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Private Property and Public PowerEminent Domain in Philadelphia$

Debbie Becher

Print publication date: 2014

Print ISBN-13: 9780199322541

Published to Oxford Scholarship Online: December 2014

DOI: 10.1093/acprof:oso/9780199322541.001.0001

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(p.270) Appendix 2 The Reinvestment Fund’s Residential Real Estate Market Analysis Methodology

(p.270) Appendix 2 The Reinvestment Fund’s Residential Real Estate Market Analysis Methodology

Source:
Private Property and Public Power
Publisher:
Oxford University Press

The Policy Solutions Group at The Reinvestment Fund (TRF) categorized most of the city’s census block groups for work under contract with the City of Philadelphia from 2000 to 2002. (TRF is a Philadelphia-based community development finance institution.) TRF created a typology that identified residential neighborhoods as “Reclamation,” “Distressed,” “Transitional,” “Steady,” “High Value/Appreciating,” and “Regional Choice.” It then applied this typology to most of the city’s 1,816 block groups identified by the 2000 US Census. In my map and analysis, I used the label “Devastated” for TRF’s “Reclamation” areas and the label “Stable or Improving” to combine TRF’s “Steady,” “High Value/Appreciating,” and “Regional Choice” areas.

The Policy Solutions Group used a cluster analysis to create these six categories, which it called types of “markets.” That analysis relied on the indicators shown in Table A.4 to reflect “those characteristics of the people and housing most representative of ‘the market’...[and of] public and private housing programs.” TRF’s direct descriptions of its categories of “clusters,” which it called market types, and variables used in the analysis are provided in the following text and in Table A.4.1

Table A.4. Indicators of Neighborhood Type in the Reinvestment Fund’s Analysis

Variable

Indicators

Data Source1

Owner occupancy rates

Percentage owner vs. renter occupied

US Bureau of the Census

Age of housing stock

Percentage of homes built after 1950

US Bureau of the Census

Housing sales price

Most recent sale year, value, type, and price

BRT2

Demolition activity

Percentage of units demolished

L & I3

Vacancy rates

Percentage of properties vacant

L & I

Presence of dangerous properties

Percentage of properties deemed dangerous and imminently dangerous

L & I

Housing assistance programs

Presence of non–market rate rental housing

US HUD4

Mix of commercial and residential uses

Percentage of properties categorized as commercial

BRT

Consumer credit profile

Percentage of households surveyed with high and very high risk credit scores

Experian

(1) Obtained 2000–2001.

(2) Bureau of Revision of Taxes of the City of Philadelphia.

(3) City of Philadelphia Department of Licenses and Inspections.

(4) US Department of Housing and Urban Development.

Reclamation: These markets have the oldest housing and the lowest average values. While the decade of the 1990s showed substantial percentage gain in sale prices (e.g., from $15,900 in 1990 to $20,700 in 1999), those prices remained well below the citywide average. Vacancy rates are very high and signs of physical deterioration are among the worst in the city. There is very little commercial presence. Although owner occupancy (p.271) rates are high, so too are the rates of Section 8 tenancy. Resident credit scores reflected the highest average risk levels in the city.

Distressed: Some markets have home values well below the other markets. There was price appreciation in these markets, but the appreciation was based on a substantially lower base amount (e.g., from $39,800 in 1990 to $46,200 in 1999). The housing stock is old and in deteriorating condition. Demolitions, vacancies and dangerous property counts are elevated. Resident credit scores are, on average, low—meaning that mainstream financial credit is not likely to be readily available.

Transitional: These markets have housing values that exceeded the citywide average; change was minimal over the 1990s. Although in many of these markets the housing stock is relatively younger, some show signs of elevated levels of vacancies, dangerous properties, demolitions, and other indicators of physical deterioration. Transitional markets have about the lowest average level of commercial uses. These markets have the highest (p.272) average level of owner occupancy. Resident credit scores reflect greater risk than Steady, High Value/Appreciating, and Regional Choice areas, meaning that access to traditional sources of credit will be reduced.

Steady: These markets have high housing values, but not as high as the Regional Choice and High Value/Appreciating markets. Price appreciation over the 1990s was not strong. Steady markets have very little commercial presence, and owner occupancy rates are high. The age of housing reflects a substantial portion of the homes built post-1950. Resident credit scores are generally high, but showing signs of erosion.

High Value/Appreciating: These areas, like the Regional Choice markets, have very high average housing values that fluctuate with the general economic cycle. Appreciation in this market was stronger than in the Regional Choice markets. Older housing in good condition is the norm. There are fewer rentals and less commercial presence than the Regional Choice markets. Resident credit scores are generally quite good.

Regional Choice: These areas have the highest average housing values; values tended to fluctuate along with the general economic cycle experienced in this and other cities. The housing stock is generally older and in good condition. Regional choice markets have a mix of both residential and commercial uses as well as owner- and renter-occupied stock. Resident credit scores tend on average to be the highest in the city.

Notes:

(1) This methodology documentation (description of market types and variables used) obtained from The Reinvestment Fund, 2006. (p.312)