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U.S Department of Housing and Urban Development

Spotlight on the Housing Market

in the Philadelphia-CamdenWilmington, PA-NJ-DE-MD MSA
U.S. Department Efforts to Stabilize Development Office and Help American Homeowners
The Obama Administration’sof Housing and Urban the Housing |Marketof Policy Development and Research | July 2014

The Philadelphia-Camden-Wilmington, PA-NJ-DE-MD Metropolitan Statistical Area (Philadelphia MSA) includes 11 counties located in
southeastern Pennsylvania, south-central New Jersey, northern Delaware, and northeastern Maryland. As with similar areas along the East
Coast, the initial downturn from the foreclosure crisis was less severe than in some areas of the nation but the recovery from the crisis and
subsequent recession has been slower. In the years leading up to the housing crisis, the Philadelphia MSA experienced levels of new home
construction which exceeded household growth and a rise in home prices which surpassed the national appreciation by 8 percent. After the
bubble burst, home prices in Philadelphia fell by 17 percent, which was only half the national drop in prices of 33 percent. The lower property
values and the resulting underwater mortgages were fueled by unsustainable mortgage lending and investor speculation going into the crisis.
The rise in unemployment during the recession added further to rising defaults and the decline in property values. The share of mortgages at
risk of foreclosure (those 90 or more days delinquent or in the foreclosure process) did not peak until the beginning of 2013—three years later
than for the nation—and at a much higher rate, although the share of distressed mortgages was higher going into the crisis. Contributing to
the high share of distressed mortgages are longer than average foreclosure processing times in Pennsylvania and New Jersey, which keep
homes in the foreclosure pipeline longer. The share of mortgages at risk of foreclosure has begun to decline in Philadelphia–the result of four
years of modest job growth, fairly stable gains in home prices, and local legislation in 2008 that sharply curtailed foreclosure activity. The
Administration’s broad approach to stabilizing the housing market has been a real help to homeowners in Philadelphia and the surrounding
area. This addendum to the Obama Administration’s Housing Scorecard provides a summary of local economic trends and conditions and the
impact of the Administration’s efforts to stabilize the housing market and help local homeowners.

Population Growth, Employment,
and Housing Market:

With nearly 6.0 million people according to the most recent
Census, the Philadelphia MSA is the 6th largest in the nation.
From 2000 to 2010, the population increased by an average
of 27,800 people, or 0.5 percent, a year. Natural population
growth (births minus deaths) accounted for 83 percent of
population growth during this period. An average of nearly
4,925 people per year moved to the Philadelphia MSA
during the last decade and accounted for the remaining 17
percent of the net population increase.
Philadelphia MSA Housing Unit Growth Outpaced Population and
Household Growth During the Past Decade
Date of Census

4/1/2000

4/1/2010

Philadelphia MSA Population

5,687,147

5,965,343

Annual Growth Rate

-

0.5%

Philadelphia MSA Households

2,134,404

2,260,312

Annual Growth Rate

-

0.6%

Philadelphia MSA Housing Units

2,281,825

2,433,611

Annual Growth Rate

-

0.7%

Source: Census Bureau (2000 and 2010 Decennial)

During the decade spanned by the Census, new housing production
exceeded household growth in Philadelphia. Net annual housing
unit growth of 0.7 percent in the Philadelphia metropolitan area during the last
decade was greater than the corresponding population and household growth
rates of 0.5 and 0.6 percent, respectively. However, according to the Census
Bureau, the rate of increase in vacant units in the Philadelphia metro area during
the 2000s was less than half the national rate, with vacant units increasing at
an average annual rate of 1.8 percent, compared with 4.4 percent nationally.
Investor speculation stimulated some overbuilding in the years leading up to the
housing crisis, as a relatively large share of home purchases in the MSA were
by non-occupant investors. Specifically, from 2000 to 2005 investor home sales
rose from 8.3 to 20.0 percent of total sales in the Philadelphia Metropolitan
Division, while the corresponding increase for the nation was from 8.0 to 14.6
percent. Subprime lending also contributed to overbuilding in the Philadelphia
MSA. A study by the National Bureau of Economic Research indicates that the
Philadelphia MSA ranked 57th out of the top 107 metros with the highest share
of subprime originations during 2005, with subprime originations as a share of
new mortgages at 18 percent in Philadelphia. A conservative estimate based on
HMDA (Home Mortgage Disclosure Act) data indicates that high-cost (proxy for
subprime) originations tripled nationally between 1998 and 2005, while a study
by the Center for Responsible Lending estimates that approximately 90 percent of
subprime mortgages during that period faced increases in monthly payments of

Spotlight on the Housing Market in the Philadelphia-Camden-Wilmington, PA-NJ-DE-MD MSA | Page 1

U.S Department of Housing and Urban Development

U.S. Department Efforts to Stabilize Development Office and Help American Homeowners
The Obama Administration’sof Housing and Urban the Housing |Marketof Policy Development and Research | July 2014
30 to 50 percent within a few years, causing subprime loans
to typically default at more than 7 times the rate of other
mortgages.
Philadelphia’s economy is improving. The local
economy was growing slowly before it began to decline in
2008. From the first quarter of 2004 through the first quarter
of 2008, jobs increased at an average annual rate of 0.8
percent, compared with a national increase of 1.4 percent
during the same period. The impact of the Great Recession
was not as severe for the Philadelphia metropolitan area
as it was for the nation. Jobs in the MSA declined at an
average annual rate of 2.4 percent, from the second quarter
of 2008 through the first quarter of 2010, compared with
a national decline of 3.1 percent. The recovery from the
recession has been weaker for the Philadelphia MSA than
for the nation, however, with jobs increasing at an average
annual rate of 0.6 percent from the second quarter of
2010 through the first quarter of 2014, compared with a
1.5-percent increase nationally.
The Philadelphia MSA is known for its hospitals and
institutions of higher learning. During the recent recession,
a period when every other private sector in the MSA lost
jobs, the education and health services sector expanded
at an average annual rate of 1.7 percent. Job losses were
most severe during this period in the construction and
manufacturing sectors, which declined at average annual
rates of 11.9 and 7.2 percent, respectively; job losses were
also substantial in the financial sector (4.1 percent). The
recovery from the recession has been led by the leisure and
hospitality and professional and business services sectors,
which expanded by average annual rates of 2.5 and 1.9
percent, respectively. Gains in the education and health
services sector continued, but slowed to an average rate
of 1.3 percent during this period. Growth in these sectors
was offset by average annual job losses of 2.5 percent
in the information sector and 2.3 percent in the federal
government. The unemployment rate for the Philadelphia
MSA peaked at 9.0 percent in April 2010 and has
since fallen to 6.1 percent as of June 2014. The national
unemployment rate peaked in October 2009 at 10.0
percent, falling to 6.1 percent by June 2014.
Home sales in Philadelphia are improving.
After reaching a peak of 82,700 units sold in 2005,
purchases of existing homes in the metropolitan area declined
between 2006 and 2011, first by an average annual rate
of 15 percent from 2006-2008 and then at the slower pace
of 8 percent from 2009-2011. Existing home sales began to
rise again 2012 and 2013, increasing at an annual rate of
14 percent (although on a much lower base) to reach sales of

44,000 during 2013. By comparison, existing home sales in the nation peaked
in 2005 and declined by an annual rate of 14 percent between 2006 and 2008;
existing home sales began to rise in 2009, increasing at an annual rate of almost
5 percent from 2009 to 2013. Purchases of new homes in the Philadelphia
MSA peaked in 2005 at 8,700 units, before falling from 2006 through 2011
at an annual rate of 13 percent. New home sales have since stabilized at
approximately 2,275 units, increasing over the last two years at an annual rate
of 16 percent (albeit on a low base). Nationally, new home sales also peaked

Spotlight on the Housing Market in the Philadelphia-Camden-Wilmington, PA-NJ-DE-MD MSA | Page 2

U.S Department of Housing and Urban Development

U.S. Department Efforts to Stabilize Development Office and Help American Homeowners
The Obama Administration’sof Housing and Urban the Housing |Marketof Policy Development and Research | July 2014
in 2005 before declining by an annual rate of almost 13
percent from 2006 through 2011; sales have increased since
at an annual rate of 20 percent (also on a low base).
Home prices in Philadelphia climbed higher but
fell later and less steeply than for the nation
during the housing crisis. The CoreLogic repeat-sales
house price index (HPI) shows that home prices in the
Philadelphia MSA peaked 14 months after and rose 8
percentage points higher than for the nation, but had a
less-pronounced decline. Home prices in the metropolitan
area fell 17 percent from their peak in June 2007 to their
low in November 2012 compared with a national peak-tolow decline of 33 percent (ending February 2012). Investor
speculation had an impact on the rise in home prices in
the Philadelphia MSA, with sales to investors averaging 14
percent in Philadelphia during the bubble—higher than the
11 percent share nationally. As described earlier, subprime
lending was also a factor in fueling home prices in the
Philadelphia MSA. Since reaching their low point, home
prices have increased by 7 percent in the Philadelphia
metropolitan area–one-fourth the 28-percent low-to-current
increase for the nation. Home values in the Philadelphia
MSA are currently on par with prices in mid-2005.
The apartment vacancy rate in Philadelphia has
closely tracked the national vacancy rate during
the past three years. According to MPF Research,
the Philadelphia MSA apartment vacancy rate was 4.9
percent in the first quarter of 2014, down from 5.4 percent
a year earlier, representing generally balanced supply and
demand for apartments. The decrease in the vacancy rate
occurred despite increased construction because demand
for rental housing was extremely high during the prior
year. The national apartment vacancy rate was relatively
unchanged at 5 percent over the same period. During the
first quarter of 2014, the average apartment rent in the
Philadelphia MSA increased 1.4 percent from a year earlier
to $1,132, compared with a nationwide increase of 3.4
percent to $1,130. Overall rental market conditions in the
Philadelphia metro area remain weaker than the apartment
market due to a high number of vacant single-family rental
properties. According to the CPS/HVS (Current Population
Survey/Housing Vacancy Survey) conducted by the Census
Bureau, as of the first quarter of 2014 the overall rental
vacancy rate for the Philadelphia MSA was 10.2 percent
compared to a national rate of 8.3 percent. The 2012 ACS
(American Community Survey) indicates that single-family
homes accounted for 12 percent of all rental units in the
Philadelphia MSA, while representing 29 percent of all rental
units in the nation.

Trends in Mortgage Delinquencies and
Foreclosures:

The rate of mortgages at risk of foreclosure in Philadelphia has
begun to decline, after peaking 3 years later than nationally.
According to Black Knight Financial Services, Inc., as of May 2014 the
Philadelphia MSA placed 46th out of 381 metropolitan areas ranked by share of
mortgages at risk of foreclosure (90 or more days delinquent or in the foreclosure
process). From 2000 through most of 2005, the share of mortgages at risk of
foreclosure in the Philadelphia MSA was higher than the national rate by more
than 1 percentage point, and began to converge with the national rate from the
end of 2005 through 2006, according to CoreLogic data. In 2007 and 2008,
when the foreclosure crisis began and single-family foreclosures were largely
driven by unaffordable non-traditional loan products, the increase in mortgages
at risk of foreclosure in the Philadelphia MSA mirrored the rise nationally. From
the beginning of 2007 to the end of 2008, the share of distressed mortgages in
Philadelphia rose from 2.2 to 4.6 percent, compared with a national increase of
1.6 percent to 4.4 percent. Beginning in 2009, foreclosures were increasingly
driven by loss of income, unemployment, and strategic defaults as the economy
worsened, according to research by the Federal Reserve Bank of Chicago. A
sharp spike upward in the rate of distressed mortgages occurred in 2009 for
both the Philadelphia MSA and the nation. By early 2010, mortgages at risk of

Spotlight on the Housing Market in the Philadelphia-Camden-Wilmington, PA-NJ-DE-MD MSA | Page 3

U.S Department of Housing and Urban Development

U.S. Department Efforts to Stabilize Development Office and Help American Homeowners
The Obama Administration’sof Housing and Urban the Housing |Marketof Policy Development and Research | July 2014
foreclosure peaked at 8.0 percent nationally and have since
fallen to 4.1 percent. The share of distressed mortgages in
the Philadelphia MSA continued to increase for another 3
years, peaking at 9.6 percent in the beginning of 2013;
it has since fallen to 8.1 percent. The share of distressed
mortgages in the Philadelphia metro has begun to decline
at a faster rate. Over the last year, mortgages at risk of
foreclosure in Philadelphia decreased by 25 percent–from
54,000 to 40,700–compared with a national decline of 17
percent over the same period. At least a partial explanation
for the higher share of distressed mortgages in Philadelphia
relative to the nation is a longer foreclosure processing
timeline. As of the first quarter of 2014, the average time to
complete a foreclosure was 633 days in Pennsylvania and
1,103 days in New Jersey, much higher than the national
average of 572 days.
Realty Trac data show foreclosure completions in
Philadelphia have trailed the national rate. From
April 2009 through June 2014, the number of foreclosure
completions as a percentage of all housing units was 1.6
percent in Philadelphia, much lower than the 2.9-percent rate
for the nation. Foreclosure completions have been trending
downward nationally and in the Philadelphia MSA since
2011; however, during the first and second quarters of 2014,
foreclosure completions ticked up slightly (7 percent) from
a year earlier in the Philadelphia metropolitan area. This
represents a foreclosure completion rate of 0.06 percent, on
par with the national rate during the same period.
The efforts of numerous state and local entities and financial
institutions in partnership with the federal government have
helped contain the rate of foreclosures. One local initiative
is the Residential Mortgage Foreclosure Diversion Program,
which was created pursuant to a court order from the First
Judicial District of Philadelphia Court of Common Pleas of
Philadelphia County in April 2008; it has saved nearly 7,500
homeowners from foreclosure in the City of Philadelphia.
The need for recovery efforts continues, as 10.5 percent of
mortgages in the Philadelphia MSA remain underwater as of
the first quarter of 2014 according to CoreLogic, although this
is down from 16.1 percent a year earlier. This compares to
a 12.7-percent share of underwater borrowers for the nation
during the first quarter.
Foreclosure Completion Rates in the Philadelphia MSA
Second Quarter 2014
Area
Philadelphia MSA
Nation
Note:

Foreclosure
Completions

Foreclosure
Rate

Since April 1, 2009
Foreclosure
Completions

Foreclosure
Rate

1,580

0.06%

37,840

1.6%

85,300

0.06%

3,869,600

2.9%

Foreclosure Rates as Percent of All Housing Units;
Data through December 2013 for foreclosures since April 2009	
Source: Realty Trac and Census Bureau

The Administration’s Efforts to Stabilize the
Philadelphia MSA Housing Market

The Administration’s mortgage and neighborhood assistance programs–the Home
Affordable Modification Program (HAMP, which is part of the broader Making
Home Affordable program), the Federal Housing Administration (FHA) mortgage
assistance programs, the Neighborhood Stabilization Program (NSP), and the
Hardest Hit Fund (HHF) program–combined with assistance from the HOPE Now
Alliance of mortgage servicers and the National Mortgage Servicing Settlement
have helped stabilize the Philadelphia MSA housing market.
From the launch of the Administration’s assistance programs in April 2009
through the end of May 2014, more than 151,800 homeowners have received
mortgage assistance in the Philadelphia metropolitan area. Nearly 89,000
interventions were completed through the HAMP and FHA loss mitigation and
early delinquency intervention programs. An estimated additional 62,800
proprietary mortgage modifications have been made through HOPE Now
Alliance servicers. While some homeowners may have received help from more
than one program, the number of times assistance has been provided in the
Philadelphia metropolitan area is more than 4 times the number of foreclosures
completed during this period (37,300).
Under the landmark National Mortgage Servicing Settlement in February 2012,
more than 9,418 Pennsylvania homeowners have benefitted from over $438
million in refinancing, short sales and completed or trial loan modifications,
including principal reduction on first and second lien mortgages provided as of
June 30, 2013. Nationwide, the settlement has provided more than $50 billion
in consumer relief benefits to more than 631,000 families. That is in addition
to the $2.5 billion in payments to participating states and $1.5 billion in direct
payments to borrowers who were foreclosed upon between 2008 and 2011.
Given over three rounds, the Neighborhood Stabilization Program
has invested $7 billion nationwide to help localities work with non-profits and
community development corporations to turn tens of thousands of abandoned and
foreclosed homes that lower property values into homeownership opportunities
and the affordable rental housing that communities need.
NSP1 funds were granted to all states and selected local governments on a
formula basis under Division B, Title III of the Housing and Economic Recovery Act

Spotlight on the Housing Market in the Philadelphia-Camden-Wilmington, PA-NJ-DE-MD MSA | Page 4

U.S Department of Housing and Urban Development

U.S. Department Efforts to Stabilize Development Office and Help American Homeowners
The Obama Administration’sof Housing and Urban the Housing |Marketof Policy Development and Research | July 2014
(HERA) of 2008; NSP2 funds authorized under the American
Recovery and Reinvestment Act (the Recovery Act) of 2009
provided grants to states, local governments, nonprofits and
a consortium of nonprofit entities on a competitive basis; and
NSP3 funds authorized under the Dodd–Frank Wall Street
Reform and Consumer Protection Act of 2010 provided
neighborhood stabilization grants to all states and select
governments on a formula basis.
In addition to stabilizing neighborhoods and providing
affordable housing, NSP funds have helped save jobs.
Each home purchased, rehabilitated and sold through the
NSP program is the result of the efforts of 35 to 50 local
employees.
Overall, a total of $86.8 million in NSP funds has been
awarded to three grantees in the Philadelphia MSA: the City
of Philadelphia, Camden Development Authority,
and the Housing Authority of Camden City. In
addition, a total of $34.6 million in NSP funding was
awarded to the State of Delaware, of which $22.4 million
has been sub-allocated to the City of Wilmington and New
Castle County in the Philadelphia MSA. Approximately 529
households in the MSA have already benefited from NSP
and activities funded by the program are expected to provide
assistance to an additional 802 owner-occupied and renter
households.
The City of Philadelphia received a total of $60.7
million in NSP funding. The City targeted NSP investments
in areas where foreclosure rates were found to be high but
where vacancy and abandonment rates were relatively low,
including development activities in the Mantua, Nicetown,
and Point Breeze neighborhoods, among others. The City
encouraged for-profit and nonprofit, minority and women real
estate developers to participate in the program. Twenty-six
developers participated in the NSP program, of which 45
percent were minority, women or disabled-owned small
businesses. The following are examples of NSP funded
projects in the City of Philadelphia.
•	 In the Point Breeze neighborhood, the City of
Philadelphia invested $8 million to construct 40 homes–
18 homes for households earning less than 120 percent of
area median income (AMI) and 22 homes for households
earning less that 80 percent of AMI. Six of the homes have
been designed to be accessible by people with disabilities
and minority-owned entities were awarded 84 percent of
the contracts.
Philadelphia MSA Housing Units to Date Benefitting
from NSP by Type of Activity
Construction or Rehabilitation
Demolition and Clearance
Homeownership Assistance to low- and moderate-income
Total Housing Units
Additional Projected Housing Units

262
19
248
529
802

•	 Another NSP project in the Point Breeze neighborhood is the Patriot House,
which was developed by CATCH (Citizens Acting Together Can Help, Inc.)
The Patriot House provides 15 units of affordable permanent supportive rental
housing for chronically homeless veterans. In addition to providing permanent
housing, it offers a continuum of care to its tenants. Program coordinators
along with case managers work closely with the formerly homeless veterans
to access services and resources to increase their quality of life, stability, and
integration into the community-at-large.
•	 In the Fairhill neighborhood, the Women’s Community Revitalization Project
built Evelyn Sanders II Townhouses, 31 units of affordable rental housing
serving very-low and low-income households. The development site was
previously overrun with abandoned buildings and vacant lots.
•	 In a building that was previously vacant and foreclosed, the Gaudenzia
Foundation redeveloped Shelton Court, located on North Broad Street in
the East Oak Lane neighborhood, into 20 permanent supportive housing
units for formerly homeless families, working specifically with female heads of
households in recovery from chronic substance abuse and reuniting them with
their children.
The Philadelphia MSA has also benefitted from an allocation of $300.5 million
from the Administration’s Hardest Hit Fund to the state of New Jersey. The
New Jersey Housing and Mortgage Finance Agency (NJHMFA) administers
these Hardest Hit funds through the New Jersey HomeKeeper Program,
which was launched statewide in May 2011. HomeKeeper offers mortgage
payment and reinstatement assistance for New Jersey homeowners who are
unemployed or underemployed through no fault of their own and are at high risk
of default or foreclosure. Through the program, NJHMFA provides twenty-four
months or up to $48,000 in monthly mortgage payment assistance paid to the
servicer on behalf of the qualified homeowner; the program also provides up to
$48,000 in reinstatement assistance for recently re-employed homeowners to
cure delinquent payments, escrow shortages, and/or delinquent property taxes
to avoid foreclosure. Due to high volumes and growth in borrower participation,
New Jersey HomeKeeper stopped accepting new applications on November 30,
2013, but will continue reviewing existing applicants for assistance until
all program funds have been committed. For additional information, see
https://www.njhomekeeper.com/.

Spotlight on the Housing Market in the Philadelphia-Camden-Wilmington, PA-NJ-DE-MD MSA | Page 5


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