Guest Commentator: Alexandra Lee, Economist, Zillow Group @ZillowGroup
How will some of the factors that contribute to the Great Reshuffling impact our local business community?
The pandemic has upended the meaning of home and prompted many of us to rethink how and where we want to live. A recent Zillow survey found that 11% of Americans say they have already moved in the past year — by choice or by circumstance — contributing to what we at Zillow refer to as the “Great Reshuffling”. As remote work became more commonplace during the pandemic, many Americans shifted their priorities away from short commutes to the office and towards home affordability.
Zillow’s research shows that over the last year, the hottest housing markets were among the more-affordable metros in the country. Philadelphia was no exception, especially when compared with more expensive metros along the eastern seaboard. Home values in Philadelphia grew 16.7% over the last year, a larger increase than New York City (14.1%), Washington, D.C. (13.3%), or Baltimore (13.5%). Even with this significant home price appreciation over the last year, the typical home value in Philadelphia, at $307,863 is still 45.7% less expensive than New York City, 40.7% less expensive than Washington, D.C., and 11.7% less expensive than Baltimore. If this data shows us anything, it’s that when given an opportunity, people will move in search of relative affordability. In fact, movers that changed states in 2020 moved to areas with homes that were, on average, both larger and less-pricey than in the areas they moved from, according to a Zillow analysis of data from North American Van Lines — a notable reversal of trends from prior years. We found that the average mover to Philadelphia relocated to an area with home values nearly $83,000 lower and homes 55 square feet larger than where they came from. Philadelphia saw the most inbound moves from New York City, Washington, D.C., Miami, Houston, and Tampa.
Similarly, typical rents in Philadelphia grew 10% over the last two years to $1,724. This was less than Baltimore’s 12.4% growth ($1,785), but more than Washington, D.C.’s growth at 5.3% ($2,114) or New York City’s at 1.8% ($2,737). Despite Philadelphia’s relatively low housing costs, affordability (and attracting new talent) can remain a challenge if wages fail to keep pace with rising prices, especially for renters who typically face more constrained budgets and higher housing cost burdens than homeowners.
During the Great Reshuffling, many thought demand for urban areas would suffer due to COVID-19. What’s clear, however, is that people generally moved in pursuit of greater affordability — and in metros where homes in urban areas were less expensive than suburban or rural areas, that’s where we saw the greatest housing demand. That was the case in Philadelphia — less expensive urban areas grew more rapidly in price than suburban or exurban parts of Philadelphia even before the pandemic, and continued to hold a more rapid pace of growth throughout much of 2020. Philadelphia’s relatively affordable cost of housing especially in its urban core compared to more expensive cities on the eastern seaboard can give its employers an advantage in attracting talent. Business leaders in the Philadelphia region should keep an eye on Philadelphia’s peers— not just where Philadelphia is attracting new residents from, but the areas it’s competing with to attract talent.
Through Recharge & Recover PHL, the Chamber is working with our members to make Greater Philadelphia the healthiest and most livable community in the Northeast.
This objective is part of five aspirations of Recharge & Recover PHL with the aim to support not only Greater Philadelphia’s recovery but to also provide a means to differentiate our region for decades to come.
Upcoming Event
[Virtual] The Great Reshuffling: The Impact of Remote Work on Relocation Trends
Tuesday, November 16, 2021 | 2:00 PM – 3:00 PM | Held via Zoom
The pandemic and remote work have encouraged what Zillow has called “the great reshuffling.” Liberated from a daily commute, many people and businesses are moving to new locations, and often seeking out lower housing and commercial property costs. Learn how Philadelphia stacks up in terms of its affordability, retaining, and attracting businesses and workers, and creating a livable region that all can enjoy.
