Pennsylvania Real Estate Differs from National View of Mortgage Crisis

By Richard Barrington
Local Lender Columnist
Oct 29, 2007
You know that old adage about how location, location, and location are the only things that matter in real estate? Well, it also applies to how you should interpret real estate news.

The national picture of the real estate market is this: a housing boom has collapsed amid a flurry of mortgage foreclosures, leading to falling prices and slowing home sale rates. However, in parts of Pennsylvania, the picture may well be very different.

What Goes Up...

So far, Pennsylvania does not seem to be experiencing the worst of the housing slump. For example, a recent report out of Pittsburgh reported home prices and sales both up modestly over the prior year.

Significantly, Pennsylvania never saw especially rapid rates of housing price growth. For example, according to the Office of Federal Housing Enterprise Oversight, housing prices in California increased by 117.8% from the first quarter of 2001 through the first quarter of 2007. In Florida, the increase was 121.0%. Meanwhile, over the same period, housing prices in Pennsylvania increased at a more sedate rate of 63.3%.

Not that Pennsylvania is immune to the mortgage crisis, but to some extent this is a case of what goes up must come down. Prices in what were once the hottest areas are likely to represent the greatest risk.

Winners and Losers

So who are the winners and losers from the relative stability of Pennsylvania's real estate market? Obviously, existing homeowners who have kept up with their mortgages are in good shape, with their home values intact. Still, even though home prices have not suddenly become bargains, it can be argued that new buyers are winners as well. Buying into a stable market is a lot more reassuring than trying to jump onto a moving roller coaster.

Sources
Office of Federal Housing Enterprise Oversight Pittsburgh Tribune-Review

About the Author
Richard Barrington is a freelance writer and novelist who previously spent over twenty years as an investment industry executive.