Takeaways from report on how Philly’s housing market changed over two decades

Philadelphia has stayed a relatively affordable place to buy a home over the last couple of decades when compared to other large cities. But there’s more nuance to the city’s affordability picture than that.

Philadelphia’s housing market isn’t as accessible as it used to be.

Adjusting for inflation, households with incomes below $50,000 are still the largest group of Philadelphia homeowners. But the number of home-owning households that make more than $100,000 a year grew over the last two decades while the number of homeowners with lower incomes shrank, according to the Pew Charitable Trusts’ analysis of city records of single-family home sales.

“In Philadelphia, we’ve had this great legacy of home ownership” that has been possible across income groups, said Octavia Howell, a manager with the Pew Charitable Trusts and the report’s author and lead researcher. But to make sure Philadelphians with lower incomes can keep owning homes, policymakers need to understand the landscape and challenges they face, she said.

The report released Tuesday focused on single-family properties sold from 2000 to 2021 that weren’t transferred between family members, from or to a bank or government entity, or sold for less than $100.

Over that period, the city’s housing market changed as a result of local and national factors, including Philadelphia’s population growth after decades of shrinkage, the 10-year property tax abatement that expanded in 2000 and spurred residential construction, the national housing market crash, and years of low mortgage interest rates that attracted new homebuyers.

Below are some key findings from the report by the Pew Charitable Trusts, which looked at sales records, population data, and mortgage data.

From 2000 to 2021, fewer homes sold for $100,000 or less and more sold for $400,000 or more, adjusting for inflation.

In 2000, 52% of homes that cost $100,000 or less sold to traditional buyers — those who used a mortgage to purchase a property where they would reside. That share dropped to 12% in 2010 and 3% in 2021.

For homes that cost $400,000 or more, 3% went to this type of buyer in 2000. That share rose to 11% in 2010 and 23% in 2021.

From 2000 to 2021, Philadelphia gained 25,000 homeowner households that make more than $100,000 per year. It lost 11,000 homeowner households that make less than $50,000 and lost 13,000 that make between $50,000 and $100,000.

The price of a median single-family home sold in 2021 was $208,000. But that’s before accounting for differences between investors and traditional homebuyers.

From 2000 to 2021, traditional homebuyers bought just over half of single-family homes. The median sales price of homes they bought increased from $99,000 in 2000 to $265,000 in 2021, adjusting for inflation.

Investors bought about a third of the single-family homes purchased over that two-decade period. The median cost of the single-family homes they bought in 2021 was $100,000.

“Investors are really just spending a lot less when buying a home than traditional homebuyers are,” Howell said. And although investors are not necessarily competing with traditional homebuyers because they tend to buy homes in need of a lot of repairs, that investor activity drives down median prices in a given year. That can make homes overall seem more affordable for traditional buyers than they are, Howell said.

“Our understanding of ourselves as an affordable city doesn’t necessarily change,” she said. “But in terms of how affordable — for me that shifts a bit.”

Adjusting for inflation, the median price of an entry-level home in Philadelphia increased from $59,000 in 2000 to $160,000 in 2021.

Researchers categorized the least expensive 25% of homes sold in a given year as entry-level homes.

» READ MORE: Philly-area buyers need to make thousands of dollars more than last year to afford a starter home (From 2023)

Over the two-decade period analyzed, monthly costs for the mortgage, property taxes, and insurance for an entry-level home rose 55%. Over that same period, the median household income in the city rose 10%, adjusted for inflation.

In 2000, 70% of the city’s households could afford an entry-level home. That share dropped to 58% in 2021.

Between 2000 and 2021, the city’s home ownership rate slipped from 59% to 53%. Philadelphia gained 71,000 households during that time, but almost all of them were renters.

The number of households that owned their homes in 2021 was pretty much the same as the number in 2000 — about 350,000.

But the number of home-owning households didn’t stay steady during that time period. Philadelphia lost about 38,000 homeowner households from 2000 through 2010 and then gained about as many back over the next 10 years.

White households made up the city’s largest racial or ethnic group of homeowners in 2021 at about 143,000. But that was down from about 186,000 white homeowner households in 2000. So the white home ownership rate — the share of households that own their home — dropped 9 percentage points to 57% in 2021.

The city’s Black home-owning population was the second largest with about 129,000 households in 2021. But although Philadelphia added roughly 21,000 Black households between 2000 and 2021, the city had about 1,000 fewer home-owning households in 2021 than it did in 2000. So the Black home-ownership rate dropped 5 percentage points to 50% in 2021.

Black households was the only racial or ethnic group that was issued fewer mortgages in 2021 than in 2000 — almost 1,000 fewer.

Over this same period, Philadelphia gained Asian and Hispanic home-owning households, relatively smaller populations. And these groups saw large increases in the number of mortgages issued to them.

The city gained 20,000 Hispanic homeowner households — from about 19,000 in 2000 to about 39,000 in 2021.

The number of home-owning Asian households more than tripled — from roughly 8,000 in 2000 to roughly 27,000 in 2021. The Asian home ownership rate grew 23 percentage points to 63% in 2021 — the highest rate of any racial or ethnic group.