Phila. condo market is holding up well

Given the depressed state of the housing market in the Philadelphia region and beyond, sales of condominiums in the city, at least in the first quarter of 2011, were fairly encouraging.

One of the more expensive condo purchases was by Phillies pitcher Cliff Lee, on the 20th floor of 1706 Rittenhouse Square Street, for $4.85 million, records show.

Sales of Philadelphia condos January through March were better than the first three months of 2010. That said, the pace of first-quarter sales was less than the numbers recorded for 2010 as a whole.

Of the 370 sales listed by the Philadelphia recorder of deeds from Jan. 1 through March 30, 234, or 63 percent, were for units under $400,000.

All but 57 of the condos sold were in Center City or its adjacent neighborhoods. Sales prices of the units elsewhere in the city sold in the $100,000- to-$200,000 range.

Sales in the first quarter of 2010 totaled 322. There were 605 in the second, 526 in third, and 434 in the final three months.

The city condo market remains stable despite the general absence of aging suburban homeowners trading larger houses for the convenience of condos and the amenities of the city.

"These are buyers mostly without homes to sell - mainly first-time buyers and relos [relocations]," said developer Carl Dranoff, speaking of the first-quarter condo buyers.

"When the suburban resale market picks up, many more higher-end buyers will be coming into the marketplace," he said.

Median prices in the suburbs have fallen more than those in Philadelphia, a recent analysis by economist and Econsult Inc. vice president Kevin Gillen show.

Existing-home data from Prudential Fox & Roach HomExpert Report show April sales were much lower than in the same month in 2010 in many suburban counties than in the city.

"On a positive note," Dranoff said, "prices seem to be holding steady."

Gillen said that while Center City condo sales and prices are down from the peak years of mid-decade, the "median prices have consistently hovered around $300,000, for the past year, and the number of transactions still continue to be in the hundreds each quarter despite the challenging economic environment."

But, as difficult as current market conditions are, "I continue to be surprised by how much worse they could be," Gillen said.

Center City Realtor Mark Wade, who specializes in the mid-rise condo market, said first-quarter sales statistics could "sometimes be a bit misleading, especially if we have an extended winter that keeps buyers inside until April."

"Once the weather warms, buyers start their home search, and this past year, they just postponed their decisions," Wade said

Allan Domb of Allan Domb Real Estate, who specializes in high-rise units, posits that the "actual bottom" of the condo market was 2009.

"2010 was slightly better," he said, "and 2011 is slightly better than 2010."

The largest number of first-quarter 2011 sales, 49, were in Waterfront Square on North Penn Street on the Delaware riverfront.

Twenty-nine units in the newest of Waterfront Square's three towers, the 22-story Reef, which opened in 2009, were sold at auction Nov. 21 and closed after the first of the year.

Originally, 35 units were set to be auctioned, but developer Doron Gelfand stopped the auction at 29 - having shown the market, according to auctioneer Jon Gollinger, what the right price was.

As was the case with other Center City condo auctions in the last two years, unsuccessful bidders and others purchased 20 additional units.

Sale prices ranged from $235,000 to $626,000.

The effects of April 2010's auction at the Residences at the Phoenix at 1600 Arch St. continued into the first quarter this year, as sales of 10 more units, ranging from $240,000 to $652,500, were recorded.

Forty-seven units sold at the 2010 auction.

There were 21 million-dollar-plus condo sales, with six at 1706 Rittenhouse Square Street that ranged from $1.68 million to $4.85 million - the Cliff Lee purchase.

"We are two-thirds sold, and have gone to settlement on all but two contracts, which are scheduled for June," said 1706 developer Tom Scannapieco. "The good news is we have not lost a single contract."

Five million-plus sales at 10 Rittenhouse Square ranged from $1.225 million to $2.183 million (two other units sold for $475,000 and $647,334).

The rest were scattered over several Center City high-rises.

Twenty-one sales were of bank-owned foreclosed properties. While this number is higher than in the four previous quarters, it represents a minuscule share of all sales.

Wade has 12 foreclosure listings in Old City that have been on the market for about a month. Four have been sold and there is an offer on the fifth.

He doesn't expect sales of these foreclosures to have an effect on the median price of the Center City market.

"The bank has discounted them up to 10 percent from last listed prices," he said. "I don't think they will affect the market as a whole, as the sell-off is just a dozen units. Buyers are finding the value in these units, and the market is pretty much price-driven."

Gillen said the city should be grateful that this segment of the housing market was doing as well as it was.

Consider "that we nearly doubled the amount of supply just as both the housing market and economy began to severely contract, and that these new units are listed at price points that are disproportionately affordable to only relatively affluent households, and then you combine this with the fact that we have been a city that has been shrinking in population for decades," he said.

Las Vegas and Miami have experienced price deflation in excess of 50 percent, and have entire "ghost towers" dotting their skylines, even though they are generally growing in population, Gillen said.

"We've managed to get through this downturn so far without an outright and complete collapse of the market," he said.