Philly transplants have over $150,000 more to spend on homes than locals — and it’s driving up home prices

Philadelphia may be an affordable big city compared to others on the East Coast and across the country — a draw for new residents — but that’s little comfort to locals who have watched prices rise.

In the first half of 2022, people looking to move into Philadelphia searched for houses with a maximum price of $588,000 on average, according to the online brokerage Redfin’s analysis of searches on its website. Locals capped their searches much lower at $422,000.

As home prices continue to climb, people moving largely from more expensive cities have an advantage with an average of 39% more to spend. That, in turn, helps push up prices across the market.

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Philadelphia has the biggest gap between the budgets of out-of-town and local home searchers among the 23 cities that Redfin analyzed. New York, Atlanta, and Dallas have the next-highest gaps. But in New York, for example, budgets overall are higher. People moving to the Big Apple had an average budget of $1.3 million. That’s 31% higher than the average budget of a local.

Only Baltimore and San Antonio, Texas, had lower average maximum budgets for out-of-towners than Philadelphia — $395,000 and $515,000, respectively.

Rising home prices and mortgage rates continue to drive home buyers to look beyond their own cities for more affordable options, said Taylor Marr, Redfin’s deputy chief economist.

» READ MORE: Rising mortgage rates mean home buyers now pay hundreds of dollars more per month

“Someone moving from Los Angeles to Philadelphia may have a higher monthly housing payment than they would have six months ago, but it’s still much lower than it would be in coastal California,” he said in a statement. “The market looks different for locals, many of whom are priced out or driven to search in the suburbs” for the same reasons.

Trey Dodge, a Redfin agent based in Philadelphia, said he has seen home prices rise over the last two years mostly because buyers from outside the city are purchasing high-end properties. Those moving to Philadelphia typically come from more expensive places with higher incomes and have money from selling valuable property, according to Redfin.

» READ MORE: For New Yorkers, the Philly area is a real bargain

“Philadelphia has been kind of getting more noticed over the last few years, but I think it took a big step forward after COVID came” and more people considered other cities when they started working remotely, Dodge said.

Some of his recent buyers have come from San Francisco, Texas, Boston, and Washington, but the majority of his out-of-town buyers are from New York. Some of his clients want to come back to where they or their partners grew up. These buyers “want to have a city life, but New York and D.C. that we sit between are just exponentially higher in cost of living,” he said.

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And while home prices are growing everywhere, prices in Philadelphia have not grown as much as they have in New York. Philadelphia will continue to draw out-of-town buyers, he said.

“They can buy a nice big house here,” Dodge said, “which costs a fraction of what it would in New York.”

The Philadelphia Inquirer is one of more than 20 news organizations producing Broke in Philly, a collaborative reporting project on solutions to poverty and the city’s push toward economic justice. See all of our reporting at brokeinphilly.org.