To stay ahead of the current real estate downturn, a Philadelphia neighborhood needs a certain mix of ingredients: reasonably priced housing; property-tax abatements; an active residents' association; proximity to Center City; and a blend of singles, young couples, longtime owners and willing developers.
Southwest Center City has turned out to be a prime example of all that right stuff. From Oct. 1 to Dec. 2, 73 houses there went to settlement, against a backdrop of bank failure, stock collapses and a sharp chill in the credit market. Over the last decade, the neighborhood has transformed from a swath of vacant housing to an enclave of hip rowhouses and trendy cafes, with a construction boom thrown in.
That's what attracted British transplant Andrew S. Turner, who in June closed on a million-dollar townhouse that doctor-turned-developer Joe Williams had built on Bainbridge Street near 15th.
"I walked the streets and noticed just how much development was going on," Turner said. "Every fifth or sixth house seemed to be undergoing some sort of renovation, and the area seemed to be changing very quickly."
Transferred about 16 months ago by JP Morgan from London to Wilmington, which he said he found "too quiet," Turner quickly began "to fall for the charms of Philly, and I knew this was a place I wanted to stay."
After months of house-hunting and ensuring that, as a Briton, he would be able to get a mortgage with his employer's help, Turner looked at Southwest Center City, also known as South of South.
Even though his new address had only bare stud walls when Turner first saw it, "I fell in love within about 30 seconds. . . . I knew I had found my house."
The neighborhood's turnaround has been "dramatic," says John Kromer, senior consultant at the University of Pennsylvania's Fels Institute of Government. As head of the city's Department of Housing and Community Development during the 1990s, Kromer oversaw the inventorying of vacant properties in about a half-dozen neighborhoods in partnership with Penn's Cartographic Modeling Lab.
In 1998, Southwest Center City - defined as the area bounded by South Street and Washington Avenue, Broad Street and the Schuylkill - had 553 vacant houses. A decade later, according to a study completed in the summer by the Fels Institute's Hallie Mittleman and Catherine Lamb, only 49 houses were vacant.
Just as the 1990s count was concluding, the city's real estate market began heating up, spurred by 10-year tax-abatement programs for renovations and construction.
That's when things began to change around what is also known as the Graduate Hospital area. Since 1997, the median price of a single-family house has almost tripled, from $86,000 to $232,145, says Kevin Gillen, a vice president of Econsult Corp. in Philadelphia who tracks city sales. (A median is the middle value - half the houses sold for more, half for less.)
The median price topped out at $275,000 in the second quarter of 2007, Gillen's data show, just as the region's housing boom was peaking.
More than half the houses that were vacant in 1998 have been rehabbed, await renovation, have been razed and replaced by infill housing, or converted to other uses, the Fels study says.
Toll Bros.' massive Naval Square project along 24th and Bainbridge Streets helped prompt other developers and homeowners to build and rehab townhouses by boosting confidence in long-term neighborhood investment. Among sales recorded by the city the week of Nov. 17, units in Naval Square had three of the top 10 prices, selling for more than $498,000 each.
Today, about half of Southwest Center City's homeowners are between 25 and 35 years old, the Fels study says; most had been renters previously, and 66 percent are in one- or two-member households. Nearly all are professionals, and most say they plan to stay in their houses for five years.
"If I moved, I'd keep it," first-time buyer Patrick Grenko said of the house he bought on Carpenter Street in April 2007. "There are a lot of doctors working at Penn who are looking to rent here."
The neighborhood's old anchor, Graduate Hospital, closed last year. But after $70 million in renovations, the facility reopened in July as Penn Medicine at Rittenhouse and will eventually employ 400 people.
"There has been an absolute market shift since the [fall's] economic debacle," said Realtor Jeff Block of Prudential Fox & Roach, who handles properties in Southwest Center City. Prices are relatively stable there, and "I think . . . the Graduate neighborhood in particular continues to have strong fundamentals for continued growth in the real estate market."
Nancy and Zebulon Kendrick bought near 15th and Fitzwater Streets for $817,000. They looked elsewhere in the city, she said, and "found here a combination of house, price and convenience."
"The neighborhood will certainly continue to morph into its next incarnation," Nancy Kendrick said. "We bought this house hoping that we would be able to live here for at least 10 years, and I look forward to all the changes that are bound to occur."
The Carpenter Street house that Grenko, who commutes to his job with a Fort Washington investment firm, bought for $297,800 in April 2007 was vacant in 1998, then extensively rehabbed. Living near Rittenhouse Square and South Street means "I can drive home Friday night, park the car and not have to use it until Monday morning," he said.
Cafes, restaurants and specialty stores continue to spring up.
Grenko said he and his girlfriend have been trying to visit all the BYOBs, but he wishes there were a convenience store where he could pick up milk. (At 16th and South, homeowner Mark Scott said, there is a "a new high-end deli/corner store, and a new organic market.")
Crime was a concern for Turner: "I have a 16-year-old daughter in the U.K., and when she comes out to stay with me, how safe will it be?" And there's no question that the neighborhood once had a rough-and-tumble reputation.
But resident Jill Anastasi said that has changed, and that police spend more time patrolling now than chasing down criminals. As a sign of the new times, Scott, who is Anastasi's husband, was part of a South of South Neighborhood Association effort that purchased a bicycle for police to use on patrol.
In November 2005, Anastasi and Scott moved to a block of Christian Street populated by "a couple of people who had been here 50 years, and some who arrived in the first wave in the late 1980s and early 1990s," she said.
The block had been especially blighted, with a lot of vacant houses, Anastasi said.
Their house, for which they paid $365,000, had been renovated five years before. They had looked in other city neighborhoods, she said, but found building quality better here.
"When my parents were first married, they rented on Fitler Square. When we told them where we were moving, the color drained from their faces," Anastasi said. "But after seeing it, they changed their mind, saying how quiet and civil the neighborhood had become."
(For June to December 2008)
Month Listings Av. List Price Sales Av. Sale Price June 152 $277,977 75 $313,200
July 154 $296,146 60 $255,831
Aug. 126 $255,759 50 $232,700
Sept. 153 $244,097 47 $266,410
Oct. 106 $274,421 38 $217,666
Nov. 98 $227,569 34 $191,202
Dec.* 4 $188,725 1 $259,000
Totals 793 $264,283 305 $255,828
*As of Dec. 2
SOURCE: Trend Multiple Listing Service.EndText