(To read more on the multifamily market, click here.)
PHILADELPHIA-No housing bubble is about to burst here, insisted Paul Levy, president of Center City District, during a press conference in which he released CCD's annual residential report.
Levy acknowledged "a few developers now reporting that they are putting proposed projects on hold" has resulted in "media hyperbole about bursting bubbles." The delays signify "a slowing of the market," he says. "The sky is not falling. The demand for Center City housing is quite strong and quite sustainable."
An average of 1,358 units has been added to the inventory per year during this decade, according to the report. And over that period, occupancy levels remained high and rents and housing prices increased. "This suggests a healthy market equilibrium between supply and demand," he said.
Yet, the number of new units took a "quantum leap" in 2006. As of Sept. 1, a total of 1,932 units reached completion and another 1,189 are scheduled to deliver by year's end. Levy said local real estate experts believe no more than 20% to 30% of the projects that have been announced, but not begun, will move forward at least for several more years. He called that "a normal business correction."
Research says the city's housing cost-to-income ratio is 31%. This compares with a ratio of 53% in Washington DC and Newark, and 72% in New York City. Furthermore, he said Philadelphia's residential buyers have been overwhelmingly owner-occupants, not speculative buyers. He says a significant drop in housing values is not expected.
Both the CCD report and a survey of Center City residents by locally based Allan Domb Real Estate suggest an increase in residents to the city. Of the 900 respondents to the Domb survey, 86% said Center City is a better place to live today than it was five years ago. Half of the respondents identified "Baby Boomers looking for an urban lifestyle" as the driving factor.
"The survey suggests that Philadelphia is on a long-term upswing," Domb tells GlobeSt.com. However, the survey also identified areas in need of improvement. Chief among them is the city's retail sector. "Respondents particularly would like to see more lifestyle retailers, upscale grocers and department stores," he said.
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