At the end of the second quarter, home prices in Philadelphia were one-third of the way to recovering what they had lost since August 2007.

That's when the city's single-family home market - and the region's, as well - took ill. That's what economist Kevin Gillen, vice president at Econsult Corp., has determined.

Losses here haven't been as severe as those in Arizona, California, Florida, Nevada, or the Rust Belt, but a decline is a decline, no matter the size.

Gillen's home-price index is based on arms-length transactions data from the city Recorder of Deeds Office.

The typical Philadelphia home gained in value by 7.6 percent in the second quarter, meaning that prices are back to where they were in 2005.

At the market's trough, Philadelphia's housing stock had fallen in value by 22 percent since the declines began five years ago. With this most recent gain, city house prices are now down only 15 percent from their 2007 peak.

What does all this mean to a buyer or a seller?

Well, this is an average increase, not one that every seller is guaranteed to experience. And in 2005, city prices were just starting to boom; the numbers overall here didn't rise as much as they did elsewhere, and didn't fall as far, either.

To qualified buyers - emphasis on qualified - Gillen's calculations might open that window they've been looking for, propped by record low fixed mortgage-interest rates.

Gillen said the facts suggest that "credit conditions are loosening, and buyers are getting back into the market, but that these buyers are the most-qualified and relatively higher-income of all potential buyers that are out there."

"They are bidding up the price of homes in the upper end of the market, which is what is causing both the jump in the [home-price index] and the increase in the spread," he said.

Gillen's analysis points out that housing inventories, measured by the number of homes listed for sale, are down 25 percent from their peak, and continue to decline.

With fewer houses for sale, there is greater competition among buyers for what is available, meaning that median sale prices will likely rise.

But by how much? Inventory remains well above the average that would be considered typical of a balanced housing market.

Anecdotal evidence from real estate agents inside and outside the city shows competition limited to a few price ranges, as Gillen affirmed.

There were 20 single-family houses - not condos - in the city that sold for $1 million or more during the second quarter, the highest number since early 2008, he said.

All but three were in Center City. Prices were modest compared with just a few years ago, with nothing over $2.4 million.

In the first quarter, there were seven $1 million-plus home sales.

The spread between the average house price and the median house price in Philadelphia jumped to an all-time high of nearly $40,000 in the second quarter, compared with $16,000 two years ago.

"The result is that these higher-priced sales could be skewing average prices up, while many homes in the lower-priced segment of each submarket are still stagnating in their value," he said.

What remains low is the number of sales. The spring market in the city was well below even the depths of the recession in 2009, Gillen said.

The market remains challenging, and recovery, thus far, defies prediction. Many observers call recent claims that prices have bottomed premature.

People who look at current results and call it a bottom "are being dangerously short-sighted," said Michael Feder, CEO of Radar Logic in New York, which tracks residential real estate prices nationwide. "Not only are the immediate signs inconclusive, but the broad dynamics are still quite scary."

Contact Alan J. Heavens at 215-854-2472 or, or follow on Twitter @alheavens.