Center City building is still going strong

Given the inventory of unsold properties - and the rise in the number of days it takes to sell each one, even as median prices continue to increase - you'd think residential construction in Center City would be slowing.

Yet from Front Street to the Schuylkill, and well north and south of the traditional boundaries of the business district, high-rises are rising and low-rises are spreading across what had been abandoned lots.

The housing market may be sluggish, but 30-year fixed-rate mortgage rates remain low and available to buyers with good credit. And there's still that 10-year tax abatement for units in new construction and converted buildings.

Among the major projects under construction or nearing completion are:

Western Union Building, 11th and Locust Streets; 100 condo units, 70 percent sold. The first owners began moving in last week. Price range: $399,000 to $2.6 million.

Residences at Two Liberty, 19th and Chestnut Streets; 100 units (down from 123 because some buyers bought multiple units to combine). The first 59 are under construction, with delivery in January. Prices start at $1 million.

Symphony House, Broad and Pine Streets; 163 units, 25 remaining. The first owners arrived in June. Price range: $500,000 to $5 million.

Residences at the Ritz Carlton, 10 Avenue of the Arts; 270 units, about 50 percent sold. First move-ins expected in late 2008. Price range: low $600,000s to $12 million.

The Ellington, 1500 Chestnut St.; 160 units, 85 percent sold, immediate occupancy. Price range: $370,000 to $1,295,000.

2200 Arch St.; 145 units, five left. The last owner is expected to arrive in April. Price range: upper $300,000s for one-bedroom, upper $400,000s for two-bedroom.

22 Front, 22 Front St.; 42 condo units, 16 sold, first move-in Nov. 1. Price range: $395,000 to $2.5 million.

Thus far, credit tightening hasn't been a major issue in the downtown market.

Jon Orens, a partner in Orens Bros. Real Estate and the developer of 2200 Arch St. loft condos, said no deals had died as a result of the credit crunch. "I've seen loans blow up on the day of settlement, but the buyer has always been able to get a replacement quickly."

Fred Glick, a mortgage broker and Realtor in Old City, said a lot of buyers, especially first-timers, think that they can't get a mortgage, "that values are going down. But the reality is that there are still 100-percent programs out there."

With city developers so focused on condos since the late 1990s, the supply of rental apartments has been squeezed, and rents are beginning to equal mortgage payments.

"Once rents start skyrocketing, you'll see more buyers," Glick predicted.

Though median sale prices in the city are still rising, albeit at a slower pace than in 2004 and 2005, the inventory of existing houses on the market is still high, as is the number of days on the market.

Philadelphia has, to date, not suffered badly in the downturn that has been suffocating residential markets in Las Vegas, Miami and even Baltimore.

Still, there's a lot to look at, and existing condos and townhouses, some of them less than five years old, are competing with hundreds of new units coming on the market every month.

Prospective buyers "want to see everything that's on the market," said Prudential Fox & Roach agent Bari Shor, who sells in Washington Square and Society Hill. "Yet a lot of them don't want to wait, and those who do still want to see and touch what they may be buying."

Allan Domb, developer of 22 Front, the Lanesborough, Parc Rittenhouse, Warwick, the Bank building, and the Lippincott, said it was a lot easier to sell a unit as a building approached completion.

"In Philadelphia, people do not believe buildings are going to be built, with good reason - so when it is done, it becomes a reality," Domb said.

In the contest between existing and newly built units, which will win? It depends.

Absent the all-important "location, location, location" factor, people will purchase existing homes, said Bruce Lang, of Coldwell Banker Realty on Columbus Boulevard.

"Over 85 percent of buyers are buyers of necessity - marriage, divorce, relocation for work," Lang said, and they will go with something already built.

If the new construction is at the highest end - such as the Residences at Two Liberty, 10 Rittenhouse Square, 1701 Rittenhouse, and the Residences at the Ritz Carlton - the buyers fall into the "don't-mind-waiting" category.

These high-end buyers have few worries about money, but they do need a place to live in the meantime, and that becomes part of the real estate agent's job.

"So we try to find them suitable rentals while they wait," said Joanne Davidow, vice president of Prudential Fox & Roach, who manages and sells real estate from an office in Rittenhouse Square.

The hot spot in the Center City market remains the $350,000-to-$550,000 range. But that's where a lot of the unsold inventory can be found, as well.

Size influences the limits of price range. Orens, for example, has set the limit on two-bedroom units at $500,000 because he doesn't believe the typical buyer will pay more than that.

Like Shor and Domb, Orens said people wanted to see evidence of construction before they decided to buy.

"When we started showing the building, they'd ask: 'How do we know you'll build it?' But those questions stopped with the arrival of the first two stacks of drywall," Orens said.

"That's the answer. Two stacks of drywall, whether we're ready for them or not."

.