New construction in Center City is booming, particularly
projects by builders of $1 million-plus single-family homes.
In fact, developers can barely keep up with demand from
empty-nesters, émigrés from the suburbs, upwardly mobile families with
children, and One Percenters who want to replicate 5,000-square-foot homes in
an urban neighborhood.
"People want new construction," said Atrium
Group architect Shimi Zakin, who with developer Victor Agiv is building seven
$1 million-plus homes on the 100 block of Church Street. "We looked at Old
City, which has had no new single-family home construction for years, only
condos. We found this very private street for very high-end townhouses. All of
a sudden, it's the new thing."
Ted Libfeld's Conservatory Group is building Van Pelt
Mews, up to 5,000-square-foot townhouses fronting Van Pelt Street between
Walnut and Sansom Streets.
And in the last year, Noah Ostroff has developed
Rittenhouse Estates at 19th and Lombard Streets, eight new homes at Broad and
Fitzwater Streets, and Walnut Estates at 22d and Walnut.
Why the boom now?
Because of the baby boomers now able to move to the city,
Ostroff said. Starting in 2012, would-be buyers were finally able to sell their
suburban manses, but they wanted equity in something of similar size.
"Some couldn't buy in town because they didn't want
to carry two properties," he said. "And if they want to raise kids in
the city, we have to offer them something of suburban scope here."
The $1 million price point "has become the new
$750,000, like 'orange is the new black' for homes," Zakin said.
Overall, while Philadelphia home sales have run below
their historic average for the last five years, "million-dollar home sales
have rebounded strongly to their pre-bust levels," said economist Kevin
Gillen, who studies the region's real estate market.
An analysis by Gillen of sales data from the city Recorder
of Deeds Office shows there were 22 sales of $1 million-plus homes, including
condos, in the third quarter. The most expensive per square foot was a
townhouse on Spruce Street near Fourth that sold for $1.625 million ($593 per
square foot).
Some banks, such as Wells Fargo, are eager to lend to $1
million-plus buyers. The banks keep the loans on the books, and these buyers
require less paperwork.
Generally, the power of continued low interest rates is
"huge," said Allan Domb, president of the Greater Philadelphia
Association of Realtors.
"A 4 percent interest rate on a $1 million home, or
about $40,000 a year before tax incentives, is very doable," he said.
Noah Ostroff, his father, Harvey Ostroff, and Mickey
Murray are partners on several projects catering to two main demographics:
families who want to raise children in the city without giving up the space of
suburbia, and empty-nesters.
"The city is cool now, and they want to be in the
heart of the action, but in a house that's not a tight city townhome,"
Noah Ostroff said. Many of the new-construction single-family homes his group
is building are wider: 20 feet, rather than the standard 16 feet, with two-car
garages.
The Ostroff-Murray team's 10-house Rittenhouse Estates
pre-sold for about $2 million each and should be completed in 2015. At 1800
Lombard, they have built homes that sold for $950,000 to $1.2 million.
Conservatory Group, a Toronto developer, chose Van Pelt
Mews as its first ground-up project in Philadelphia, using Duling Construction
Management. The 12 townhouses range from 2,200 to 5,000 square feet, said real
estate agent Joanne Davidow; prices range from $950,000 to $2.3 million.
In Queen Village, new homes sprout in small infill spaces
and on vacant lots. Agiv and Zakin recently completed two townhouses at Sixth
and Kater Streets, which they sold for more than $1 million each.
"The houses are more modern, the design is classic
contemporary," said Zakin. "Are we going to be building more in this
price segment? Of course."
Source: Philly.com
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