BY T I N A X I E (C ‘ 1 2) A N D DA N I E L H E L LW I G ( W ‘ 1 1 )
THE FUTURE OF METROPOLITAN PHILADELPHIA Janet Rothenberg Pack, Professor of Business and Public Policy and Real Estate at the Wharton School, provides some insight on the current real estate market within metropolitan Philadelphia, also in comparison with other cities throughout the United States. During our interview, we learned about the difficulties associated with privatization and private sector altervatives, recent cost cutting measures, and with the provison of financial incentives to local businesses. Can you give us a brief overview of today’s real estate environment in the Philadelphia center city area? In the current market environment, it’s difÀcult to talk about trends, everything is very idiosyncratic. One of the arguments about why house prices went up in the second quarter is that they had fallen so much before. Also, in June, the federal tax credit for home purchases ended. People who wanted to take advantage of the tax credit jumped into the market in the second quarter, and therefore, in the third, the market was expected to slow down both in terms of growth in house prices and in the volume of house purchases and it did. House prices in Philadelphia in the third quarter of 2010 (July-September) fell by 4.6% on average (seasonally and quality adjusted), compared with an average increase of 3.8% in the previous quarter (when the federal tax credit was still available), and a decline in the Àrst quarter of 4%. Thus in the quarter and before the end of the housing stimulus program, house prices in Philadelphia fell. This is similar to what happened to automobile sales when the federal credit ended. (The Àgures cited here on the Philadelphia
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I N T E R N AT I O N A L B U S I N E S S R E V I E W
housing market are based upon quarterly reports on house values produced by Kevin Gillen of Econsult.) Have there been major differences between parts of the city? Variation in house prices within the city was substantial.
Variation in house prices within Philadelphia* Neighborhood
Q. 1 (Jan.-Mar.)
Q. 2 (Apr. - Jun.)
Q. 3 (Jul. - Sep.)
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11/27/2010 3:13:16 PM
Fall edition of the IBR magazine at the Wharton School.