Things are a little better in the city than the suburbs–at least in terms of falling home prices, according to new numbers from a Philadelphia-area consulting firm.
In Philadelphia County, the typical home declined in value by an average of only 1.3 percent in the first quarter, compared with an average decline of 3.9 percent in the surrounding suburban counties in Pennsylvania, New Jersey and Delaware.
Econsult and University of Pennsylvania economist Kevin Gillen did the analysis.
“Since the housing bubble burst, we’ve generally seen price declines across the region spread uniformly. But this is the first time you actually see the city diverge from the suburbs,” said Gillen. “In most housing downturns and most recessions of the past, the opposite’s been true–the city values have fallen by more than the suburbs.”
Gillen and other economists have an idea on why things are different this time.
“We think one big reason is energy costs, and the cost of gas is certainly much higher than during past recessions … that bears on the cost of commuting,” said Gillen. “What people are saying is, ‘If you want me to take that long commute from the suburbs into the city every day, then you’re going to have to sell me that house at a lower price so I can afford to pay for the extra cost of commuting.’ “
Gillen said energy costs also figure into the city versus suburbs divide because city homes tend to have a smaller footprint and cost less to heat and cool.