If the massive cluster of new housing, shops, and restaurants rising in King of Prussia is any indication, the suburbs are as prosperous as ever. There, as elsewhere across the Philadelphia region, developers have poured millions into new developments and town squares, betting on the prospect that Philadelphia itself can’t stay attractive — or affordable — forever.
It makes sense: Since 2010, every suburban county in the region except for Camden County has seen its population grow. Communities such as Ardmore and Media have enjoyed new success after rethinking their downtowns. And corporations have been ditching the city for the suburbs, heading to municipalities they say can offer lower taxes.
There’s just one flaw in this picture: Nearly 10 years after the housing bubble burst, the median home-sale price in the Philadelphia suburbs is down 11 percent, having dropped $27,000, from $242,950 in the first quarter of 2007 to $216,000 in 2017. And few signs exist that the suburbs will regain their pre-housing-bust vigor quickly.
It’s posing a problem for some suburban homeowners — many of whom are holding on to their homes longer, for fear they may not be able to sell for a high enough price. And it’s causing ripple effects across the market, resulting in fewer properties for sale and bidding wars for those that are, and a growing challenge for first-time buyers and the middle class to find houses they can afford.
“Suburban homeowners … cannot obtain a sufficiently high price that allows them to also pay off their remaining mortgage balance,” said economist Kevin Gillen of Drexel University’s Lindy Institute for Urban Innovation, who releases a quarterly analysis of regional home values based on sale-price data for single-family homes from the city’s Recorder of Deeds Office and Trend Multiple Listing Service. (The analysis does not include condo sales.)
The slump also presents a sharp contrast to Philadelphia, which in first-quarter 2017 saw home values surge 11.8 percent compared with a year ago, according to Gillen’s analysis for his Home Price Index, which evaluates the region’s entire housing stock, regardless of whether homes were purchased during a particular period.
By contrast, suburban values dropped 0.5 percent as a whole in first-quarter 2017, according to Gillen’s analysis of homes in Bucks, Chester, Delaware, and Montgomery Counties in Pennsylvania and Burlington, Camden, and Gloucester Counties in New Jersey.
Yet the losses in the suburbs have been exacerbated over time, Gillen found: Since the first quarter of 2007, when the housing boom peaked in the suburbs, every county in the region has seen its overall home values fall — some of them drastically. And even with property values appreciating at a rate of 2.4 percent a year, a typical suburban home is still valued 19.1 percent lower than it was at peak of the housing boom in 2007.