Philly.com | By Caitlin McCabe
To get a sense of just how robust the Philadelphia real estate market has become, look no further than the city’s 19146 zip code, the Southwest Center City neighborhood that encompasses parts of Graduate Hospital, Grays Ferry, and Point Breeze.
It’s here in this 0.4-square-mile enclave that the city has seen unprecedented levels of development and home-price increases after decades of commercial and residential flight, so much so that from April to June, six homes in 19146 sold for more than $1 million ― a record quarterly high and something unheard of for the zip code just 10 years ago.
But the strength of the area, which stretches from Broad Street to the Schuylkill and from Waverly to Tasker Street, is bolstered by more than just the high-end market: In the second quarter of 2017, the neighborhood had the highest volume of sales citywide ― 329 total ― far outpacing other Philadelphia neighborhoods that have long been known for their buyer appeal.
The vibrancy of the market in the 19146 zip code reinforces what many Philadelphians have discovered: As home prices have soared in and around Center City for years, developers and buyers have been seeking better deals in bordering neighborhoods once overlooked because of deterioration and crime.
Strongest Quarter Since the Recession
The result has been a record spring and early summer for Philadelphia real estate: In the second quarter of 2017, the city recorded 5,613 home sales ― the highest number since the third quarter of 2007, and up 17.6 percent from one year ago, according to home-sales data (excluding condominiums) that were analyzed by Drexel University economist Kevin Gillen. Part of the surge has been driven by a flood of developers, into such neighborhoods as Graduate Hospital, Point Breeze, Port Richmond, and Fishtown, who have been enticed by cheaper and plentiful land, older homes in need of redevelopment, and the city’s 10-year tax abatement, which waives real estate taxes on new construction or home improvements.
In turn, buyers have been pouring in, driving home prices to record highs ― and creating both concern and excitement over increased gentrification.
Just as quickly as these areas have seen development, unexpected pockets of Philadelphia have, too. According to an Inquirer analysis of Gillen’s data, the 19137 zip code ― home to Bridesburg and the northern part of Port Richmond in the River Wards section ― has seen the greatest increase in the number of home sales in the last year, jumping 43 percent from 98 sales between July 2015 and June 2016 to 140 sales during the same period this year.
“My god, it’s out of sight,” Bridesburg-based Realtor Gary Dydak said. “We were doing sales before, but nothing like we are now. Bridesburg is definitely a hot commodity.”
Sales Activity in Philadelphia Zip Codes
The sudden interest is quite the change for tiny Bridesburg and the tip of Port Richmond, both of which have predominantly been hubs for middle-income Philadelphians, largely of Polish descent. For decades, residents said, the neighborhood was stable ― more than 90 percent of homes were occupied by their owners, and real estate transactions were largely made between family members.
Recently, younger couples have been moving in, residents say, buying older, affordable homes and renovating them. Small development companies are “popping up a house or two on vacant areas,” asking more than $200,000 for new homes, said Joseph Slabinski, president of the Bridesburg Community Development Corp., a price nearly 50 percent higher than the zip code’s current median price of $135,000 (half the homes sold for more, half for less).
Meanwhile, the Delaware River City Corp. has been working toward building a greenway in the Northeast, which would include a riverfront park for Bridesburg. And the former industrial Philadelphia Coke Co. plant, a sprawling, former gas manufacturing site, has been eyed for development.
But don’t ask Slabinski whether Bridesburg is the next hot Philadelphia neighborhood.
“Don’t tell anyone that,” he admonished, jokingly. “We like to put our finger to our lips and say, ‘Shhh, don’t tell anyone.’ We like flying under the radar in Bridesburg.”
The interest in such overlooked neighborhoods as Bridesburg ― as well as Eastwick near the airport, which had the second-highest increase in the number of sales in the last year ― indicates just how hot Philadelphia’s real estate market has become, experts say. Already, “gentrifying” areas have become pricey very quickly, while established, well-to-do neighborhoods have become almost unattainable for middle- to high-income residents.
Take, for example, the 19146 Southwest Center City zip code: In the second quarter of 2017, the median price of a home was $300,000 ― nearly 27 percent higher than the median price of $237,000 in the same period last year. Compared with 10 years ago, when the city’s housing market last peaked, the median price of a home in 19146 is 79 percent higher today.
Even more astounding: the city’s 19104 zip code, the area that includes University City, Mantua, and Powelton Village in West Philadelphia. In the second quarter, it recorded a median price of $185,700. That’s up 49 percent from $125,000 last year, and 176 percent from $67,250 a decade ago.
Which raises questions: If gentrifying areas already have seen profound price increases, what could that mean for neighborhoods on the cusp of change ― or ones that remain untouched? And in Philadelphia, one of the poorest big cities in America, what could that mean for residents living below the poverty line as development spreads?
“Development is happening” from the center, said Christopher Baker, a Realtor with Coldwell Banker Preferred. “The push went from Rittenhouse Square to Graduate Hospital to Point Breeze. It typically does not skip a neighborhood, and it’s expanding outward from the city.”
Realtor Michael P. Cohen, who is concentrated in Southwest Philadelphia, including Eastwick and the rest of the 19153 neighborhood, said he senses the urgency from buyers to find more affordable homes.
“People are looking for alternative places to live,” said Cohen, an associate broker with Keller Williams Philly. “Look at the prices in Kensington ― they are going up and up.” (According to Gillen’s data, the 19122 and the 19125 zip codes, both of which include parts of Kensington, saw median home prices increase 62 percent and 16 percent in the last year, respectively.)
“The people that were living in Fishtown are now having to move to parts of Kensington. And then Bridesburg,” Cohen continued. “I think we are running out of affordable housing.”
Part of what is driving up Philadelphia prices is a lack of inventory, known as the number of homes listed for sale, said Gillen, senior research fellow at the Lindy Institute for Urban Innovation at Drexel. His analysis is based on data from the city’s Recorder of Deeds Office and Trend Multiple Listing Service.
“Although inventories are low in many other metropolitan markets in the U.S., they have fallen to a new all-time low here,” Gillen said Tuesday. “There are currently 3,883 houses listed ‘for sale’ in Philadelphia. This is the first time that this number has fallen below 4,000 in the history of this data going back to 2001.”
The lack of available housing has fueled unprecedented bidding wars, Cohen said.
“I put up a property in Overbrook Park [in West Philadelphia] on Monday morning,” he continued. “By today, we had 11 offers. Isn’t that crazy? People are bidding over the asking price.”
Some Realtors, such as Cohen, believe all of this heat could mean the local market is due for a correction ― which Cohen believes could happen as soon as 16 months from now.
“Growth is good,” Cohen said. “Rapid growth? I don’t know if that’s as good. … It might get too expensive, and people will stop buying.”
Others, however, disagree.
“I don’t think we’re poised for that,” said Kristin McFeely, a Realtor with the Philly Home Girls branch of Coldwell Bank Preferred. “I think we will just see expansion into some other neighborhoods that are off downtown, a little farther away.”