Philadelphia is seeing an incredible housing boom — and once again, millennials are the group to thank (or maybe blame if you’re having trouble finding the perfect place to live). In 2018, 2,810 new housing units were built in Greater Center City, which is the biggest number of new housing units in one year since 2002 according to a report from the Center City District.
Millennials Pushing for More Housing
It could be nerve-wracking to see ” . . . since 2002″ in the previous paragraph, as that was the housing boom that signaled beginning of the end for the economy for a period of time. It’s imperative to note that the 2002 boom was based on credit lines that were too easily accessible. This time, however, the boom is driven by a population of people with the means to pay for housing in an area of the city that is most desirable to the younger generation. One real estate expert noted that she sees additional population growth from people of ages from New York City, as well as older people formerly living in the Philadelphia suburbs moving into Greater Center City.
Renting is the Focus
Seventy-two percent of the most recent housing units added to the market are Philadelphia apartments, which amounts to 10,660 additional units since 2010. Conversely, 4,143 condos and single-family homes were sold during the same time frame. Approximately 80% of the new housing developments are located in Greater Center City and the five next door zip codes. Notably, these areas account for only 17% of Philadelphia’s footprint. The reason for this could be the addition of 71,900 Philadelphia-based jobs that are mainly concentrated in Center City and University City. While apartments in Philadelphia are the most commonly added housing units, Francisville, Point Breeze, and Northern Liberties see the most growth in single-family home development.
Although thousands of units have been added to Philadelphia neighborhoods, a slow-down of new developments is predicted. For example, 2,100 apartments in Philadelphia were being built as 2018 came to a close, compared to 3,900 at the end of 2017. Experts believe that construction of new units may cease in 2019, but that’s not necessarily a warning sign; it could be that the housing market is finally caught up to the population growth and need.
Poverty Could Affect Future Growth
While statistics show that housing has boomed in Philadelphia, the growth still lags behind other metro areas, like San Francisco, Dallas, and New York in terms of new units constructed. Experts believe that the issue of poverty in Philadelphia is holding the city back from keeping pace with other cities due to a lower tax base. Currently, the poverty rate in Philadelphia is 26%, and housing costs remain a big percentage of the average household’s paycheck.
Overall, housing growth in Philadelphia is strong thanks to more jobs (although the city still has a way to go in bringing in new jobs), and more people who want to live in the downtown areas.