Expert: Richard Taylor, AIA - 4/29/2005

Question
I am looking to own property in the center city area of philadelphia. The houses here are typically row/townhomes. Im wondering if its cheaper to purchase a property (150,000-200,000 average price) in need of major renevation (ie gut job) or to purchase a lot (100,000) and build new on the land. Any help would be greatly appreciated.

Answer
Hi Chris - thanks for your question!

There's no easy answer to this one - you've got to start by sitting down and making of list of your priorities.

For example, if your priority is the convenience and prestige of living in an area like Society Hill, for example, then no lot outside the city at any price will do for you!  No matter what kind of new home you build, you can't replicate the experience of living in the middle of the city.

If it's strictly about price, then a new home would definitely be less expensive than a total remodeling in the city.  The kind of project you're talking about can get very expensive, especially when you are in an architecturally-controlled area (which is the case in many restored city centers).  A brick townhome in center city Philly for $200k could end up needing $500k or more in remodeling by the time you're done.  That same $700k will buy a nice 3,500 sf home on a big lot outside of town.  Your total gut and remodel will also jerk your property taxes through the roof!

What about appreciation?  Chances are that a well-done remodel in Society Hill will bring quicker appreciation than a typical suburban home, especially with all the new construction and improvement going on downtown right now (they can't do anything BUT improve the roads, right?)

Bottom line is that the least expensive way is to build outside of town.  But when you add appreciation, quality of life, and access to cultural attractions, parks, etc., you might find life in the city pays you back in ways you didn't expect.

Hope this helps!

Richard Taylor, AIA
Richard Taylor Architects, LLC