The start of the Great Recession began just a little more than a ten years ago, but as a millennial that began my first job search in its midst, it’s a time that’s in the back of my mind. In the post-recession economy, we’ve seen a building boom in Philadelphia and for many of us, walking past construction of a new condo or set of rowhomes is a daily occurrence. So for this month’s Philadelphia Housing Index (PHI) post, we took a quick look at how the average sale price of homes in Philadelphia has changed since the Recession. You’ll notice in the charts below that while the Recession officially ended in mid-2009, Philadelphia’s market took until mid-2010 for home prices to reach their cyclical low and through 2011 to rebound. In any case, what we’re most interested in here is how today’s market compares to that pre-recession peak in mid-2007.
Neighborhoods with the greatest home price growth are no surprise
Anyone watching the Philadelphia housing market can probably guess the neighborhoods that have seen rising home prices in the post-recession economy: Poplar (ESI’s neighborhood name for what includes part of Northern Liberties), Point Breeze, and Brewerytown. These neighborhoods gained recent traction, particularly among my generation for their relative affordability and easy access to Center City. The neighborhoods have seen a huge influx of new residents and in turn, higher and higher sales prices. Point Breeze’s home prices have seen the greatest appreciation in contrast to the Recession. Not taking a huge hit in sales prices during that time, average homes are now selling for almost 200 percent more than they did at the conclusion of the Great Recession (June, 2009). Surging sales prices may show a strong residential market, but begs questions of affordability and displacement of long-term residents in these neighborhoods.
You can take a closer look at how other neighborhoods have changed in comparison to their pre-recession peaks, by clicking through to the “Percent Change” feature of the PHI. You can play around with the reference date at the bottom of the page and do your own comparison of what areas of the city have simply recovered to reach their pre-recession peaks, which have achieved higher average sales prices, and which neighborhoods have experienced overall appreciation.
The city has fully rebound from the Great Recession, but has room to grow
In contrast to these high demand neighborhoods, the citywide average change in home sales prices has only increased slightly since the previous cycle’s peak in early-2007 (an approximately 8 percent increase since mid-2007). That’s not even taking into account inflation. This means there are neighborhoods where the average home is still selling for less than it did ten years ago.
The good news is that there’s still room in the housing market to grow and that there should still be affordable homes in the city. The bad news on the affordability front is that some of these homes are likely not in the same neighborhoods where displaced residents currently live (or where they’d want to move) and may require extensive renovation. But that discussion of gentrification, filtering and equity are too complex to be covered in a simple blog post.
Here at ESI, we think a lot about the intersection of new development, affordability and how neighborhoods change over time. Are there specific neighborhoods that you think we should analyze in more detail? Specific housing types that are worthy of a deeper dive? Send me an email and let’s talk!
Gina Lavery is an Associate Director at Econsult Solutions. Gina focuses and leads projects on market research and analysis for the Greater Philadelphia area.