The Philadelphia Metro Area

For purposes of this market snapshot, the Philadelphia MSA includes a five county area in Pennsylvania including Philadelphia and its suburbs as well as four adjacent counties in New Jersey.¹  

Demographic Highlights
Population

The all-age population in the Metro area is expected to remain stable through 2014 as compared to an estimated growth rate for the U.S. all age population of .7%.

The age 55-74 population in the Philadelphia Metro area is growing but at a slightly slower annual rate (3.1%) than the U.S. rate of 3.6% and in contrast the age 75+ population in the Metro area is expected to decrease slightly with a rate of -0.5% as compared to the U.S. rate of .7%.

Households

Unlike the population trends, the number of all-age households in the Metro area is expected to grow at a faster annual rate (1.0%) than all-age U.S. households, which are expected to grow at an annual rate of .7% through 2014.

The households age 55-74 in the Metro are expected to grow at a slightly faster annual rate (4.0%) than the U.S. rate of 3.2%. Age 75+ households in the Metro area are projected to grow at an annual rate of .3%, which is the same rate projected for U.S. age 75+ households.

Median Household Income

Median household income for all-age households in the Philadelphia Metro is expected to grow at a slightly lower annual rate (1.4%) than the median income for all-age U.S. households which is expected to grow at an annual rate of 1.6%.

The median income for households age 55-74 in the Metro is growing at almost the same annual rate (1.6%) as the U.S. (1.8%), and the median income for age 75+ households in the MSA is growing at a faster rate (2.3%) than the  U.S. rate of 2.0%.

Housing Highlights

Home Values

The growth in the values of homes owned by households of all ages at the Metro level is slighly trailing the growth of home values projected for the U.S. as a whole.

Home value projections for Philadelphia Metro area homes are expected to be around 1.4% per year, as compared to U.S. home value growth of about 1.6% annually through 2014.

Philadelphia Metro Area Economic Indicators

Employment growth in the Philadelphia MSA has dropped considerably over last year. As of May 2009, the Bureau of Labor Statistics reports that the number of employed individuals fell by 88,100 (a drop of 3.1%) from the prior year. In comparison, employment declined 4.0% nationally from May 2008 to May 2009. 

In the greater Philadelphia metropolitan area, the trade, transportation, and utilities super-sector lost 21,400 jobs from May 2008 to May 2009, more than any other industry. The Philadelphia MSA is among the 12 largest MSAs in the nation, and all of these areas experienced over-the-year job losses. 

The unemployment rate in the Philadelphia MSA increased substantially, from 5.2% in June 2008 to 8.7% in June 2009. In comparison, the national unemployment rate was 9.7% in June, an increase of four percentage points over last year. While the national trend is consistent for the Philadelphia MSA, the unemployment rate in the Philadelphia MSA remains slightly below the national levels. (See graph below.)

It is interesting to note that the unemployment rates fluctuated among the counties comprising the MSA. Chester County, Pa., reported the lowest unemployment rate (6.6%), followed by Montgomery County (7.1%); Salem County, N.J., had the highest rate (11.4%). 

Philadelphia Housing Indicators

Home Sales:  In the greater Philadelphia region, the number of homes sold dropped 1.3% from last year. This trend is higher than the national trend, with a reported drop of .2% from last year. In the Northeast region, the decline was 4.7%, suggesting that the greater Philadelphia area is faring better than many markets in the northeast part of the country.

Median Home Sale Price—Existing Single-Family:  The median price of homes sold in the Philadelphia region dropped 4.3% from July 2008 to July 2009. Nationally, the median sales price fell 15.4% as compared to 5.9% in the Northeast from last year. This trend again suggests that the Philadelphia region is performing more favorably than other markets in the country. 

Median price of homes sold in the Philadelphia area is $225,000. This is approximately 24% higher than the median reported in the United States in 2009.

Average Days on the Market:  The number of days on the market in the Philadelphia region is reported to be 86 days on average. This is an increase of 21.2% over last year when the average number of days was 71. Overall, there has been a 43.6% increase in the average days on market in the region since 2007, when the average number of days was 60.

Housing Starts:  In the Philadelphia MSA, the number of building permits dropped 39% for single- family homes, and 67% for multifamily homes during the period from July 2008 to July 2009. In comparison, building permits in the United States dropped 36% for single-family and 62% for multifamily homes. In the Northeast, there was a 33% drop in single-family and a 76% drop in multifamily building permits during the same period.²

Decline in Number of Building
Permits from July 2008 to July 2009

Supply Highlights

Active Adult

The Philadelphia MSA offers many options for the active adult target buyer. According to data provided by Hanley Wood Market Intelligence, there are 88 active adult communities currently selling within the Philadelphia region. There is a higher concentration of communities and units planned on the Pennsylvania side of the region, with 59 communities and 7,184 units planned compared to 29 communities and 4,858 homes planned in New Jersey. Of the 12,042 units planned in the region, more than 4,900 homes (41%) are sold, leaving a little more than 7,000 remaining. A higher proportion of the sold homes are in the four-county Pennsylvania portion, with 3,419 sales and 47.6% of the 7,184 homes planned there, compared to 1,516 homes sold in Southern New Jersey totaling 31% of the 4,858 homes planned. Year over year, the 2009 sales volume is off 28.6% through July, with 411 active adult homes sold in the Philadelphia region. 

In response to concerns that the active adult product segment is saturated in the State of New Jersey, the Governor signed legislation in July that opened the door for builders and developers to reverse age restriction on communities that have not started sales. However, the municipality can reject the conversion to non-age-restricted housing if it determines that the conversion is detrimental to the public good. If the age restriction is lifted, builders will be required to offer 20% as affordable units.  

The communities highlighted below demonstrate the wide variety of products available in regard to type of environment, pricing, product and the socioeconomics of the target audience. Most communities in this region offer a lifestyle amenity package, and do not rely on location alone to motivate buyers to choose an age-restricted community. 

Athertyn at Haverford Reserve, by Pohlig Builders, is located on an infill property in suburban Philadelphia’s affluent Main Line. Athertyn was positioned to fill a void in the marketplace for an upscale lifestyle community catering to a well-heeled, established, mature target buyer who refused to leave the area. The models and a 6,000-square-foot resort style clubhouse, as well as a pool, tennis, putting green, and community gardens, were completed in June of this year. The community is built on 11 acres with 45 acres of township recreation space and 124 acres of passive recreation, including nature trails and a proposed environmental center. The 192 homes are configured in four-story stacked flat buildings, with 24 sold and 15 closed. Base prices range from the mid-$600,000’s to more than $1.3 million.

The Arbors at Eagle Point, by Westrum Development, is located on an 80-acre revitalization site that  formerly was a hospital with 25 acres dedicated to open space. This community filled a void in the northeast section of Philadelphia, and is attracting buyers locally as well as from the surrounding suburban counties. A total of 398 homes are planned, with 60 sold and 26 closed since the builder opened from models in May, 2008. The community is segmented into four product offerings including: 96 three-story stacked flats over parking, priced from $239,990 (805 sq. ft.) to $309,990 (1,405 sq. ft.);  187 Villas and Carriage Homes priced from $359,990 (2,287 sq. ft.) to $399,990 (2,452 sq. ft.); and 87 detached homes priced from $469,990 (2,262 sq. ft.) to $509,990 (2,869 sq. ft.). The Arbors offers a 7,000-square-foot clubhouse with pool and tennis, and a 10 year tax abatement.

Fox Field, by locally-based McKee Group, is located in heavily built-out Delaware County, Pa.  Amenities include a 9,200-square-foot clubhouse, pool and tennis, and a 6-hole golf course. The property totals 174 acres, and the community is being  built on 64 of those acres. It will include three product lines: 232 detached homes priced from $297,990 (1,586 sq. ft.) to $312,990 (1,831 sq. ft.); 126 stacked flat villas priced from $219,990 (1,114 sq. ft.) to $249,990 (1,400 sq. ft.); and a completed 155-unit  attached component, with prices from the $230,000’s to $270,000’s. To date, 430 homes have sold and 413 are settled.  his is McKee’s second active adult community in the town of Concord.

Four Seasons at Weatherby, by K. Hovnanian, has successfully repositioned pricing for its single- family detached product on lots from 45' to 55' wide. Pricing originally was from the mid $200,000’s, and now ranges from $199,950 (1,458 sq. ft.) to $292,950 (2,356 sq. ft.), and the community has consistently sold an average of 5 homes per month during 2009, with a total of  300 sold. This Four Seasons offering represents a 850-unit active adult component of the mixed use PUD of Weatherby in Woolwich Township, Gloucester County, N.J. The location, within close proximity to Philadelphia and the New Jersey Shore, allows the community to attract buyers from a wide geographic area, including the greater South Jersey area and nearby Pennsylvania. The leading pull factors are value, the security of being in the only gated community in the area, and buyers trailing children who have migrated into the area for moderately priced new homes. The recreational amenities are phased, with one of the three planned buildings complete. Other completed amenities include an outdoor swimming pool, and bocce, shuffleboard and tennis courts. 

Service Enriched

The Philadelphia MSA offers a wide variety of service-enriched senior housing options, and has one of the highest concentrations of continuig care retirement communities (CCRCs) in the nation. In fact, there are currently a total of 70 CCRCs within the Pennsylvania and New Jersey portions of the Philadelphia MSA. There are a total of 78 communities with the majority of their units designated for independent living, 85 communities offering mostly assisted living, and 161 facilities with primarily nursing care beds in this portion of the MSA.  In total, there are nearly 35,000 units/beds in independent living, assisted living and nursing care facilities in the MSA. The demand for these units remains strong, with stable occupancies of 89.2% for independent living, 88.3% for assisted living, and 89.4% for nursing care facilities in the second quarter of 2009.

The newest CCRCs to enter the market are The Hill at Whitemarsh, Lafayette Hill, Pa. (2007), Maris Grove, Glen Mills, Pa. (2006), Wellington, West Chester, Pa. (2005), Shannondell at Valley Forge, Pa. (2002), and Lions Gate, Voorhees, N.J. (2007). 

The Hill at Whitemarsh, a life care community, offers 180 apartments, 86 cottages, 28 assisted living, and 60 nursing beds. Independent living apartments range in size from 880 to 1,522 square feet, and two- and three-bedroom cottages range from 4,378 to 4,596 square feet. Two entrance fee plans are offered, including a non-refundable plan and a 90% refundable plan. Entrance fees range from approximately $233,000 to $630,000 (for the 90% refundable plan). The community features numerous amenities including a creative arts studio, indoor aquatics center, multiple dining venues, and a pub. The average age of incoming residents is 74.
 
Wellington is a fee-for-service rental community with 193 independent living apartments, 64 assisted living and 36 nursing beds. The community offers underground parking and a 34,000 square foot community center and is within walking distance to a neighborhood shopping center.  There are 35 different floor plans, with one- and two-bedroom apartments ranging from about 800 to 1,600 square feet and monthly rental fees of approximately $2,900 to $4,300. The average age at entry is in the mid-80s, and many of the residents have moved from the neighboring active-adult community of Hershey’s Mill.
  
Maris Grove is the second Erickson community to open in the Philadelphia market following Ann’s Choice, which opened in 2003 in Bucks County. Together they add about 3,000 independent living units to the existing supply in the Philadelphia MSA. Maris Grove is a fee-for-service CCRC, and at completion will offer up to about 1,500 independent living units with sizes ranging from 700 to 1,900 square feet, as well as 228 assisted living and nursing beds. The community boasts a 52,000-square-foot clubhouse with numerous state-of-the-art amenities and a fully refundable entrance fee. The community has attracted active seniors with an average age at entry of 74 years, and approximately 60 percent are couples. 
  
Shannondell at Valley Forge offers a total of 891 independent living apartments, as well as 30 assited living, 18 Alzheimer's, and 60 nursing care beds. Entrance fees are 100% refundable, and range from approximately $148,000 to $700,000.  There are 29 different floor plans available for independent living apartments, with unit sizes ranging from 400 sq.ft. for a studio, up to 2,300 sq.ft. for a two-bedroom den. Shannondell offers an exceptional level of amenities, including six dining venues and a performing arts center. Residents are involved and active, with the average age at move in 73 years, and 50% are couples.

Lions Gate, affiliated with the Jewish Federation of Southern New Jersey, offers a total of 152 apartments for independent living ranging in size from 684 to 1,730 square feet. There also are 12 cottages, sized at approximately 1,500 to 1,700 square feet. Original residents had the option to customize the cottages and add more square footage with a loft or extra room. Two entrance fee plans are now available. Fees for the 90% refundable plan range from $174,000 to $360,000; a 50% percent refundable plan was recently introduced with lower entrance fees. The average age at move-in is approximately 80 years, and about 37% are married couples.

Forecast for 50+ Market

Like much of the nation, the past year has been a struggle for most of the builders and senior communities in the region. However, the summer of 2009 has shown a marked increase in traffic and, in the mid-priced communities, there has been an increase in sales. People with homes to sell are now beginning to be more realistic about selling price of their houses.  

It is projected that sales will continue to be slow for the next six months and, within a year, we will begin to see a "new normal" in the market. 

Frank McKee, a long-time builder of active adult housing, noted that the housing market in the area hit bottom in the spring, and then this summer started to slowly come back. He sees an increase in sales in his mid-priced communities, and feels that a "political" focus on housing is required for the economy and the housing market to surge.

Todd Pohlig, an award-winning custom home builder who ventured into the 50+ luxury marketplace a few years ago, told us he is optimistic about the future of the 50+ industry. "First," he said, "I believe there will be a pent-up demand. We have a two-year window because new competition has been delayed due to marketplace demand and lack of financing.” One year from now, he expects sales to be good, although he feels the new normal will be two-thirds of last year’s expectations.

Long term, the forecast is a good one for the Philadelphia Metro area. The demographics are strong,  the senior consumers are educated, and the emerging boomers want a lifestyle without the maintenance. All this reveals growing opportunities for new 50+ and senior housing developments, particularly in late 2010 and early 2011. This is an excellent time to start the planning process for new product which would come on line in mid-to-late 2011 and early 2012.
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¹ Various sources such as the U.S. Census Bureau and NIC MAP also include Cecil County, Md., and New Castle County, Del., in the Philadelphia Metro area. 
² Source:  Bureau of Census, prepared by NAHB's Economics Department, and available at www.housingeconomics.com.

Authors

Barbara Kleger is President of 55+ Consulting, and has been active in retirement housing for more than 30 years. She specializes in consumer research and marketing strategy and has surveyed more than one million households, and has helped clients nationally and internationally for more than three decades. She is an instructor for NAHB’s Certified Active Adult Specialist in Housing (CAASH) designation program. Barbara is the 2009 recipient of the prestigious Icon of the Industry award presented by the 50+ Housing Council of NAHB.

Nicole D. Muller has nearly 20 years of experience in the senior living industry, including market feasibility analysis, market research, public relations and marketing. Nicole is a consultant with Brecht Associates, Inc., a nationally recognized firm based in Philadelphia which specializes in market feasibility and planning for senior housing and care clients. 

Lisa Price is President of the Northeast Region for New Home Marketing Services ,and has been providing market research and strategic planning to the homebuilding industry for more than 20 years.  Lisa has positioned active adult, age-targeted, transportation oriented developments (TOD’s), TND’s and Urban Infill Communities that are cater to a diverse market, including the 50+ audience.  Most recently, Lisa has been involved in the strategic repositioning of age-restricted communities to reverse age restriction to market-rate and other mature market housing due to the saturation of this product type in portions of New Jersey.  [Return to top]