Real Estate Market Trends for Greater Philadelphia and Southern New Jersey

A reader (Ed), commented on the following

"You did not mention the effect of foreclosures on inventory. Might that change the long term forecast?"

To reiterate my prior comment, I suggested that in the short term (the next several months), values are likely to rise slightly due to the fact that we are currently in the seasonal  spring-summer market.  however my longer term forecast is that this market will continue to see a steady decline in values based on the continued deterioration in the employment market in the Philadelphia region. 

In response to your comment Ed, foreclosures are definitely a factor to consider and I believe they will continue to place downward pressure on values.  In fact, this provides additional support for my longer term forecast.  In the short term however, I believe that seasonality will have a stronger affect than foreclosures. 

To take this a step further, I researched foreclosure statistics on several national web sites (including Realty Trac and Foreclosure.com) and found that they reported significantly different foreclosure numbers.  Based on my research, I believe that the statistics from Foreclosure.com are more accurate.  They reported 3,025 properties currently in "pre-foreclosure".  These properties haven't actually been foreclosed upon yet, rather, they are nearing the end of the foreclosure process and all of the properties have a reported auction date.  An additional 666 properties are reported as being "foreclosed".  There are 661,958 households in Philadelphia (as of the last census in 2,000), thus the rate of foreclosure is 1 in every 994 homes.  Properties classified as being "Pre-foreclosure" are not included in this ratio.  For comparison purposes, a number of large metropolitan areas have a much higher rate of foreclosure.  For example, Los Angeles is 1 in 405; Atlanta is 1 in 77; Miami is 1 in 36.

It should also be noted that a ban on foreclosure sales and evictions on  Fannie Mae and Freddie Mac owned properties was eliminated on March 31, 2009.  The moratorium on foreclosures began during the 2008 holiday season as an effort keep people in their homes as the government tried to come up with homeowner rescue plans.  This will probably lead to an increase in foreclosures in the coming months.  From the Washington Independent:  Fannie, Freddie Quietly Lift Moratorium on Foreclosures.