Philadelphia Real Estate Blog

There are clearly a number of condos for sale in Philadelphia. Duh. But what about the unmentioned “Shadow Inventory” that might be creeping up on us all? Shadow inventory, in my mind, are the condos that are part of some non-performing new developments here in town. There are a number of buildings with a hefty amount of inventory that has been sitting for quite a while, and is not selling. And the bulk of it is high rise condominiums – in generally what most buyers term as “B” locations.

IF A BUILDING HAS NOT BEEN ABLE TO SELL 70% OF ITS UNITS IN SAY 3 YEARS- THE PRICES ON THOSE AVAILABLE UNITS AREN’T GOING TO RISE ANYTIME SOON.

Prices  have a tendency to come down in such situations. Sometimes a new buyer will come in and buy the inventory in bulk, sometimes a condo auction will reset the pricing structure, and sometimes the buildings become glorified rental buildings- which simply postpones the inevitable price restructuring in the building (Delay and Pray).

Will Center City’s Shadow Inventory Come back to Haunt the Pricing Structure for Condos in this Segment? Will Philadelphia Condo Buildings that are viewed as substitutes for this shadow inventory suffer as well?

Stay Tuned..I’ll tell you what I think.

Mark Wade
www.CenterCityCondos.com
Prudential Fox and Roach REALTORS®
530 Walnut St., Suite 260 Philadelphia, PA 19106

… in a Low Rise Condo Building.

 
Just like comparing apples to oranges, an elevator vs. a NON-elevator building is just not the same. But there are a number of “red flags” I would preface this information with….

I am not suggesting that an elevator building in inherently more valuable than a non-elevator building. That is not the point. And it ain’t true in all cases. However, there MUST be some differentiation in value when you are talking about two IDENTICAL units (in terms of size, location, condition, amenities,etc) in which one is a FIFTH floor walk-up, and the other is a FIFTH floor condo in an elevator building. HUGE difference in price.

No one could tell me, with any conviction (unless they were mental) that a value difference needn’t be considered.

Most Philadelphians will hike it up to the 2nd floor without a gripe. A few noises for 3rd floor walk-ups. Fifth floor is a tall order- no pun intended.

But then again, most of the higher walk-up floors are going to be discounted. Just look at 924 Spruce St. # 301 – probably one of the best deals in town! Generally speaking, the higher the floor ( above 2nd) is going to have to be discounted more and more. These units are saleable, but adjustments need to be made.

Mark Wade
www.CenterCityCondos.com
Prudential Fox and Roach REALTORS®
530 Walnut St., Suite 260 Philadelphia, PA 19106

What I find interesting about the current state of the market, here in late Spring 2009, is that not all segments of the real estate market in downtown Philadelphia are equal in terms of it being a sellers or a buyers market. 

The hottest segment in town has got to be the two bedroom townhouse market in the 19103, or northern portion of 19146- roughly called the Rittenhouse Square area, under $400,000. Slim pickins’ should a buyer find themselves looking for housing in this crowded area. Many buyers, either Penn students, or whomever, are searching for that perfect, say, $375,000 two bedroom townhouse. I would strongly suggest that this segment of the market is a sellers market, or at least leaning in that direction- more so than any other segment of the Center City real estate market.

Conversely, I would venture to guess that an extreme buyers market is in effect in the Northern Liberties section of Center City in terms of the condo market. Simply looking at inventory levels in one clue. The other clues, or symptoms would be average “Days On Market”, and the difference between asking price and selling price of many of these units. The last hint to where any segment of the market may fall, in an extremely unscientific measure, is the amount of buyers I have who visit my website, and search for inventory in those two particular neighborhoods. The Rittenhouse Square area out weights other areas in a disproportionate manner. 

Depending on what market segment you may be interested in, may determine your ability to not only have a lot to different condos to look at, but also may provide more opportunity to bargain with any given seller. Yes, there can be a buyers market on one end of town, and a sellers market on the other end of town- at the same time.

Mark Wade
www.CenterCityCondos.com
Prudential Fox and Roach REALTORS®
530 Walnut St., Suite 260 Philadelphia, PA 19106

Twenty years ago, if you had $750,000 to spend on a piece of Philadelphia real estate, you had just two options- Rittenhouse Square or Society Hill. Or like most buyers in the Philadelphia region, you may actually have omitted the downtown options, and landed in suburbia. Back in the late 1980’s/early 1990’s, transferees into the metro Philly area would seem to magically bounce of Center City (our downtown area) and end up in a suburb. The idea of spending anything over a half million dollars to live in Old City, The Art Museum area, or say Washington Square West was just not a popular option or idea- even if you could find something in those neighborhoods in such a price range. You would have to be out of your mind NOT to position yourself front and center on Rittenhouse Square, or in Society Hill- our two mainstays for the Location, Location. Location equation.

Today, options for high end condos and townhomes in Philly are varied- not only in terms of location, but also style. Old City is a REAL possibility for many condo buyers in the upper tier. Old City is probably the one neighborhood where a high end modern loft condo has not only become a real possibility, but a true draw to many empty nesters looking to abandon such things in their lives as lawnmowers and multiple car ownership.  Fitler Square, with its quaint cobblestone side streets and small pocket gardens, as well as the Avenue of the Arts- replete with cultural activities nearby, are options that high end buyers did not exercise in the late 1980’s.  And let’s not forget the Waterfront areas, as well as Art Museum areas, and Queen Village, each offering their own attractions and pleasures of an urban lifestyle.
   
With the growth and popularity of downtown Philly, there has arisen a variety of options in which buyers should explore, before sticking with one neighborhood in which they are familiar. And it seems that all buyers coming into Philadelphia have heard of locations like Rittenhouse Square and Society Hill. With the advent of Google Street Views, and maps, one can easily learn about all of the area neighborhoods before even stepping foot into the downtown Center City area.

So take a look around, and explore. Not only neighborhoods, but also the variety of housing stock offered in the downtown area. From converted brownstone mansions, to contemporary new “green” structures, downtown Philadelphia has come a long way in the past twenty years as a viable alternative to suburban life. And it seems like the table have now turned- transferees now magically bounce off the outlying suburban areas, and end up putting their money and their belongings in a Center City townhouse or condominium.

Mark Wade
www.CenterCityCondos.com
Prudential Fox and Roach REALTORS®
530 Walnut St., Suite 260 Philadelphia, PA 19106

You call THAT an upgrade?

 
Since when are closet inserts an upgrade? When one buys an $800,000 condo, should you not be able to expect that some sort of clothes hanging mechanism would be included? Even the cheesy cheap wire mesh systems? I have seen developers try to pass off even the basic necessities as upgrades, and it is insulting. Perhaps Mr. Developer, you think my $800,000 buyer just fell off the back of a turnip truck? How the hell do you think he or she got to the point in their life where they could afford such a condominium without a brain cell or two? Dumbass.

And please stop with the patronizing “and you get lovely carpet in the bedrooms at no extra charge”. Again, you are an idiot.

And touting the virtues of a dishwasher, a garbage disposal, and/or doorbell for each condo unit?Yippee…where does my buyer sign?? If developers could take a minute or two to tour some of the condo offerings in Center City Philadelphia, and realize that the buyers I am bringing to your front door have seen almost EVERYTHING on the market, then maybe that developer could wise up, and compare apples to apples. Tell us about the significance of your location, the quality of your construction, or the fact that you are priced competitively. My buyers are not stupid, and I will not allow them to be uneducated. So wise up, and let’s make a deal. Because until you (Mr. Developer) come to your senses, my buyer’s desire to write an offer on one of your condos is going to be severely limited.

Mark Wade
www.CenterCityCondos.com
Prudential Fox and Roach REALTORS®
530 Walnut St., Suite 260 Philadelphia, PA 19106

It is difficult to put a price on a new kitchen in say, The Hopkinson House condominiums, or the Academy House condos. Though it is easy to calculate what the seller may have paid for the new granite, the appliances, and the cabinetry, but what about all the other costs associated with a new kitchen in an existing high rise condo here in Philadelphia?

Consider the fact that you have to first plan for the new kitchen. You measure, you check, you curse, you get confused, you wing it, and you now have some plans. But you have to pull permits from the city. And get approval from your condo association. You then must shop for all the new ingredients- including baseboard, toekicks, quarter round, and backsplash tile. You then need to get rid of your old kitchen. It is not like you can just throw the sink down the trash chute. And you have to live with this mess. And without a kitchen for a while as well. Then you have to take delivery of the new cabinetry and appliances and all (from M-F 9am-4pm only in most Philadelphia condo highrise buildings) and see that your delivery men get a parking space, don’t bang the walls in the hallway, etc. Next plan for something to go wrong, and put your plans back 3 weeks. It happens. All the time 🙂

So congratulations. You now have a new kitchen. And a healthy respect for EVERYTHING you had to go through to get this new kitchen inside your new Center City condo. And you swear you will never do it again. So, you still think that new kitchen in the condo you are looking to buy is only worth $20,000?

Mark Wade
www.CenterCityCondos.com
Prudential Fox and Roach REALTORS®
530 Walnut St., Suite 260 Philadelphia, PA 19106

…and floor height isn’t the only factor affecting values within the same buildings.

Probably the most overlooked effect on value to high rise condominium is the view that any particular piece of Philadelphia Real Estate has to offer. And not all views are created equal. Let compare and contrast a few different scenarios. All are based on my opinion, as a fairly seasoned realtor who specializes in condo sales I have learned a great deal about the effect on value that particular views may or may not have, and any given buyer’s perception of how that view might affect their desire to purchase.

 
1) It is possible for a posh condo to nearly double in value if it has a highly coveted view. Think Central Park.

2) In some buildings, the highest values have been posted not only on the highest floors, but also on what we call “treetop” view. A very nice view of the treetops, say on the 5Th floor of a high rise condo can be very appealing to a number of buyers

3) A condo on a high Floor does not always warrant a higher sales price. IS there a benefit to looking directly into a neighboring high rise condo building- from the 27Th vs the 8Th floor?

4) I personally have found few buyers to discriminate between an East vs West view. However, a number of condo values are greatly affected by a North Vs South view.

5) Not all views from the 16Th floor of various buildings are the same. Think about ceiling height, and windows that run floor to ceiling. The building itself can manipulate either the view, or the feeling that the view offers, and this in turn will affect resale value and overall appeal.
 
At times, the need for a good view can be bypassed if a condominium has great light. There are many Rittenhouse Square condos that offer tremendous natural light, be it north or south, east or west, that don’t necessarily have great visuals. I find a lot of buyers will fore-go a great view if the natural light is strong. Conversely, I find that a great view will not overcome the weakness of a dark condominium. I would suggest that natural light is a stronger motivator than a great view- at least in terms of resale ability.
So know that it has been my experience that view does indeed affect resale price and the time it may take to sell any given Philadelphia condominium. Though direct “park views” are the most desirable, there are compensating factors, and issues that can compensate for a lovely tree lined view of say, Washington Square. One needs to consider the window size, ceiling height, amount of natural light, and of course floor height. All factors should be considered when determining the resale ability of any given Philadelphia condo.

Mark Wade
www.CenterCityCondos.com
Prudential Fox and Roach REALTORS®
530 Walnut St., Suite 260 Philadelphia, PA 19106