Philly’s Next Real Estate Boom
There’s been a lot of talk about the fitful post-bubble recovery of the Philadelphia real estate market. It seems that for every two steps we move forward (home values are up! Days-on-market is down!), we take one backward. (Where’s all the inventory?)
But now — finally — industry experts are optimistic, as Philly’s rising real estate market is showing signs of genuine, sustained momentum. We didn’t have to search long before we saw it for ourselves: About halfway through writing the story you’re about to read, one of our editors put his Pennsport home on the market — in the dead of winter, mind you — and sold it. In two days. His story is far from the exception. There’s a mountain of evidence that points unambiguously to one thing: Real estate in Philly is heating up, and it’s projected to get even hotter this year. If there ever was a moment to get in, it’s now. So whether you’re buying your first home, moving to your second or scoping out a luxury condo, consider this your playbook for coming out on top.
For the First-Time Buyer
Ready to take the plunge? You’ll need your cash firmed up and your wish list flexible.
The budget: $150K to $300K
Buyers lured from the clutches of Philly’s rental scene (where the average one-bedroom apartment is currently going for about $1,200 — and even higher in Center City) are finding that now is a really good time to shift to ownership. Not only are interest rates low — we’re talking mid-three to mid-four percent — but lots of starter-home-friendly neighborhoods are experiencing a housing boom, with home values steadily rising (in the third quarter of last year, they were up a whopping 5.2 percent in South Philly and 4.4 percent in Kensington, Port Richmond and Fishtown) and projected to continue to rise this year. So, are you ready to dive in?
Rule 1 • In this market, your money must be locked and loaded.Yes, it’s the least sexy part of the home-buying process, but unless you get your finances in order up front, you’ll never know what you can afford. Plus, Philly’s current market is Hunger Games-level competitive — as demand and sales activity increase, supply is dropping. You need all your up-to-date information at your fingertips so you can move fast when you see something you like. While you can get a mortgage pre-qualification online, you’ll get a more thorough — and tailored-to-you — assessment by chatting with a mortgage adviser over the phone. She’ll evaluate your credit, tax returns, pay stubs and bank statements to come up with a target price that actually makes sense for your financial situation. “Plus, we can see if there’s anything you can do to improve your credit score or debt-to-income ratio,” says Angela Tobin, senior mortgage adviser with Plymouth Meeting-based Philadelphia Mortgage Advisors. “An unpaid traffic ticket from 10 years ago can really come back to haunt you.”
Rule 2 • Don’t overanalyze. House-hunters of the Internet generation tend to spend as much time on Trulia and Redfin as they do scrolling through Instagram. That’s a good thing, realtors say, because it helps them narrow down the neighborhoods they might want to live in and build a wish list. But you can overdo it: “I often have to help first-timers unlearn things they think they learned from all of their hours on Zillow,” says realtor Elizabeth Clark, of Philly’s Space and Company. It’s the catch-22 of having information at your fingertips: Not all that information is accurate. So it’s important to choose an agent you trust (crowdsourcing recommendations isn’t the worst way to find one) who can draw on real experience to understand where Philly’s market has been and where it’s headed.
Rule 3 • Don’t get too attached to the idea of parking. Of all the popular wish-list items for Philly buyers — central air, hardwood floors, stainless appliances, parking — that last item is almost always the first to go in this price bracket. “The majority of housing stock in Philadelphia, particularly in Center City, doesn’t have parking. Period,” says Clark. If you’re really, really set on it, you need to look farther out, in neighborhoods like East Falls, Germantown and Mount Airy, where some houses have driveways and garages, or Kensington or Brewerytown, where street parking tends to be more ample.
If not parking, what amenities are within reach for most first-time Philly buyers? According to Clark: outdoor space, including roof decks, as well as updated kitchens and multiple bathrooms.
Rule 4 • Be wary of the “TLC” project. You have the Property Brothers to thank for your dream of meticulously rehabbing a fixer-upper. But experts across the board say massive renovation projects are usually a bad idea for first-time buyers, especially here in Philly. Why? For one, developers with deep pockets are flourishing in our city, thanks to the affordability of real estate in up-and-coming neighborhoods and the influx of first-time buyers who want move-in-ready homes. They’re who you’ll be competing with for fixers in desirable neighborhoods, like Point Breeze, and they’ll be offering cash and opting out of inspections — two things most first-time buyers can ill afford.
Plus, in Philly, where century-old (or more) houses are common, you may find lots of unpleasant and costly surprises when you begin to open up the walls. Of particular worry is old knob-and-tube wiring, which can pose a fire hazard. Some insurers won’t cover a property that contains knob-and-tube, or will make you update your wiring within a set time frame after closing. According to Debbie Lutz, co-owner of Grays Ferry-based Generation 3 Electric, rewiring a house can cost between five and 15 percent of the home’s value.
“I personally think the best bang for your buck is to find a home with good bones, like a little grandma’s house that needs cosmetic updates that you can get for a good price in a good neighborhood,” says Kristin McFeely, realtor and co-owner of Philly Home Girls, a real estate agency in Old City. These houses offer realistic projects you can tackle — ripping out carpet, painting walls, swapping light fixtures, maybe even retiling the bathroom — that will improve the home’s value without requiring a top-to-bottom, ulcer-inducing gut-job.
Rule 5 • When you find your dream home, you’ll need to pull the trigger fast. “Gone are the days of working with someone for a year before they find something,” says Jeanne Whipple, the other half of the Philly Home Girls leadership team. You may look at only four or five houses total, and agents say some first-timers buy the first house they see. In fact, in a survey of Philadelphia-area realtors conducted last November, 11 percent said they’d worked with at least one buyer in the past year who made an offer on a house without actually seeing it in person.
When you do fall in love with the perfect house, you’ll need to put an offer in fast — another reason, says Tobin, to get your financial ducks in a row before you start looking: “The swiftness with which properties change hands in Philly is astounding. In hot areas, there are usually multiple bids,” she says. In fact, Philly’s average days-on-market — the typical number of days it takes to sell a home — dipped to 61 in the third quarter of last year. That’s the lowest it’s been since 2007, according to Drexel’s Lindy Institute for Urban Innovation. So if you opt to sleep on it, your dream home may be gone — poof! — by morning.
Rule 6 • Make yourself more attractive to the seller. Because you might be jockeying with one or two (or three) other prospective buyers when you submit an offer, it’s important to use all the tools at your disposal. You’ll obviously want to offer a fair and competitive bid with guidance from your agent, but as Clark says, “There are other currencies in the world besides the purchase price.”
Your objective should be to build a good rapport with the seller on the front end, so he or she feels comfortable working with you through the months-long transaction. Ideas: Humanize the deal with a letter detailing why you love the house or neighborhood. (Note: This tactic worked for one Philly Mag staffer, who identified three streets in Fairmount where she wanted to buy, wrote letters to every homeowner on those streets, and found one who eventually sold her his house before it went on the market.) You can ask your agent to sleuth out the seller’s ideal settlement date and write it into the offer. Or you can ask your mortgage broker to reach out to the seller’s agent to make it clear you’re in great financial shape. Says Clark, “It creates another sense of security that you’re on top of your game.”
Rule 7 • Know this: The purchase price isn’t all you’ll be paying. In addition to the closing fees (roughly five to seven percent of the home’s total price), property taxes and mortgage insurance, there’s a realty transfer tax: All buyers in Pennsylvania pay one percent, which goes to the state, and Philadelphia buyers pay an extra one percent, which goes to the city. (Crazy fact: Sellers in Philadelphia also pay a two percent realty transfer tax, which is split between the state and city in the same manner.) Your mortgage adviser should be able to offer you a breakdown of exactly what you’ll be paying and when, so there are no surprises.
Rule 8 • Don’t buy a boat. Or apply for a credit card. Or quit your job. Basically, anything that could hurt your ability to qualify for a loan or alter your income is a big no-no during the home-buying process. Best-case scenario, you’ll have to provide your mortgage adviser with documentation for any new activity or transactions. Worst-case scenario, you’ll be denied your loan.
True story: One broker we know had a client who went out and leased a motorcycle a week before closing to celebrate his new house. But because of the new debt, he no longer qualified for his mortgage, so he lost the loan — and the house.
Rule 9 • Remember: Your home is more than an investment. While it’s smart to approach your first house as an investment, you need to remember that you actually have to live there, too. Striking a balance between buying a home in a neighborhood that makes sense for you now and investing in one that will put you ahead financially when it comes time to sell is easier to do if you know a couple of facts.
First: Agents say most Philly first-timers end up staying in their starter homes for three to seven years, so you might want to consider your needs now (space to work from home, a back patio to entertain) and what you’ll need out of your home a few years down the road (whether you’re planning on getting married, having kids or adopting six dogs).
Second: From a dollars-and-cents perspective, in Philly you get the best resale value out of homes with two to three bedrooms and at least a bathroom and a half. Anything smaller will shrink your buyer pool significantly.
WHERE TO BUY RIGHT NOW:
Brewerytown • The vibe: This neighborhood just north of Fairmount is in the midst of a renaissance, with a slew of rehabbed properties and new building projects drawing interested buyers. Commercial growth along West Girard Avenue is blossoming, too. What’s nearby: Fairmount Park’s Lemon Hill and, across the Girard Avenue Bridge, the Philadelphia Zoo; there’s also Crime and Punishment Brewing Co., Rybrew cafe, Brewerytown Bicycles and SpOt Burgers, the former food truck that just opened a storefront at 2821 West Girard. Word on the street: This year the city will invest $1.5 million in streetscape improvements—more landscaping, bike racks, trash cans and lighting—along West Girard from 33rd to College Avenue.
Point Breeze • The vibe: A mix of residents ranging from millennial newbies to older families with decades-old roots calls this conveniently located South Philly neighborhood home. New construction has in some cases been met with resistance, but the community continues to grow. What’s nearby: Watering holes like South Philadelphia Taproom, American Sardine Bar and newcomer Buckminster’s, plus the freshly refurbished Ralph Brooks Park, a project of Philadelphia Eagle Connor Barwin, with a new playground and basketball courts. Word on the street: Rumor has it the crew behind Rittenhouse’s shuttered Nodding Head brewpub might be opening a new brewery in Point Breeze, which would add to the neighborhood’s growing appeal.
Port Richmond • The vibe: This tight-knit community includes a sizeable Polish-American population that has a long history and deep neighborhood pride. The Fishtown and Kensington boom is beginning to seep into Port Richmond, bringing a new wave of buyers looking for quality homes in a stable, safe neighborhood. What’s nearby: Krakus Market and Czerw’s Kielbasy for traditional Polish eats; Green Rock Tavern (everybody raves about the pierogies); the beloved Tacconelli’s Pizzeria; and the newly minted Monk’s Dog Run, the result of a community effort to repurpose an abandoned lot at Monkiewicz Rec Center. Word on the street: Although the Port Richmond Trail just opened a new half-mile-plus extension along the Delaware Riverfront, work on the multi-use path isn’t complete yet. This year the city will break ground to extend it—and Delaware Avenue—even further, to connect more easily to Bridesburg and other points north. The result: a more bikeable Port Richmond.
For the Move-Up Buyer
Got your eye on that spacious home with a glorious third bathroom? You’re not the only one.
The budget: $350K to $800K
It’s a seller’s market — news that might elicit both heavenly chimes and minor fits of panic for those looking to unload their first homes and begin the quest for a bigger pad in the Philly marketplace. The economy has wholeheartedly bounced back since the Great Recession of 2008. So, too, has the housing market, and owners are taking advantage by selling their homes for handsome prices. Compared to 2012, the average days-on-market is way down in nearly every zip code, while median prices of properties sold in parts of Fishtown and Kensington, for example, are up by 45 percent. Numbers like these give a tremendous edge to sellers but could be hell for buyers, who face stiff competition in just about every neighborhood. You can navigate the booming move-up market and come out in one piece, if you know the full story.
Rule 1 • Take a lesson from the past. “Once you’re ready to move up from your first house, you’ve learned the foibles of homeownership,” says Jennifer Seal, listing agent with Redfin’s Philly outpost. “You’ve figured out what you can and cannot live with.” Think about it: Do you need a space to entertain, or a bigger kitchen? Do you want to drag your trash through the house, or do you want an alley? How important is gardening space?
You might find what you need in an unexpected place. A house in a slightly left- (or right-) of-Center City neighborhood might check all your boxes — for a great-looking home with a yard and parking, check out East Falls or Mount Airy; for a grand Victorian, you might want to look in Cedar Park or Spruce Hill in West Philly — while still delivering the benefits of city living: proximity to work, ease of commute, and a walkable (or bikeable) lifestyle.
Kevin Gillen, chief economist with Meyers Research and senior research fellow at Drexel University, says the positive push in Philly’s housing market stems from growth outward from Center City to the periphery, specifically around key transportation infrastructure like SEPTA’s Broad Street and Market-Frankford lines. “I never thought I’d say ‘$400,000’ and ‘Kensington’ in the same sentence, but it’s really all about the trains, buses and bike lanes,” he says.
Rule 2 • The hassle of a project might not pay off. Here’s an argument in favor of turnkey: All new-construction homes come with a one-year warranty from the builder, which offers some peace of mind and could help eliminate buyer’s remorse. You’ll also probably get a 10-year tax abatement — meaning that for a decade, you’ll pay taxes on the pre-build value of your land rather than the post-construction value. Space & Company realtor Michael Garden points to this as a major factor in luring the move-up buyer back into the real estate game.
“The cost to live in a $500,000 restored home is about the same, month to month, as in a $600,000 new-construction home with a 10-year tax abatement,” says Garden, who now estimates that a quarter of his business in the move-up market is in Northern Liberties and, increasingly, Fishtown.
On the flip side, existing homes that are renovated up to 85 percent (basically, a gut job) are also eligible for a tax abatement. So if you love a classic Philly rowhome but want a sleek kitchen, a spa-like bath or even a dreamy outdoor space, you still can snag a deal that makes financial sense in the long run.
Rule 3 • Sell first, then buy. When you bought your first home, the trickiest part was probably coordinating your lease with your closing date. Now, you’re house-hunting and keeping your current home open-house-ready, all while navigating the financial rigmarole that comes with buying a new home and terrified that you’re going to somehow end up with two mortgages and no escape. The good news: There are ways to minimize the angst.
Guillermo Salas, broker and owner of Re/Max Platinum, advises unloading your first house before you take on a second. Let’s say you do sell the place but can’t necessarily move out right away: You could rent it back from your buyers for the short term in what’s called a post-settlement possession addendum. It’s a pre-arranged agreement between both parties in which the seller is allowed a short-term stay in the old house (typically from a few days to three weeks) while figuring out a new living situation. “It’s not going to work in every instance, but we’ve been able to do it quite a bit,” says Salas. “It really relieves some of the stress.”
On the buying side of things, experts advise making yourself as attractive to the seller as possible (see Rule 6 in the First-Time section) and being as flexible as possible on the closing date. Average days-on-market in Philadelphia has been hovering around 65, and sales typically take between 30 and 60 days to close.
Rule 4 • Be prepared to escalate. Competition among move-up buyers is at least as fierce as in lower price brackets. Many agents say the city’s limited inventory is the biggest hurdle homebuyers are facing in the current market. So if a quality home is priced properly — especially in a highly desirable neighborhood like Fairmount, where the average days-on-market last year was 62 but dipped to a swift 38 in November — it’s a given that lots of buyers will jump right in and make an offer.
So, what does being prepared look like? You might consider including an escalation clause in your offer, to get a leg up on the competition. It promises the seller that you’ll beat any competing offer up to a certain dollar amount by $1,000, or whatever figure you determine feels comfortable. “If you really want to win, that’s a great way to do it,” says Jimmy Caraway, a buyer’s agent for Redfin in Philadelphia. “It shows you want the house and that you’re going to put in the work to ensure it closes.”
Rule 5 • Not all new construction is created equal. It’s easy to think that just because a place is part of the hottest new development in Queen Village or Grad Hospital, you’re getting a top-of-the-line home. But as with true love, it’s good to remember: It’s what’s on the inside that really counts. So don’t be afraid to ask deeper questions, and be wary about taking everything at shiny face value.
Chad Ludeman, president of Postgreen Homes in Kensington, suggests that simply knowing the name of the architect who designed the home — something most home buyers never think to ask about — can go a long way, because it lets you further research his or her projects using resources like the American Institute of Architects website. Reputable architects, he adds, can add financial value to the home.
It’s obviously a major plus if a home is designed with energy efficiency in mind, and even better if it’s LEED-certified or built with super-insulated materials. At the very least, Ludeman suggests looking for a home that’s Energy Star-certified: “It ensures you’re going to get an above-code house that’s energy-efficient.”
Whether you’re following the construction of the home or not, be sure to know what type of lumber was used for its bones. Professionals say to look for two key words: “engineered lumber” — that is, wood specifically manufactured to be dead plumb and strong. “It’s the top thing, material-wise,” says Ludeman. “There are guys out there that don’t care about energy efficiency, and that’s okay, but they’re using the right lumber to build a home that lasts.”
Other key items for your checklist: a commercial-grade roof (you want TPO, rubber or fiberglass, not lower-quality asphalt); Energy Star-rated windows (double-pane, airtight, and not made of cheaper vinyl); and a moisture-resistant subfloor, because it’s almost guaranteed to get wet during construction.
Rule 6 • If the suburbs are calling, you have to answer ASAP. There are lots of buyers in the move-up segment looking for suburban homes, but supply is pretty limited. Meaning: The good houses go quickly, so as in the city market, you have to be ready to pounce.
“For people who don’t want to move into the city, we’re seeing a trend in walkability,” says Debbie McCabe, vice president of Berkshire Hathaway HomeServices Fox & Roach in Devon. “Buyers, including downsizing baby boomers and younger established professionals, are looking at Bryn Mawr, Paoli, Wayne, Ardmore and Narberth.” The draw of jobs and cheaper land for new construction has also pushed buyers westward toward downtown Malvern, which was formerly the end of the line for Main Line buyers.
WHERE TO BUY RIGHT NOW:
Spruce Hill and Cedar Park • The vibe: University City’s employment boom has created a real-estate ripple effect in surrounding West Philly, specifically the neighborhoods along Baltimore Avenue. The pretty streets lined with gorgeous Victorian homes have become very attractive to the move-up set, especially those with young kids: Spruce Hill is in the catchment for the Penn Alexander School, one of the top public elementary schools in the city. What’s nearby: Woodlands Cemetery for serene walks; Clark Park, which has farmers’ and flea markets, outdoor theater shows, playgrounds and sledding; Dock Street Brewery and Clarkville for pizza and beer; Baltimore Avenue Dollar Stroll, a popular summer street festival; outdoor jazz concerts at Malcolm X Park. Word on the street: University City District and SEPTA are working to remake the 40th Street Trolley Portal into a lively — and safe — public amenity with seating, programmable space, bike parking and meadow-like landscaping.
Fishtown and South Kensington • The vibe: With its collection of restaurants, bars and shops and street art galore, Frankford Avenue is becoming the most sought-after corridor in the city. It’s also the main hub between Fishtown and South Kensington, two old-school Philly neighborhoods that are seeing growth as residential development pushes north along the El. What’s nearby: Anything revelers could want, including live music spots (Johnny Brenda’s, Kung Fu Necktie, the Fillmore), eats (Pizzeria Beddia, Fette Sau, La Colombe’s mother ship) and plenty of places to drink. Word on the street: A boutique hotel is in the works near Frankford Hall, and a massive riverfront event space with lodging and restaurants is planned at the former Delaware Power Station, adjacent to Penn Treaty Park.
The Mount Airys • The vibe: Looking for some fresh air and a little green space to call your own? Head to East or West Mount Airy. Both hamlets are just a quick train ride away from Center City (and a short trip to Conshohocken and the northern suburbs) and offer timeless homes with beautiful style. What’s nearby: The Wissahickon for hiking, biking and outdoor activities; Weaver’s Way food co-op; two SEPTA regional rail lines; top bars and eateries (Earth Bread + Brewery, Goat Hollow, Trolley Car Diner, McMenamin’s); an established arts scene. Word on the street: The Free Library’s Lovett branch on Germantown Avenue is undergoing a major redesign to incorporate a new public park with a reading garden, an amphitheater and an area for creative play.
For the Condo Buyer
Homework is essential. Is your dog permitted? And how thin are the walls?
The budget: Under $800K
Right now, young professionals and empty nesters are riding high on the low-maintenance-living wave. And with the Philly condo market booming — the wide range of options includes everything from airy lofts in Callowhill to retrofitted units on cobblestone streets in Old City — the forecast looks especially sunny: Industry experts say the market value for condos is only going to keep increasing as the city prospers. Just be sure to have a clear picture of what you want most going in: Like everything else in the housing market right now, the best places are selling fast.
Rule 1 • Know your boundaries. The glorious thing about condo life is that you own and are responsible for the inside of your unit; building management is responsible for everything else. Make sure you nail down the details on gray areas to find out whether a broken window or burst water pipe will fall on your dollar or the building’s.
Rule 2 • Buy the parking space, even if you don’t own a car. Sometimes, you can rent it out. According to agent Melanie Stecura, realtor at Kurfiss Sotheby’s, “If you’re on the fence, pony up and buy the parking space. If it comes down to your unit or another without a space, a buyer will go for yours with parking, even if it’s smaller.” Your spot will become even more attractive to future buyers as city-planning mores move toward fewer and fewer parking spots. If your building doesn’t offer parking, try renting a space in a nearby garage. Otherwise, good luck with street parking!
Rule 3 • Prepare for extra tacked-on fees. First, there’s the monthly condo fee (which ranges from 25 cents to 70 cents per square foot of your unit). Then there’s the capital contribution — three months of condo fees that are due when you sign. It’s put into the building’s reserve in case a major building-wide renovation is required (see Rule 8). And then, in some buildings, you’ve got the move-in fee, because you need to reserve the freight elevator for the day. Oh, and there’s also a fee for renting out the common area for your birthday party, because someone will need to clean up after you. And then … well, you get the picture.
Rule 4 • Know the building’s renter ratio. Sorry to crush your Airbnb moneymaking
dreams: Most complexes cap the percentage of units that can be rented at any given time — some at as low as 25 percent — because transient tenants make a complex less desirable. If living among renters doesn’t bother you, buildings with higher renter-to-owner ratios could save you some cash, as the price point is usually lower.
Ask your agent to find out the renter ratios for your top-choice buildings so you can weigh your options side by side.
Rule 5 • Don’t buy a walk-up if you plan to sell anytime soon. As more and more suburban-dwelling baby boomers start sleuthing out city living (see the High-End Buyers section on page 72), your condo will be in high demand — as long as it has an elevator. Many buyers don’t want a place where they’ll have to worry about a lot of stairs. One flight is okay, according to Iris Felder, a realtor at Berkshire Hathaway HomeServices Fox & Roach in Society Hill, but more than that and your buyer pool for that elevator-less flat will be limited.
Rule 6 • If you’re noise-sensitive, look out. Many units, especially older ones, don’t have great soundproofing, so — surprise! — noise is the top complaint among condo dwellers. When touring, ask your would-be neighbors to turn on their music and TV, to gauge the noise levels you can expect day to day.
Rule 7 • Your pit bull might not pass muster. Many complexes strictly enforce breed and weight restrictions — if pets are even allowed in the first place.
Rule 8 • Watch out for a surprise $15,000 bill on your doorstep. Special assessments aren’t uncommon, and you should know if one is coming. Every month a percentage of your condo fee is saved in a reserve account, but special assessments occur when the building needs more work than there are funds reserved. Residents have to cover the cost out-of-pocket, a detail that will be addressed in your condo documents. Speaking of which …
Rule 9 • Read your documents. ASAP. When your offer is accepted, you have five days to review the condo resale documents, which list any near-future assessments and increases, pending lawsuits, and the financial health of the condo association. If there’s a lawsuit pending, that’s a red flag. Not only does it indicate poor management and a host of headaches down the line; you may have a hard time getting a loan.
If you don’t like what you see, you can walk away without any repercussions. However, when those five days are up, the unit is yours, for better or worse. Feeling overwhelmed? Get a lawyer to look over the documents with you.
WHERE TO BUY RIGHT NOW:
Old City • The vibe: Philly’s historic hub is home to eclectic boutiques and a huge arts community. It’s a magnet for tourists, of course, but you’ll also find locals — young and old — who enjoy the proximity to nightlife. Here, you’ll find smaller boutique condo buildings with only a handful of units and a tight-knit resident community. What’s nearby: Historic Christ Church and Elfreth’s Alley; the Delaware Riverfront (think Spruce Street Harbor Park and Race Street Pier); dozens of art galleries; and more bars and restaurants than you can count. Word on the street: Phase two of the Race Street Connector, a beautification project on the northern side of Race Street between 2nd Street and Columbus Boulevard, will begin later this spring. Improvements include new sidewalks, lighting, plantings and a shared-use side path.
Callowhill • The vibe: Out-of-use industrial buildings have been morphed into new loft condos, appealing to buyers looking for interesting spaces with a gritty feel — exposed brick, structural beams, rustic hardwoods — and a growing neighborhood. What’s nearby: Gallery spaces like Vox Populi and Grizzly Grizzly; restaurants, including all-day brunch spot Café Lift and Bufad pizza; music venue Union Transfer; plus Prohibition Taproom, Brick and Mortar and other popular bars. Word on the street: Plans for an elevated Viaduct Rail Park, which will transform unused rail lines that run through Callowhill into a green space akin to New York City’s High Line, are trucking full steam ahead, with more than half the needed funds raised for the project’s first phase. Advocates hope to break ground later this year.
Queen Village • The vibe: It may not be the first place you think of for condo living, but agents say buyers looking for a quiet, family-friendly neighborhood that’s still close to city life often end up in this southeastern quarter. Just note: Parking is at a premium. What’s nearby: Restaurants and bars, from classics like Dmitri’s and Bistrot La Minette to newbies like the Hungry Pigeon and Imli; Three Queens Yoga, among other wellness choices; Mario Lanza Park, with its enclosed dog run; lots of boutiques along Fabric Row. Word on the street: Residents want to transform the median strip on Bainbridge between 3rd and 5th into what they’ve dubbed “Bainbridge Green,” a more useable 22,000-square-foot public green space, according to the latest plans.
For the High-End Buyer
Parking. Privacy. Pools. You want it all — and for enough cash, you can get it.
The budget: $900K and up
Our region’s high-end market is on the brink of a dramatic shift. On the one hand, more properties over $1 million — 181, to be exact — have sold in Philadelphia in the past year than in any year prior, thanks largely to the city’s brand-new (and still growing) luxury condo market. In fact, two ultra-luxe buildings under construction right now — One Riverside in Fitler Square and 500 Walnut in Society Hill, both delivering in 2017 — have already sold about half their units. While demand for high-end city properties is ramping up, it’s waning in the suburbs, as boomers and empty nesters are beginning to leave their pads for city living. If the ’burbs are what you want, this is great news: Experts say the exodus to Center City is about to open up major inventory in the suburban market.
Rule 1 • In the city’s high-end market, you’re paying for major amenities … Like the 24-hour concierge at Two Liberty Place, who will stow your delivered groceries in your fridge while you’re at work; residents there can also enjoy catered breakfast from R2L restaurant every single morning. (Oh, and did we mention the private R2L entrance with individual wine cellars for tenants only?) If cars are more your thing, the futuristic automated-valet parking garages at 1706 Rittenhouse and 500 Walnut whisk away your wheels and deliver them back like gigantic vending machines — literally no one touches your car but you. Over at One Riverside, residents can make use of a private entrance to the Schuylkill River Trail, an on-site private bike-share program, an outdoor terrace and kitchen, and a spacious private park. One Riverside also has a fully furnished hospitality suite that you can rent for the duration of your guests’ visits instead of sending them to a hotel. And that’s not to mention the fitness suites, lap pools, gigantic hot tubs, yoga studios, saunas and on-call massage therapists at your fingertips.
Rule 2 • … And location. “Better to buy the right property on the right street than the one that’s the most desirable on the inside,” advises Laurie Phillips, of Berkshire Hathaway HomeServices Fox & Roach Realtors. Why? Because insides can change, but in a crowded city like Philly, prime locations tend to stay prime forever. Worth noting: Units on Rittenhouse Square that Dranoff Properties sold in 2011 appreciated as much as 65 percent in the three years that followed.
Rule 3 • You might have to make your own million-dollar unit. Despite a relative boom in high-end properties, supply is still super-limited, especially in Center City, so if you’re able, it might be best to buy two adjacent units and combine them. Just be sure to consult with your realtor about your reno plans before you start tearing down walls: When it comes time to resell, that custom mini bowling alley in the bedroom might turn off potential buyers.
Rule 4 • Want to own a Philly brownstone? Now’s your chance. A domino effect of Philly’s new wave of luxury condos is that older empty nesters with homes on some of the city’s most desired blocks are downsizing from their big, gorgeous brownstones to move into hassle-free condo living. That means homes that haven’t been on the market for years — sometimes decades — are becoming available.
Buyers have taken notice. “Last year I gave 39 showings in two days for a home at 21st and Delancey,” says Berkshire Hathaway HomeServices Fox & Roach realtor Kristen Foote, who specializes in high-end properties in Center City. According to data from Drexel’s Lindy Institute for Urban Innovation, 34 home sales here topped the $1 million mark in Q3 of last year (eight of the deals were actually over $2 million), which was more than double the number of sales in this price bracket during the preceding quarter. Even crazier? Those high-end home sales set a new quarterly record, shattering the previous record of 25 in the third quarter of 2008.
Foote says demand for these properties is being fueled by suburban baby boomers who have older kids and want to move to the city but need more space than a condo affords. The most desired street remains Delancey, but addresses in Society Hill and Fitler Square are also at the top of buyers’ lists. While many of the homes need renovations — “They’ve been highly customized to the homeowners’ tastes, so buyers will probably want to put their own touches on them,” says Foote — many of them come with beautiful gardens, roof decks (or multiple roof decks) and elevators.
Parking is another story. “You can’t put a figure on the value that parking adds to one of these homes. It’s almost priceless,” says Foote, who notes that as many of Center City’s parking lots are being redeveloped for other purposes, parking is really at a premium. Her advice? If you find a home you like that suits your needs and has parking, pounce on it — fast.
Rule 5 • If you’re escaping the city for wide-open spaces, you’re going to play more of a waiting game. It’s no secret that the suburban market trend is leaning toward owners downsizing, as empty nesters begin to move from larger suburban homes to more compact city dwellings. But the trend hasn’t reached its tipping point just yet. While many suburban owners are seriously considering taking the Philly plunge — one source tells us it’s the topic of conversation at every Main Line cocktail party — they’re sitting on their homes for the time being because they want (and can afford) high-end, high-quality places but haven’t found exactly what they like.
“There hasn’t been enough construction in the [luxury] condo market to make people pull the trigger,” says Steve Darlington, associate broker at Berkshire Hathaway HomeServices Fox & Roach. These buyers want new places with top-notch amenities, open floor plans and updated interiors, and there simply aren’t endless options with those amenities in the city — at least, not yet.
So if you’re looking for the perfect suburban dream home, be patient. As more luxury condo options pop up on the market, mansions in the ’burbs will also appear.
WHERE TO BUY RIGHT NOW:
Rittenhouse Square • The vibe: Some of the most coveted addresses in the nation abut this historically desirable central park. It’s where Philly A-listers go to be seen, but residents can enjoy total privacy and seclusion. Here, you can find old-money brownstones or brand-new five-star condo units. What’s nearby: Well, everything, really: restaurants like Parc and R2L; bars that include Tria and A.Bar; arts powerhouses, including the Kimmel and the Academy; and green space like the Schuylkill Banks, Rittenhouse Square and Schuylkill River Park Dog Run. Word on the street: Chef Chris Painter, formerly of Starr’s Il Pittore, is returning to Rittenhouse with a new wine bar in ROOST Rittenhouse, an extended-stay hotel at 19th and Chestnut.
Washington Square and Society Hill • The vibe: These eastern neighborhoods offer the luxury of Rittenhouse but with less of a scene — i.e., quieter residential streets that feel set off from some of the bustle. Go here for the gorgeous and meticulously maintained historic rowhomes. What’s nearby: Washington Square (of course) and all the historic sites, but also Talula’s Garden and Talula’s Daily; Walnut Street Theatre; chef Michael Solomonov’s crown jewel, Zahav; and, just a short walk away, Franklin Square and the shops and dining in Old City. Word on the street: The Curtis Center, which flanks Washington Square on the northern side, is getting redeveloped as a luxury apartment building with 55 units and ground-floor retail, including a large restaurant space.
Chestnut Hill • The vibe: This northwest neighborhood is where you go for suburban-esque living — think an ivy-covered mansion on a half acre of land — with a city address. If you’re not lured by Germantown Avenue’s small-town charm, take a look at the area’s amazing private schools and country clubs. What’s nearby: The Wissahickon and pretty Morris Arboretum; dining and drinking options including Mica, Paris Bistro and McNally’s (get the Schmitter sandwich!); a slew of boutiques along Germantown Avenue; the just-opened 21,000-square-foot Fresh Market grocery store. Word on the street: About 41 acres of land, including the nine-hole golf course at the Philadelphia Cricket Club, has been designated preserve space by the Natural Lands Trust, protecting it from future development.
Published as “The Next Housing Boom Is Here” in the March 2016 issue of Philadelphia magazine.