According to the report, more than 10,000 new housing units have been constructed in Center City since 1997, averaging 1,155 new owner or rental units per year. Housing prices in Center City have appreciated by 246% in the last decade, and the average home sales price, at $383,000, is 39.2% higher in the first half of 2008 than it was in 2003. That price is, however, slightly lower than it was when the housing market peaked in 2006.
"Compared with the peak of the market in 2006, when there was a lot of product and a lot of velocity, then yes, some housing is staying on the market longer and being sold for less," Levy admits. "But we went back to 2003, when the market was more normal in terms of the volume of production and sales velocity, and we saw that housing values are significantly above 2003 levels, and homes now are only staying on the market an average of eight days longer than in 2003, when the atmosphere was much more upbeat."
High-end housing has become more popular in Center City. In 1998, only one condominium was reported as being sold for more than $1 million. In 2007, that number had risen to 115. These wealthy buyers could be the reason Philadelphia hasn't seen a run of foreclosures. There were only four foreclosures so far this year in the Center City district, and Philadelphia boasts the lowest foreclosure rate amongst the ten largest metro areas in the country.
Levy attributes the city's strengths to a number of factors, including a steady market, solid employment and the vibrant atmosphere. "Places like Las Vegas and Miami, where there was a lot of speculative housing, those areas have suffered a lot in the downturn," he points out. "We've always been far more steady in terms of bringing new product to the market, and in the new product downtown, almost 90% is owner occupied, so there's very little speculative buying. The steady nature of the market buffered us from the extremes.
"The last three years we've seen solid employment growth in the downtown area," he continues. "And of course there's this huge spike in fuel costs. We are seeing significant increases in ridership in public transit in Philadelphia, which is one strategy for dealing with that, and living near work is the second obvious strategy people have been using to respond."
The numbers attest to this: a survey of condominium owners shows that 73% of those polled worked downtown. Half walked to work, while others took public transportation. Center City's vibrant atmosphere has also drawn in a number of residents. The study found that respondents ranked the area's convenience to shopping, dining and entertainment as its greatest asset and the top reason they chose to live there. Safety, price of housing and proximity to employment were also points in the neighborhood's favor.
Going forward, Levy hopes to see the Center City's popularity continue and strengthen. "The demographics are very strong," he says. "Basic source of demand is very good, and it's not dependent on speculative buyers from elsewhere, which is a real strong point. Obviously if there's a major downturn in employment, which we have not had, that could affect us, but things have held up incredibly well and we're very upbeat."
In an effort to keep Center City strong, Center City District is hoping to keep young families with children in the area, fighting the traditional suburban flight. "We've seen a significant increase in families with children, so we've been doing a lot of work with our public and independent schools in terms of getting information to people so families can stay and have good school choices," says Levy. "Continuing to focus on schools really can help us sustain and retain this group of young professionals as they have kids. One of the things we recommend the city focus on is recreational amenities like playgrounds and bike trails, which have become increasingly important. The more the city can improve its schools and improve its facilities, the more we can retain families with children."
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