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Residential rehabbers push into north city: 'We broke down that Delmar Divide' - SLBJ

Real estate investors are rehabbing and selling homes north of Delmar Boulevard in neighborhoods adjacent to the affluent Central West End and DeBaliviere, transactions that, while small in number, are bringing unheard-of sums for the area and leading to hope that the region’s long-standing dividing line for race and wealth may be starting to break down.

“People are starting to see home values shouldn’t change just because you cross the street,” said Antione Lawrence, a broker for Hybrid Real Estate who sells in the West End neighborhood.


In recent years, the value and number of building permits — mostly a reflection of residential rehab activity in the historic areas — are up significantly in the Academy neighborhood, and remain strong in the West End.


Prices in those and other north St. Louis neighborhoods abutting Delmar illustrate the turnaround: The city of St. Louis has said that appraised values for single-family homes in the 26th Ward, which includes the West End and Visitation Park, rose 8.3% from 2019 to 2021, while values in the 18th Ward, which includes Academy and Fountain Park, increased 3.7%.



“People are starting to see home values shouldn’t change just because you cross the street,” said Antione Lawrence, a broker for Hybrid Real Estate who sells in the West End neighborhood.

ALLEN B


ZIP codes that include those neighborhoods are seeing homes sell for larger sums, according to the St. Louis Realtors, a trade group. The 63113 and 63112 ZIP codes, for example, saw median sale prices of $73,000 and $180,000 last year, up from $45,000 and $167,000 in 2018.


Developers say the change — with buyers willing to pay hundreds of thousands of dollars in some instances — has allowed them to embark on luxury rehab and other projects in the areas.


No one suggests that heavily Black north St. Louis – which saw a major exodus of residents last decade and still counts thousands of vacant lots and structures, many owned by the government – is experiencing a widespread renaissance. But the developers believe that in their targeted areas of the city, they may be witnessing an initial dismantling of the so-called Delmar Divide.



Rodney Norman, a former IT professional, lived for decades near Dallas. But after seeing how little his parents’ West End property would fetch on the market, he and his wife, Juanita, decided to move back to St. Louis to rehab and sell his childhood home.

DILIP VISHWANAT, SLBJ

'URBAN PIONEERS'

Rodney Norman, a former IT professional, lived for decades near Dallas. But after seeing how little his parents’ West End property would fetch on the market, he and his wife, Juanita, decided to move back to St. Louis to rehab and sell his childhood home.

In 2007, when they got to town, almost no one was rehabbing houses in the West End, he said.


In the past two years, he’s fixed up and sold houses along his parents’ street, Maple Avenue. Now, the market is finally developing, Norman said.


“We are urban pioneers,” he said. “And we feel that we have motivated other people to look at Maple because there’s activity on our immediate block.”


Norman sold his first house on the block in 2019 for $270,000, city records show, after he bought it in 2015 for $25,000 and rehabbed it.

Meanwhile, Norman said he put $140,000 into his childhood home, and in May sold it for $339,900, the government said.


Lawrence, the West End broker, said he calculated that the property fetched more per square foot than similar houses in the Skinker-DeBaliviere and DaBaliviere Place neighborhoods, just south of Delmar. That idea prompted resistance from other real estate agents and appraisers, he said.


“It sent shock waves,” Lawrence said, adding that the price of a West End home primed for rehab has doubled, to about $80,000, in a year. “We broke down that Delmar Divide area in terms of price.”


Now Norman said he’s fielding offers up to $415,000 on another Maple Avenue rehab project that’s in the works. He believes it could sell for closer to $500,000.



Kevin Bryant's Kingsway Development owns development rights to 200 acres north of Delmar.

DILIP VISHWANAT | SLBJ


'DELMAR IS PSYCHOLOGICAL'

It’s not surprising that momentum from the desirable and built out Central West End and DaBaliviere would spill into adjacent neighborhoods, said developer Kevin Bryant, whose company, Kingsway Development, owns development rights to 200 acres north of Delmar.

“We are essentially the affordable side of the Central West End,” he said. “Delmar is arbitrary. Delmar, more than anything now, is psychological.”


A commercial district on Delmar between the Loop and Central West End has seen significant development, including the Third Degree Glass Factory, MADE maker space, Magic House at MADE and Craft Alliance Center of Art + Design. Other major commercial projects aimed at drawing investment north of Delmar are also taking shape, notably the mixed-use Delmar Divine and Kingsway, Bryant's development.


The area benefits from its proximity to two of the region’s largest employers, Washington University and BJC HealthCare. Employees of either institution are eligible for an $8,500 forgivable loan for buying a house in the nine neighborhoods closest to the school, with options added in recent years north of Delmar.


Brian Phillips, the assistant vice chancellor at Washington University Medical Center who developed the program in 1998, is renovating a house he purchased in the West End that he hopes will be ready for him to move into this spring. The West End was attractive for sentimental reasons since Phillips lived nearby for part of his childhood, but mostly because of what he sees happening in the neighborhood now.


“I love the neighborhood because of its diversity and people of all income levels, and it’s close to a burgeoning Delmar corridor,” Phillips said.


As more people move north of Delmar, it will become easier for developers to see the value in the residential stock there, Bryant said.


He plans to create a residential square around the oval-shaped Fountain Park. The first of 40 planned new homes is nearly finished, and could go on the market in February for $225,000. At that price, it will sell for a loss made up by historic tax credits, Bryant said.

When he started work in the area six years ago, few others were interested. Now, developers call Bryant daily to ask about opportunities north of Delmar, he said.

“I’m the canary in the coal mine. If I’m successful in the couple blocks that I’m developing, it’s going to attract other investors,” Bryant said.


MAKING A STATEMENT

Developer Guy Slay of Mangrove Redevelopment started looking to overhaul homes north of Delmar after more than a decade redeveloping buildings around the city, especially in Forest Park Southeast.


Slay remodeled and in 2015 moved into a house in Visitation Park, got involved in community organizations, and started using state and federal historic tax credits to remodel seven houses on Maple and Vernon avenues near Union Boulevard.

Slay said he's renting the properties for at least five years, to comply with federal requirements tied to the credits but also to see whether market prices catch up with his investments.


Slay said he sees houses in Visitation Park and Academy selling for more now than when he started in the neighborhoods. The upward trajectory is inevitable for historic homes within walking distance of Forest Park, he said.


"We pick the houses that were really headed for the wrecking ball, that were burned out and gutted out on the inside, but they’re beautiful, spectacularly built homes from another era," Slay said. "What I love about that is I’ve gone up and down Union since the 1970s, and I've always admired that spectacular architecture. But it was off a lot of people's radar for a long time, except for the people who lived there."


Bryant and Norman said that banks have been reluctant to finance their projects over the years.


The reasons can make sense on paper: Not enough houses have sold on their streets to serve as comparable sales, or houses have deteriorated so much that they cost more to fix than banks believe they’re worth, a problem known as the appraisal gap.


“That’s been my hardest fight, finding banking partners who believe in me and this plan enough to invest a few bucks in these homes while we turn the market,” Bryant said.

To get around those barriers, Norman self-financed and created his own comps by making Maple Avenue a “statement street,” a showcase of what could be done. Bryant, meanwhile, has worked with the city on a new housing fund that uses New Markets Tax Credits, which are typically reserved for businesses.


“When it turns, it’s going to be obvious,” Bryant said of the area’s residential real estate market. “People will be kicking themselves. We’re just about there, but just not there yet.”