As It Gentrifies, Philadelphia Is Shedding Affordable Housing

The demand for rentals, especially affordable ones, has risen to record levels since the recession, and the supply has not caught up anywhere in the U.S. Philadelphia is no exception: It lost a fifth of its low-cost housing stock with rent at or below $750 between 2000 and 2014, according to a new report out of the Federal Reserve Bank of Philadelphia. (That cost threshold is 30 percent of the annual median income of $30,000, which is around the maximum an average person in the city can afford in 2014.) Given that incomes have been flat in the city, a growing shortage of affordable housing means more rent burden and financial stress, especially in the city’s gentrifying neighborhoods.

But what’s especially concerning is that the lower-income neighborhoods that gentrified in this period have lost low-cost units at five times the rate of that in similar neighborhoods that didn’t. (Gentrifying neighborhoods are defined here as those that saw a rise in college-educated residents, as well as median gross rents or home values above the city-wide median.) “Over time, gentrifying neighborhoods became less accessible to more vulnerable residents,” says Eileen Divringi, community development research analyst at the Philadelphia Fed. “The challenge that develops from an inclusive development standpoint for the city is that there's a risk of redistributing the more vulnerable residents to more far-flung distressed parts of the city where their access to opportunity might be even worse—[it’s] an exacerbation of existing neighborhood inequalities."

There’s support for Divringi’s argument. Previous studies by her team have shown that when low-income former residents of gentrifying areas are priced out, they end up moving to worse areas. And of course, new residents of a similar economic profile are increasingly unable to afford these neighborhoods. As a consequence, there’s a racial sorting taking place along neighborhood lines. Philadelphia native Jonathan Tannen observed how resegregation is shaping the city in his recent research at Princeton University. “Philadelphia overall is becoming less white,” he told CityLab contributor Ryan Briggs earlier this year. “But there are pockets of predominately white regions that are expanding. And the blocks along those boundaries are flipping very quickly, from a racial standpoint.”

The new Fed study details how the death of affordable housing plays into that dynamic at the Census-tract level. Per their analysis, of the 101 tracts where a statistically significant change in affordable housing stock occurred between 2000 and 2014, 91 experienced a net loss. Some of the low-cost units were unsurprisingly located in distressed neighborhoods, and were torn down because they were vacant and in disrepair. Others were in hot markets, where they were renovated and marked up to attract residents with more means. The creation of new affordable housing—where it actually took place—didn’t really compensate for these losses.

The shrinking of affordable housing was much more acute in certain areas. The ten tracts wth the largest losses were responsible for a quarter of the total loss of affordable units in the city, even though they contained only six percent of total housing stock. At the very top of the list was University City—the region around the University of Pennsylvania lost almost 900 units. It was followed by the stable, middle-class Holmesburg neighborhood in Northeast Philadelphia (down 737 units), where a large public housing development was demolished in 2011. And third was the area around Thomas Jefferson University Hospital (730 units) in Center City.

The map below shows the gain and loss of rental units across the city:

The previously low-income tracts that gentrified lost a startling 36 percent of their low-cost housing, while similarly positioned ones that didn’t dropped only 7 percent. University City and areas in Center City saw the largest losses. In areas around Graduate Hospital, which “already had high proportions of investor-owned properties in 2000, the loss of low-cost units … may have been mitigated by the relatively high concentration of federally subsidized rental housing in these tracts,” the authors write in the report.

Here’s a map showing the changes in low-cost housing among the gentrifying tracts:

In the absence of market-rate affordable housing, low-income renters can bank on government-subsidized units. However, 20 percent of the city’s 37,000-plus subsidized rentals will see their affordability restriction periods run out the within the next five years, according to the report.

A lot of them might stay affordable. But from this soon-to-be expiring pool, 14 percent (1,099 total) of rentals in Philly’s hot housing markets are owned by for-profit companies, and these are at risk of being converted to more expensive, market-rate housing. Without intervention and introspection, the city is charging full-speed ahead toward a future where racial and economic inequalities are even more amplified than they are now.