That Philadelphia Home Is Within Reach, Survey Says

We’ve noted before that Philadelphia is a great place to live. By East Coast standards, it’s also a bargain. Of the Northeast’s five large metropolitan areas, Philadelphia consistently ranks at or near the top in housing affordability.
The latest confirmation of our status comes from The Atlantic Cities, which features a study by Jed Kolko, chief economist at Trulia, Inc. Kolko’s study measures how long it would take someone earning the average weekly wage to save up for the down payment for a home priced at the median asking price per square foot in the 100 largest U.S. metropolitan areas.
(The study assumed households saved 10 percent of their pre-tax earnings and earned a 1.5 percent annual return on them. It also assumed a standard 20 percent down payment; many mortgages, especially FHA-insured mortgages, require smaller amounts.)
Using those assumptions, it would take a Philadelphia household 9.1 years to accumulate the down payment on a median-price house. Among the denizens of the five big Northeast metropolitan areas, only Washingtonians, who can save up that much in just nine years flat, can buy that new home faster.
However, since the study included metropolitan divisions of those large areas as well as mid-sized Northeast metros, there are two metropolitan areas in the Northeast where homes are even more affordable than in Washington, and they’re both in this region: Camden, N.J., and Wilmington, Del.
To put this in context, the length of time needed to save for a down payment ranges from a mere 3.4 years in Detroit, where housing is super cheap, all the way to 28.7 years in Honolulu, where moderate wages and high house prices combine to form a perfect storm of unaffordability. On the mainland U.S., California is the champion of housing unaffordability, starting with second-ranked San Francisco, whose residents must toil for 20.6 years to save up the down payment. Of the 10 metros where residents must wait the longest to accumulate a down payment, six are in California.
(Of the 100 cities surveyed, Philadelphia was at the high end of the middle tier, placing 39th highest on that time-to-save scale. Washington was 40th, Camden 41st, and Wilmington, where average weekly wages are relatively high and median asking prices modest, was all the way down in 65th place. Wilmingtonians can have that down payment in hand in 7.8 years.)
Generally speaking, the difference in earnings between high-wage and low-wage cities is far outstripped by the difference in house prices as a factor in determining affordability. Which explains those New Yorkers moving here in search of urban living they can afford. We’re of two minds about them: we welcome them because they contribute to the health of the local housing market, but not too enthusiastically, because too many of them might push us up that unaffordability curve.