I'm from California, so I can't say, specifically how the market in Philly isâ€¦but I can say that I hear this question daily in my market. The answer is, "it depends". Nationally, we're seeing reports of slowing foreclosure ratesâ€¦.some markets have rebounded, while others (usually smaller markets) are still in decline. The news is rosier than it has been in many markets since 2007, but expect to see ups and downs. The "bottom" may be reached in some markets, where we may have a year or more to hit bottom in others. I think there is little debate that we're towards the end of the foreclosure disaster, though - rather than early or mid stage.
There is a lot of uncertainty still regarding the "shadow inventory" â€¦ foreclosed homes that banks are still holding on to. I feel it's unlikely that we'll see a second wave of declines, as the banks have demonstrated pretty clearly at this point that they aren't likely to shoot themselves in the foot by dumping huge numbers of properties onto the market all at once and cause further price declines. There are plenty of buyers in most markets, fighting over very few quality listings. As such, that together with low interest rates are keeping prices stable in most markets. I see this continuing for some time as banks trickle their inventory out to the market, and the Fed is committed to keeping interest rates low. Now is a good time to shop. As there is a lack of inventory, prepare to have to try a number of times before finding the right property. Consider being more flexible and open minded - less rigid with your wants/needs lists. But also don't feel like if you don't buy this very instant you are going to miss out on a hot market.
This is a good time to do your homework, and be prepared to make logical offers in the fair market value range. There are too many buyers out there to think that you're going to get a big discount off the asking price. That discount is already built in to the asking price for the majority of homes in the market - In a true Buyers market, buyers often get big discounts off asking prices because a lot of houses are competing for the attention of a few buyers. This is not the case. It's also not a true seller's market - Where unusual and sudden leaps in value with bidding wars can cause wild appreciation. This is a common sense market. See what has been sold (not asking prices, but closed prices) in the past 3 months for similar homes and keep your offer in line with those prices. Throw out the extreme lows, throw out the extreme highs - and focus on the median range. That's where you'll find true fair market value.
Good luck to you!