Regional Commentary: Delaware Valley, Pennsylvania

Home prices in the Delaware Valley? Suburbs - up. Center City - way up!

Last year, average home prices increased 13.6% in the Delaware Valley , with the highest growth rate in Center City .

According to TrendMLS, average housing prices in the Delaware Valley increased from $185,400 in 2004 to $210,000 in 2005 -- a 13.6% year-over-year increase. Although this figure is far lower than the increase experienced by a handful of other markets in the South and on the West Coast, it represents a solid increase in home values relative to historical norms. In Montgomery and Delaware Counties , housing prices experienced more modest increases - 7.9% and 5.0%, respectively.

In Philadelphia , the average price of a home increased a whopping 30% -- from $100,000 to $130,000. Throughout 2005, purchases of Center City real estate by out of town investors have been widely reported. We believe that this purchasing pattern has contributed to this price increase.

Area employment is a significant factor driving real estate values. According to the Bureau of Labor Statistics, nonfarm employment in the metropolitan area has increased by 0.9% from last year. This is lower than the 1.4% increase for the nation.

As for 2006, the Pennsylvania Association of Realtors predicts that the housing market will say healthy, but that growth in home prices and sales will grow more slowly than in 2005. We concur, and believe that in most areas, average home prices are likely to increase between 5% and 8% in 2006.