Banks are under increasing pressure from regulators and shareholders to identify and manage risks in real estate loan portfolios.  While many banks already can evaluate loan portfolios for borrower or property-type concentrations, few banks have systems to evaluate geographic concentration.  In other words, most banks cannot actually map their commercial real estate loan portfolio.

Arcadia has worked for two years developing such a loan mapping system, called LoanMap, for a major mid-Atlantic bank.  This  secure web-based system enables the bank to see all loans on residential tracts and to classify those loans by loan status (i.e., REO, workout, performing), product type (i.e. townhouse vs single-family), and other criteria.  Now, when a new loan is made, it is clear what other loans the bank has around the location of the proposed loan's collateral.

Our loan mapping system also contains market data and record plans of all surrounding subdivisions so that the market context can literally be seen and understood.  Quantitative data such as lot counts, house sales, average home prices, etc. are also in the system, making it easy to determine facts like:

• Total vacant finished lots within a given sub-market;
• Current new home absorption within X miles of a given tract;
• Bank's lot collateral as percentage of lot supply in market. 

Arcadia partnered with PolicyMap, a web-based GIS provider associated with the Reinvestment Fund, to build the system.  In addition to the market and loan information prepared by Arcadia, PolicyMap provides a rich contextual database including population,  incomes, jobs, home sales, and HMDA (Home Mortgage Disclosure Act) data that can improve decisions for new CRE loans and workouts.

Potential applications for the data include: individual home loan portfolios, CRE, and loan categories with significant geographic concentrations (e.g., student housing, industrial).

To learn more about Arcadia's CRE mapping solutions for your institution, please contact Rich Wilson at (610) 659-5400 x26 or rich@arcadialand.com

In November 2008, we analyzed home prices in the region to answer the question: are prices affordable yet?  We revisit this analysis today to see whether home prices have truly returned to historic ranges relative to rents and household incomes. 

While Philadelphia MSA house prices have clearly retreated (FHFA data suggest that the region is off 11% from its 2007 peak), our ratio analysis suggests that prices may still be at the high-end of historic norms. 

The ratio of house prices to rents at the end of Q1 2011 was 13.3, still above the range that was typical in the 1990s.  Similarly, house prices are still a higher multiple of incomes than in year 2000, a fact that may be as much related to income stagnation as to house price appreciation.  A Philadelphia Inquirer article on July 17, 2011 brought the phenomenon of stagnating incomes to life in a story about families in Willingboro, New Jersey.

Until household finances stabilize and improve, house prices will be at risk.  The apparent correlation between regions with strong employment trends  (e.g., see Brookings' metro employment analysis) and those with housing market stability is not surprising.

While site work continues at Sadsbury Park, Arcadia's newest traditional neighborhood development, substantial progress has already been made in the restoration of the property's 18th-century farmhouse. Arcadia partnered with Earthcare, a leading landscape and erosion control services firm based in Honeybrook, PA to ensure that the building would not only remain, but be restored handsomely as an asset to the community.  Scott Risbon, Earthcare's owner, deserves immense credit for bringing this sturdy home back back to its former glory.

The Sadsbury Township Historical Society recently celebrated the restoration of the farmhouse, a building that was once home to John Pinkerton, a soldier in the American Revolution.