Quarterly Philly condo sales still strong

Boosted by sales coming at the tail end of the federal tax credit, and at auctions of unsold units at Center City high-rises, Philadelphia's condominium market remained strong in the third quarter.

Five hundred twenty-five transactions were recorded between June 30 and Sept. 30, compared with 604 completed sales in the second quarter, according to data compiled by economist Kevin Gillen, vice president of Econsult Corp. of Philadelphia, from deeds recorded during the quarter.

City condos are "one of the few relative bright spots in the region's current housing market," Gillen said.

"It was a big bet for both developers and the city to believe we could absorb the largest amount of new units since the post-World War II boom," he said. "The fact that we continue to not only do so, but in such a difficult economy, makes the Center City market not only a real, but also surprising, success story."

Still, the expiration of the tax credits for home buyers meant sale agreements for condos plummeted as the third quarter progressed. To qualify, deals had to go to settlement by June 30 or, after a government extension, be in the pipeline to close by Sept. 30.

Two hundred contracts were signed in September compared with 500 in June, Gillen said.

Regionwide, that helped push condo inventory to a record 22.3 months from about 15 months in June, and it hints that fourth-quarter city transactions will plummet.

The data show that just 20 third-quarter sales were resales of foreclosed units and that those were scattered among several lower-price condo buildings in Center City and Northeast Philadelphia. In the second quarter, 11 units sold were bank-owned.

Strongest sales volume continued to be in the market's lower and middle segments, the data show. In fact, 83 percent of all condo sales were below $500,000, compared with 79 percent in the second quarter.

Auctions boosted the third-quarter numbers as well. For instance, 64 sales were directly or indirectly connected to an April 29 auction at the Phoenix, 1600-18 Arch St.

The auction was timed so that successful bidders could qualify for the tax credit, which required signed sales agreements by April 30. Minimum prices ranged from $185,000 to $415,000. Data show sale prices between $224,900 and $472,000.

The 257-unit Phoenix had 119 owners before the auction. Three third-quarter transactions were resales.

At WSFS Bank's May 15 auction at 10-unit CU257, at 257-59 N. Second St., the remaining nine condos were sold.

Minimum bid for the two penthouses, once listed at $1.2 million each, was $200,000. For the seven other units, the minimum bid was $95,000; list prices had ranged from $698,400 to $871,255. Sale prices at CU257 were between $473,000 and $650,000.

Nov. 21 will bring the next scheduled auction, of 35 units at Waterfront Square's Reef Building. Minimum bid prices will range from $195,000 to $415,000, according to Accelerated Marketing Partners, of Boston, which was the auctioneer for the Phoenix and also handled the June 2009 auction at the Murano, 21st and Market Streets.

On Aug. 30, 51 original buyers of Murano units sued developer Thomas Properties Group Inc., of Los Angeles, and others involved in sales, accusing Thomas of inflating sales numbers to boost prices.

During the third quarter, nine additional Murano units sold, at prices ranging from $450,000 to $895,000.

Ten Rittenhouse Square at 130 S. 18th St., mired in a legal battle for control between its mezzanine and senior lenders, had nine sales in the quarter, including the largest - $7.17 million for a 31st-floor unit bought by auto-parts dealer Stephen A. Thorne and his wife, Sabrina Tamburino Thorne, finance and budget coordinator at the Greater Philadelphia Tourism Marketing Corp. The other eight units sold for $616,800 to $3.7 million.

(The most expensive condo sale to date was the penthouse at 1706 Rittenhouse Square Street, bought by Theodore R. and Barbara B. Aronson in the second quarter for $12.5 million.)

Technically, the third quarter's most expensive condo transaction was $10.7 million paid by Parkway Corp. to Abington Bancorp Inc. for 40-unit American Lofts, at 212 Brown St. in Northern Liberties.

The mid-rise building - developed as condos by Creative Real Estate Innovations, then recovered at sheriff's sale by the lender and completed - now is apartments, with monthly rents from $1,300 to $3,800.

At the 53-unit Hawthorne Lofts at 12th and Fitzwater Streets - the rehabbed Nathaniel Hawthorne School, in the neighborhood just east of Broad Street - 14 units, priced from $149,900 to $279,900, went to settlement in the third quarter, with three more under agreement.

"Almost all [were] first-time buyers who were motivated by price and the fact that the units were newly rehabbed and included parking," said Mark Wade of Prudential Fox & Roach, who handled sales for developer Anthony Rufo.

"Many buyers came from outside the Philadelphia area to attend school, or start jobs here," Wade said.

He called the third quarter "a mixed bag, with the segment that saw the most activity at the lower end of the price scale."

"It is said that anyone who has the money to buy a home in July or September," Wade said, "also has the money to be at the Shore."

Richard Oller, whose GoldOller Partners L.L.C. bought half the unsold units at the Aria on Locust Street near Broad in late 2009, closed on five additional units in the third quarter, ranging from $270,000 to $757,000.

"The rebound from the summer was somewhat delayed, with activity lagging until mid- to late September," Oller said. "The pace has picked up and remained strong."

These days, Realtors and condo developers said, they are seeing increased interest from buyers motivated by record-low interest rates of 4.17 percent for a 30-year fixed mortgage.

"Lower rates have stimulated the first-time home-buyer market," said Allan Domb, whose Allan Domb Real Estate specializes in Philadelphia condominiums. "There is also a feeling that the worst is over, and we are starting to stabilize."

Read more about the condo market in Philadelphia at http://go.philly.com/condos

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