By Al Heavens
Inquirer Real Estate Columnist
There is considerable evidence, both anecdotal and statistical, that fewer people in the region are listing their homes for sale.
Several real estate agents with whom I regularly connect tell me that frequently, by the time they meet with a sales prospect - even if only 24 hours has passed since the homeowner requested a meeting - the person has decided not to list the house.
As a result, the number of listings in the eight-county metropolitan area is down 6.3 percent over the same period last year, according to Prudential Fox & Roach's HomExpert Market Report, which is based on third-quarter data from Trend multiple-listing service. And houses that are being listed take longer to sell than last year - 16.7 percent longer, or 11 days. The reasons are many, from tight credit to houses being priced incorrectly.
Economists not employed by the housing industry - and whose opinions, therefore, are not subject to questions of bias - are predicting that the downturn will last until mid-2009, depending on the length and depth of the current recession.
One thing that could jump-start the housing market is looser credit - not as loose as two years ago, which is how we got into this terrible mess in the first place, but a situation that doesn't require borrowers to offer their firstborn as collateral, either.
One step in the right direction was the decision by the Federal Reserve last month to purchase $600 billion in mortgage-backed securities.
The Fed's action accomplished two things: It offered a guarantee to investors that the government fully backed the value of those mortgages; and, more important for prospective home buyers, it sent fixed rates closer to where they really should be - 5 percent or lower.
The only reason fixed rates are higher is to entice investors into buying mortgage-backed securities with the promise of higher yields to protect their money, said Philadelphia mortgage broker Fred Glick. With the government guaranteeing their investments, the wide yield spread narrows considerably.
"I think this decline in mortgage rates will have more staying power," said Moody's Economy.com chief economist Mark Zandi. "The Fed is now explicitly committed to making sure that mortgage spreads stay low by buying Fannie [Mae] and Freddie [Mac] debt and the mortgage securities they guarantee."
Zandi predicts that the fixed rate should soon be near 5 percent.
So far, only refinancing has benefited from the Fed action, and by clients who have asked to be informed when rates dropped, said Jim Goldstein, branch manager of Gateway Funding, in Horsham.
Some people are no longer able to refinance because the value of their home has declined, and "they now owe more than 80 percent and either have to pay down the loan or obtain private mortgage insurance," said Jerome Scarpello of Leo Mortgage in Ambler.
But falling prices and lower rates are perfect for buyers with secure jobs and good credit, Scarpello said, and, "if you're smart, you can get a bargain."
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Inquirer real estate writer Alan J. Heavens is the author of "Remodeling On the Money" (Kaplan Publishing). His home-improvement columns appear Fridays in Home & Design. "On the House" appears Sundays in The Inquirer. Contact Alan J. Heavens at 215-854-2472 or aheavens@phillynews.com.
http://www.philly.com/inquirer/real_estate/35895894.html

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As consumer prices and housing starts plunged, the Fed boldly slashed rates to fight recession.
By Kevin G. Hall
McCLATCHY NEWS SERVICE
WASHINGTON - The Federal Reserve slashed its benchmark lending rate yesterday at least three-quarters of a percentage point to a record low as it struggled to right the economy amid a deepening recession.
Fresh signs of the recession arrived yesterday as the Labor Department reported a record plunge in consumer prices in November - reflecting the massive drop in energy prices spurred by the economic slowdown - and housing starts dropped 18.9 percent from October to November.
But there was a bright spot: Stock markets rose sharply yesterday. The Dow Jones industrial average was up more than 4 percent, and the S&P 500 and Nasdaq each rose more than 5 percent. The Fed's action was bold enough to convince investors that it would do what was necessary to combat the recession.
The extraordinary Fed action, which brings the overnight lending rate between banks down to a target range of zero to one-quarter of a percentage point, was larger than expected. Also, the Fed usually targets a specific rate.
In theory, it should bring down the cost of borrowing for consumers and businesses, because the prime rate, which banks charge their best customers, moves in tandem with the federal funds rate.
The prime rate typically influences a wide range of rates for car loans, student loans, credit cards and other instruments of debt. With yesterday's cut, the prime rate is expected to fall to 3 percent to 3.25 percent from 4 percent.
Even so, banks simply are not lending to most consumers and businesses in this climate. Weak financial institutions continue to hoard cash and build their balance sheets, with little appetite for risk in new loans. That is worsening the downturn, especially because it hurts consumers, who drive almost two-thirds of U.S. economic activity.
In a statement announcing its rate cut, the Fed's policymaking Open Market Committee said that, because "the outlook for economic activity has weakened further . . . the Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability."
It vowed to stimulate the economy through interest-rate and monetary policy and by buying federal agency debt and mortgage-backed securities. It said it was weighing whether to buy longer-term Treasury debt.
The Fed also said it would tap its Term Asset-Backed Securities Loan Facility to "facilitate the extension of credit to households and small businesses."
Expect the Fed to take additional aggressive steps in the weeks and months ahead, said Mark Zandi, the chief economist for forecaster Moody's Economy.com, in West Chester.
"The Fed has the ability to purchase just about anything," he said, "and they will do so if they think it will help unfreeze credit markets."
Plunging oil and gasoline prices were behind the month's steep 1.7 percent drop in consumer prices, the Labor Department reported. That helped energy-intensive companies such as airlines and trucking. Falling prices also give consumers buying power.
Not all the news was good on the inflation front, however. The monthly drop was the largest since the government began compiling inflation records in 1947, and that underscores the magnitude of the current downturn.
It also highlights the possibility of deflation, a broad decline in prices that erodes value.
Also, U.S. housing starts fell 18.9 percent in November, according to the Commerce Department. On a year-over-year basis, housing starts are off 47 percent since November 2007.
"This may be the worst housing report ever. Not only did housing starts, housing permits, and single-family starts plunge to all-time lows, [but also] the double-digit drop in permits points to further two-digit drops in starts in December and January," Patrick Newport, an economist with forecaster IHS Global Insight Inc., of Lexington, Mass., said in a research note. Federal housing data began being collected in 1947.
While that is bad news for the construction sector and home builders, it indicates good news longer term for the nationwide housing market because it means there is less inventory being built on top of what is viewed as a glut.
Rising home foreclosures and the difficulty in obtaining loans amid the credit freeze, Newport said, are likely to depress the market for new housing units well into next year.
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In the Fed's Words
From yesterday's Federal Open Market Committee statement on interest rates and the economy:
Since the committee's last meeting, labor market conditions have deteriorated, and . . . consumer spending, business investment and industrial output have declined.
Meanwhile, inflationary pressures have diminished. The committee expects inflation to moderate further.
The Federal Reserve will employ all available tools to promote resumption of sustainable economic growth.
In particular, the committee anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.

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By Alan J. Heavens
Inquirer Real Estate Writer
If you're looking to refinance your mortgage, you may have to take a number.
The 30-year fixed-rate is about to fall below 5 percent. And this week's Federal Reserve move to slash its target interest rate to a range of zero to 0.25 percent lowered the rate on which most adjustable-rate mortgages are based - meaning homeowners could soon see ARMs of 2.5 percent to 4 percent, mortgage experts say.
"I'd say booming best describes what I'm seeing," Jerome Scarpello, president of Leo Mortgage, in Ambler, said, referring to the pace of activity. "Many, many inquiries to refinance. I locked in someone at 4.875 percent, but the rates are really volatile."
Unlike the two other refi booms this year - in January and again in September - brokers, lenders and even economists are expecting this one to last.
"I'm hiring and training," said Philadelphia mortgage broker Fred Glick, with four loan officers, including himself, staffing the phones at his Center City office.
The average 30-year fixed-rate is officially 5.19 percent, the lowest since records on the rate began in 1971, said Freddie Mac chief economist Frank Nothaft. It fell more than a quarter of percentage point since last week. The one-year ARM now averages 4.94 percent. A year ago, the 30-year fixed was 6.14 percent, and the one-year ARM was 5.51 percent.
This is seventh consecutive week rates have fallen.
"I did one yesterday at 4.125 percent with two points," Glick said. "Both the borrower and I were surprised." Points are fees paid by the borrower at closing.
While experts suggest that borrowers - either buying or refinancing - act now rather than wait, most people appear to be waiting, especially buyers.
The federal government is said to be considering a single 4.5 percent rate for people buying new and existing homes. The housing industry is pushing for 2.99 percent, and both scenarios require the government to buy and guarantee those loans - leading University of Maryland economist Peter Morici to ask: "What next, the People's National Bank?"
Those wishing to refinance today generally need to meet three criteria: Verifiable, sufficient income; equity in property; and good credit. Enough of all three usually will mean the lowest rates.
"The customers are all still very qualified, and the home values have been very stable," said Peter Buchsbaum, of Arlington Capital Mortgage, Jenkintown, with a 50-50 mix of Federal Housing Administration and conventional (Fannie and Freddie) loans.
Government intervention in the credit markets has made this possible, though some say more is needed.
The Fed has yet to address the fact that many consumers no longer qualify for low rates because of tighter lending guidelines, said Gibran Nicholas, chairman of the CMPS Institute, which certifies mortgage bankers and brokers.
While Nicholas expects credit rules to ease in 2009, "those who do qualify for the low rates should act now before either their situation or market conditions change."
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Loans On Sale
Mortgage rates at the end of each quarter and for the most recent week.
Period 30-year fixed-rate 1-year adjustable-rate
2007 Fourth quarter 6.14 percent 5.51 percent
2008 First quarter 5.85 5.24
Second quarter 6.45 5.27
Third quarter 6.09 5.16
Week ended yesterday* 5.19 4.94
*Rates are for seven-day periods ending every Thursday.
SOURCE: Freddie Mac
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Contact real estate writer Alan J. Heavens at 2156-854-2472 or aheavens@phillynews.com.

(ELIZABETH ROBERTSON / Staff Photographer)
Fred Glick, a Center City broker with U.S. Loans Mortgage , is swamped with homeowners wanting to refinance. This is seventh consecutive week mortgage rates have fallen. "I did one [refi] yesterday at 4.125 percent with two points," Glick said. "Both the borrower and I were surprised."
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By Alan J. Heavens
Inquirer Real Estate Writer
To stay ahead of the current real estate downturn, a Philadelphia neighborhood needs a certain mix of ingredients: reasonably priced housing; property-tax abatements; an active residents' association; proximity to Center City; and a blend of singles, young couples, longtime owners and willing developers.
Southwest Center City has turned out to be a prime example of all that right stuff. From Oct. 1 to Dec. 2, 73 houses there went to settlement, against a backdrop of bank failure, stock collapses and a sharp chill in the credit market. Over the last decade, the neighborhood has transformed from a swath of vacant housing to an enclave of hip rowhouses and trendy cafes, with a construction boom thrown in.
That's what attracted British transplant Andrew S. Turner, who in June closed on a million-dollar townhouse that doctor-turned-developer Joe Williams had built on Bainbridge Street near 15th.
"I walked the streets and noticed just how much development was going on," Turner said. "Every fifth or sixth house seemed to be undergoing some sort of renovation, and the area seemed to be changing very quickly."
Transferred about 16 months ago by JP Morgan from London to Wilmington, which he said he found "too quiet," Turner quickly began "to fall for the charms of Philly, and I knew this was a place I wanted to stay."
After months of house-hunting and ensuring that, as a Briton, he would be able to get a mortgage with his employer's help, Turner looked at Southwest Center City, also known as South of South.
Even though his new address had only bare stud walls when Turner first saw it, "I fell in love within about 30 seconds. . . . I knew I had found my house."
The neighborhood's turnaround has been "dramatic," says John Kromer, senior consultant at the University of Pennsylvania's Fels Institute of Government. As head of the city's Department of Housing and Community Development during the 1990s, Kromer oversaw the inventorying of vacant properties in about a half-dozen neighborhoods in partnership with Penn's Cartographic Modeling Lab.
In 1998, Southwest Center City - defined as the area bounded by South Street and Washington Avenue, Broad Street and the Schuylkill - had 553 vacant houses. A decade later, according to a study completed in the summer by the Fels Institute's Hallie Mittleman and Catherine Lamb, only 49 houses were vacant.
Just as the 1990s count was concluding, the city's real estate market began heating up, spurred by 10-year tax-abatement programs for renovations and construction.
That's when things began to change around what is also known as the Graduate Hospital area. Since 1997, the median price of a single-family house has almost tripled, from $86,000 to $232,145, says Kevin Gillen, a vice president of Econsult Corp. in Philadelphia who tracks city sales. (A median is the middle value - half the houses sold for more, half for less.)
The median price topped out at $275,000 in the second quarter of 2007, Gillen's data show, just as the region's housing boom was peaking.
More than half the houses that were vacant in 1998 have been rehabbed, await renovation, have been razed and replaced by infill housing, or converted to other uses, the Fels study says.
Toll Bros.' massive Naval Square project along 24th and Bainbridge Streets helped prompt other developers and homeowners to build and rehab townhouses by boosting confidence in long-term neighborhood investment. Among sales recorded by the city the week of Nov. 17, units in Naval Square had three of the top 10 prices, selling for more than $498,000 each.
Today, about half of Southwest Center City's homeowners are between 25 and 35 years old, the Fels study says; most had been renters previously, and 66 percent are in one- or two-member households. Nearly all are professionals, and most say they plan to stay in their houses for five years.
"If I moved, I'd keep it," first-time buyer Patrick Grenko said of the house he bought on Carpenter Street in April 2007. "There are a lot of doctors working at Penn who are looking to rent here."
The neighborhood's old anchor, Graduate Hospital, closed last year. But after $70 million in renovations, the facility reopened in July as Penn Medicine at Rittenhouse and will eventually employ 400 people.
"There has been an absolute market shift since the [fall's] economic debacle," said Realtor Jeff Block of Prudential Fox & Roach, who handles properties in Southwest Center City. Prices are relatively stable there, and "I think . . . the Graduate neighborhood in particular continues to have strong fundamentals for continued growth in the real estate market."
Nancy and Zebulon Kendrick bought near 15th and Fitzwater Streets for $817,000. They looked elsewhere in the city, she said, and "found here a combination of house, price and convenience."
"The neighborhood will certainly continue to morph into its next incarnation," Nancy Kendrick said. "We bought this house hoping that we would be able to live here for at least 10 years, and I look forward to all the changes that are bound to occur."
The Carpenter Street house that Grenko, who commutes to his job with a Fort Washington investment firm, bought for $297,800 in April 2007 was vacant in 1998, then extensively rehabbed. Living near Rittenhouse Square and South Street means "I can drive home Friday night, park the car and not have to use it until Monday morning," he said.
Cafes, restaurants and specialty stores continue to spring up.
Grenko said he and his girlfriend have been trying to visit all the BYOBs, but he wishes there were a convenience store where he could pick up milk. (At 16th and South, homeowner Mark Scott said, there is a "a new high-end deli/corner store, and a new organic market.")
Crime was a concern for Turner: "I have a 16-year-old daughter in the U.K., and when she comes out to stay with me, how safe will it be?" And there's no question that the neighborhood once had a rough-and-tumble reputation.
But resident Jill Anastasi said that has changed, and that police spend more time patrolling now than chasing down criminals. As a sign of the new times, Scott, who is Anastasi's husband, was part of a South of South Neighborhood Association effort that purchased a bicycle for police to use on patrol.
In November 2005, Anastasi and Scott moved to a block of Christian Street populated by "a couple of people who had been here 50 years, and some who arrived in the first wave in the late 1980s and early 1990s," she said.
The block had been especially blighted, with a lot of vacant houses, Anastasi said.
Their house, for which they paid $365,000, had been renovated five years before. They had looked in other city neighborhoods, she said, but found building quality better here.
"When my parents were first married, they rented on Fitler Square. When we told them where we were moving, the color drained from their faces," Anastasi said. "But after seeing it, they changed their mind, saying how quiet and civil the neighborhood had become."
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SW Center City Home Sales
(For June to December 2008)
Month Listings Av. List Price Sales Av. Sale Price June 152 $277,977 75 $313,200
July 154 $296,146 60 $255,831
Aug. 126 $255,759 50 $232,700
Sept. 153 $244,097 47 $266,410
Oct. 106 $274,421 38 $217,666
Nov. 98 $227,569 34 $191,202
Dec.* 4 $188,725 1 $259,000
Totals 793 $264,283 305 $255,828
*As of Dec. 2
SOURCE: Trend Multiple Listing Service.
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Contact real estate writer Alan J. Heavens at 215-854-2472 or aheavens@phillynews.com.
http://www.philly.com/philly/news/homepage/36429349.html?viewAll=y
Image 1 of 3

(BONNIE WELLER / Staff Photographer)
Homes at 21st and Carpenter Streets. From rowhouse renovations to Toll Bros.' Naval Square project, a building boom has boosted occupancy and affluence in Southwest Center City.

Divan Turkish Kitchen & Bar is among the cafes, restaurants and stores springing up in Southwest Center City. Some residents decry the lack of a convenience store, however.

(BONNIE WELLER / Staff Photographer)
Transformed from a swath of vacant housing to an enclave of hip rowhouses and trendy cafes, the area, also known as South of South, has a construction boom going on.

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