10/11/2005
Condo-buying Shows no Letup
 
By EARNI YOUNG
The Philadelphia Daily News
 
 
It's opening day at Liberties West, a condo conversion project at 7th and Fairmount, and the joint's jumping.
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 quickly.
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 District.
"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 construction.
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 market."

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