Why aging rental stock hasn’t led to more affordability in Philadelphia
Healthy housing markets usually reflect falling prices for aging rental units — an important factor in maintaining market affordability, according to researchers at Apartment List. But in Philly, rents are rising.
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It may seem like new apartment buildings are sprouting up on every corner in Philadelphia, but a recent report from Apartment List found that aging rentals actually outnumber new construction in the city (and nationally). Because aging rentals are a source of housing affordability, it's worth a closer look at the age distribution of rental units in Philadelphia.
Apartment List researchers note that healthy housing markets usually reflect falling prices for aging rental units — an important factor in maintaining market affordability. For optimal distribution of rental rates, the market requires a balance of new construction and aging units. Nationally, Apartment List found that rental units 30 years old or more make up an increasing share of the rental market, while units built in the last 10 years are at an all-time low.
In Philadelphia, the share of rental units 31 or more years old has grown from 65 percent of the market in 2000 to 78 percent of the market in 2016. New construction — understood as buildings less than 10 years old — has remained steady at 6 percent of the market. The share of rental units 11 to 20 years old was 10 percent in 2000 but fell to 4 percent by 2016. The share of those 21-30 years old was 18 percent in 2000 but just 12 percent in 2016.
Yet the aging rental stock has not resulted in more affordability in Philadelphia. In 2000, the median rent for units built before 1960 ($720) was 28 percent lower than the median for units built between 1990 and 1999 ($994). Between 2000 and 2016, the median Philadelphia rent in properties built before 1960 rose by 14 percent (to $819) and rents in units built between 1990 and 1999 were up 11 percent ($1,099).
Simply put, rents are increasing in aging properties — whether because of historic cachet or because those buildings are ripe for redevelopment — and a recent construction boom has not compensated for the dip in construction after the markets crashed in 2008. What that means for affordability long-term remains to be seen.