Philly Appraisal Blog

On July 27, 2010, The National Association of Realtors released its monthly report on home-sale transactions. In it the NAR states that the sales of existing homes declined in June while the inventory of unsold homes rose. Also, newly signed contracts dropped off by 30%...most likely a result of the tax credit expiring.

What does this mean for the Philadelphia region? Well, it’s not a good sign.

Whenever you have a supply (a growing supply, at that) of homes and a dwindling number of buyers chasing those homes something has to change. Prices will have to come down. In order to attract the shrinking pool of buyers to their properties, Sellers will be forced to lower their prices to compete.

Another factor looming on the horizon in coming months is the wave of foreclosures that are expected to hit the market as banks work to complete government-mandated loan modifications. This will likely affect densely populated metropolitan areas like Philadelphia the hardest since there is a greater occurrence of foreclosures per capita than in the other surrounding counties.

As more inventory is added to an already saturated market…prices will continue to decline through the second part of this year.

Below is a graph of the inventory levels for Philadelphia, Montgomery, Bucks, Delaware and Chester Counties. As you can see, since the beginning of the year, inventory levels in all five counties have been on the rise. As this trend continues, prices will have to give way.

Memorial Day has come and gone, the unofficial start of Summer and Pennsylvania's property tax assessment appeal season is here.  Now, is the time for residential and commercial property owners to really consider appealing their assessments. 

It's this time of year that we receive hundreds of phone calls and emails from property owners who what to know if appealing their assessment is feasible.  One thing we've noticed is that many property owners have a fundamental misconception about their property taxes and how to go about appealing them. Most people think that they can appeal their taxes. Unfortunately, we can’t appeal our taxes. Sorry, folks, no such luck.

However, it is your right as a property owner to appeal your assessment. Your assessment is the underlying factor upon which your taxes are calculated. Given that most properties are taxed on an “ad valorem” basis, meaning the tax is based on the value of the real estate, your assessment should represent the current fair market value of your property.

Now, most counties in the Philadelphia metro region (including Montgomery, Bucks, Delaware, Chester, Berks, Lehigh & Northampton) have not been reassessed in years (its very costly to do a countywide reassessment). What this means is that the assessments may present an inaccurate representation of current fair market value. Now, as a means of trying to keep the assessments current with the real estate market, equalization rations have been developed in an attempt to make the assessments echo the current market. These ratios don’t always succeed in reflecting the market, especially the turbulent markets of the past 3-4 years. As a result, the assessment of a given property may be over stated, which translates into taxes that may also be overstated.

So, it stands to reason, if real estate values are declining your assessment should mirror those declines…right? This is done by filing a tax assessment appeal with your county board of assessment. Along with filing the necessary appeal paperwork, it is your responsibility to demonstrate that the assessment does not reflect the current fair market value of your property. The best way to do this is to present an appraisal report to the board at the time of your hearing.

Appraisals should be completed by a state certified appraiser (or licensed appraiser depending on the state) who is familiar with your area. In Pennsylvania, for instance, only a certified appraiser can provide an appraisal of your property. Anything completed by someone other than an state certified appraiser is not an appraisal.  Real estate agents and brokers cannot provide appraisals in Pennsylvania.

The deadlines for filing a tax appeal are usually in Bucks, Delaware and Chester Counties August 1, 2010 and September 1, 2010 for Montgomery County.  If you reside in any other Pennsylvania counties, please check with your county tax assessor’s office to confirm your county’s deadline. Remember, if you miss the deadline, you miss the opportunity to appeal and will have to wait another year (paying the same high taxes).

For more information or to see if you are a candidate for tax assessment appeal, please contact The Coyle Group. 

The Coyle Group provides appraisals for tax assessment appeals in Montgomery, Bucks, Delaware, Chester, Lehigh, Berks and Northampton Counties. 

Part of our coverage area is the City of Philadelphia.  Obviously, being located just outside the city limits of the 5th largest metropolitan market in the county, it would be a pretty poor business decision not to appraise properties in Philadelphia. The other day I was in South Philly...one of my favorite parts of the City.  South Philly is a patchwork of small neighborhoods, each with their own character and flavor.  This stems from the immigrant population that used to live in these tight knit communities when they were built to house factory workers in the late 1800's thru 1940's.  Each group (Italians, Irish, Germans, Jewish, etc.) imprinted their own ethnicity and personality on the neighborhoods.

Frankly, it's what makes South Philly great!

The most common housing type in South Philly is the 2-story, flat front row house.  They are anywhere between 11' to 16' (the masons weren't too exacting) wide and typically have 2 to 4 bedrooms.  It was easy to build them quickly and at a high density.  It's not uncommon to have 60 homes or more in one city block.

Being that the houses were so bland and homogeneous, there wasn't much a builder could do to make his product different from the next builder's.  Some used shutters and ornate cornices, but others used the front door to make their statement.

This South Philly red door is a prime example of how Philadelphia builders at the turn of the last century added a little curb appeal to their homes.  This door is original with it's "keyhole" shaped leaded glass window, brass mail slot and old "crank" style doorbell.  It really sets this house apart from the others on the block.

Funny how curb appeal is still so important when it comes to real estate. 

Part of the job of a real estate expert in the Philadelphia Metro Area is to follow, track and understand market trends. Not only do appraisers need to stay on top of the market as a whole but, we have to understand what is going on in the individual neighborhoods and communities.

Since, Philadelphia is known for being a “city of neighborhoods” I will be publishing our research on certain neighborhoods in Philadelphia and the surrounding counties. If you have a particular neighborhood, market or community you would like to see trending information for, just let me know.

To get started, I’d like to show you how my particular neighborhood is trending these days. Lafayette Hill is a suburb located just outside the Philly city limits in Whitemarsh Township, Montgomery County. Lafayette Hill is located within the award winning Colonial School District.  It’s a typical suburb comprised primarily of single family detached, semi-detached homes and townhouses. There are some condos in the area but I will only be providing data for Fee Simple homes in Lafayette Hill.

Below is a chart that shows the sales activity in Lafayette Hill since January 2006 through May 20, 2010. During that time there were 415 sales of homes, not including condos. The cumulative average sale price for that time period was $392,063.  The highest sale was $1.685M in March 2007 and the lowest was $150,000 in January 2007.  

The yellow line represents the path upon which the data has been trending. In this case, you can see, the overall trend in Lafayette Hill has been moving downward. In fact, the average sale price in Lafayette Hill has dropped more than 11%, since January 2006. Keep in mind that there are segments of this market that may trend outside of what is indicated here in the macro data models.

If we were to track more specific sub-markets and property attributes we may see different results. For instance, if we tracked only sales of 3 bedroom homes in Lafayette Hill, we may find that the declines are different or even stable.

What are your thoughts?  If you have a particular market or neighborhood that you would like to see featured on our Philly Appraisal Blog, please let us know by leaving a comment.

Sales in the Philadelphia Five County Area have picked up as the Spring Selling Season gets under way.  Much of the activity can be attributed to the Tax Credits that were offered and expired at the end of April.

It will be interesting to see how the late Spring and Summer numbers develop not that the Credit is gone. 

We are noticing more and more transactions that get hung up due to the contract price not being supported by the appraised value.  This is due to a couple of factors.  One, Sellers are still trying to get top dollar and Buyers are trying to get discounted prices, taking advantage of the market downturn.  Two, Sellers and their agents are pricing their properties to sell without taking into consideration whether or not the property will appraise at that selling price.

Several Agents in the area have engaged us on a regular basis to perform pre-listing appraisals to assure that the selling price that they put on a property will be supported by the sales in the market.  They are selling their homes faster and for much more of their asking price.