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May 31, 2017

As Philly real estate booms, suburbs left in the dust

New report on housing values finds widening gap between Philly and the 'burbs

Housing values
Chesterbrook, Chester County Google Maps/for PhillyVoice

An aerial view of Chesterbrook in Chester County.

As Philadelphia's housing market keeps rising, the 'burbs continue to take a hit.

Average home values in Philly's surrounding suburban communities declined by 2.9 percent in the first quarter of 2017, while they increased by 5 percent in the city, according to a new report from Drexel University researcher Kevin Gillen.

The widening real estate gap between Philly and its suburbs has been an ongoing trend of late.

"The current spread between house price appreciation rates in Philadelphia [and] its suburbs is at an all-time high," Gillen stated.

Delaware County saw the largest dip of them all, dropping 6.6 percent in average house values through the first quarter of 2017. Montgomery County's values did appreciate by a slim margin, the only increase among the counties found in the report. 

Using data provided by the city's Recorder of Deeds and real estate company Berkshire Hathaway Home Services, Gillen examined house values in Bucks, Chester, Delaware and Montgomery counties in Pennsylvania; Burlington, Camden, Gloucester, Mercer and Salem counties in New Jersey; and New Castle County in Delaware. Median house prices between them have fallen 14 percent from $231,000 to $213,000 in the first quarter of the year, Gillen stated.

Gillen said the widening split between city and suburban housing prices has strong implications for the region's real estate market. Citing the housing crash of 2007-2009, he said Philadelphia's housing prices are 14 percent higher than its previous peak in 2007, while suburban values remain 17 percent below their 2007 high marks.

"This divergence cannot be explained by fundamental economic or demographic forces," Gillen wrote. "If so, then suburban house prices and sales need to start making some active gains — and soon — or the only remaining option will be for the city's housing market to become increasingly unaffordable or to make a painful but necessary correction."

Gillen's report, dated May 24, comes as a Zumper National Rent Report had Philly as the 14th most expensive city in which to rent a home, tied with Long Beach, California.

Read Gillen's full report here.