Not sure if this is the right place for this discussion but it does tie into development of the city. Given all the new apartment buildings that have been announced lately I got to wondering how Philadelphia compares to other metro areas in homeowner versus rental rates of the population. So I found this from the 2010 census.
Table 5.Ten Largest Cities and Percent of Renter-Occupied Units: 2010 (For information on confidentiality protection, nonsampling error, and definitions, see www.census.gov/prod/cen2010/doc/sf1.pdf
City -- Total population --Total occupied housing units --Percent renters
New York, NY 8,175,133 --3,109,784 --69.0
Los Angeles, CA 3,792,621 --1,318,168 --61.8
Chicago, IL 2,695,598 --1,045,560 --55.1
Houston, TX 2,099,451 --782,643 --54.6
Philadelphia, PA 1,526,006 -- 599,736 --45.9
Phoenix, AZ 1,445,632 -- 514,806 --42.4
San Antonio, TX 1,327,407 --479,642 --43.5
San Diego, CA 1,307,402 -- 483,092 -- 51.7
Dallas, TX 1,197,816 -- 458,057 --55.9
San Jose, CA 945,942 -- 301,366 --41.5
Source: U S Census Bureau, 2010 Census Summary File 1
From the above data it is clear that Philadelphia has a low rate of renters when compared to other major cities of it's size on the east coast. After seeing this I wondered what type of affect this has on the city.
The more conventional thinking in the US over the past 60-70 years has been that a higher rate of homeownership is a good thing. I do not actually agree that owning is better then renting based on the fact that after adjusting for inflation, taxes, upkeep, and other costs assoicated with owning a home the historical return on your investment is basically zero while other investments such as investing in the stock market typically brings a 6-7% return after inflation. This means that owning a home is putting a large portion of equity into an inferior investment opportunity.
But even if we take out the cost of lost investment opportunity and assume that the value of our house will increase at the same rate as other investments there is still another problem with homeownership and that is the cost of upkeep. A little info about this problem
As specified by the study, Philadelphia’s home repair dilemma is twice that of other America cities. “Thirty-eight percent of homeowners fall at or below the poverty line, which is twice that rate of Atlanta and Chicago and more than three times the rate of New York or Boston,” the study stated. “Philadelphia family incomes over the past three decades have not kept up with inflation.”
Along with high poverty levels, Philadelphia’s rich historic background, while a notable aspect of the city, proves to be problematic when considering the aged housing infrastructures, which need the most on-going repairs. The most unsettling figure is the majority of Philadelphia homeowners’ repairs cost an average of $5,300. “The cost of not repairing these homes can be more than eight times this amount,” the Philadelphia’s Home Repair Crisis study claimed.
So what happens when homeowners can not afford the upkeep on their houses? There is one theory that this can lead to increases in crime. See http://en.wikipedia.org/wiki/Broken_windows_theory
Another aspect that high owner occucancy rates brings in the NIMBY attitude that can manifest itself in many different ways. One way that this comes through is residents who are afraid of being priced out of their current area. Call it the fears of gentrification.
"Political action, to either promote or oppose the gentrification, is often the community's response against unintended economic eviction caused by rising rents that make continued residence in their dwellings unfeasible. The rise in property values causes property taxes based on property values to increase; resident owners unable to pay the taxes are forced to sell their dwellings and move to a cheaper community.
While most homeowners welcome a rise in home values because of the appreciation of their investment it is important to note that it is not uncommon to see a community vote against improvement measures for fear that price appreciation in the area will increase taxes and could cause home owners to lose their houses. Since the rate of income in many poor areas does not increase as the value of the home increases the only way to pay the increased taxes would be to take equity out of the home. This is unsustainable as eventually all of the equity will be gone. This means that the homeowner is caught in a catch 22. The majority of their equity is in an asset that the home owner wants to see appreciate at the rate of other investments (6-7%) but at the same time if the appreciation happens will price them out of the area as taxes rise (in theory atleast but I have to admit I do not understand Philadelphia real estate taxes as I live in Jersey)
The other major affect is the typical type of dwelling that is traditionally owned versus being rented. As we all know the most common type of housing in the city is the rowhome. This presents a problem in the type of density that is created. The typical 2-3 floor row home does not currently create the density that is required to make it financially feasible to have mass transit meaning that the residents are faced with the choice of excessively long commutes via public transportation (having to make transfers ect.) or the added cost of owning a car.
Maybe I am crazy but it seems to me that the high homeowner rate in Philadelphia is actually detrimental to the development and improvement of the city. What does everyone else think?