The City in Between

For those of you who haven't noticed, philly.com posted a revised homepage over the weekend. It'll be interesting to see what people think of it. MDC

This will be a tiny post, but I wanted to flag two items: one story and one resource.

First, the Inquirer's pair of articles (here and here) on the real estate picture in the city. Despite a slowdown in year-over-year sales, the residential market seems to be pretty brisk -- and continues to push prices beyond the "old" borders of Center City (e.g. south of Washington west of Broad or north of Girard east of it).

There are all sorts of things you can say about this development, from transfer and property taxes to the changing shape of neighborhoods and the workforce. But I was struck by this assessment (which I neither endorse nor disdain) of the future picture for real estate development in Philly, by Kevin Gillen, an economic forecaster and Wharton fellow:

Philadelphia's housing has less of a high-price problem and more of a "low-income, low-quality and high-cost" problem, he said. The city's low-income population occupies old, depreciated housing stock that's very costly to replace or maintain.

"We are a city with Baltimore houses, St. Louis house prices, and Cleveland incomes, but New York costs, Boston taxes, and San Francisco regulations."

The other resource I wanted to link to also concerns real estate and neighborhoods. A site called Walkscore.com has a Google-style interface to determine a neighborhood's "walkability index," an idea that's been kicked around for a long time in a lot of different contexts. Here, though, it's popping up as a resource for real estate agents, renters, and homebuyers.

One thought that I had is that walkability, particularly in a city like Philadelphia, can be used as a proxy measure for a neighborhood's health and vibrancy, possibly independently from home and rental prices or other criteria. If a neighborhood has adequate resources nearby, in the form of schools, shops, restaurants, pharmacies and grocery stores -- and significant choices for all of those -- it's doing pretty well. This is on top of the benefits of walkability on its face.

However, there are two major resources that as far as I can tell, don't factor into a neighborhood's walkability score: access to transit and access to employment, again with a premium on significant choices for both. Clearly, the two go hand in hand -- many people don't walk to their jobs (although many in the most desirable neighborhoods do) but use transit to get back and forth. Walkability doesn't mean nearly as much if it consigns you to a particular part of the city, or means that you have access to plenty of bars and movie theaters but no way to pay for them.

Walkability A Useful Concept

Walkability is a useful concept, even if, like all concepts, it has its limits.

From my house in Castor Gardens, I can walk to many other houses and sites where community meetings are held. I can also walk to grocery stores, car repair shops, restaurants, bars, banks, tailor shops, dry cleaners, credit unions, doctors offices, insurance offices, an accounting office, a funeral home, a mortgage company, chiropractic offices, and many, many others.

Being located near main streets obviously increasing walkability. So does a good supply of middle class or upper middle class patrons.

As the number of shops in a neighborhood tends to rise and fall with the stature of a neighborhood--with the exception that shops in houses often get converted to extra rooms in an improving neighborhood--walkability is a rough proxy of neighborhood desirability. Unacceptable levels of crime limit the amount of walking, and eventually will serve to reduce the number of neighborhood establishments as well.

the crash won't come here

I've always said that I don't see a crash coming in Philadelphia so long as people want to move here, and they seem to still be doing so. There's just too much unused space in this city for it to balloon beyond all proportion of value.
And while there are a lot of beat up old houses out there, skilled home flippers are proving ever day that there are plenty of fundamentally good houses out there that just need some TLC. My block just got to 100% occupancy with two excellent flips in the last two months (besides our 6 empty lots, that is).

I think a lot of the armchair real estate quarterbacking on this site and elsewhere misses the fact that any where from 1/2 mile to a full mile out from any major node of redevelopment, like Brewerytown or Fishtown or ever-expanding U-City, there is quieter redevelopment that's also going on for the early movers (like me) that lays the foundation for a larger scale redevelopment a few years later.

There's still SO MUCH ROOM in this city, I just can't see a big crash coming. Center City will certainly soften but the supply is simply too good here.

---
The Russellian Incorporated Innovations Corporation
Lefty Homilies

You forget, the dollar is declining quickly.

Well, there may not be a crash in nominal terms but Bush and your great Federal Reserve have already trashed the dollar. So your house that hasn't decreased in value would fetch a lot less oil, gold and euros than it would have a year ago. That slide is likely to continue. The lack of decline in prices is a figment of the imagination.

--Mike
Weeds in the Sidewalk

Philly + real estate

I don't think a genuine crash is in the offing for Philadelphia for the simple reason that Philly never really saw the insane price increases as other large cities, such as Boston,
Washington, DC (Taxation w/o Representation continues; thx GOP), + NYC.

Combine this w/the glut of available housing- remember, we've got ~ 1.4 million people living in a city w/housing stock for ~ 2 million- and you see a reason why the boom didn't pump up the values so stratospherically that a crash was likely. What we're likely to see is more or less what the Inky's figures suggested: a slower rate of appreciation in home values, w/some neighborhoods doing better than others.

-Z

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