Condo-buying Shows no Letup
The Philadelphia Daily News
It's opening day at
Liberties West, a condo conversion project at 7th and Fairmount, and the joint's
What was supposed to be an invitation-only opening of the former
156-unit garden apartment complex quickly became a free-for-all open house. News
that the units were priced between $89,000 and $235,000 apparently had spread
A group of Prudential Fox and Roach agents led by Realtor Mike
McCann took deposits on 20 sale agreements in less than two hours on opening day
Oct. 1. Another 19 units were purchased on day two.
The buyers were a mix of
investors and young and middle-aged professionals looking to buy their first
home as close to downtown as possible.
It is a mix reflective of the region's wealth of empty nesters, young
childless couples and single professionals - the demographic fuel driving the
Center City real estate market.
There is no evidence to support often expressed anxiety that the local real
estate market is a fragile bubble about to pop with disastrous consequences,
according to Paul Levy, executive director of the Center City
"Unlike a lot of American cities just beginning to build downtown
populations, we've sustained a downtown population for a long time," Levy said.
"We are building off a very very strong base that has been put in place over the
last 30 years."
An estimated 8,235 housing units have been created in the
city since the start of the residential boom in 1997, Levy said.
The boom was
kicked off with the approval of a 10-year property tax abatement on office,
commercial and industrial buildings converted to residential use. It was further
accelerated when the abatement was expanded to include new housing
Another 3,574 units are under construction for delivery by
2008, Levy said. That does not include several thousand more that are on the
drawing boards, but not yet in the ground.
Can the condo frenzy that accounts for most of the new housing be sustained?
Levy believes so.
He bases his confidence on the 1.5 million baby boomers in
the Philadelphia area, who account for 30 percent of the region's population.
Behind them is Generation X - 28-41 year olds - who make up 18 percent.
"Those are the folks who have been filling up downtown," said Levy,
estimating that there is at least a 10-year supply of Boomers itching to trade
lawnmowers and traffic jams for downtown living.
"This is going on in virtually every American city," he said. "It's only
Philadelphians who have so much insecurity that they can't believe in a strong
There are some worries about the top of the market where condos and homes are
selling for $1,000 or more per square foot.
Real estate broker and developer
Allan Domb predicts the supply of premium-priced luxury homes runs the risk of
exceeding buyer demand. Even so, he doesn't expect the steep price deceleration
that marked the collapse of the '80s real estate boom.
"There's still plenty
of room for more inventory, especially in the price ranges that attract 24- to
44-year-old buyers," he said.
The city is seeing a slew of condo conversions aimed at these
middle-of-the-market buyers, who can't afford to pay $500,000 and up for a new
condo or home.
In addition to Liberties West, several other apartment buildings and hotels
recently converting to condo sales include the Ambassador, 21st and Chestnut;
the Marine Club, Broad Street at Washington Avenue, and the Sheraton Hotel and
Regency apartments on Rittenhouse Square.
If the growth continues, Levy projects Center City's current population of
88,000 to grow to 105,000 by 2010.
"Instead of fretting about whether the
boom will last, we need to be planning new playgrounds, schools and other
amenities to accommodate growth," Levy said. "Clearly the city needs