Thursday, January 16, 2020

Newly Released Census Figures Show Surge in College Educated Renters in Philly

Just before the start of the new year, the U.S. census released a treasure trove of its most recent demographic data for 2018.

While the census’ data releases are lagged, the bureau still provides far and away the most granular insights available on changes in long-term demographic trends that shape commercial real estate markets across the U.S.

For Philadelphia’s commercial real estate community, one of the most important takeaways from the recent release was the continued surge in Philadelphia’s population of college-educated renters.

The year-end tally of overall renter households in Philadelphia County wasn’t particularly noteworthy. At 287,500, the figure was almost unchanged compared to 2013 levels.

But the slow-growing headline figure masks dramatic changes in the demographic makeup of Philadelphia’s renter population. With rents having risen for 10 years straight, low income renters are being priced out of Philadelphia at an alarming rate.

The number of renter households without a college degree declined by almost 20,000, or 13% over the past five years, more than 10 times the national rate of decline in this cohort. Conversely, the number of renter households with bachelor’s or graduate degrees jumped to 97,000 in 2018, an acceleration over the 5.4% annual growth the figure has averaged during the past five years.

In line with these shifts, Philadelphia’s share of renter households earning over $75,000 has now doubled from 10% in 2010 to 21% in 2018, with most of the gains accruing during the second half of the decade.

hy is Philly experiencing such rapid growth in high income renters? Increasing affordability barriers to homeownership (which will be covered in a future update) are keeping more high-income residents in the renter pool well into their 30s.

However, even greater affordability challenges in nearby New York and Washington, D.C., are sending residents Philadelphia’s way. As housing costs have skyrocketed in those locations during recent years, the number of college educated migrants arriving in Philadelphia annually has grown by more than 50% since 2012.

This influx has been offset by Philadelphia’s continued losses in low- and middle-income renters. Census data suggests that in many cases, these renters are moving to some of the lowest-cost corners of the Philadelphia MSA, including Delaware County, Pennsylvania and New Castle County, Delaware, which both saw their tallies of non-college educated renters rise by more than 4,000 over the past five years. However, others continue to leave Philadelphia, seeking the mix of lower housing costs and better blue collar employment prospects offered in the southern U.S.

The overarching takeaway from 2018’s census release is that while Philadelphia’s renter population is growing more slowly than it was five years ago, it continues to gentrify at a rapid pace.

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