(The Center Square) — Philadelphia’s new mayor, Cherelle Parker, knows the city needs more affordable housing and says fixing the problem is one of her top priorities.
As part of her 100-day action plan announced Tuesday, the mayor pledged to enable more housing to get built and ordered a plan for “affordable luxury” for low- and middle-income families.
The problem is a serious one for the city and Pennsylvania broadly. Experts argue that the state has a shortage of almost 100,000 housing units.
“Housing is essential for economic opportunity and wealth-building,” Parker said in her action plan. “Philadelphia historically was a majority homeowner city.”
The key to keeping home prices and rent in check may be to build more than what the city has allowed in previous years.
“Apartment rents growth has, in fact, slowed in geographies that built a greater number of units,” Chris Bruen of the National Multifamily Housing Council wrote in a December research note.
Places like Myrtle Beach, South Carolina; Sarasota, Florida; and Boise, Idaho all saw rents fall when the number of apartments rose significantly. When supply expands to meet the demand of current and new residents, rents tend to stabilize or fall.
What’s happened nationally can be seen in Philadelphia, where rents for new apartments in the greater Center City area have stabilized as more get built.
That stabilization, though, could be temporary. Rising interest rates that drive up the price of new construction projects and what Bruen called “market softness” could mean that fewer get built.
“Unless we find ways to remove more chronic barriers to supply, this balloon of apartment deliveries and reduction in costs is likely to be short lived, which will put upward pressure on rents and hurt housing affordability over the longer term,” Bruen wrote.
“In addition to leveraging programs that support housing production and preservation, we will address longstanding barriers that add cost and delay,” Parker wrote in her plan.
Those barriers will be tough to overcome, important though they may be.
It takes, on average, months longer to build new housing in Pennsylvania than in other parts of the country. According to the U.S. Census Bureau, an apartment building with two to four units needs 17 months to get built in the Northeast, compared to 11 months in the South.
Without a faster or cheaper process, Philadelphia renters could wait years until rent becomes less of a burden.