Persistently low residential incomes, mixed with escalating home prices, has made housing affordability a key policy challenge in Philadelphia’s 3rd City Council District. While the long-term impact of COVID-19 is still unclear, in the short-term, intervention and strategic coordination will be needed to curtail future housing instability and residential displacement.

This report compiles a set of space/time indicators that can inform strategic planning by illustrating gaps in affordable housing choices and by describing emergent trends in the demand for and supply of housing.1 We have also developed a Strategic Planning Tool to help stakeholders understand where housing instability is most pronounced relative to affordable housing supply now and into the future.


Executive Summary

Key findings of this report include:

  • Renters comprise a majority of District households, a share that grew slightly from 57% in 2011 to 60% of households in 2018.

  • 23,262 District households (43%) were paying more than 30% of their income toward housing costs prior to the COVID-19 pandemic. Put another way, this is the number of households living in homes that were not affordable to them.

  • Renters were more likely than homeowners to be cost-burdened (55% of renters, or 17,107 households, compared to 38% of homeowners, 6,155 households). There were 10,735 severely cost burdened renters paying more than 50% of income toward housing costs.

  • Cost burden in the District is largely driven by low incomes:

    • 14,606 cost burdened renter households earn less than 50% of the Philadelphia Area Median Income (approximately $35,000/year for a family of three). This is 85% of the District’s cost burdened renters and 63% of all burdened households

    • An overwhelming majority of renter households earning less than 50% AMI are cost burdened, including 85% of those earning under $20,000 and 78% of those earning from $20,000-$35,000.

    • Affordable maximum rents for those income brackets would be just $500 and $875 respectively for a family of 3.

    • The portion of low-income households struggling with cost burden has been relatively steady, with a slight decline for the lowest income households, possibly as a result of access to subsidized units, and a slight increase for the $20,000-$35,000 bracket.

    • The District’s 7,802 single-parent families with children make up a higher-than-average share of family households (32% compared to 23% of households citywide). Additionally, single-parent families in the District have lower incomes on average than their counterparts across the city (roughly $20,000 compared to $25,000 for single-parent households citywide).

  • Rising monthly rents have had the greatest impact on renters earning from 50%-80% AMI.

    • The cost burdened share of residents earning from $35,000 to $55,000 grew from only 24% in 2011 to more than 40% in 2018. The maximum affordable unit cost for this group would be $1,375 per month.

    • The number of cost-burdened households in this group grew to about 1,700 in 2018 from 919 in 2011.

  • Although it is common locally and across the country to use Area Median Income as a tool to evaluate and respond to affordable housing needs, the stark difference between central city and suburban family incomes makes a compelling argument that AMI is an inadequate or incomplete frame of reference at best.

    • The median income in the city of Philadelphia ($53,000) is only 60% of federally recognized AMI for the region ($87,400). This means half of the city’s families would still be cost-burdened if they lived in units priced for incomes at 60%-80% of AMI, which is frequently the target for new subsidized housing.

    • The average median income for census tracts in the 3rd District is about $30,000, which is just 34% of AMI. Units created for households at 80% AMI will only be affordable to households earning more than twice the average income in the 3rd District.

  • Public subsidy is scarce; there are not enough resources to meet the entirety of affordable housing need. At the same time, because need in the 3rd District is so concentrated among households earning less than 50% AMI, the cost of construction would put new units out of reach of many residents, even if an increase in supply alleviates some of the upward price pressure in the district. It would be difficult for the private market to meet the totality of demand for low-cost units, but private sector investment will be needed to complement the public sector.

  • 70% of District rental units cost more than $750 a month, a level affordable to only about 35% of renter households; only 17% of reported rents were less than $500 (including subsidized units) while about 40% of renters could afford only that much.

  • The supply of subsidized units is far below the demand for those units.

    • There are 7,904 subsidized housing units in the 3rd District (PHA, LIHTC, and Housing Choice Voucher holders), meeting just 25% of the total need.

    • Cost-burdened households are concentrated in the same western, northern, and southern parts of the District where the most subsidized households are located.

    • The presence of subsidized units has helped some areas retain lower-income families in the face of development pressure. For example, Spruce Hill and West Powelton each have LIHTC-financed units with affordable rates lower-income households but many families who can’t access subsidized units have been priced out. LIHTC and PHA-operated rentals in Mantua have helped reduce displacement in that historically Black community.

  • Reinvestment Fund’s Displacement Risk Ratio (DRR) measures where prices are appreciating the most in relation to incomes of longtime residents, increasing the likelihood of price-based displacement. The DRR identified high displacement risk in several parts of the 3rd District including Mantua, West Powelton, blocks adjacent to 52nd Street from Market Street to Baltimore Avenue particularly around Malcolm X Park, the West Shore neighborhood, and Cedar Park.

  • The aggregate monthly rent gap for all of West and Southwest Philadelphia (including areas outside the 3rd District) is approximately $15.6 million, out of the Philadelphia’s total rent gap of $74.4 million This is the amount of money it would take each month in either additional income or subsidy to eliminate cost burdens for all current renter households. The creation of additional subsidized units offering units at lower rents would also reduce the gap. The gap is likely substantially larger following the increase in unemployment and underemployment associated with the pandemic; a 10% decrease in incomes for those already earning less than $100,000 would increase the rent gap by $1.5 million dollars across West and Southwest Philadelphia and a 20% decrease in incomes would expand the gap by $2.9 million each month.

  • The city’s unemployment rate and foreclosure filings between 2012 and 2018 were highly correlated. The historic levels of unemployment associated with the pandemic suggest foreclosure filing volumes could exceed those in the great recession. With a 20% unemployment rate that some economists have projected, and absent a significant effort to give sufficient assistance to homeowners, the citywide foreclosure rate could double. The 3rd District has had approximately 200-300 foreclosures annually in the last several years, down from a peak of more than 600 during the foreclosure crisis. The foreclosure rate, as a share of homeowner units, has hovered at 1.5%-2.0%, down from a high of 3.0%.

  • Research on the last housing crisis showed that just one foreclosure had an adverse impact of 0.9% on neighboring home values within 1/8 of a mile. That kind of impact is quickly compounded in the kind of dense rowhouse neighborhoods that make up much of the 3rd District. If there are 30 or 40 foreclosures and hundreds of nearby homes, it will become difficult for owners to refinance or for buyers to get mortgages, which could speed the shift towards renting and potentially lead to more vacancy, blight, and the loss of unsubsidized affordable units.

  • Research from the foreclosure crisis also found that while home prices declined, rents for the most part held steady or increased. A similar pattern would create a significant challenge for the 3rd District, which has had an increase in the number and share of renters, and many of whom are already struggling to afford their homes.

  • The Strategic Planning tool created for this report shows that an overall rent increase of 10% without a commensurate rise in income would increase the number of cost burdened households by 1,208.

Profile of the 3rd District

Demographics

Philadelphia’s 3rd Council District is home to approximately 150,746 residents (up 2% since 2011), living in 54,570 households. Just under half of households are families (46%), defined as two or more people living in the same household who are related to each other by birth, marriage or adoption. The average household size of 2.8 people in the District has been steady and is close to the city average of 2.6. Family households accounted for 46% of the total. Single parents with children comprise 32% of District families compared to 23% of city families.2

Please note: All maps have color ranges broken out by quintiles, so the first color break is the high value for the first 5th of the data; etc.

Overall, the population is 71.2% Black, 18.4% White, 3.8% Hispanic, and 6.0% Asian, but racial and ethnic makeup varies widely across census tracts; Black residents range from 13% to 94% of tract-level populations, Whites from 10%-60%. The Hispanic population is notably lower than the citywide share of 15%, not exceeding about 7% of the population of any District census tract. Asian residents comprise from 0% to 25% of tract-level populations. Majority-Black tracts make up much of the western, northern, and southern portions of the District, including the neighborhoods of Cobbs Creek, Mill Creek, Belmont and Kingsessing. Majority-White tracts are limited to University City and adjacent eastern/central areas including Powelton Village, Spruce Hill and Cedar Park. Tracts where more than 10% of people identify as Asian are in or close to University City (the share citywide is 7%). In recent years, the number and share of residents identifying as White has grown in the census tracts around 52nd Street from Market Street to Baltimore Avenue, in West Powelton, and in Mantua. The Asian population has grown in some of the same areas, as well as in pockets in the west and southwest of the District.

The District’s age profile has remained relatively steady since 2011, with working-age adults accounting for about 68% of the population, children 21%, and seniors 11%.

University students have long had an impact on the 3rd District’s housing markets, which together are home to approximately 24,000 undergraduate and 6,800 graduate students. Half of the student population lives in just 4 census tracts, including in a single large census tract that contains much of the Drexel and Penn campuses (4,993 students). This tract has been excluded from the larger housing market analysis because of the many unique residential characteristics of campuses. There are notable student populations in a number of other tracts east of 52nd Street, particularly around the University of the Sciences. The student-age population (18-24) across the District actually declined from 2011-2018.

Socio-economic characteristics

The average tract median income across the District rose by 25% between 2011 and 2018, but at $29,657, it was still well below the city median. Median incomes at the tract level range widely, with the lowest and highest incomes on the District in 2018 directly adjacent; Mantua’s median income was $19,605 while in Powelton Village it was $113,000.

In the District 29% of family households were in poverty, compared to 18% of all Philadelphia families.

The share of residents with a bachelor’s degree or higher has risen in recent years, as it has across the city, to 25%. While college educated residents remained concentrated in tracts in and around University City, there were notable gains in college completion in tracts throughout the District, including Parkside, Angora, Kingsessing, and Cobbs Creek. College attainment rates don’t necessarily indicate a shift in demographics (e.g. gentrification) or economic stability for longtime populations; they have been rising across all demographic groups and in all types of neighborhoods in Philadelphia over the last two decades, in keeping with national trends. Bachelor’s degrees are now more often required for jobs with what were once considered “working class” salaries, and the attainment gap between Black and White Philadelphians has persisted.

Employment opportunities are highly concentrated in University City, which is well known as a regional hub of education and health care services. Analysis of data from the U.S. Census Bureau’s Longitudinal Employer-Household Dynamics Survey (LODES) illustrates the striking concentration of 3rd District jobs in these two sectors. LODES breaks employment data down into Census tracts where workers reside (home tracts), and Census tracts where workers work (work tracts).

At more than 30,000, health care jobs are the most bountiful, with education services a close second.

There were about 5,000 accommodation/food services sector jobs in the District. Outside the core University City census tract that includes the main facilities of the Hospital of the University of Pennsylvania (HUP) and Children’s Hospital of Philadelphia (CHOP) as well as most of Penn and Drexel’s campuses, there were 10,520 jobs in health care, and 4,321 in accommodation/food.

For residents, the health care sector is far and away the largest source of employment, accounting for 27% of jobs (14,719 at last count). The education services sector employed 5,790 residents, which was slightly fewer than the number of residents working in the accommodation/food services sector (6,015). Data indicate that a substantial number of residents working in this sector commute outside the District. There are concentrations of health care workers in the western portion of the District (and some commute to jobs outside the city or in other parts of Philadelphia), while concentrations of education services workers were east of 52nd Street.

University City is indeed the employment anchor for the district. The plots below show where health care and education workers live as a function of distance to University City. Those employed in education are concentrated in an area roughly one mile west from University City, declining with distance. The opposite trend is found for healthcare workers who live in greater numbers as distance from University City increases.

We also take interest in transit equity. The 3rd District is well known for its array of transit amenities including bus, trolley and subway. The maps below show that residents across the district have exceptional access to transit.

Housing supply

There are an estimated 67,497 housing units in the 3rd District. That is close to the number of units reported in the 2007-2011 ACS, representing a slight rebound after a declining in each of the 5-year estimates from 2013 through 2016. There are 32,933 renter households, making up about 60% of the total, up from 57% in 2011.

Single family attached homes (rows and twins) account for about 56% of all units, while 22% of all units are in apartment buildings with 3-49 units. Buildings with 2 units or more than 50 units each comprise about 9% of the total, while just 4% of units are in single family detached homes. In terms of unit size, 3-bedroom units are by far the most common, making up 40% of the stock, followed by 1 and 2-bedroom units (19% and 17% respectively). The distribution of units by size category has remained relatively consistent since 2011.

More than half (57%) of the District’s housing stock was built before 1940; just 5% of units were built since 2000.

Figure 16 relies on Census data, while Figure 17 below, is created from the City’s own administrative data. We can see the stark contrast between single and multi-family housing at two different spatial scales.

Where might unsanctioned renting be an issue in the 3rd District? Rental licenses follow the zoning pattern of the 3rd District, with a greater number of active rental units closer to University City. Panel 3 in the figure below visualizes the difference between the renter occupied units reported in the 2018 ACS and the number of units accounted for by rental licenses.

A positive difference indicates that there may be rental units in those Census tracts not covered by an active rental license.

There are 7,904 subsidized housing units in the 3rd District (PHA, LIHTC, and Housing Choice Voucher holders).

Area Median Income (AMI) is a commonly used tool to evaluate and respond to affordable housing needs, however, due to differences between central city and suburban family incomes, AMI can be an incomplete frame of reference. Table 1 shows the discrepancies in median family income between the 3rd District, the City of Philadelphia, and the Philadelphia-Wilmington-Camden metropolitan region at various AMI levels. Income differences are also plotted in Figure 20 below confirming the 3rd District lags far behind that of the City and the Region across each AMI category.

Table 1: 2018 Median Family Income (average tract median for 3rd District)
30% 50% 80% 100% 120% 200%
3rd District $8,897 $14,829 $23,726 $29,657 $35,589 $59,314
Philadelphia $15,927 $26,545 $42,472 $53,090 $63,708 $106,180
Region $26,220 $43,700 $69,920 $87,400 $104,880 $174,800

In fact, the average median income for census tracts in the 3rd District ($29,657) is only 34% of the federally recognized AMI for the region ($87,400). Therefore, units created for households at 80% AMI (the target for new subsidized housing) will only be affordable to households earning more than twice the average income in the 3rd District. Thus, regional AMI standards do not necessarily apply to the District.

Black residents are 69% of renters, down from 72%. Hispanic and Asian households make up a growing share of renters. There are 21,637 owner-occupied homes, a decline of 7% since 2011 that were concentrated in tracts along the western/southwestern edges of the District.

The Census estimated a residential vacancy rate of 18%, or 12,149 units for 2018, which was a 10% decline from the number of vacant units estimated for 2011. An analysis of long-term vacancy using U.S. Postal data identified 3,399 vacant housing units in the District as of the last quarter of 2019. City of Philadelphia data indicates that vacant parcels in the District are mainly located north of Haverford Avenue.

In 2019, the average single-family home price across the District was $139,180, up 45% from a decade earlier, and out of reach for a family with the average District median income. Tract-level average prices ranged from $55,342 to about ten times that, $525,014. The high end of the market was relatively steady, while the lowest-priced neighborhoods saw a clearer upward trend. The median rent, according to the Census, ranged from $400 in the tract containing PHA’s Bartram Village development to $2,100 immediately west of Penn and Drexel.

Building permits for both new construction and rehabilitation also provide useful housing market intelligence. Figure 25 below visualizes the space time trend in both, showing that investor interest in the 3rd continues to grow mightily.

The current gap in affordable housing

23,262 District households (43%) were paying more than 30% of their income toward housing costs prior to the COVID-19 pandemic. This is the number of households living in homes that were not affordable to them. Renters were more likely than homeowners to be cost-burdened (55% of renters, or 17,107 households, compared to 38% of homeowners, 6,155 households). The number of cost burdened renter households grew by 1,146 (7%) in the 5-year estimates from 2011 through 2018 while the number of cost burdened owner households declined by 2,091 (25%). It is likely that some cost burdened owners became renters over this period. 10,734 renters were severely cost burdened in 2018, paying more than 50% of their incomes in rent, an 11% jump since 2011.

Cost burden in the District is largely driven by low incomes: The total number of cost burdened renter households earning less than 50% of the Philadelphia Area Median Income (approximately $35,000 per year for a family of three) is 14,606 (accounting for 85% of the District’s cost burdened renters and 63% of all burdened households). An overwhelming majority of renter households earning less than 50% AMI are cost burdened, including 85% of those earning under $20,000 and 78% of those earning from $20,000-$35,000. Affordable maximum rents for those income brackets would be just $500 and $875 respectively. The portion of low-income households struggling with cost burden has been relatively steady, with a slight increase in the $20,000-$35,000 bracket.

Rising prices have had the greatest impact on renters earning from 50%-80% AMI. The cost burdened share of residents earning from $35,000 to $55,000 grew from only 24% in 2011 (919 households) to more than 40% in 2018 (1,773 households). The maximum affordable unit cost for this group would be $1,375 per month.

Because the affordability gap is driven by households with very low incomes, the private housing market alone will not be able to provide enough units at low enough prices to fill the affordable housing gap. 70% of District rental units cost more than $750 a month, a level affordable to only about 35% of renter households; only 17% of reported rents were less than $500 (including subsidized units) while about 40% of renters could afford only that much.

The supply of subsidized units is far below demand. The District’s 7,904 subsidized housing meet just 25% of the total need. While inadequate, the ratio of affordable units to demand in the District is better than for the city as a whole, the city’s Assessment of Fair Housing estimated that only 12% of very low income renters in need of subsidy/subsidized housing received it. Cost-burdened households are concentrated in the western, northern, and southern portions of the District.

Figures 26 and 27 visualize the count of renter and owner-burdened households respectively, by income level.

Conclusion

The gap between affordable housing supply and demand in the 3rd District is extensive and will only grow wider in the wake of COVID-19. Many District residents are particularly vulnerable to housing instability. These families, already working to beat back the effects of structural racism, must now contend with uncertainty in housing, labor, and credit markets.

The benefits of increased neighborhood investment over the last two decades should be touted, along with a warning that job growth, land value appreciation, and housing construction may also increase displacement risk for incumbent residents. These are important assets that can be leveraged to drive toward equity, but planning will be key.

The answer is increased strategic investment in affordable housing - ensuring it will be placed in areas most at risk of increased housing burden. We hope the indicators provided here as well as the Strategic Planning tool linked above, will help stakeholders target their interventions accordingly to help ensure the 3rd District remains racially, ethnically, and economically diverse.

Appendix 1: The Affordable Housing Strategic Planning Tool

A household is said to be rent burdened if they spend more than 30% of their income on rent. Being rent burdened may increase family risk for food insecurity and make it more difficult for them to afford other necessities. Furthermore, rent burdened households in or near appreciating neighborhoods are also at risk for residential displacement, eviction and other forms of community disenfranchisement.

The goal of the 3rd District Affordable Housing Strategic Planning tool is to understand where rent burdened households live throughout the 3rd district; where subsidized affordable housing is located; and most important, where these two indicators (mis)align. Stakeholders can target new affordable housing resources in tracts where burdened households outnumber subsidized housing units most severely.

Many 3rd District neighborhood housing markets will likely suffer from affordable housing shortages as house prices climb, higher income residents move in, and COVID-19 continues to have an impact.

To aid in planning, a simple statistical model was developed to forecast housing burden increases given increases in rent. Users can manipulate the slider bar to increase rent across the District. Below, this model is explained in more depth.

There are several indicators in the tool worth exploring:

Forecasted rent burden: Given baseline or slider bar increases in rent, where are rent burdened households located and how many are there?

Burdened/Housing Alignment: (Number of ‘fixed’ subsidized units minus the number of rent burdened households). This indicator shows the extent to which burdened households outnumber subsidized housing units and where the gaps are largest. ‘Fixed’ housing units include Public Housing and Project-based Section 8 and are included because unlike Housing Choice Vouchers, are less likely to decrease as rents increase.

Number of fixed subsidized housing units: The number of Public Housing and Project-Based Units in a tract.

Select a tract and view the tables on the right to learn more about the alignment of housing burden and subsidized housing therein.

The descriptive statistical model built for this tool forecasts housing burden increases as a function of rent, conditional on income and neighborhood effects. The model is estimated at the Census tract level, Citywide. The model yields a simple multiplier that is then used to forecast rent burden increases. Future iterations of this model may be able to improve on this methodology using administrative data from the City of Philadelphia.

Appendix 2: Data Sources

Data Type Data Sources
Census variables U.S. Census Bureau 5-year American Community Survey (ACS) for the years 2011 - 2018
Employment by Sectors U.S. Census Bureau Longitudinal Employer-Household Dynamics Survey (LODES)
Single and Multi-family home sales Real Estate Transfers, Open Data Philly
New Construction and Rehab permits Licenses and Inspections Building and Zoning Permits, Open Data Philly
Subsidized Housing HUD Picture of Subsidized Households, 2019
Rental Licenses Licenses and Inspections Business Licenses, Open Data Philly
Residential Zoning Land Use, Open data Philly
COVID-19 cases COVID-19 data by zip codes, Open Data Philly
Evictions Reinvestment Fund
Market Value Analysis Reinvestment Fund
Displacement Risk Ratio Reinvestment Fund

  1. All maps in this report use ‘quintile breaks’ to bin data into colored categories. Each number on a legend is the 1st - 5th quintile, given a certain distribution.↩︎

  2. Population loss in the easternmost areas of the District may be attributable to sample/survey coverage, as these areas are home to many University students.↩︎