Sunday, November 29, 2015

Based on "Top 10 Metro Areas," Philadelphia is ranked #2 for Affordability

Image courtesy of The Philadelphia Foundation

Interesting title, I know. This one can be looked at a few different ways, so let me elaborate a bit.

There is a difference between "Top 10 Cities" and "Top 10 Metro Areas." Top "city" means that the population of the city proper (within a city's borders) is what classifies its population. Here is a list of the top 10 cities by population in the US (according to Wikipedia):

1. New York, NY
2. Los Angeles, CA
3. Chicago, IL
4. Houston, TX
5. Philadelphia, PA
6. Phoenix, AZ
7. San Antonio, TX
8. San Diego, CA
9. Dallas, TX
10. San Jose, CA

Top "metro area" means that the population of the metropolitan statistical area (or MSA, which defines a "core" with an "adjacent territory that has a high degree of social and economic integration with the core") is what classifies its population. Here is a list of the top 10 metro areas by population in the US (again, according to Wikipedia):

1. New York - Newark - Jersey City
2. Los Angeles - Long Beach - Anaheim
3. Chicago - Naperville - Elgin
4. Dallas - Fort Worth - Arlington
5. Houston - The Woodlands - Sugar Land
6. Philadelphia - Camden - Wilmington
7. Washington - Arlington - Alexandria
8. Miami - Fort Lauderdale - West Palm Beach
9. Atlanta - Sandy Springs - Roswell
10. Boston - Cambridge - Newtown

So as you can see, there is a difference between a major city's population, and a major urban area's population; as noted in the 2 different lists above. Since every city/area has its own borders, tax laws, and rules, population sizes will vary; which is why it's always good to look at both when analyzing numbers/data.

Take Boston, for example. The city itself is ranked #24 by population (about 655,000 people), and the metro area is ranked #10 by population (about 4,750,000 people). So as you can see, there is a big difference between the population of "Boston" and the population of the "Boston Metro Area."

Okay, enough fact finding. Let's get down to business.

For purposes of the article that inspired this post, NerdWallet used "metro area" to calculate its numbers. In my opinion, that's a more valuable approach as it more closely looks at each different "area" in its entirety; not just within "city" limits.

This is where Philadelphia performs very well. When you look at our local MSA (Philadelphia, Camden, and Wilmington), Philadelphia's real estate market is affordable.

How affordable exactly? Well, out of the Top 10 largest MSAs, Philadelphia ranks #2 in affordability (just behind Atlanta, Sandy Springs, and Roswell) and #24 out of the top 100 US metro areas.

Considering Philadelphia is the 5th largest city in the US, and the 6th largest metro area in the US, that's pretty d*mn good.

Why, you may ask? Because it means that Philadelphia has a lot to offer its local residents as a major US city/area, while keeping its home ownership cost low. Since owning a home is typically the largest expense any person/couple/family carries on a monthly basis, this bodes well for those who live in/around Philadelphia.

To top it off, this study doesn't account for location; and you all know I love to talk about Philadelphia's convenient US location.

So to summarize my own opinions/thoughts, Philadelphia is an affordable urban area to own a home and a convenient urban area to live in. In my profession, those are the 2 most important reasons why people choose to buy real estate.