University City housing prices increasing at higher rate
Penn has been trying to improve the surrounding area to address high levels of crime
August 21, 2013, 11:45 am · Updated August 21, 2013, 2:57 pm·
Six years after Philadelphia housing prices topped out, University City prices increased at a rate above the city average over the past year — indicative of a neighborhood revitalization driven in part by Penn’s investments.
A report released in July by Kevin Gillen, a senior research consultant at the Fels Institute of Government, shows that University City housing prices increased 11.8 percent between the second quarter of 2012 and the second quarter of this year — over 11 percentage points more than the city as a whole. While home prices near Penn dipped between the first and second quarters of this year, Gillen noted that there were only a dozen sales in the second quarter, causing “statistical noise.”
In the late 1990s under the leadership of then-President Judith Rodin, Penn began an effort to improve University City to address high levels of crime. Penn’s options were to “either build a moat around 40th Street or extend [its] borders,” said Chair of Spruce Hill Zoning Committee Barry Grossbach, who has been involved in the community since the 1990s.
“I always tell people that come through here that the important thing that Penn did wasn’t just a single thing. It was a holistic strategy,” Executive Vice President Craig Carnaroli said. “A lot of what was born out of the late ’90s under Dr. Rodin and [former Executive Vice President] John Fry’s leadership was really born out of a concern about the perception of safety of students.”
That strategy included the creation of University City District — a nonprofit that provides security, landscaping and trash removal services to the area — and a renewed focus on an employee mortgage program to attract employees to live in University City. “As they looked to buy a house in the neighborhood, it would never appraise properly,” Carnaroli said. “We were in the position of guaranteeing that difference.” Since mid-1997, 1,060 employees have participated in the loan program, which subsidizes both home purchases and home improvements. “The mortgage program incentivized a lot of faculty and staff to buy homes in University City and invest in those homes,” Gillen said. “Once you have high-end residents somewhere, the high-end restaurants and shops will follow.”
Since the late 1990s, the rate of homeownership has increased slightly, from 17 percent to 19 percent. Carnaroli added, however, that the figures can be misleading because of the high number of student renters in the area.
“Capital has been relatively inexpensive and, notwithstanding the financial crisis, when things kind of froze up. There’s been a fair bit amount of money available in the multifamily sector — for rental housing,” Carnaroli said.
As a result, there has been a revitalization of the housing market in University City.
“An average house price in the late ’90s was $100,000 to $150,000. There’s no way you could find anything for that price anymore,” Gillen said. Also contributing to rising property values in the area was the establishment of the Penn Alexander School — a partnership between the School District of Philadelphia and Penn — at 4209 Spruce St. The University provides $1,330 per student in additional funding to the school, which is one of the highest-performing in the city.
“The dearth of quality education was a huge drawback to families living here,” Grossbach said. Despite recent controversy surrounding the school relating to enrollment caps, he cited it as the single most important factor in the neighborhood’s renaissance. “I don’t think there has been anything frankly that has impacted this more than the Penn Alexander School,” he added.
Complementing the residential strategy, the University undertook initiatives to attract private commercial investment in the area. Between 1997 and 2010, Penn invested $149 million in commercial development, which led to a $489 million in private investment, according to the office of the executive vice president. That investment included the construction of the Fresh Grocer at 40th and Walnut streets in 2001 on a space that used to be a parking lot.
Future development plans include constructing more residential spaces at 40th and Pine streets — where the University faced some resistance in its attempts to demolish a vacant mansion on the corner — and an effort “to enhance both the physical appearance and the area around 40th and Market,” Carnaroli said.
While some residents decry Penn’s strategies as gentrification, Grossbach dismissed those claims. “I don’t think anyone in their right mind is going to tell you they prefer a slum to an improved neighborhood,” he said. “I don’t hear that.”