Yes, it may take a little longer to sell a house these days. And, yes, your house may not command today quite the dream price that your neighbor got for his last year.
But that does not mean that the local real estate market is slipping. Quite the contrary, real estate industry observers say.
Prices in this region should continue to rise in the coming year, said Lawrence Yun, senior economist at the National Association of Realtors.
"Philadelphia will outperform the nation in price appreciation in 2006," Yun said.
Because the current median price of a house here is roughly half that of a house in Washington or New York, "price growth could be near 10 percent in 2006, even as the rest of the country is expected to see a price growth of 5 percent," he said.
"Insulated, though not immune" is how Mark Zandi, chief economist of Moody's Economy.com in West Chester, describes the current situation in the Philadelphia area.
"There is no evidence of significant speculation here as in other juiced-up markets, so investor demand does not play a significant role," Zandi said. "The job market is well-supported and not tied in any significant way to the housing market."
"There are for-sale signs everywhere" as sellers, fearful of rising interest rates, try to cash in on higher prices, he said. "It is just taking longer, and [sellers] aren't getting the premium they had been receiving."
In general, local real estate observers said, the frenzied seller's market that has existed in the eight-county region for the last few years appears to be settling down. Buyers are taking their time before making a commitment, and there are fewer bidding wars.
Steve Storti, senior vice president at Prudential Fox & Roach, said that although the 10 percent price increases Yun predicts for next year likely will not be shared by all parts of the region, communities that do see prices rise will owe a huge debt to the hot housing market in the city.
"The city boom will drive up that percentage," Storti said.
For now, third-quarter 2005 figures - compiled by Prudential Fox & Roach's HomExpert Market Report based on data from Trend Multiple Listing Service, which tracks sales of existing homes - offer this snapshot of a housing market in transition:
Demand dropped.Though the number of houses increased by almost 2,000 between the third quarter of 2004 and the third quarter of 2005, only 110 more houses - 7,397 - sold in the eight-county metropolitan area between June and September 2005 than sold in the same period last year - 7,287.
Days on market were steady. On average regionwide, according to HomExpert data, houses spent the same number of days on the market as in the third quarter of 2004 - 24 - though some individual counties (Bucks, Gloucester, Camden and Delaware) showed quicker sales.
Prices went up. Overall, third-quarter prices in the city and the suburbs were higher this year than they were in the same period a year ago - up 17.4 percent, to a regionwide median of $229,000 from $195,000, the HomExpert data show.
Every county in the metropolitan area saw median prices increase. Montgomery County showed the lowest increase year to year, 10 percent. Philadelphia posted the largest increase year to year, 24.9 percent. The remaining six counties fell in between, with most at the higher end, according to the HomExpert data.
"Prices are finally leveling off to let us catch our breaths," said John Duffy, a broker with offices on the Main Line. "It means that we can establish sale prices accurately instead of throwing out a number."
Regionally, "we are going back to what we know as a normal market," said James Fizzano, Weichert Realtors' regional vice president. "The decisions aren't being made as fast, and multiple offers are being made on nice houses that are priced right. Buyers are taking their time. In a word, normal."
Sellers, however, don't always realize that the market is changing, and they want to walk away from their homes with much more money than the family down the street got for theirs, said Craig Lerch Jr., a broker in Northeast Philadelphia.
"They aren't going to get it," he said.
Not reflected in the HomExpert data is the region's new-home market.
In the first nine months of 2005, sales of new houses totaled 7,907, just 109 more than in the same period a year earlier in the seven suburban Philadelphia counties followed by the Meyers Group, an independent research firm that tracks such sales in dozens of markets nationwide. (The peak building year in this area was 2000, when more than 14,000 homes were constructed.)
New-home price information for the third quarter was not available.
Regionwide, fewer new houses are being constructed because of dwindling land supplies and increasing restrictions on building, though overall demand remains high.
Luxury-home builder Toll Bros. of Horsham lowered its sales forecast for fiscal 2006 because of delayed openings for new developments and weakened demand in several markets nationwide.
"It appears we may be entering a period of more moderate home-price increases, more typical of the past decade than the past two years," company chairman Robert Toll said.
In downtown Philadelphia, where sales of existing and new homes have been strong of late, there are no signs of a slowdown. Center City District executive director Paul Levy attributed that to a preponderance of primary-home buyers rather than investors, as well as simple demographics - buyers tend to be mostly young professionals and empty-nesters.
"We aren't overbuilding like other large cities," Levy said. "Supply and demand remain in balance."
In Northeast Philadelphia, whose neighborhoods have experienced median-price increases of 20 percent and more in the last few years, Lerch said average time on the market for homes has increased in the last year to 40 days, from 36.
"Asking prices are being raised 10 percent, and then readjusted down 5 to 8 percent for the market," he said. "It doesn't mean people are losing money. It's just being realistic."
David Seiders, chief economist of the National Association of Home Builders, takes a cautious view of what 2006 will bring, even though the Philadelphia region is not on his list of vulnerable U.S. markets.
Interest rates are climbing, with 30-year fixed mortgage rates averaging 6 percent now and expected to reach 7 percent next year. That will likely affect the first-time buyers needed to keep the entire market running.
"The accumulation of price increases now is taking a real toll on affordability, and a persistently rising interest-rate structure is piling on," Seiders said. "These forces will provoke an orderly cooling down of single-family and condo markets [including in the Middle Atlantic area] beginning in the fourth quarter of this year, extending through 2006 and possibly 2007.
"I view this as an inevitable adjustment back to sustainable levels of activity, and I don't expect to hear any loud explosions," Seiders said.
Lerch agreed, adding that there were more open houses now than in the last few years and a lot more negotiating going on.
"Buyers are just taking their time," he said. "It's what I call a double-shot espresso Starbucks market. You don't get a coffee to go. You sit there and take your time to drink it."
