Monthly Economic Report: Philadelphia Short Sales Increase Since 2010

Audit Date: June 27, 2012
Audit Categories
  • Financial
Controller: Alan Butkovitz

Executive Summary

For Immediate Release:
June 27, 2012

Contact: Brian Dries

Philadelphia Short Sales Increase Since 2010
Controller Alan Butkovitz’ economic report shows 29% increase
in homes purchased through a short sale in last two years

May 2012 Economic Report

PHILADELPHIA –City Controller Alan Butkovitz today released his latest economic report that indicated the total number of homes purchased in Philadelphia through a short sale in the first five months of the year have increased by 29 percent over the same period in 2010.

From January through May 2012, there were 199 short sales that represented existing sales, compared to 165 in 2011 and 154 in 2010. While foreclosures still outpace short sales in Philadelphia by more than 2:1, there has been a 26 percent decrease in foreclosures in the last two years at the same time the percentage of short sales have increased.

According to the Controller’s economic report, the increase in short sales is due in part to homeowners trying to unload their homes with mortgages that are “underwater”, meaning they owe more than their home is worth. Those opting for a short sale can sometimes realize less of impact on their credit score, and lenders are starting to see short sales as a less costly alternative to foreclosure.

In addition, the Controller’s report looked at the latest Business Outlook Survey from the Philadelphia Federal Reserve which shows the broadest measure of manufacturing conditions fell from a reading of -5.8 in May to -16.6 in June, its second consecutive negative reading. The majority of firms reported that they expect to spend about the same amount on new plant and equipment over the next six to 12 months.

A review of tax revenues for this month found that while many of the city’s major taxes were higher than last year’s collections, the Wage/Earnings/NPT collections for the month of May totaled $134.2 million, a two percent decrease in what was collected in May 2011. Monthly sales tax collections totaled $22.7 million, which is unchanged from the same month last year.