A reader reached out this week, wondering about some ongoing construction on the 2600 block of Reed. The construction seemed notable to them for two reasons, first because the new homes featured an unusual window alignment, and second because it appeared as though the homes would only be rising two stories. Both factors are obviously of interest to us, with the latter being especially worth exploring. For the most part, new construction will always rise three stories because the market generally demands as much space as possible and the cost of building two stories vs. three stories makes it nearly impossible to profitably develop smaller homes.
The exception to this rule, of course, is when the homes aren’t being built for market rate, but are instead built with affordability in mind, typically with some sort of subsidy. When the developer doesn’t have to pay full freight for some aspect of the project, two-story homes can be feasible from a financial perspective. An example of this can be found of 15th Street in Francisville, where the River Ward Group has been building two-story homes on lots formerly owned by the City and offering them for sale as workforce housing, with a cap on sale prices. And wouldn’t you know it, that’s just what’s happening on the 2600 block of Reed.
In this case, it’s Civetta Property Group that’s doing the developing, after winning an RFP from the Land Bank to purchase 19 parcels in Grays Ferry, with the caveat that the homes would have to sell for no more than $185K. Along with 2639, 2641, and 2643 Reed St., Civetta now owns properties on Sears Street, Earp Street, and 27th Street, and has started building homes on several of the other lots as well. They’re able to make a profit at this sale price because the City agreed to sell the lots for $1,000 per lot- still not a ton of wiggle room when you consider construction costs, various soft costs. But when you consider the number of homes they’re building and the likelihood of strong demand for them, the project makes sense. And to their credit, Civetta is building some interesting looking homes.
We recognize the need for additional quality affordable housing in this city and we applaud the efforts of this developer to increase the supply. That being said, we still believe that a wiser approach from a political standpoint would be to encourage and incentivize the development of affordable rental properties to help more of the folks on the lowest end of the income spectrum. It’s great that more people with moderate incomes will be homeowners as a result of this project and others like it, we’d just prefer to see these limited resources help a needier segment of the population. One explanation might be that the City still has plenty of land to give away, but the money that would be needed to support long term affordable rentals is tougher to come by. Perhaps the Housing Trust Fund can help fill some of that gap?