Philadelphia Housing: Pricing, Homeownership, and New Builds
What You Need to Know:
- Housing prices in Greater Philadelphia have appreciated more over the last forty years than at the state and national level. The most accelerated local growth occurred during the early 2000s and between 2016-2019.
- Amongst Philadelphia residents, the overall homeownership rate declined from 54% to 52% between 2012-2022. As of 2022, the white population has the highest homeownership rate of 58%, while the Black population has the lowest homeownership rate of 48%.
- Philadelphia County’s housing stock is far older than those in many of its neighboring counties. In Philadelphia, 41% of the current housing units were built prior to 1940, while only 15% were built since 1980.
Housing Price Appreciation
The Federal Reserve Economic Data (FRED) platform provides metrics for numerous economic indicators at the local, state, and national level. The House Price Index estimates change in single-family house prices over time using sales and appraisal data from the U.S. Federal Housing Finance Agency [1]. This index indicates growth over time based on a given starting point.
Figure 1 compares housing price growth over the last forty years in Greater Philadelphia, Pennsylvania, and nationally. Using 1980 as a starting point where the index is set to 100, we can visualize year over year growth across the three domains. While the actual value of the index is arbitrary, the change in the index between each interval represents the percentage change in housing prices. For example, the index’s movement from 100 to 104 translates to a 4% appreciation in single-family homes that quarter. The index is not adjusted for inflation, therefore it is expected for the index to show growth over time.
Figure 1 shows that housing prices in the Philadelphia region have appreciated more since 1980 than prices statewide and nationally. It also illustrates which time periods experienced comparatively faster or slower growth. Philadelphia area prices rose at a similar rate to the state and nation between 1980 and 2001, but grew more quickly between 2001 and 2005. While prices declined in all three geographies between 2008 and 2011, national prices recovered the most quickly through 2016. From 2016 to 2019, Philadelphia price growth again outpaced the state and national level, but state and national growth overtook local appreciation in 2021 and 2022.
Figure 1:
Source: FRED Quarterly House Price Index
Homeownership Rates Across Demographic Groups
Home prices have risen sharply over the last ten years, as the overall homeownership rate in Philadelphia has fallen slightly. Figure 2 shows ACS estimates for changing homeownership rates across demographic groups since 2012. In Philadelphia as a whole, homeownership rates fell from 54% to 52%. White and Black homeownership rates both fell by a few percentage points over the ten-year period, though for the first time, Black homeownership rates dipped below 50%, while white rates fell from 61% to 58%.
Homeownership rates amongst Asian, Latino, and Native residents have experienced an upward trend since 2012. The Asian population saw the largest increase in homeownership, rising from 50% of residents in 2012 to 57% in 2022. However, homeownership within the Latino population saw the most fluctuation across the ten-year period, falling by 4 percentage points between 2012 and 2017 and then rising 6 percentage points between 2017 and 2022.
Figure 2:
Availability of New Housing Units Across Greater Philadelphia
Figure 3 illustrates one further facet of the housing market in Greater Philadelphia: the pace of new housing being built across the eleven counties. Without access to data tracking the quantity of new builds each year, we look instead at the age of current housing units as of 2022. Across the eleven counties, housing built since 2020 makes up 1% or less of the current housing stock. Units built between 2010-2019 makes up between 3%-8% of available housing. New builds from 2000-2009 make up 18% of housing in Cecil County, yet only 3% of Philadelphia County units.
Filtering Figure 3 to view all units built since 1980, there are some noticeable differences between counties. Units built since 1980 make up more than 50% of current housing in Cecil and Chester Counties, and more than 40% of current housing in Bucks, Burlington, Gloucester, and New Castle. However, units built since 1980 make up only 19% of housing in Delaware County and just 15% of housing in Philadelphia County.
Similarly, there are striking differences in the prevalence of old housing structures across the eleven counties. Units built in 1939 or earlier provide 41% of housing in Philadelphia County, nearly twice as much as any other county. In Salem and Delaware Counties, 22% of current housing was built prior to 1940, while in the remaining counties, less than 20% of housing comes from this period.
Figure 3:
Source: ACS 5-year estimates
Conclusion
As housing prices continue to rise alongside inflation and high interest rates, some potential first-time buyers are hesitant to enter the housing market, instead choosing to rent homes. This is reflected in the slight decline in the homeownership rate amongst Philadelphia residents since 2012. The rise in homeownership rates among Latinos and Asians may eventually balance out the decline in rates among white and Black Philadelphians, but that is not yet the case.