Home sales, prices rise in Center City

The former AAA building at 21st and Market streets was converted to rental housing with 275 units.
The former AAA building at 21st and Market streets was converted to rental housing with 275 units.
Posted: November 28, 2012

Trouble remains in many real estate markets, but the continued influx of young adults and empty-nesters to Center City has resulted in increased home sales and prices in much of that area through the first nine months of 2012, according to a report released Tuesday by the Center City District.

The CCD is a privately directed, municipal authority, created under Pennsylvania and Philadelphia laws, to help develop, maintain and promote the district, which includes parts of eight zip codes in the city.

The CCD report said the number of home sales handled by real estate brokers in what it defined as "Greater Center City" during the first three quarters of 2012 increased by 6.7 percent over the same period in 2011, with the average sale price increasing 7.5 percent to $386,599. Greater Center City's boundaries were defined as Girard Avenue and Tasker Avenue on the north and south, respectively, and the Schuylkill and Delaware Rivers - a territory more sprawling than the typical sense of what is Center City.

Homes in a smaller area named Core Center City - encompassing the area between Vine Street (north), Pine Street (south) and both rivers - sold for 13 percent more during same period in 2011, for an average price of $546,703.

Economist Kevin C. Gillen of the University of Pennsylvania's Fels Institute of Government supplied data to the CCD but said he was not involved in writing the report. Gillen said he thought the "days of deep descent" in the housing market are behind us, but there is a "slow, sloping, bumpy road ahead," including an increase in foreclosures in the Philadelphia area in the last year.

"The performance of the Center City housing market has been nothing short of remarkable," Gillen said.

Gillen said that part of the surprise is the reversal in fortunes between the Center City and surrounding suburbs compared to the previous housing slump of 1989 to 1994. In the earlier period, city property sales fell 30 to 40 percent and suburban sales fell 1 to 3 percent, Gillen said. This time, Center City fell the least, even though "the supply doubled because of the additions of all the condos."

The CCD's report shows that of the nearly 5,500 homes completed from 2006 to 2008, two out of three were condominiums.

The financial crisis of 2008-09 was prompted by shaky lending practices and misuse of collateralized debt obligations, resulting in a real estate boom and then a bust when thousands of individuals couldn't pay the mortgages they signed up for. Afterward, credit markets froze and have only thawed slightly since then.

Only 19 percent of the 463 housing units completed through September of 2012 were condos. The report said that within the boundaries of the CCD, 403 of 3,871 condo units are still held by the developer of the property.

The "overwhelming majority" of unsold units, according to the report, were in the last four buildings to come on to the market before the recession: the Aria, the Murano, Ten Rittenhouse, and the Residences at the Ritz-Carlton. But even with those properties, the report said, the vacancies decreased from 43.2 percent at the start of 2012 to 30.3 percent by the start of November.


Contact staff writer David Sell at dsell@ phillynews.com or 215-854-4506.

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