Archives: Residence

This is not a real estate blog but many of our clients have a heavy portion of their net worth invested in residential real estate.  So when the Fels Institute of Government at Penn Published a State of the Philadelphia Housing Market in mid November we thought it worthwhile to secure and read a copy.

According to the survey home prices peaked both in the region and the country in the first quarter of 2007.  The last time we had seen a decline was from 1990 to 1994. We tend to forget that prices climbed as an amazing rate from 1998 to 2007 and that prices are currently in the same range as they were circa 2004-05.  Measured against 10 other metropolitan markets over the past 25 years Philadelphia housing grew 25% less in price than the other cities.  But, in typical Quaker style when we did plunge from the high, Philly houses declined by less than one-half of the decline in the 10 composite cities.  Where we feel like today is 2005 in home pricing our ten city neighbors are feeling more like mid-2003 in terms of value. Resorts fared the worst with losses of 61% in Las Vegas 51% in Phoenix and 45-48% on the Florida coasts when measured against the high.  Only Dallas and Denver fared better than Philadelphia.  Even the darling markets of Washington and New York was 26-27% declines from the peak.  Still, we will need to recover an additional 14% to get back to our 2007 peak.  We may not feel happy about what occurred but our house value declined later and was more modest than in our shoulder cities of New York and Washington, both of which will need to see another 25% price rise to recover that old time 2007 feeling.  Meanwhile if you had been in a Dow Jones index fund this entire time you are less than 2% away from the Dow’s all-time high in early October, 2007 of 14,006.

 

There is another unhappy aspect to consider.  Securities are highly liquid.  And while we are reporting that home prices are recovering, actual home sales remain very sluggish.  From 2002-through the third quarter of 2008 (the Lehman Bros crisis) the Philadelphia market saw pretty steady sales of more than 5,000 houses each quarter, the first quarter of each year excluded.  In 2012 just over 3,000 homes sold and our region has not seen us break 4,000 since second quarter of 2010. The quarterly average since 1995 has been about 4,300 homes per quarter and measured by sales alone in contrast to price, the data look more like 1995 than 2005 when we peaked at 8,000 homes sold each quarter.  Another approach to this is to look at the number of homes on the market.  From 2001 to early 2005 Philadelphia typically had 5,000 6,000 homes for sale each quarter. In 2005 that number began to spike reaching a peak of more than 12,000 homes for sale in late 2006 and again late in 2007. The number has bounced around between 9 and 11,000 homes since late 2007 with the current trend close to 9,000.  But this still means that in times of relatively stagnant growth we have one-third more homes on the market than we did eight to thirteen years ago.  So the lesson is that if you want your price be prepared to wait a long time and if you don’t have time, your price is going to have to be very competitive.

 

In the end, the news is not gratifying but before we start complaining it might be wise to remind ourselves that in comparison with almost all of the rest of the United States, we were not badly hurt.

We live in a world where people travel.  And often travel takes them across state lines without their realizing the consequence.  Meanwhile, we need to have rules so that no two states are deciding custody of a child at the same time. The Rennie v. Rosenthal case, decided by the Superior Court in late Spring of this year helps us understand the process.

The basic rule surrounding custody jurisdiction is that, in the first instance, custody should be decided in the state where the child has been living.  This is called the “home state”.  It is where the child is spending most of his or her time.  But once a state assumes jurisdiction over a child, that state is supposed to retain jurisdiction until another state becomes a more appropriate place for child decisions to be made.  The Rennie case illustrates that jurisdiction tends to stick where it starts even in situations where the child has more contacts with another state.

Mother and Father are married in California in 1996.  They move to Pennsylvania six months later and a child is born here in September, 1997.  Custody is contentious and there is a series of orders entered beginning in Fall, 1998. One of the orders entered in 2003 says that Philadelphia County will retain jurisdiction.  Just about the same time the mother moves to Minnesota with the child. Two more orders are entered in Pennsylvania in 2004 and 2007 relating to the child.  Both orders were agreed to by the parties but said nothing more about Pennsylvania retaining jurisdiction. 

In May, 2008 Father filed for primary physical custody.  He was still living in Pennsylvania.  By this time the child has been living in Minnesota for five years.  So Mother responded with a request for the case to be transferred to Minnesota.  Almost a year later a hearing was held concerning this issue.  By this time the child had been living in Minnesota for six years. The Court denied the transfer but certified that Mother’s arguments merited appellate review.

The law in question is what is termed a uniform law. That means that states try to mirror its provisions throughout the country so there are not conflicting standards on a subject as one travels from state to state. Just about every state in the US has adopted a version of the 2004 Uniform Child Custody Jurisdiction and Enforcement Act.

Mother’s argument in this instance was that the child lived in Pennsylvania for only one year and had resided in Minnesota for six.  Accordingly, most of the significant contacts between the child and any jurisdiction involved Minnesota.

But the Court in Pennsylvania parsed the language of the statute involved carefully.  Under Section 5422(a)(1) of the Act a court has made an initial custody determination in a case retains jurisdiction over the child until “neither the child nor the child and one parent have a significant connection with Pennsylvania and substantial evidence concerning the child’s care, protection, training, and personal relationships is no longer available here.”

The term “significant connection” is not defined by the statute.  But the Superior Court reasoned that so long as the child and at least one parent have a meaningful relationship to the Commonwealth custody jurisdiction should remain here.  The Court found that the child’s five year residence in Pennsylvania was significant.  The Court also seemed swayed by the fact that the child spends 4-6 weeks in Pennsylvania each year with her Father.  She has grandparents here and step sisters resulting from Father’s recent marriage. The Court explicitly states that where one parent remains in Pennsylvania and has a significant connection to the child jurisdiction should not be changed.

Curiously, the Court takes on a ruling in 2008 by another panel of the Superior Court in Billhime v. Billhime.  In that case the trial court was reversed for retaining jurisdiction in a case where the child had been living in Florida for approximately four years.  In Billhime, the Superior Court found that the test over jurisdiction centered upon where the most significant connections for the child rested.  Rennie says that the panel deciding Billhime misread the statute.  The appellant in Rennie asked the Superior Court to reconcile Billhime and Rennie.  The Court declined in an order entered in early July, 2010.

What happened here?  It’s tough to say.  Sometimes the facts sway these kinds of cases.  Had Mother filed a request for Pennsylvania to relinquish jurisdiction before Father filed for contempt of the existing order and modification, we suspect that request would have been granted.  But here, she is arguing for the Court to relinquish this case after she was found to have violated the Pennsylvania Order and after Father had asked for modification.  Commentators in this field assert that custody should be decided in that state where the most evidence can be found.  Clearly, after five years of residence, Minnesota would appear to have the trump card. But not in this case.  Father gets to seek modification here, although that trial will have to begin more than two years after he started the process.