Good Opportunity for Investors with Philadelphia Real Market Undergoing Recovery

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STATE OF THE PHILADELPHIA HOUSING MARKET: 2015 AND BEYOND

Kevin C. Gillen Ph.D., Chief Economist

September 30, 2015

Philadelphia Housing

Market


Recovery finally here?!

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House Price Indices 1980-2015: 1980Q1=100Philadelphia County v. Philadelphia MSA and U.S. Average

Phila. County*

Q2

7.5% increase in Q2 after only 7.3% rebound since bottom in 2012!


Outperforming both U.S. and Suburbs!

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Philadelphia Regional House Price Indices 1980-2015by Philadelphia Area Submarket and U.S.: 1980Q1=100

Philadelphia*

Phila. Suburbs*

U.S. Avg.**

*Empirically estimated by Kevin C. Gillen, PhD

Q2

Note: The suburban index includes all counties in the regional index, except for Philadelphia county.**Courtesy Federal Housing Finance Agency (FHFA)

Beat both our suburbs and U.S. average!


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Number of Philadelphia House Sales* per Quarter: 1980-2015

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Qtly. Average

Strongest quarter for home sales since bubble!

Sales also have rebounded:


Million dollar-plus home sales remain strong:

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Number of Philadelphia Home Sales* per Quarter with Price>=$1 Million: 1997-2015

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Qtly. Average


Recovery skewed towards higher-priced homes:

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%Market Share of Philadelphia Home Sales by Price Category: 2000-2015

<=$90k $90k-$250k >$250k

$90,000-$250,000

>$250,000

<=$90,000


Sales skewed towards higher-priced homes:


Rents up significantly, even as house prices struggle:

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Philadelphia Housing: Avg. Rent v. Avg. $Price

Rent Index

Price Index

Rents up 22%House Prices up only 8%


Supply remains constrained

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Philadelphia Houses Listed For Sale: Inventory v. Absorption Rate

# Houses Listed For Sale

% Absorbed

# H

om

es

Lis

ted

"F

or

Sa

le" %

Ab

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rbe

d =

(#S

ale

s/#

Lis

ting

s)


New construction has rebounded!

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***

Building Permits Issued for Construction of Residential Units: Single-Family v. Multifamily

Single-Family*

Multifamily**

*Structures with 1-4 dwelling units**Structures with >=5 dwelling units

# o

f U

nit

s

***Note: 2015 Numbers are extrapolated from YTD numbers.


Homes are moving at a faster pace:

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Average Days-on-Market* for Philadelphia Homes

*Days-on-Market (DOM) is the average number of days it takes for a listed house to sell.

# o

f D

ays


Markets more bullish on housing:

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Philadelphia Stock Exchange Housing Sector Index: 2002-2015

The PHLX Housing Sector Index is a modified cap-weighted index composed of 20 companies whose primary lines of business are directly associated with the U.S. housing construction market. The index composition encompasses residential builders, suppliers of aggregate, lumber and other construction materials, manufactured housing and mortgage insurers.

Note: the index underwent a significant rebalancing in January of 2006.


National observers remain bullish as well

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Philadelphia House Price Index: Actual v. Forecast

Phila. County HPI

Forecast HPI

Zillow.com is currently forecasting Philadelphia house prices to rise an average of 2.3% overthe next year, which is unchanged from its previous forecast from one quarter ago, butremains an upgrade of its 2014 Q4 forecast of 0.5%.Source: http://www.zillow.com/philadelphia-pa/home-values/


Is it happening?

So far, new home sales in 2015 have been running 24% higher than the previous year, and are on track for their best year since the recession!

Real Estate

Good Opportunity for Investors with Philadelphia Real Market Undergoing Recovery