Philadelphia has long been touted as an affordable big city - it has the highest owner-occupancy rate among its peer Northeast cities, at 53.0 percent.
High rates of homeownership are generally considered a boon from an economic development standpoint. Homeownership is a key element of wealth-building in the United States and a significant contribution to a region’s economic well-being. Owning a home enables individuals to accrue equity and take advantage of tax incentives. It stabilizes communities and the municipal tax base, tends to anchor employees to the region, and creates demand for both public and private services including maintenance, restoration, infrastructure, food and supplies, entertainment, and so forth.
This is not to say that renting does not also provide economic development incentives or that homeownership comes without economic drawbacks; however much of the current U.S. domestic economic policy aligns toward expanding and incentivizing homeownership, and many municipalities, like Philadelphia, see it as a key strategy in combating poverty and building a stronger tax base.
Yet with the local housing market’s recent boom in sales, driven in part by reduction in supply due to the COVID-19 pandemic, is homeownership becoming less attainable for Philadelphians? This is the question we explore in this Leading Indicator.
Key Takeaways
- At 53 percent in 2019, Philadelphia’s homeownership rate outpaces other Northeast peer cities like New York City, Boston, Washington D.C., Pittsburgh, and Baltimore.
- Since 2006, however, Philadelphia’s homeownership rate has been steadily declining from a high of 58.2 percent.
- Even among most of the city’s major racial and ethnic groups, homeownership is in decline – except for the city’s Asian population, which has seen a ten percent increase in homeownership between 2005 and 2019.
- One possible contributor to declining homeownership in the city is the growing cost of housing – both across the country and in the city.
- While wages in Philadelphia have remained stagnant between 2012 and 2021, Philadelphia’s median residential sale price has increased 0.8 percent per month, equating to a monthly increase of roughly $1,519, when accounting for inflation.
- If Philadelphia’s wages had grown at the same rate as the median sale price of Philadelphia homes during the same period, by July 2021 the average hourly wage in Philadelphia would have been $53.78 or a whopping average annual wage of $111,862.
- As of July 2021, a 77.8 percent gap exists between the growth in median residential sale prices and average wages in Philadelphia.
