badalamenti, Blue Bell-based assistant sales manager for Prudential Fox & Roach, who covers central Montgomery County and some of the Main Line.

Buyers must be more careful when entering into negotiations, Badalamenti said. "The tables have turned, and it seems like it happened overnight."

As in other East Coast metro areas, notably Boston and Washington, that are reporting more sales, the trend in the Philadelphia region is a definite shift from a year ago, said Noelle Barbone, manager of Weichert Realtors' Media office, and it's "gradually driving prices up."

Buyers who open with a lower offer to start negotiations may find themselves shut out because there are higher offers on the table, Barbone said.

And yet, the region has not returned to what economists would consider a "normal" market.

"The housing market feels flattish, with an upward tilt," said Mark Zandi, chief economist at Moody's Analytics in West Chester. "It is better than a year ago, but the market hasn't found its groove yet - not like many other parts of the country."

According to Prudential Fox & Roach's HomExpert Market Report, April sales for the region, based on data from Trend Multiple Listing Service, totaled 4,420 - just 18.7 percent, or 690 properties, higher than April 2012 levels. Median price - half the properties sold for more, half for less - was $205,000 in April, just 2.5 percent more than last year.

The number of houses on the market in April was 12 percent lower than a year ago, tamping down sales volume and pushing prices up.

Kevin Gillen, senior research consultant at the University of Pennsylvania's Fels Institute of Government, said 5,200 sales a month is the normal historic average for the region.

"During the boom years of mid-decade, we were averaging 7,000 to 8,000 per month," Gillen said. "The current level indicates we are off of our bottom of 3,000 per month during the recession, but still below average levels."

Agents and brokers interviewed acknowledged that not every house is moving. Generally, they reported more first-time home buyers and fewer people purchasing larger homes priced at more than $500,000. Such houses remain on the market much longer than less expensive homes, they said.

Dave Marcantuno, a Century 21 Alliance agent in Burlington County, said he was seeing fewer short sales, in which the lender agrees to accept less than is owed on the mortgage. There are still some problems getting houses to appraise at the purchase price.

"It's not a party for real estate agents," Marcantuno said, "but it's definitely a busier market."

Keller Williams' Mickey Pascarella, who sells in Center City and adjacent neighborhoods, won't say conditions remind him of the market's peak in 2005, but he's keeping a good thought - what's different is the knowledge happy days can end.

"People are a little leery because we went through a giant crash," he said.

Though the regional market has stabilized in the last year, Gillen said, it "is lagging many metro markets in moving into a full-blown recovery."

"House prices fell approximately 20 percent from peak to trough, and have largely been flat since hitting bottom last year," he said.

What may tend to confuse sellers and buyers locally is the monthly S&P/Case-Shiller Home Price Index, which recently reported large gains in many metropolitan areas - including Boston and Washington. The 20-city index does not include Philadelphia.

Case-Shiller "is affected by the share of home sales that are distressed," said Moody's Analytics' Zandi. Phoenix and Minneapolis, for example, had thousands of foreclosed or otherwise distressed properties to work through before "they could get price gains of 20 to 40 percent."

Boston, hit earlier and harder by the housing bust, has always had much higher prices than Philadelphia because land is more expensive there, and zoning and historic-preservation regulations "artificially restrict the supply to fewer but more expensive homes," Gillen said.

Thus, Boston gains reported by Case-Shiller have been substantial but still below their high point.

"Everything has been looking better over the last year, but we [Boston] are still down 11 percent to 12 percent from their peak in 2005," said Michael Lynch, regional economist at IHS Global Insight in Lexington, Mass. "We are still not back to where we were, but moving in the right direction."

Metro Washington prices, too, have shown substantial gains, according to Case-Shiller. But Paul Foster, senior vice president of Long & Foster Real Estate, noted that it was the suburbs that took the biggest hit there.

"How much prices declined depends on how far out from Washington you go," Foster said.

On the eastern side of the city, in Prince George's County, Md., the downturn was severe, at 30 percent to 50 percent, he said, so recent gains reported by Case-Shiller reflect the climb out of a deep pit.

In the nation's capital itself, depending on price range, Foster said, "we did not see any downturn at all, and properties held value, as well."

Philadelphia, Gillen said, "tends to be both less responsive and slower than most of the other metro markets covered by Case-Shiller. We didn't rise or fall by as much as the other indices, and whereas most other markets appear to be in full recovery, we are still stuck in neutral."

In fact, some might say the downturn is still with us.

In February, Jennifer and James Daubert of Mantua Township, Gloucester County, sold the $160,000 condo she bought in 2006 for $120,000, hoping to buy a single-family home. Their savings account took a hit as they wrote a check for the condo's mortgage balance.

"Without our savings, we would not have been able to do it," Jennifer Daubert said.

Until they close on the Mantua house they have purchased for $259,000, they are living with her parents. "We're moving forward, and we're going to have a home to raise our family," she said.

In Northeast Philadelphia, any talk of a new boom is exaggerated, said John Wogan, a broker with Heyer-Kemner Realtors in Bustleton.

That doesn't mean business is flat, though, with investors buying up duplexes in Philmont Heights and strong demand but low supply in Fox Chase and Bustleton.

As Gillen noted, "The best leading indicator of the recovery are housing inventories, which are down substantially from their peak and are close to being back to their natural historic levels."

Rebounds are especially noticeable, Gillen said, in traditional, walkable suburban town centers with access to transit and in neighborhoods close to Center City.

In Center City itself, it's like 2005 again.

"Perhaps you've seen me singing and dancing at Broad and Walnut?" real estate agent Mark Wade asked. "I've not seen a flurry of activity like the past two months since 2005."

For an interactive map with home prices in your town or zip code, go to www.inquirer.com/

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A look at the hottest - and coldest - markets in Philadelphia, South Jersey, and the suburbs. Graphic, A19.

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Inquirer staff writers Barbara Boyer, Alfred Lubrano, and Allison Steele contributed to this article.