According to a recent report from The Pew Charitable Trusts, “The State of Housing Affordability in Philadelphia: Who’s Cost-Burdened—and Why” 4 in 10 households in Philadelphia, representing 54% of renters and 28% of homeowners, are cost-burdened. Cost-burdened means these residents spend at least 30% of their income on housing costs.
The cost burden of homeownership and renting is more acute among Hispanics, at 50%, and African-American residents, at 46%, than Asian Americans, at 33%, and non-Hispanic White residents, at 32%. The recent pandemic has exacerbated income inequalities which have contributed to the cost burden of renting. An August 2020 poll, found that 24% of respondents said that they had trouble paying their rent or mortgage since the pandemic-related economic shutdown in March.
As of September 30, Philadelphia’s Unemployment Rate stood at 10.60%, compared to 14.50% at the end of August and 5.10% at the same time last year. This is higher than the long-term average Unemployment Rate of 6.13%.
Real estate development companies have been rushing to fill the shortage of apartment rentals in Philadelphia and take advantage of a 10-year tax abatement that is set to expire at the end of 2020.
As of the end of July 2020, Philadelphia’s Zoning Board of Appeals were working through a review of a backlog of variance applications for buildings that would add a total of more than 2,400 housing units, many other proposed real estate developments do not require zoning variances. It is anticipated that 3,600 or more apartments will be approved.
Although there is much speculation about residents fleeing cities like Philadelphia to the nearby suburbs, the facts do not strongly support this theory. Landlords are bullish and developers are aggressively expanding their project scope, even in the midst of historically high unemployment numbers and an economic slowdown brought on by the global pandemic.
Center City apartments, University City apartments, Logan Square apartments, Rittenhouse Square apartments, and Northern Liberties apartments, for example, offer uncommon value compared to other Northeastern cities. Philadelphia apartment rentals are priced $1,568 less than the most expensive neighborhoods in the Boston metro area, and $3,172 less than the highest-priced neighborhoods in New York City.
Over the years, Post Brothers has emerged as one of the most successful real estate development companies in greater Philadelphia, with successful projects like Presidential City at the border of Philly and Bala Cynwyd, or its warehouse conversion into luxury loft apartments at the Goldtex building in northern Center City. Post Brothers’ mixed-use development at The Piazza in Northern Liberties is another highly anticipated project attracting interest from young professionals, students, artists, and entrepreneurs.
Amid the downbeat health and economic news and the painful financial challenges facing many Philadelphia residents, there is a great deal of optimism for the future of Philadelphia apartment rentals.