Tuesday, January 3, 2017

Media PA is about to be hit with a glut of luxury housing in the next 18 months. That'll be good for renters/buyers, but what will happen in the long term?

"A housing bubble is a run-up in housing prices fueled by demand, speculation and exuberance. Housing bubbles usually start with an increase in demand, in the face of limited supply which takes a relatively long period of time to replenish and increase. Speculators enter the market, further driving demand."
I'm told the three golden rules of real estate are 1) location, 2) location, and 3) LOCATION!  I suppose if it was that easy there'd be a lot more people buying and selling land and making a really nice living.  One ingredient quite often overlooked and perhaps the 4th golden rule, can no doubt be timing.  Here's how that applies.

Ten years ago many in the borough thought that bringing a hotel to Media was the right idea, at the right place and at the right time. (sorta like love, i guess.) The idea was solid, the location was less so, and the timing of it all proved to be its ultimate undoing.  The "timing" part was mostly due to the cyclic ways real estate and financing ebb and flow in any given boom and bust period.  There is a political element there, but for the sake of this discussion, that's been omitted from this article.  Having spanned from 2006 to now, when a hotel in Media was first proposed, we've certainly seen one of the biggest real estate runs and the associated crash in recent memory.

What we see in and around Media today is an explosive race towards high-end luxury housing that really ramped up in the last 3 years.  During 2013 came Rose Tree Reserve featuring 112 luxury townhomes, along with Jefferson Square who announced in late 2014 their 26 units.  Then we saw commitments toward West End Flats (161 units), West End Walk (26 units), Promenade at Granite Run (400 units) and perhaps as many as 24 more by Media Real Estate starting in 2017.

Within 1.5 miles of Media, including the borough, there will be an insane amount of supply on the market in the next 18 months.  That's over 700 units going at an estimated cost of about $1,500 per month and higher. Granted, some are townhomes, but they can typically be more expensive!  At what point would one spend more to own a townhouse, as opposed to living in an apartment at a similar monthly price?  Walking around State Street?

It's impossible to call the top of a real estate cycle, but what intrigued me most was a story by the Wall Street Journal yesterday that practically shared the same concerns towards a high-end luxury housing bubble that one could say is upon us here in Media.  A "building binge" they called it and it is happening in almost every large metropolitan area across the country.  The WSJ went on to say, "But a slowdown is happening. In a report set to be released Tuesday, MPF found that rents rose a modest 3.8% in calendar year 2016, a significant drop from the recent high of 5.6% year-to-year growth in the third quarter of 2015. Monthly rents now average $1,248 nationally."  The monthly rent for a West End Flat unit should easily beat $1,248 by hundreds of dollars.
Ravencliff Development

They also pointed out that NYC, among other cities, will be flooded in 2017 with 30,000 units, twice the historical average.  Per apartment market data company Axiometrics, roughly 85% of the housing being built in NYC are luxury units. Comparatively speaking, the Media area will have over 700 units and I'd say maybe 95% percent are luxury oriented (> $1,500 per month either rent/mtg.) Or, granite kitchen counters and stainless steel appliances could also pass as "luxury" depending on who you ask.

Higher supply will create a renters/buyers market, but could there be possibly too much inventory to realistically work through?  I haven't even mentioned Ravenscliff off of State Road, which has at least 70 units built and maybe that many more under construction.

As for Media's Luxury Housing Market?  The right idea? Perhaps.  The right location? Looks to be. The right timing? Time will surely tell, it always does.


  1. Lack of hotel led to demise of Towne House fewer wedding receptions.

    1. Wedding receptions, is just one example.. Wedding rehearsals, confirmations, bar/bat mitzva, funeral reception/wake, baptisms, significant Birthdays, anniversaries, reunions. You used to be able to hold all these things at Media Inn. You're typical Hampton would not accommodate these either, bit a nice hotel would.

      The Brandywine Craft Brewers festival might also see huge expansion potential if there was a nice place for non-locals to spend the night after. (I feel like I need a tetanus shot just walking past The Raven)

    2. You speak of needing a tetanus shot walking past The Raven motel, but this is the way I always felt about the Media Inn. Maybe when it was new it was something different, but I thought it looked disgusting, and was thrilled to see it torn down. I never ventured inside, and when I saw the interior as it was being demolished, I was glad I hadn't. I don't know who would ever have chosen to hold a bar/bat mitzvah, rehearsal dinner, or anything else significant there. I only knew it as the place with the sad perpetual banner advertising their singles' mixers for those over 50. I do wish that The Raven and America's Best Value Inn would both be demolished, as well as the old defunct Penn medical building that inexplicably sits on this huge lot at the corner of Beatty and Providence Rds.; these are all spots that could have thriving businesses, but instead are contributing to blight. I would love to know what the holdup is to building on the former site of the Chinese buffet restaurant, on the block that sits between Dunkin' Donuts and the A+ gas station on Baltimore Pike. That could be a great spot for a hotel.

  2. The new pipeline will most likely blow everything up anyway

  3. you didn't mention the impact on the School District. It will bring more tax money and if it's mostly high income older buyers that will have minimum impact but if there are lots of school age kids District costs will rise significantly in the long run. Right now difficult to predict.

  4. Lets run out all the working class people in Media.

    1. Amen not everyone can play tennis