9.1.26 Philadelphia Chapter Meeting

Philadelphia Chapter September Meeting!

• Philadelphia’s housing market varies dramatically by neighborhood. Median sale prices across the Market Value Analysis categories ranged from approximately $71,600 in the weakest markets to more than $1.07 million in the strongest.
• Housing affordability remains a major concern. Based on Philadelphia’s median household income of $61,953, homes in the strongest market categories were generally unaffordable under the standard benchmark of a home costing no more than three times household income.
• Affordable housing is concentrated in weaker markets. Nearly all homes in the G, H, and I market categories were considered affordable to households earning the city’s median income. However, these areas also tend to experience higher vacancy, financial distress, abandonment, and disinvestment.
• Middle- and weaker-market neighborhoods experiencing rapidly rising prices may face the greatest displacement risk. Reinvestment Fund’s Displacement Risk Ratio compares long-term residents’ incomes with current housing prices to identify areas where existing residents may no longer be able to afford homes in their own neighborhoods.
• Both rising and falling housing-market pressure can be concerning. Rapidly rising prices may lead to displacement, while declining prices may signal weakening demand, vacancy, abandonment, and continued neighborhood disinvestment.
• Investor activity is most significant in Philadelphia’s lower-priced markets. Across the city, approximately 20% of sales were from investors to owner-occupants, 11% were between investors, and 16% involved owners selling to investors. Investor-to-investor and owner-to-investor transactions were particularly prevalent in weaker markets.
• Corporate buyers accounted for approximately 23% of Philadelphia’s single-family home purchases between 2020 and 2022.
• Corporate investors generally targeted less-expensive homes. Their median purchase price was approximately $129,000, compared with $247,000 for individual homebuyers.
• Corporate buyers were most active in Black and Hispanic neighborhoods, raising concerns about the long-term effect of investor ownership on wealth-building opportunities, housing stability, and homeownership.
• Investor sourcing changed during the pandemic. Before sheriff sales were paused in 2020, investors purchased approximately two-thirds of the properties sold through sheriff-sale auctions. As sheriff-sale acquisitions declined, investors may have increasingly purchased properties directly from homeowners.
• Larger investors were more likely to obtain rental licenses and permits. Across the 2017–2022 study period, 60% of properties purchased by high-volume investors had rental licenses, compared with 36% for smaller investors.
• High-volume investors also had substantially higher eviction-filing rates. Approximately 14% of properties purchased by high-volume investors had an eviction filing, compared with 4% for smaller investors and 1% for individual homebuyers.
• Code violations were common among investors of all sizes. Approximately 19% of high-volume investor properties and 20% of smaller-investor properties had code violations, compared with 9% of properties purchased by individual homebuyers.
• Smaller property owners were slightly more likely to have multiple code violations. The presentation suggested that some smaller investors may lack the resources or experience needed to hire responsible professional property management.
• Philadelphia’s Right to Counsel program appears to produce positive results. In participating ZIP codes, landlords were generally more likely to use targeted financial assistance, less likely to pursue Municipal Court filings, and less likely to complete tenant lockouts.
• Identifying problematic owners is complicated by layered ownership structures and property transfers. Some investors operate through multiple entities or portfolios consisting largely of transferred properties, making it difficult to identify beneficial owners, parent companies, and actual acquisition dates.

Recommended Policy Priorities

The presentation concluded with four primary recommendations:

1. Use strategic code enforcement to identify problematic investors and address violations across their entire portfolios.
2. Improve beneficial ownership transparency so that the individuals and organizations controlling properties can be identified.
3. Continue expanding Philadelphia’s Right to Counsel program.
4. Support public-interest legal organizations pursuing affirmative litigation against repeat or particularly harmful property owners.

Overall Conclusion

Philadelphia faces two interconnected housing challenges: protecting residents in neighborhoods where rising prices are creating displacement pressure and encouraging investment in neighborhoods still struggling with vacancy and weak demand. Effective policy will require neighborhood-specific strategies, stronger oversight of investor-owned housing, greater ownership transparency, and continued renter protections.