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December 19, 2016

Fed: Philly lost a fifth of its affordable rental units

Housing Gentrification
Rowhomes Sam Oberter/Interface Studio Architects

Rowhomes in South Philadelphia.

A pattern of gentrification in many of Philadelphia's neighborhoods has resulted in the city losing a full fifth of its affordable rental housing units priced at $750 or below, according to a new report from the Federal Reserve Bank of Philadelphia.

RELATED ARTICLE: Pew: Gentrification just one facet of neighborhood change in Philadelphia 

The study, which relied on U.S. Census Bureau data between 2000 and 2014, works with the following overall definition of gentrification:

Gentrification occurs when an initially low-income central city neighborhood experiences an influx of new residents of a higher socioeconomic status than the incumbent residents. The increased demand for housing from more economically advantaged in-movers leads to higher housing prices, which increase housing cost pressures on existing vulnerable residents and make the neighborhood less accessible to lower-income in-movers.

During the period in question, researchers found that the trend away from affordable units — despite Philadelphia's comparative affordability relative to other big cities — occurred alongside a significant growth in rental demand. Between 2000 and 2014, the total number renter households increased by 15.3 percent in Philadelphia.

At the same time, between 2005 and 2014, the number of affordable units for every 100 lower-income renters fell from 82 to 68, where $750 in gross rent is defined as the affordabilty threshold for households earning at least $30,000 per year. The citywide median gross rent in Philadelphia was $936 in 2014, while the median household income of Philadelphia renters was $28,726.

Source/Federal Reserve Bank of Philadelphia

Changes in Philadelphia rental stock (2000-2014).

Even as Philadelphia lost 23,628 affordable rental units during this period, the city saw a 191 percent in units with gross rent over $2,000. A review of 101 census tracts revealed the depletion of affordable housing in Philadelphia was not equally distributed, as shown in the table below.

Source/Federal Reserve Bank of Philadelphia

Census tract level losses of affordable housing (2000-2014)

Areas that lost the greatest number of affordable units included University City (882), Holmesburg (737) and the vicinity of Thomas Jefferson University Hospital in Center City (730). The study authors provide several contextual reasons for the drop in affordable units, including rises in market rate rents and property upgrades, but characterzed the trend as particularly concerning in light of stagnant incomes.

Philadelphia’s loss of low-cost rental units would be less concerning if households experienced a corresponding increase in income, allowing them to afford more expensive units. But incomes of renters in Philadelphia have not kept pace with rising rents. While the city’s median gross rent increased by nearly 20 percent between 2000 and 2014, the median renter income fell by 2 percent.

In gentrifying neighborhoods with household incomes below the citywide median in 2000, the rate of affordable housing loss was higher than other parts of the city.

Source/Federal Reserve Bank of Philadelphia

Changes in gentrifying neighborhoods (2000-2014).

Looking ahead, the study authors express serious concern for greater loss of affordable units in Philadelphia, particularly as 1,099 federally subsidized properties will reach the end of their affordability restriction in five years.

"With a growing body of research highlighting the influence of neighborhood characteristics on residents’ economic outcomes, these trends merit serious consideration from policymakers concerned with community inclusivity and economic mobility."