West Chester Real Estate Trends (Posted March 31, 2006)
With yesterday's news that mortgage rates have risen again, following months of articles asking if the "real estate boom" is finally over, WCJIM took a few minutes to review some trends for real estate prices in the Borough. The first observation will surprise no one -- prices continued to rise, at least through November of 2005. But there is also evidence that some parts of town are "cooling off" while other parts show signs that the boom is still underway. The F&M Building, shown to the right, sold for $3.76 million in 2004. Previously, it sold for $1.1 million in 1997 and just $130,597 in 1975!
The highest prices in the Borough went for commercial properties. The single most expensive property sold in West Chester during this period was the F&M Building at High and Market Streets : $3.76 million. The former Penn Mutual Building at 15-21 E. Gay Street was a close second at $3.6 million (which included a parking lot on Matlack Street), while one of the buildings constructed on the old Fermtech site at 530 E. Union Street sold for $2.85 million. Other big ticket properties included 117 W. Gay Street for $2.2 million, the Italian Social Club for $1,619,822, the former Integra Medicus factory on S. Franklin Street near Lacey St. for $975,000 and the former Gawthrop Greenwood law office at 119 N. High Street for $950,000. The second highest prices were for apartment complexes: $1.05 million for Franklin Court Apartments (corner of S. Franklin St. & Rosedale Ave.), $1.35 million for the apartments on Marshall Street just west of High St., $1.5 million for Rosewood Apartments at the south end of S. Walnut Street across from Bayard Rustin Park, and $1.54 million for Carriage House Apartments at the corner of Market and Brandywine Streets. Ironically, all four of these sales involved members of the landlord group who sued the Borough to contest an increase in rental permit fees from $36 to $42. To no one's surprise, the most expensive homes were all in the Borough's north end. The highest was $949,000 paid for a home on N. Matlack Street facing Marshall Square Park in late 2005. The second highest was $902,000 for a home in the 700- block of N. Walnut Street. A house in the 100-block of W. Virginia Avenue came in third at $875,000. At the low end, there were still some houses available for less than $100,000 in 2003. For around $50,000 you could have bought a condominium unit at 420 N. Everhart Ave. (north of Hannum Avenue, behind Oak Place Apartments) or a row house in the vicinity of New and Chestnut Streets. For around $75,000, you could have found something better in the same neighborhood, but under $50,000 all you could get was a vacant lot or a condemned building. For instance Habitat for Humanity bought a derelict house on E. Barnard Street for $32,000 in order to tear it down and build a new one on the site. In 2003 $100,000 bought something east of Walnut Street in the southeast quadrant or else on W. Washington Street between Church and New Streets. For $50,000 more, possibilities opened up in the area around Darlington and New Streets or on the east side near the Melton Center. If you could muster $200,000 then you had your pick of neighborhoods -- all except for the area north and west of Marshall and Franklin Streets. By 2004, all of that had changed. There were only 23 sales that year for less than $100,000, and most were either vacant lots or rental properties in desperate need of maintenance and repairs. In 2005, there were only nine sales under $100,000, including the afore-mentioned Habitat for Humanity purchase and a couple other houses which were immediately gutted and rehabbed. The following table shows the number of home sales in each of the Borough's voting wards, based on published information from the County Tax Assessment Office through the end of November 2005. Number of properties sold* in West Chester by ward, 2003-2005 Year 1 2W 2E 3 4 5 6 7 Total 2003 48 19 39 25 38 20 72 60 321 2004 33 20 41 19 41 28 52 56 290 2005 17 19 52 19 34 24 37 53 255 * Although efforts were made to identify actual property sales, these numbers may include refinancing and/or transactions intended to change the names on a deed.
It appears that between 2003 and 2005, there was a gradual decline in the number of sales throughout the Borough, a steady decline in sales activity in the northeast part of the Borough (ward 1), and a lesser decline in the northwest (ward 7) where activity along the south end near St. Agnes and the Beer Mill offset reduced activity in the north end around Hoopes Park. There was also a drop in the western half of town center (ward 6), although that may be due to an artificial spike in investor activity in 2001-2003 around the time that the County announced its intention to build on W. Market Street. Finally, sales activity in the south-central part of the Borough (ward 3) located between High Street, New Street, Union Street and the University also declined, for no apparent reason. Wards 2W and 4, the so-called "Southeast," both showed steady or increasing activity, as did the southwest (Ward 5). The largest increase percentage-wise was in Ward 2E east of the railroad tracks and south of Gay Street, thanks to investors who sought bargains in a neighborhood that began to show dramatic improvement with the creation of an active neighborhood association and the influx of state money for the Elm Street project.
Almost everybody who bought and resold a property between 2003 and 2005 in the Borough made money on the transaction. There were differences, however, in how fast property values appreciated in different parts of town. For instance, in the northeast where housing is usually well- maintained and there are less opportunities to rehabilitate a low-cost property, the average monthly increase in value of was about $3,300 and one investor even lost money. In contrast, there were more properties in need of rehabilitation in the east end, so there the average monthly increase was over $10,000. [Disclaimer: These figures should be read with a great deal of caution since they obscure relevant information such as the length of time that a property was held before resale. In each ward, properties that turned over within a few months generated much higher average monthly increases than properties held longer. The average for 76 properties that turned over within the two-year period was just under $9,200 per month.] The house to the right, located on Nields Street, sold twice in just over two years and more than doubled in price from $99,000 to $205,000.
What will the future hold? If WCJIM knew that, he'd be dealing real estate instead of writing this web page. But one thing seems to be certain -- the really easy money in rehabilitating real estate has already been made here in West Chester. With property values at a record high, further investments will most likely be made by wealthy professional investors rather than by "handyman carpenters" and "do-it- yourselfers."