New Census Figures Show Rise in College Educated Renters in Philly
Just before the start of 2020, the U.S. Census Bureau released a treasure trove of its most recent demographic data from 2018.
While the census’ data releases are slightly dated, the bureau still provides far and away the most granular insights available on changes in long-term demographic trends that offer a view of the national and Philadelphia commercial real estate markets.
For the U.S. commercial real estate market – including Philly retail space – one of the most important takeaways from the recent release was the continued surge in Philadelphia’s population of college-educated renters.
This CoStar Realty Information Inc. report involving U.S. and Philadelphia commercial properties is being made available through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.
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. (See Chart “New Households Moving into Philadelphia County”)
But the slow-growing headline 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 percent 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 percent annual growth the figure has averaged during the past five years. (See Chart “Renter Households With Bachelors Degrees or Higher”)
In line with these shifts, Philadelphia’s share of renter households earning over $75,000 has now doubled from 10 percent in 2010 to 21 percent in 2018, with most of the gains accruing during the second half of the decade. (See Chart “Percentage of Renter Households Earning $75K+”)
Why is Philly experiencing such rapid growth in high income renters? Increasing affordability barriers to homeownership (which will be covered in a future Costar Research update) are keeping more high-income residents living near U.S. and Philadelphia commercial real estate listings in the renter pool well into their 30s.
However, even greater affordability challenges in nearby New York and Washington, D.C., are sending residents to be closer to national and Philadelphia commercial real estate properties. 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 percent 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 metropolitan statistical area, 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 national and Philadelphia commercial real estate properties seeking the mix of lower housing costs and better blue-collar employment prospects offered in the southern U.S. (See Chart “Total Renter Households”)
The overarching takeaway from the 2018 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 – By Adrian Ponsen, CoStar Realty Information Inc.
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