FOR IMMEDIATE RELEASE
PHILADELPHIA (February 19, 2019) – In 2018, 2,810 new housing units were completed in Greater Center City – the largest number since Center City District began tracking the market almost 20 years ago. Strong growth is continuing at the beginning of 2019 with 3,017 more housing units under construction in Greater Center City, based on a new report from Center City District, Building Out From The Core: Housing Report 2019.
“The strong downtown narrative is a prominent, but not dominant, part of the total housing story in Philadelphia,” CCD President Paul R. Levy said. “It should be neither exaggerated nor prompt over-reactions through local policies that could stifle growth.”
The majority of housing built in and around the downtown during the past eight years focuses on renters: 72% of the new housing units added since 2010 are apartments (10,660 units); 4,143 for-sale condominiums and single-family homes were delivered during the same period.
New housing development is highly concentrated in limited areas: 46% of new units in Philadelphia are in Greater Center City, and 80% are being built in Greater Center City or its five adjacent ZIP codes – an area comprising just 17% of the city’s geography.
Compared to many peer cities, Philadelphia prices remain moderate; growth is modest and reinvestment is limited in geographic scope. While there has been a lot of discussion of “luxury” housing in the city, housing sales in excess of $1 million have constituted just 0.5% of all home sales and 5.3% of all condo sales in the city between 2010 and 2018. Only 1,593 out of 158,863 – or just 1% of the sales of homes of all types citywide in the previous eight years – have been for more than $1 million. In 2018, 78% of houses sold in the city were priced at $250,000 or less; only 0.4% were priced over $1 million. The Philadelphia region is the 15th most affordable of 91 global metro regions of more than one million people with free markets.
Housing development is expanding beyond Greater Center City. The areas just to the north are experiencing the most activity. More than 3,000 units are under construction, or recently completed, in the 19121, 19122 and the 19125 ZIP codes. Along the Market-Frankford Line, passenger volumes entering SEPTA’s five rail stops that serve the neighborhoods between the Spring Garden and Huntingdon stations have increased by 22% since 2010 and by 78% since 2000.
Recent development is driven by positive employment and demographic trends, particularly the growth of the millennial generation, now larger than the baby boom generation. But, millennials are no longer as young as they used to be. Nationally, regionally and locally, there soon will be fewer 27-year-olds than 37-year-olds as the supply of young people to replenish Philadelphia tapers down over the coming decade. As older millennials age into mid-career professionals, many will look to buy homes and start families. It becomes increasingly important, from both a workforce and a housing market perspective, to keep them in the city.
Beyond Center City and adjacent neighborhoods, many sections of Philadelphia have stable housing markets without much new, outside investment, while other neighborhoods continue experiencing long-term disinvestment, deterioration and weak demand. The city still loses 7,000 more households to the suburbs annually than it gains – many of which, contrary to widespread assumptions, are households without children. Moreover, the tide of younger new residents moving in or near the downtown is not enough to offset older trends elsewhere in the city, as Philadelphia’s job levels and household incomes trail behind our peer cities.
Lower income families in Philadelphia face a major affordability challenge that is due primarily to low incomes, rather than a reflection of high rents or high sales costs. Of households making $50,000 or less, 200,000 are significantly cost-burdened, spending more than 30% of their income on housing costs. Compare that to the 33,339 publicly subsidized affordable housing units across the city and you have a measure of the magnitude of the challenge Philadelphia faces.
Given limited federal funds, Philadelphia has increased the amount of funding it is providing from its general fund for housing improvements, which is a good approach. Philadelphia needs to tread carefully, however, with efforts with efforts to fund lower-income housing by increased fees on housing for the middle or upper middle class.
There is a significant difference between the local redistributive capacity of cities like San Francisco which has a median income of $110,800 and has grown jobs annually at the rate of 3.4% since 2009, or Seattle, with $86,800 median income and 2.6% job growth; or New York City, with $60,900 median income and 2.5% job growth; and Philadelphia’s median income of $39,800 and growth rate of 1.5% – 23rd slowest of the country’s 25 largest cities, despite the acceleration during the last few years.
“Faster growth, more jobs and rising incomes should be the top priority for Philadelphia’s leaders both to improve housing opportunities for lower income households and to retain our time-limited surge of millennials in the city,” Levy added.
To see the 20-page report, using data from city, state, federal sources along with extensive, original research and a wealth of statistics, charts and graphics, visit- Building Out From The Core: Housing Report 2019.
February 19, 2019 | Strongest growth in housing production in Center City Philly area since 2002, new report finds, philly.com
February 19, 2019 | Record number of housing units built in Center City last year — but not enough to offset old trends, PhillyVoice
February 19, 2019 | Record number of housing units added in 2018, most from core of Center City, KYW Newsradio 1060
February 21, 2019 | Report: Bright spots in Center City housing market but room for improvement, Philadelphia Business Journal
About Center City District
Center City District, a private-sector organization dedicated to making Center City Philadelphia clean, safe and attractive, is committed to maintaining Center City’s competitive edge as a regional employment center, a quality place to live, and a premier regional destination for dining, shopping and cultural attractions.