Philadelphia’s suburbs are studies in contrasts. Developers are pouring millions of dollars into construction crews, new developments and town squares in towns such as Haddonfield and King of Prussia. Business owners and local officials in Ardmore and Media are experiencing the fruits of their “new thinking” about downtown strategies and attitudes. Long established corporations are taking the bait of lower taxes and moving from the city to Philadelphia’s suburbs. And, every suburban county in the region, save Camden County, is and has been experiencing vibrant population growth for the last 5-7 years.
On the other hand, Philadelphia’s suburban homeowners are holding on to their homes longer than they’d like because they’re worried they won’t get a high enough price. As in other parts of the country, fewer properties on the market translates in bidding wars on those homes that are for sale which, in turn, translates into the challenge for first time and middle income home buyers to find something they can afford.
Equally important is the vast difference in pricing between the Philadelphia’s city and suburbs. Jessica Handbury, assistant professor of real estate at the Wharton School of the University of Pennsylvania said that first time and middle income buyers “…want to be close to bars and restaurants and gyms and nail salon establishments…you have people who want to spend money on housing downtown (close to both jobs and amenities). And (obviously) you see prices respond to those wants.”
The response to those wants and prices is glaring. According to Kevin Gillin, an economist at Drexel University, points out that downtown Philadelphia’s home values have surged since 2012. Compared to 2007, home values in Philadelphia have increased 15% and compared with just last year, those prices have increased 11.8%. In contrast, Philadelphia’s suburban home values are down 19.7% from 2007. In Q1, 2017. suburban home values dropped another 0.5%. Gillin’s research on the price differential in Philly’s urban and suburban markets feeds the worries of those hanging on suburban homeowners. “…(they) simply cannot obtain a sufficiently high price that allows them to…pay off their remaining mortgage balance…” and move forward.
Something will eventually give. In Philadelphia’s suburbs, when that will be is the question.
