Cheltenham: Why are values not keeping up?

Cheltenham SealThe economy appears to be improving.  We had a strong Spring/Summer selling season in the Philadelphia region and indicators point toward a pretty “normal” Fall selling season.  Then, why aren’t Cheltenham’s home values keeping up with areas like Abington, Springfield and Upper Dublin?

Well, Cheltenham represents a classic case of where local taxation and zoning policies can actually handicap a community’s property values.  However, in order to fully understand the implication of the township’s tax situation, it’s also important to understand what the township has to offer. When fully put on the table and compared to competing local townships, the existing tax structure becomes even more burdensome to the potential buyer or seller.

As a whole, Cheltenham town has a lot going for it.  It’s a desirable community, safe, clean, and great for raising a family.  It has easy access to employment centers in Philadelphia and the surrounding suburbs.  The housing stock is varied and appealing.  It has an “average” school system that has continued to sustain itself for generations, although it’s not quite what it used to be.   There are also community groups, parks, as well as arts and crafts and extracurricular events regularly scheduled.

Unfortunately, despite all the above, Cheltenham levies the majority of its tax base onto residential property owners.  Compared to neighboring communities like Abington, Upper Dublin and Springfield, Cheltenham has very few commercial usages that contribute to the tax base.  This issue dates back to when Cheltenham was being developed and the zoning code was created.  The zoning code that was put in place at that time did not adequately allow for the future expansion of commercial and industrial properties in the area.  As a result those entities were attracted to other neighboring townships, along with their tax dollars.  With only limited commercial, industrial and institutional usages the majority of the tax burden has been placed upon the residential properties. (Remember, Cheltenham was once the preferred address of many local industrial-era elite.  Which, in part, laid the groundwork for an underdeveloped non-residential tax base.)

How does this affect home values?  Well, look at it this way.  Let’s say we are looking to buy a 3 bedroom, detached home in the area for $250,000-$255,000.  Here’s how the houses and taxes would stack up.

Abington               $252,500               Taxes     $3,906 – $4,586

Springfield            $252,250               Taxes     $4,334 – $5,142

Upper Dublin       $253,650               Taxes     $4,604 – $5,216

Cheltenham        $251,250             Taxes    $6,680 – $8,044

As you can see, for roughly the same price, a house purchased in Cheltenham can, in some cases, nearly double a buyer’s tax burden.   It’s at that point that a buyer has to ask himself, “Why would I live in Cheltenham and be subject to the high taxes when I can buy a similar house in a neighboring township and pay much less?”  This is the very question that is keeping housing prices down in Cheltenham.  

The answer to the question for many buyers is to simply not consider buying in Cheltenham.  With fewer buyers seeking houses in the township, the housing inventory increases.  When inventory increases, values will drop accordingly.  This is why the collapse of the housing market affected Cheltenham more deeply than surrounding communities.  It continues to hurt Cheltenham because while values were dropping, taxes were not.  In fact, they were increasing. 

The answer is not an easy one.  The zoning and tax situation in Cheltenham combined with other factors such as an aging demographic, “average” schools and increased municipal spending have come together to form a perfect storm over the township.  Values in Cheltenham will continue to lag behind competing townships until something is done about the residential tax burden and municipal spending.

If there is a certain market or neighborhood that you would like to see discussed on PAB, just click on the “Ask PAB” link above and send your suggestion.  For more information please visit our website at  For assistance with appraisals pertaining to Estates, Bankruptcy, Divorce or Tax Appeal please contact The Coyle Group at 215.836.5500 or


Another Reason to get a Pre-Listing Appraisal

Just the other day, I received a phone call from a Mortgage Broker friend of mine. Yes, appraisers and Mortgage Brokers are still allowed to be friends.

He wanted my input on a situation in which one of his former clients found themselves.  Let’s call them the Utley’s. (For the privacy of the parties involved, I will not use the actual names, streets, pricing or house photo in this post.)  The Utley’s currently have their home listed for sale in Springfield Township, Montgomery County for $345,900.  There home has been on the market for 39 days and they have an offer on the table for $339,000.  The Utley’s are concerned about whether or not they should accept an offer this “low”.

I began buy pulling up the information on the Utley’s home in the MLS and public records.  It is a nice 1939 colonial with three bedrooms, 1.5 baths, approximately 1,500 Sq.Ft.  A very common home in this area.

Then, I took a look at the sales and listing activity in the immediate area for similar homes.  What I found was surprising.  The last three sales in the neighborhood in the past year sold for $370,000, $370, 000 and $412,000.  There are currently two competing listings in the neighborhood listed for $370,000 and $469,900.  The home listed at $469,900 was a larger, four bedroom that was completely renovated, probably not the best comparable.

However, there was also one pending sale right around the corner from the Utley’s.  This house was last listed for $339,900 but, it lacked a powder room and was roughly 220 Sq.Ft. smaller.  It had also been on the market for over 160 days with an original list price of $364,000.

After looking at this information, my question to my Mortgage Broker friend was “why did they list it so low?”

By listing at $345,900, the Utley’s are basically telling the market “Hey, this is my pie-in-the-sky, hope I can get it number…but, I am probably willing to take less!”  The reason they are receiving “low” offers is because they apparently under listed their home, based on available market data.  They (and their agent) may have shot themselves in the foot.

To compound the issue, it turns out, the Utley’s agent is a “friend of the family” (probably not for much longer after this experience) that is a licensed agent but, who is not very familiar with their neighborhood.   In the end, the Utley’s may be leaving thousands of dollars on the table or may have to re-list at a higher price.

This is a perfect example of why Sellers and Agents need to have a Pre-Listing Appraisal completed prior to listing a property.  A Pre-Listing appraisal can assist Sellers and their Agents maximize their selling price without over or under pricing.  If the Utley’s and their Agent had an appraisal of the home done prior to listing they might have developed a different price point and might not be in a situation where they are entertaining such “low” offers.

For information on The Coyle Group’s Pre-Listing Appraisal services, please call our office at 215.836.5500 or visit this link.