Leading Indicators

Rising Renters of Philadelphia

Recent media and research reports have commented on increasing rents across the country [1,2,3]. Many of us are now familiar with how a tight housing market during the initial years of the COVID-19 pandemic slowed the typical churn of the rental market and kept many first-time and middle-income buyers locked into the rental market. This subsequently increased competition and demand among rental units and caused monthly rents to soar [1,2,3]. However, renting has been on the rise both across the U.S. and in Philadelphia for some time prior to the pandemic. In this Leading Indicator, we take a closer look at the growth of Philadelphia’s renting population prior to the pandemic and make comparisons with peer cities. We conclude that while the majority of residents in both Philadelphia and the U.S. are homeowners, renting is definitely on the rise.

 

What You Need to Know

  • Prior to 1950, renting dominated as the primary means by which residents across the U.S. and in Philadelphia attain housing.

  • Since the early 2000s, renting has modestly resurged across the U.S. and in Philadelphia.

  • From 2006 to 2013, renter-occupied households in Philadelphia increased from 41.8 percent to 49 percent (a 7.2 percent increase); since 2013, on average around 47.5 percent of Philadelphia households are renter-occupied.

  • As of 2020, renter-occupied housing in Philadelphia accounts for 47.2 percent of all occupied housing.

  • The ten largest U.S. cities all saw increases in their renter-occupied housing concentrations between 2010 and 2020.

  • Cities that saw the largest increase in their renter-occupied housing were predominantly located in the Sunbelt – such as San Antonio, which saw the largest increase in its share of renter-occupied households between 2010 and 2020 at 4.8 percent.

  • Philadelphia had the sixth largest net increase in its renting population from 2010 to 2020 at 2.5 percent.

  • New York City had the highest proportion of renter-occupied housing in both 2010 and 2020—at 67.0 and 67.2 percent, respectively—but saw the smallest net increase among the ten largest U.S. cities at 0.2 percent.

  • Increases in Philadelphia’s renter population over the past decade largely reflects demographic gains among Hispanic/Latinx and Asian residents as well as residents aged between 25- and 34-years-old.

Renting in the U.S. and Philadelphia

The U.S. is a relatively recent homeowning nation. Prior to 1950, most U.S. residents procured housing via the rental market [4]. A combination of factors explains why more than half of the nation was renting prior to 1950, including a relatively small middle class, high density living in urban areas, and increased immigration [5,6]. Foremost among these factors, however, was that jobs were largely located in cities, as was the preponderance of housing options. That would all change after the Second World War, when the U.S. government heavily invested in highway construction and subsidized suburban living—at least for white residents—while the postwar economic boom created rapidly rising living standards [5,6]. Prior to the mass production of suburban homes and greater disposable income, many U.S. residents lived as renters within the country’s major cities. This is evident in figure 1 which tracks historic renter-occupied housing concentrations in the U.S. and Pennsylvania from 1900 to 2020.

 

FIGURE 1 

SOURCE: U.S. Census Bureau, Historical Census of Housing Tables: Homeownership 

 

Even as the costs of suburban living dropped due to mass production of housing and heavy subsidies, many U.S. cities continued to retain large concentrations of renting households. The demographic groups most likely to be renting after 1950 included lower-income and less-educated residents, as well as younger generations between 21- and 34-years-old [7]. As we have outlined in our Color of Inequality series, many individuals of color are also more likely to be renting because of discriminatory policies and practices still ingrained within our social and financial systems. Since the early 2000s, renting has modestly resurged across the U.S. While homeownership still exceeds renting, a series of economic and social trends since the 1990s, including de-industrialization and the rise of the urban-centric service/knowledge economy, have pushed individuals back to urban centers as renters [8]. Philadelphia has seen this renting resurgence as displayed in figure 2 which shows the growth of renter-occupied households in the city and across the U.S. between 2005 and 2019. 

 

FIGURE 2 

SOURCE: Data were obtained from one-year estimates of the U.S. Census Bureau’s 2006 through 2019 American Community Surveys. 

NOTE: The U.S. Census Bureau admits to sampling errors in their 2017 one-year estimates of the American Community Survey for Philadelphia. 

 

Figure 2 shows that renter-occupied homes steadily grew both in Philadelphia and across the U.S. from at least 2006 to 2013. During this time, renter-occupied households in Philadelphia increased from 41.8 percent to 49 percent (a 7.2 percent increase) while renter-occupied households across the U.S. grew from 32.7 percent to 36.5 percent across the U.S. (a 3.8 percent increase). This time largely coincides with the competitive housing market that preceded the Great Recession in 2007 followed by a large influx of renters following the subprime mortgage crisis [9]. In Philadelphia, the share of renter-occupied housing peaked in 2013 (the higher value in 2017 is largely due to sampling error from the U.S. Census Bureau) and began to fluctuate around 47.5 percent between 2013 and 2019. As of the five-year estimates for the 2020 American Community Survey, renter-occupied housing in Philadelphia accounts for 47.2 percent of all occupied housing [10]. Across the U.S., the share of renter-occupied housing continued to climb from 2013 to 2015 where it peaked at 37 percent. It then slightly declined between 2015 and 2019. As of 2020, renter occupied housing accounts for 35.6 percent of occupied housing across the U.S. [10].

 

Rising Renters in U.S. Cities

Philadelphia is not the only major city to have seen a modest rise in its renting population prior to the pandemic. Figure 3 shows the net difference between the 2010 and 2020 proportions of renter-occupied household for the ten largest U.S. cities.

 

FIGURE 3 

SOURCE: Data were obtained from five-year estimates of the U.S. Census Bureau’s 2010 and 2020 American Community Surveys.

 

Figure 3 shows that, in the past decade, the ten largest U.S. cities saw increases in their renting populations. Cities that saw the largest increase in their renting populations were predominantly Sunbelt cities or cities located in the Southern or Western regions of the country. San Antonio saw the largest ten-year increase at 4.8 percent. It was followed by Dallas, Phoenix, Houston, and San Jose who all saw increases between 3.5 and 4.5 percent. Many of these cities have seen significant increases in their overall residential populations in the latter half of the twentieth century [11]. This has undoubtably increased their renting populations. Philadelphia had the sixth largest net increase in its renting population at 2.5 percent. It was followed by much larger cities, like Chicago and Los Angeles, as well as the smaller San Diego. It is also interesting to note that Philadelphia’s 2010 and 2020 renter-occupied housing rates were more aligned with many Sunbelt cities rather than older Midwest and East Coast cities like Chicago and New York City. As we have detailed, Philadelphia has a considerably higher homeownership rate than many of its peer cities along the East Coast. Unsurprisingly due to its long history as a majority-renter city, New York City had the highest proportion of renter-occupied housing in both 2010 and 2020 but saw the smallest increase among the ten largest U.S. cities at 0.2 percent. In sum, figure 3 demonstrates that renting is on the rise across many U.S. cities in different regions of the country.

 

Who is Renting More in Philadelphia?

The demographics of Philadelphia’s renters has somewhat shifted in the past decade. These shifts mirror larger demographic and socioeconomic trends occurring in the city. Figures 4 and 5 show that the total concentration of renter-occupied housing has shifted among different demographic groups in Philadelphia from 2010 to 2020.

 

Figure 4 shows the concentrations of renter-occupied housing among Philadelphia’s largest racial and ethnic groups between 2010 and 2020. It shows that the share of Black renter-occupied households fell from 46.6 to 43.8 percent of all renter-occupied households in Philadelphia between 2010 and 2020 (a 2.8 percent decrease). Since Black homeownership in the city also declined during this period, these decreases may be explained by the overall net decrease of roughly 13,000 Black residents in Philadelphia between 2010 and 2020 [10]. The share of white renter-occupied households also fell during this period – from 39.2 to 36.9 percent (a 2.3 percent decrease). Like the city’s Black residents, the white population of Philadelphia declined by over 21,000 residents between 2010 and 2020. This may be why there is a decline in their share of renter-occupied households – especially since their homeownership rate also dropped during this time from 47.6 to 44.5 percent (a 3.1 percent decrease) [10].

 

FIGURE 4 

SOURCE: Data were obtained from five-year estimates of the U.S. Census Bureau’s 2010 and 2020 American Community Surveys.

 

With a 2.6 percent increase, the city’s Hispanic/Latinx population saw the largest increase in its share of the city’ total renter-occupied housing. Philadelphia’s Hispanic/Latinx residential population has grown considerably in the last decade with a net increase of roughly 63,000 individuals; this has coincided with an uptick in Hispanic/Latinx homeownership from 7.7 to 10.3 percent [10]. Thus, the increased share of total renter-occupied households may reflect the general growth of this residential population. The city’s Asian population only saw a 0.2 percent increase in its share of total renter-occupied housing. Similar to the city’s Hispanic/Latinx population, the city’s Asian residential population has grown by almost 24,000 individuals since 2010 while homeownership has increased from 4.8 to 6.6 percent [10]. Changes in the city’s racial and ethnic composition are increasing renting concentrations among growing residential groups.

 

Figure 5 details the concentration of renter-occupied housing units among Philadelphia’s age cohorts between 2010 and 2020. It shows that 25- to 34-year-olds continue to loom large among the city’s renting population with an increased share of the total renting population by 2.6 percent between 2010 and 2020. This coincides with an increase to this cohort of roughly 65,000 individuals since 2010 [10]. Homeownership for this cohort, however, declined between 2010 and 2020 by 0.7 percent [10]. A few older age cohorts increased their concentrations of renters. The 60- to 64-year-old cohort and the 65- to 74-year-old cohort each increased their share of renter-occupied households by 1.0 percent, while the 55- to 59-year-old cohort increased their share by 0.5 percent. Each of these cohorts also saw an uptick in their net population counts and homeownership rates between 2010 and 2020, coinciding with the demographic momentum of the aging Baby Boomer population. 

 

FIGURE 5 

SOURCE: Data were obtained from five-year estimates of the U.S. Census Bureau’s 2010 and 2020 American Community Surveys. 

 

The age cohorts to see the greatest decline in their renter-occupied household concentrations are the 15- to 24-year-olds and the 45- to 54-year-olds. The 15- to 24-year-old age cohort saw a 1.1 percent decline in their renter-occupied household concentration from 2010 to 2020. This may signal the demographic movement of a large share of the Millennial population from the 15- to 24-year-old age cohort in 2010 to the 25- to 34-year-olds by 2020. Because of this generation’s untimely entrance into the workforce between the Great Recession and the COVID-19 pandemic, many are still unable to afford homeownership [12]. The decline among 45- to 54-year-olds mirrors the movement of the Baby Boomers to older cohorts since the 45- to 54-year-old cohort lost approximately 98,000 individuals between 2010 and 2020 and saw their homeownership rate drop from 22.4 to 19.5 percent [10]. Their homeownership rate remains the highest among all age cohorts.

 

A Renter Momentum

The analysis shows that renter populations have been increasing across the country, and in major cities like Philadelphia, for the past decade. For Philadelphia, the growth in renters largely mirrors demographic shifts in the city – particularly, the influx of new racial and ethnic residential groups as well as a sizable 25- to 34-year-old population. While the pandemic's somewhat cooling housing market and uptick in interest rates have kept many would-be homebuyers in the rental market, competition for real estate may remain fierce for the foreseeable future. The share of renters may—once again—eclipse homeowners as the dominant means of living within Philadelphia and the U.S., but only time will tell.

 

Works Cited 

[1] Cerullo, Megan. 2022. “Apartment rents are shooting up in hundreds of cities across the U.S. Here's why.” CBS News, 4 August. Retrieved from: (https://www.cbsnews.com/news/rent-apartments-rising-housing-market-us/). 

 

[2] Peck, Emily. 2022. “It's cheaper to rent than to buy in 3/4 of U.S. cities.” Axios, 21 June. Retrieved from: (https://www.axios.com/2022/07/21/rising-rents-home-prices-cities-real-estate). 

 

[3] Joint Center for Housing Studies of Harvard University. 2022. America’s Rental Housing 2022. Cambridge, MA: Harvard University. Retrieved from: (https://www.jchs.harvard.edu/sites/default/files/reports/files/Harvard_JCHS_Americas_Rental_Housing_2022.pdf). 

 

[4] U.S. Census Bureau. 2021. “Historical Census of Housing Tables: Homeownership.” U.S. Census Bureau, 8 October. Retrieved from: (https://www.census.gov/data/tables/time-series/dec/coh-owner.html). 

 

[5] Cannato, Vincent J. 2010. “A Home of One's Own.” National Affairs, Spring. Retrieved from: (https://www.nationalaffairs.com/publications/detail/a-home-of-ones-own). 

 

[6] Sisson, Patrick. 2018. “Why buying a house today is so much harder than in 1950.” Curbed, 10 April. Retrieved from: (https://archive.curbed.com/2018/4/10/17219786/buying-a-house-mortgage-government-gi-bill). 

 

[7] Cilluffo, Anthony, A.W. Geiger, and Richard Fry. 2017. “More U.S. households are renting than at any point in 50 years.” Pew Research Center, 19 July. Retrieved from: (https://www.pewresearch.org/fact-tank/2017/07/19/more-u-s-households-are-renting-than-at-any-point-in-50-years/). 

 

[8] Acolin, Arthur, Richard Voith, and Susan Wachter. 2016. City and Suburbs – Has There Been a Regime Change? Philadelphia, PA: Penn Institute for Urban Research, Penn IUR White Paper. Retrieved from: (https://www.penniur.upenn.edu/uploads/media/City_and_Suburbs_%E2%80%93_Has_There_Been_a_Regime_Change_web.pdf). 

 

[9] Calhoun, Michael. 2018. “Lessons from the financial crisis: The central importance of a sustainable, affordable and inclusive housing market.” Brookings, 5 September. Retrieved from: (https://www.brookings.edu/research/lessons-from-the-financial-crisis-the-central-importance-of-a-sustainable-affordable-and-inclusive-housing-market/). 

 

[10] U.S. Census Bureau, American Community Survey 

 

[11] Wang, Tim and Julie Laumont. 2019. “The Rise of the U.S. Sun Belt.” Insights, 1 April. Retrieved from: https://www.clarionpartners.com/insights/sun-belt-apartments-multifamily. 

 

[12] Huddleston Jr., Tom. 2022. “Millennials and Gen Zers do want to buy homes—they just can’t afford it, even as adults.” CNBC, 12 June. Retrieved from: (https://www.cnbc.com/2022/06/12/millennials-and-gen-zers-want-to-buy-homes-but-they-cant-afford-it.html).