In the past decade, Philadelphia’s base of renters has seen an incredible surge and now rivals the homeowner population in this city of approximately 1.5 million people. According to a recent study from online rental and real estate company Zillow, the number of Philadelphians renting properties rose 6.1 percentage points from 2006 to 2016. Since the latest numbers were assessed, Zillow found that approximately 52 percent of the Philadelphia populations own their own home, compared to 48 percent who rent.
What’s even more intriguing is that the Philadelphia apartment rentals market has grown at a stronger pace than the more obvious contenders, such as New York, Chicago, Los Angeles, and Houston. While the typical American Dream usually includes owning a home (especially one with a white picket fence), young adults, and even families, nowadays are opting to rent. Some experts believe that this trend surfaced not as a path to homeownership and a means to an end but as the ‘end’ itself.
When the housing bubble burst in late 2008, and a recession ensued, the current millennial generation was on the cusp of adulthood. Millennials had little choice in their housing opportunities; they almost had to rent because homeownership was out of reach.
However, many millennials are actually choosing to rent due to their lifestyle, perspectives, and life goals. According to Forbes, some millennials wish for flexibility in their housing options, giving them the opportunity to relocate easily. Another reason is that millennials saw the previous generation lose their homes in 2008, making them fearful of taking the homeownership plunge.
Philadelphia saw an increase in the millennial generation within city limits; according to a 2014 Pew study, the number of individuals in the 20 to 34-year-old age bracket increased by approximately 100,000 people from 2006 to 2012. Many millennials choose to live in the Center City, with many more in University City and the northern half of South Philadelphia, according to Pew. Still, others reside in Manayunk, East Falls, Kensington/Fishtown, and Roxborough.
Another aspect of this Zillow study to consider is that Philadelphia had fewer renters than other major cities to start with, giving it a greater opportunity to prosper. Also, house hunters are not afraid to say ‘no’ to the pressure of purchasing a home; many who do want to buy a home are waiting for the best location, opportunity, and price, which also may contribute to the rise in renters.
Approximately 4,000 new rental units should be available in Philadelphia by 2019, driven by the desire of developers to create rental units versus single-family homes. Rents in Philadelphia are up 0.7 percent from 2017 (to $1,214), which is attractive to developers.
The Tenant Union Representative Network (TURN) is seeing an uptick in high-income bracket renters seeking advice and counsel from the organization, according to a recent Philly.com article. The organization is also concerned about increasing gentrification, which adversely affects low-income renters as they are often priced out of their own homes and neighborhoods.
For those entering the rental market, Philadelphia is a sought-after city and offering a variety of rental options, from luxury rental apartments in Center City to affordable rentals in neighboring areas.