Philadelphia's Middle Neighborhoods

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Philadelphia’s Middle Neighborhoods: Demographic and Market Differences by Race, Ethnicity, and Nation of Origin

Prepared by REINVESTMENT FUND Published MAY 2017

RESEARCH CONDUCTED BY

Policy Solutions at Reinvestment Fund

Emily Dowdall, Chief of Development and Policy Implementation Jacob Rosch, Research Associate Ira Goldstein, President

Overview Middle neighborhoods are neither the poorest nor the wealthiest neighborhoods in a city, typically experiencing neither precipitous decline nor rapid appreciation. In many cities, they account for a significant share of residents and are reasonably affordable to middle income households (earning 80- 120% of median income).1 As relatively stable communities, they are essential to a city’s tax base, identity, and ability to offer economic mobility and security. In Philadelphia, middle neighborhoods were home to 41% of the population in 2015 and 42% of the city’s homeowners, and boasted some of the highest voter turnout rates in the city for primary and general elections.

Yet middle neighborhoods are often overlooked by officials and service providers who are busy grappling with areas of concentrated poverty, demands for downtown improvements, and gentrification debates in rapidly developing neighborhoods. Although changes and stressors may not be readily apparent in middle neighborhoods, several trends indicate that in the absence of strategic intervention, a very real risk of destabilization exists in some of these areas.

This research brief examines conditions and trends in Philadelphia’s middle neighborhoods differentiated by their racial, ethnic, and national origin makeup. Although middle neighborhoods tend to be more diverse than both stronger and weaker areas, several national and local trends raise questions about the different prospects that demographically distinct communities face. For example:

 National studies have shown that members of the black middle class are more financially vulnerable than their peers of other races.2 Local research has documented the disproportionate impact of evictions and foreclosures on heavily African American middle neighborhoods.3  The presence of Hispanic residents in middle neighborhoods has increased, and high Hispanic middle areas are distinct from predominantly white or black areas in some key ways, including notably lower homeownership rates.  Immigrants made up a rapidly growing share of middle neighborhoods, and areas with larger foreign born populations appeared in some ways stronger and in some ways more precarious than other middle areas: home prices were higher and crime rates were lower, but incomes and home ownership rates fell more steeply in recent years.

A deeper understanding of the dynamics at play in different types of middle neighborhoods can help guide policy and investment approaches to shore up the inherent strength in these areas, and also head off decline that could potentially diminish not only residents’ financial health and neighborhood quality of life, but also Philadelphia’s overall wellbeing.

1 The American Assembly. On the Edge: America’s Middle Neighborhoods. Paul C. Brophy. 2016. 2 Mazumder, Bhashkar. “Black-White Differences in Intergenerational Economic Mobility in the United States” (April 8, 2014). Economic Perspectives, Vol. XXXVIII, No. 1, 2014; Pew Research Center. 2015. “The American Middle Class Is Losing Ground: No longer the majority and falling behind financially.” Washington, D.C. 3 City of Philadelphia Assessment of Fair Housing, 2016. http://www.phila.gov/dhcd/wp- content/uploads/2017/01/afh-2016-for-web.pdf; Reinvestment Fund, “Evictions in Philadelphia” 2017. https://www.reinvestment.com/wp-content/uploads/2017/01/Evictions_in_Philadelphia_brief_Final.pdf 1 The notable findings of this brief include:

 From 2000 to 2015, population growth in middle neighborhoods (5%) outpaced the city as a whole (2%), but trends varied by race and ethnicity: largely white middle areas were essentially unchanged while mostly black areas contracted slightly (-2%), and high Hispanic middle neighborhoods grew by 11%. The population in mixed middle neighborhoods increased 9%.

 While predominantly white middle neighborhoods became more diverse, black middle neighborhoods became somewhat more racially concentrated. Areas with relatively large shares of Hispanic residents in 2000 became more heavily Hispanic, although majority-Hispanic middle neighborhoods remained rare: there were only 3 among the city’s 138 middle Census tracts.

 The largest group of middle neighborhoods in 2015 was racially and ethnically mixed (43% of middle tracts) followed by predominantly black middle (32%), predominantly white (14%), and heavily (though not majority) Hispanic (12%).

 Black middle neighborhoods showed signs of elevated housing market stress: adjusted sales prices fell 5% while rising in other middle areas; mortgage applications were more often denied; and eviction rates and housing unit vacancy were higher than in other middle neighborhoods.

 Gains in the foreign born population in middle neighborhoods (+40,840) offset losses of U.S. born residents (-12,190) during the study period. The share of international immigrants in middle neighborhoods increased from 10% of the population to 16%. In 2015, more than half of all foreign-born Philadelphians lived in middle neighborhoods.

 Spanish was the most common language after English for residents in middle neighborhoods with large foreign born populations (60%), followed by Chinese and other Asian languages at 24% and Russian at 8%. Over a quarter of all Asian Philadelphians lived in middle areas with large high foreign born populations.

 The majority of high foreign born and heavily Hispanic middle neighborhoods did not overlap; one-quarter of Philadelphia’s Hispanic middle neighborhoods were also classified as high foreign born. More than half of foreign born residents of middle neighborhoods (57%) lived in areas that fell in the racially and ethnically mixed category.

The authors would like to thank the William Penn Foundation and our partners at Next City for their generous support for this research.

2 Defining Middle Neighborhoods We identified middle neighborhoods using Reinvestment Fund’s Market Value Analysis (MVA). Reinvestment Fund first developed the MVA in 2001 as a tool for understanding the characteristics and variation of local real estate markets across a city. It is built on local administrative data and uses a cluster analysis to condense multiple datasets into a manageable, meaningful typology of market types at a sub-neighborhood level. Data inputs include home sales prices, mortgage foreclosure filings, owner occupancy, vacancy, code violations, and construction permits. Our most recent MVA in Philadelphia identified 10 market categories ranging from strongest (A) to most distressed (I).

We defined all Census tracts falling within the four categories in the middle of that range (D-G) as our middle neighborhoods. Median sales prices in those areas ranged from roughly 50% below to 50% above the city’s $96,500 median home sale price ($49,674 to $148,248). It is important to note that our definition is based on a 2015 snapshot; some of the tracts currently categorized as middle may have been either strong or distressed in 2000, at the outset of our study period.

3 Race and Ethnicity To measure unique trends in demographically distinct middle neighborhoods, we categorized middle tracts as predominantly black, predominantly white, heavily Hispanic, or mixed. Using population data from the Census’ most recent American Community Survey, we defined as predominantly black those Census tracts where more than two-thirds (66%) of the population was non-Hispanic African American.4 Predominantly white middle neighborhoods were similarly defined as tracts where over 66% of the population identified as non-Hispanic white.

Because the Hispanic population in Philadelphia is much smaller than either the black or white population (13.4% of the total compared to 42% and 36% respectively), we defined as heavily Hispanic those areas where more than 25% of the population was Hispanic. To ensure our categories were mutually exclusive, we classified as mixed those tracts where over 66% of the population was white or black and over 25% of the population was Hispanic, or where none of those thresholds were met.

Census Tracts Population, 2015 Predominantly Black Middle Neighborhoods 44 182,313 (Over 66% Black and Under 25% Hispanic) Predominantly White Middle Neighborhoods 19 88,504 (Over 66% non-Hispanic White and Under 25% Hispanic) Heavily Hispanic Middle Neighborhoods 16 89,176 (Over 25% Hispanic and Under 66% White or Black) Mixed Middle Neighborhoods 59 278,045 All Middle Neighborhoods 138 638,038

4 Unless otherwise noted, all population data in this report were drawn from the most recent American Community Survey (ACS) five-year Sample (2011-2015). The ACS is a national household survey used to generate population-wide estimates at a variety of geographies. Sale price data was obtained from the City of Philadelphia. 4 National Origin In Philadelphia, middle neighborhoods were home to a large and growing number of immigrants. Citywide, 52% of all foreign born residents lived in a middle neighborhood. We defined as high foreign born those middle tracts where more than 25% of the population was born outside the United States. We applied the same threshold as we did for the Hispanic population because foreign born Philadelphians make up a similar share of the total population (12.7%).

It is worth nothing that while there is some overlap between the Hispanic and foreign born populations they are distinct groups: 19% of foreign born residents identified as Hispanic, and 18% of Hispanics were foreign born.

Census Tracts Population, 2015 High Foreign Born Middle Neighborhoods 25 135,324 (Over 25% Foreign Born) Low Foreign Born Middle Neighborhoods 113 502,714 (Under 25% Foreign Born) All Middle Neighborhoods 138 638,038

Philadelphia’s Middle Neighborhoods:

Population and Demographic Trends While much attention has been paid to residential surges in strong markets in and around Philadelphia’s downtown, the growth rate in middle neighborhoods actually surpassed the city average. Seventy-six percent of the net population uptick Philadelphia experienced since 2000 occurred in middle neighborhoods. Not all middle neighborhoods experienced that same change. In fact, most of the residential expansion in middle neighborhoods took place in mixed tracts, where it was up 9%, and heavily Hispanic tracts, where the population rose by 11%. (For a full set of tables and figures illustrating demographic, economic, and social trends in each neighborhood type, see Appendix A)

Population Change Number Change, Percent Change, 2000 2015 2000 to 2015 2000 to 2015 Black Middle Neighborhoods 186,040 182,313 -3,727 -2% White Middle Neighborhoods 88,049 88,504 455 1% Hispanic Middle Neighborhoods 79,986 89,176 9,190 11% Mixed Middle Neighborhoods 255,313 278,045 22,732 9% All Middle Neighborhoods 609,388 638,038 28,650 5% All Philadelphia Neighborhoods 1,517,536 1,555,072 37,536 2%

Between 2000 and 2015, while Hispanic and mixed middle neighborhoods were growing, the population in predominantly black and predominantly white middle areas declined or held constant. In the white neighborhoods, the overall population remained steady as the number of white residents dropped and the number of nonwhite residents swelled. In the black neighborhoods, in contrast, the number of black residents increased and the number of nonblack residents fell.

5 The net result was that white middle neighborhoods became more diverse and black middle neighborhoods became somewhat more racially concentrated. The share of black residents living in black middle neighborhoods grew from 82% to 84%, while the share of white residents living in white middle neighborhoods declined from 90% to 82%.

Hispanic middle neighborhoods saw more ethnic concentration as their Hispanic population more than doubled during the study period, growing from 20% of the population in 2000 to 38% in 2015.

Dominant Population Percent Dom. Pop. 2000 2015 Change 2000 2015 Black Middle Neighborhoods 151,873 153,901 1% 82% 84% White Middle Neighborhoods 79,337 72,265 -9% 90% 82% Hispanic Middle Neighborhoods 15,648 33,480 114% 20% 38%

Black Middle Neighborhoods:

Historic significance and current threats to stability Middle neighborhoods have been vital hubs for Philadelphia’s historically sizable African American middle class, members of which, due to a number of barriers, did not move to the suburbs at the same rate as their white counterparts in decades past. The city’s black middle neighborhoods—including parts of Overbrook and Wynnefield, Cedarbrook, and the Oak Lanes—have been where these families built wealth and provided stable settings for generations of children.

Over the last 15 years, however, worrying trends in housing values and incomes have begun to threaten the stability of some black middle neighborhoods. Although these areas still maintain a strong tradition of homeownership, rates of foreclosure and eviction pose serious threats to their long term stability.

While home values across Philadelphia climbed 33% since 2000, sales prices in black middle neighborhoods declined (when adjusted for inflation). In 2000-2001, the median home sales price in a black middle neighborhood was just over $82,000—higher than the median for the city and for other middle neighborhoods. By 2014-2015, however, the median sales price in black middle neighborhoods had fallen to $78,250.

Median Home Price* 2000-2001 2014-2015 Change Black Middle Neighborhoods $82,584 $78,250 -5% White Middle Neighborhoods $72,949 $120,000 64% Hispanic Middle Neighborhoods $68,682 $70,000 2% Mixed Middle Neighborhoods $77,629 $98,000 26% All Middle Neighborhoods $75,702 $92,500 22% All Philadelphia Neighborhoods $72,812 $96,500 33% Note: Figures adjusted to 2015 dollars. Property transaction data from Philadelphia Office of Property Assessment.

6 Black middle neighborhoods also saw declining incomes and employment during this period. They began with higher unemployment rates than other middle neighborhoods, but relatively robust household incomes. In 2000, the median household income in these neighborhoods was higher than the rest of the city and middle neighborhoods overall. And while inflation-adjusted incomes fell across Philadelphia, they fell more steeply in black middle neighborhoods: by 2015, the median household income in those areas lagged behind both the city and middle neighborhoods as a whole.

Median Household Income Unemployment Rate 2000 2015 Change 2000 2015 Change Black Middle Neighborhoods $45,873 $37,177 -19% 11.1% 14.9% 3.8% White Middle Neighborhoods $47,040 $45,207 -4% 7.8% 12.6% 4.8% Hispanic Middle Neighborhoods $42,860 $34,980 -18% 9.8% 16.7% 6.8% Mixed Middle Neighborhoods $41,343 $37,311 -10% 9.5% 13.4% 4.0% All Middle Neighborhoods $43,747 $38,085 -13% 9.8% 14.2% 4.4% All Philadelphia Neighborhoods $42,319 $38,253 -10% 10.5% 13.9% 3.4% Note: All figures adjusted to 2015 dollars.

During this period, vacancy rates in these neighborhoods were higher and increased more than in other middle neighborhoods.

Vacancy Rate 2000 2015 Change Black Middle Neighborhoods 9.3% 13.1% 3.8% White Middle Neighborhoods 6.7% 10.2% 3.5% Hispanic Middle Neighborhoods 8.4% 10.8% 2.5% Mixed Middle Neighborhoods 8.8% 11.4% 2.6% All Middle Neighborhoods 8.6% 11.7% 3.1% All Philadelphia Neighborhoods 10.8% 13.3% 2.5%

Despite these disquieting trends, homeownership in black middle neighborhoods remained relatively strong. Between 2000 and 2015, the share of households that owned their home declined across the city by 7 percentage points; in black middle neighborhoods, ownership rates fell only 4 points.

Homeownership as a Share of Occupied Housing Units 2000 2015 Change Black Middle Neighborhoods 63% 59% -4% White Middle Neighborhoods 72% 66% -6% Hispanic Middle Neighborhoods 70% 54% -16% Mixed Middle Neighborhoods 59% 51% -8% All Middle Neighborhoods 64% 56% -8% All Philadelphia Neighborhoods 59% 53% -7%

7 By some leading indicators like mortgage originations, foreclosures, and evictions, black middle neighborhoods evidenced signs of stress. To sustain high rates of homeownership, residents need access to mortgage credit, including reasonably low-risk products for both home purchase and refinancing. But mortgage applications in black middle neighborhoods were denied at a higher rate than other areas of the city. In 2014-2015, 31% of applications that residents in black middle neighborhoods submitted to mortgage lenders were denied or withdrawn. Citywide and in other middle neighborhoods, 27% of purchase mortgage applications were denied or withdrawn.

Applications for Home Purchase Acceptance Denial Home Purchase Mortgage Rate Rate Mortgage Originations Black Middle Neighborhoods 3,060 2,108 69% 31% White Middle Neighborhoods 2,099 1,667 79% 21% Hispanic Middle Neighborhoods 1,326 976 74% 26% Mixed Middle Neighborhoods 3,815 2,724 71% 29% All Middle Neighborhoods 10,300 7,475 73% 27% All Philadelphia Neighborhoods 25,045 18,249 73% 27% Note: Data are from Home Mortgage Disclosure Act filings.

These parts of the city also had higher foreclosure and eviction rates than other middle neighborhoods and the city as a whole.

Foreclosure Filings as a Eviction Filings as a Share of Sales, 2015 Share of Renters, 2015 Black Middle Neighborhoods 35% 10% White Middle Neighborhoods 21% 5% Hispanic Middle Neighborhoods 33% 7% Mixed Middle Neighborhoods 28% 8% All Middle Neighborhoods 29% 8% All Philadelphia Neighborhoods 22% 7%

8 Yet trends over time were encouraging across middle neighborhoods, including predominantly black areas. The graphs below show foreclosures as a share of home sales and eviction filings as share of renter households. In both cases, rates in black middle neighborhoods remained above the city and middle neighborhood average, but like other areas of Philadelphia, fell since reaching peaks in 2010- 2012.

Foreclosure Filings per 100 Home Sales, 2004 to 2015 120.0 Mixed Middle 100.0 Hispanic Middle 80.0 Black Middle 60.0 White Middle 40.0 All Middle 20.0 Neighborhoods All Philadelphia 0.0 Neighborhoods 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Eviction Filings per 100 Renter Households, 2010 to 2015 12.0 Mixed Middle 10.0 Hispanic Middle 8.0 Black Middle 6.0

White Middle 4.0

All Middle 2.0 Neighborhoods

0.0 All Philadelphia 2010 2011 2012 2013 2014 2015 Neighborhoods

9 A sign of strength for black middle neighborhoods was the decline in violent and nonviolent crime rates. In 2014 and 2015, these neighborhoods had lower rates of violent crime than the city, and lower nonviolent crime rates than the city and other middle areas. Since 2006, crime fell more sharply in black middle neighborhoods than in other parts of the city.

Part-one Violent Crimes, Part-one Nonviolent Crimes, Per 1,000 Residents* Per 1,000 Residents* 2006-07 2014-15 Change 2006-07 2014-15 Change Black Middle Neighborhoods 12.8 9.0 -30% 35.6 25.0 -30% White Middle Neighborhoods 8.1 5.5 -32% 37.7 32.7 -13% Hispanic Middle Neighborhoods 12.5 9.8 -22% 35.6 31.3 -12% Mixed Middle Neighborhoods 11.9 8.4 -29% 39.2 33.9 -14% All Middle Neighborhoods 11.7 8.4 -29% 37.5 30.8 -18% All Philadelphia Neighborhoods 13.8 10.2 -26% 44.9 35.3 -21% Note: Part-one violent crimes include homicide, rape, robbery, and aggravated assault; part-one nonviolent crimes include burglary, theft, motor vehicle theft, and arson. Data aggregated from the Philadelphia Police Department.

Share of Residents with a Bachelor’s Degree or Higher 2000 2015 Change Black Middle Neighborhoods 16.0% 20.9% 4.9% White Middle Neighborhoods 12.4% 21.4% 9.0% Hispanic Middle Neighborhoods 9.3% 13.3% 4.0% Mixed Middle Neighborhoods 15.1% 19.5% 4.5% All Middle Neighborhoods 14.2% 19.4% 5.2% All Philadelphia Neighborhoods 17.9% 25.4% 7.5%

Residents in black middle neighborhoods continued to have comparably high levels of educational attainment (20.9% of residents had a bachelor’s degree or higher, compared to 19.4% in all middle areas). Yet these neighborhoods lacked access to high performing public schools. Schools located in these areas performed below the city and middle neighborhood averages. These figures do not account for enrollment patterns such as the share of residents enrolled in their catchment school, in other public or charter schools, or in private and parochial schools.

Share of Students Proficient or Advanced in Grades 3–5, 2014-15 Reading Math Black Middle Neighborhoods 25% 11% White Middle Neighborhoods 44% 30% Hispanic Middle Neighborhoods 28% 16% Mixed Middle Neighborhoods 34% 23% All Middle Neighborhoods 33% 20% All Philadelphia Neighborhoods 31% 17% Note: Data are from Pennsylvania Department of Education.

10 High Foreign Born Middle Neighborhoods: Nodes of Growth As a group, foreign-born arrivals in middle neighborhoods offset declines in the U.S.-born population; the number of immigrants grew by 40,840, while the number of native born residents dropped by 12,190. High foreign born middle neighborhoods were located in Olney, East Oak Lane, and parts of Northeast, South, and Southwest Philadelphia. In 2000, 23% of residents in those neighborhoods were born outside the U.S., and by 2015 that share had increased to 36%. (For a full set of tables and figures illustrating demographic, economic, and social trends in each neighborhood type, see Appendix A)

Number of Foreign Percent Foreign Born Residents Born Residents 2000 2015 Raw Chng. Pct. Chng. 2000 2015 High Foreign Born 26,942 48,623 21,681 80% 23% 36% Middle Neighborhoods Low Foreign Born 36,226 55,385 19,159 53% 7% 11% Middle Neighborhoods All Middle Neighborhoods 63,168 104,008 40,840 65% 10% 16% Citywide 137,205 197,563 60,358 44% 9% 13%

Within middle neighborhoods, residential increases were notably sharper in areas that had larger foreign born shares. The population in high foreign born middle areas expanded by 15% since 2000, compared to 2% growth for other middle areas.

Population

2000 2015 Raw Change Percent Change

High Foreign Born 117,944 135,324 17,380 15% Middle Neighborhoods Low Foreign Born 491,444 502,714 11,270 2% Middle Neighborhoods All Middle 609,388 638,038 28,650 5% Neighborhoods Citywide 1,517,536 1,555,072 37,536 2%

11 English remains the most common language spoken in Philadelphia, and it is also the first language of arrivals from a number of countries, contributing to its being the most prevalent language by far even in areas with many immigrants. After English, Spanish was the most common language spoken in high foreign born middle neighborhoods, and in Philadelphia overall. Chinese and other Asian languages, particularly Vietnamese and Mon-Khmer, were relatively common in high foreign born middle areas, accounting for 24% of non-English languages spoken in the home. Citywide, Asian languages were the predominant foreign language in 17% of Census tracts.

Predominant Language Spoken in the Home, Excluding English Spanish Chinese Other Asian Russian Other High Foreign Born 60% 12% 12% 8% 8% Middle Neighborhoods Low Foreign Born 58% 8% 5% 1% 27% Middle Neighborhoods All Middle Neighborhoods 59% 9% 7% 2% 24% Citywide 57% 12% 5% 3% 23%

Two key strengths of high foreign born middle neighborhoods were relatively low rates of serious crime and relatively high performing public schools.

High foreign born middle neighborhoods had lower rates of crime per 1,000 residents than the city and other middle neighborhoods (7.0 part-one violent crime rate compared to 10.2 for the city in 2014- 2015). The rate of part-one nonviolent crime was lower as well: the average rate of part-one nonviolent crime per 1,000 residents was 35.3 per year in Philadelphia and only 25.2 per year in high foreign born middle neighborhoods.

Part-one Violent Crimes, Part-one Nonviolent Crimes, Per 1,000 Residents* Per 1,000 Residents* 2006-07 2014-15 Change 2006-07 2014-15 Change High Foreign Born 10.4 7.0 -32% 29.9 25.2 -16% Middle Neighborhoods Low Foreign Born 12.1 8.7 -28% 39.5 32.3 -18% Middle Neighborhoods All Middle Neighborhoods 11.7 8.4 -29% 37.5 30.8 -18% Citywide 13.8 10.2 -26% 44.9 35.3 -21% Note: Part-one violent crimes include homicide, rape, robbery, and aggravated assault; part-one nonviolent crimes include burglary, theft, motor vehicle theft, and arson. Data aggregated from the Philadelphia Police Department.

12 The average proficiency levels in schools located in high foreign born middle neighborhoods exceeded the city average performance in both reading and math. In the 2014-15 school year, 31% of Philadelphia public school students scored proficient or advanced in reading in elementary school (grades 3 through 5), compared with 37% in schools in high foreign born middle neighborhoods. In math, 17% of students were proficient or advanced citywide and 27% were proficient in schools located in high foreign born middle neighborhoods.

Share of Students Proficient or Advanced in Grades 3–5 Reading Math High Foreign Born Middle Neighborhoods 37% 27% Low Foreign Born Middle Neighborhoods 31% 18% All Middle Neighborhoods 33% 20% Citywide 31% 17% Note: Data from Pennsylvania Department of Education.

High foreign born middle neighborhoods have experienced some of the largest home price increases and some of the largest declines in homeownership in Philadelphia. Between 2000-01 and 2014-15 housing prices in these neighborhoods rose 25%. Over the same time period, the share of residents who owned their home in these neighborhoods declined by 14 percentage points, from one of the highest rates in the city to a rate below the city average.

Median Home Price Homeownership Rate 2000-01 2014-15 Change 2000 2015 Change High Foreign Born Middle $79,831 $100,000 25% 65% 51% -14% Neighborhoods Low Foreign Born $75,564 $90,000 19% 64% 57% -6% Middle Neighborhoods All Middle $75,702 $92,500 22% 64% 56% -8% Neighborhoods Citywide $72,812 $96,500 33% 59% 53% -7% Note: Figures adjusted to 2015 dollars. Property transaction data from Philadelphia Office of Property Assessment.

13 The twin trends of rising prices and falling homeownership could indicate the growing presence of investor-owners, who may have bid up the price of residential properties if they saw a growing demand for rentals. An additional sign of investor ownership is the heightened share of sales conducted in cash— transactions completed without the use of a mortgage. A comparison of the number of home purchases in 2014- 2015 with the number of new mortgage loans shows that in high foreign born middle neighborhoods, nearly 60% of all purchases were a cash sale, the highest rate of all middle neighborhoods and also greater than the citywide percentage.

Purchase Mortgage Home Purchases, Share of Purchases Not Originations, 2014-15 2014-15 Using a Mortgage High Foreign Born 1,148 2,842 60% Middle Neighborhoods Low Foreign Born 6,327 13,306 52% Middle Neighborhoods All Middle 7,475 16,148 54% Neighborhoods Citywide 18,249 40,418 55%

Along with income, educational attainment among residents living in these neighborhoods has not kept pace with the rest of the city, although there were gains. Today, a smaller share of residents in high foreign born middle neighborhoods holds a bachelor’s degree or above than in other middle areas.

Share of Residents with a Bachelor’s Degree or Higher 2000 2015 Change High Foreign Born 14.9% 17.4% 2.5% Middle Neighborhoods Low Foreign Born 14.1% 20.0% 5.9% Middle Neighborhoods All Middle Neighborhoods 14.2% 19.4% 5.2% Citywide 17.9% 25.4% 7.5%

Diverging income and home price trends could lead to increased housing cost burdens in these neighborhoods, which could have ripple effects on household stability and spending on other necessities (e.g., medical expenses, food, child care) as well as discretionary goods and services (including purchases on local commercial corridors). The drop in homeownership rates also challenges the traditional notion that middle neighborhoods are a place to build family wealth through home equity. Some similar market trends were observed in heavily Hispanic middle neighborhoods.

14 Heavily Hispanic Neighborhoods: Expanding Populations and Changing Housing Markets Heavily Hispanic middle neighborhoods comprised 12% of all middle neighborhood tracts in Philadelphia and were home to 14% of the residents living in Philadelphia’s middle neighborhoods. Most of these tracts were located in the Lower Northeast, along with some in Olney, Kensington, Eastern North Philadelphia and South Philadelphia. In many ways the trends in Hispanic middle neighborhoods were similar to trends in high foreign born Census tracts: both had population expansions along with signs of economic and housing market fragility. However, for the most part, these were not the same neighborhoods.

Only 4 of the 16 high Hispanic middle neighborhoods in Philadelphia also met the high foreign born threshold. Of those tracts, two were located in the Northeast near Oxford Circle, one was in Olney and another was centered on 7th Street in South Philadelphia. Most high foreign born middle neighborhoods were classified as mixed middle neighborhoods, where no single racial group predominated. In fact, of the 104,008 foreign-born residents who lived in Philadelphia’s middle neighborhoods, nearly 60,000 (57%) lived in a mixed middle neighborhood and 17,620 (17%) lived in Hispanic middle neighborhoods.

All Census High Foreign Total Foreign Share of Foreign Tracts Born Tracts Born Population Born Population Black Middle Neighborhoods 44 1 14,994 14% White Middle Neighborhoods 19 2 12,216 12% Hispanic Middle Neighborhoods 16 4 17,620 17% Mixed Middle Neighborhoods 59 18 59,178 57% All Middle Neighborhoods 138 25 104,008 100%

Although geographically there is only some overlap between Hispanic and high foreign born middle neighborhoods, both have experienced similar trends in income, homeownership, and population growth. In both areas, median incomes declined more steeply than in other middle neighborhoods and in the city overall. Both areas also experienced substantial declines in homeownership, while at the same time undergoing larger-than-average population growth. Hispanic and high foreign born middle neighborhoods also lagged behind other middle areas in terms of educational attainment.

Median Household Income* Homeownership Rates Population Growth 2000 2015 Change 2000 2015 Change 2000 2015 Change Hispanic Middle $42,860 $34,980 -18% 70% 54% -16% 79,986 89,176 11% Neighborhoods High Foreign Born Middle $45,341 $37,612 -17% 65% 51% -14% 117,944 135,324 15% Neighborhoods All Middle Neighborhoods $43,747 $38,085 -13% 64% 56% -8% 609,388 638,038 5% All City Neighborhoods $42,319 $38,253 -10% 59% 53% -7% 1,517,536 1,555,072 2% Note: Figures adjusted to 2015 dollars. Property transaction data from Philadelphia Office of Property Assessment.

15 Two areas where Hispanic and high foreign born middle neighborhoods differ is in housing prices and unemployment trends. While prices in high foreign born middle neighborhoods grew by 25%, in Hispanic areas they were essentially flat, up just 2%. These diverging price trends suggest different risks to neighborhood stability and different potential solutions. Contrasting unemployment rates also indicated somewhat different dynamics: unemployment in heavily Hispanic middle neighborhoods exceeded all other middle area categories, at 16.7%, while high foreign born middle areas had rates below both the middle neighborhood and city average, at 12.9%.

Median Home Price* Unemployment Rate 2000 2015 Change 2000 2015 Change Hispanic Middle $68,682 $70,000 2% 9.8% 16.7 6.8% Neighborhoods High Foreign Born $79,831 $100,000 25% 8.6% 12.9% 4.3% Middle Neighborhoods All Middle $75,702 $92,500 22% 9.8% 14.2% 4.4% Neighborhoods All City Neighborhoods $72,812 $96,500 33% 10.5% 13.9% 3.4% Note: Figures adjusted to 2015 dollars.

Hispanic and high foreign born middle neighborhoods also had different access to high quality public schools. While student performance in the schools located in high foreign born neighborhoods exceeded the city average, it lagged in Hispanic middle neighborhoods.

16 Conclusion Middle neighborhoods have long been important to Philadelphia as areas of economic stability and opportunity, moderately priced housing, and a reasonably high quality of life. Those qualities have likely been a factor in the recent residential growth in those areas—where almost three-quarters of the city’s vaunted population turnaround of the past decade took place. At the same time, a closer look reveals signs of fragility in some of these neighborhoods. Indicators of strength and instability varied greatly for middle neighborhoods according to the race, ethnicity, and national origin of their residents.

To bolster the inherent strength of middle neighborhoods, the field of public health offers a pertinent lesson: preventive care is more effective and cost efficient that reactive treatment. In introducing his recent book, On the Edge: America’s Middle Neighborhoods, which compiles new research on middle neighborhoods, Paul C. Brophy writes of the need to think of our community treatments as both vitamins and aspirin—“Of course, we need medicine to heal communities in deep need—the aspirin. But what tools do we have to keep neighborhoods healthy in the first place? We need vitamins, too.”5In many cases, attention is understandably focused on communities where years of divestment and neglect have led to declines in population and blight. But relatively stable communities, like the middle neighborhoods described in this work, require attention as well.

To ensure that all middle neighborhoods remain vital, elected officials, civic leaders, community-based organizations, and key institutions may need to consider strategic interventions to enhance opportunity in healthy areas and stabilize areas that have shown signs of stress. Depending on the characteristics and assets of a particular neighborhood (e.g., safe and clean parks and recreation facilities, major employment centers, proximity to stronger neighborhoods), effective strategies might be adapted from those frequently deployed in either distressed areas or in strong ones. In the proper situation, interventions such as housing counseling and targeted home finance tools, job training, vacant property cleanup, investment in public facilities, or commercial corridor improvements could serve to inoculate middle neighborhoods from destabilizing influences.

5 The American Assembly. On the Edge: America’s Middle Neighborhoods. Paul C. Brophy. 2016. 17

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18 Appendix A: Middle Neighborhood Characteristics and Trends

This section includes the full set of tables developed for the report. Tables for predominantly black, white, Hispanic, and mixed middle neighborhoods are presented beside similar tables for high foreign- and low foreign-born middle neighborhoods. Population and Demographic Trends Count of Population Tracts 2000 2015 Change Black Middle Neighborhoods 44 186,040 182,313 -2% White Middle Neighborhoods 19 88,049 88,504 1% Hispanic Middle Neighborhoods 16 79,986 89,176 11% Mixed Middle Neighborhoods 59 255,313 278,045 9% All Middle Neighborhoods 138 609,388 638,038 5% Citywide 384 1,517,536 1,555,072 2%

Count of Population Tracts 2000 2015 Change High Foreign Born 25 117,944 135,324 15% Middle Neighborhoods Low Foreign Born 113 491,444 502,714 2% Middle Neighborhoods All Middle Neighborhoods 138 609,388 638,038 5% Citywide 384 1,517,536 1,555,072 2%

Number of Foreign Share of Foreign Born Residents Born Residents 2000 2015 # Chng % Chng 2000 2015 Black Middle Neighborhoods 11,481 14,994 3,513 31% 6% 8% White Middle Neighborhoods 8,255 12,216 3,961 48% 9% 14% Hispanic Middle Neighborhoods 10,998 17,620 6,622 60% 14% 20% Mixed Middle Neighborhoods 32,434 59,178 26,744 82% 13% 21% All Middle Neighborhoods 63,168 104,008 40,840 65% 10% 16% Citywide 137,205 197,563 60,358 44% 9% 13%

Number of Foreign Share of Foreign Born Residents Born Residents 2000 2015 # Chng % Chng 2000 2015 High Foreign Born 26,942 48,623 21,681 80% 23% 36% Middle Neighborhoods Low Foreign Born 36,226 55,385 19,159 53% 7% 11% Middle Neighborhoods All Middle Neighborhoods 63,168 104,008 40,840 65% 10% 16% Citywide 137,205 197,563 60,358 44% 9% 13%

Economic and Housing Home Price Trends Median Income* Home Prices* 2000 2015 Change 00-01 14-15 Change Black Middle Neighborhoods $45,873 $37,177 -19% $82,584 $78,250 -5% White Middle Neighborhoods $47,040 $45,207 -4% $72,949 $120,000 64% Hispanic Middle Neighborhoods $42,860 $34,980 -18% $68,682 $70,000 2% Mixed Middle Neighborhoods $41,343 $37,311 -10% $77,629 $98,000 26% All Middle Neighborhoods $43,747 $38,085 -13% $75,702 $92,500 22% Citywide $42,319 $38,253 -10% $72,812 $96,500 33%

Median Income* Home Prices* 2000 2015 Change 00-01 14-15 Change High Foreign Born $45,341 $37,612 -17% $79,831 $100,000 25% Middle Neighborhoods Low Foreign Born $43,395 $38,190 -12% $75,564 $90,000 19% Middle Neighborhoods All Middle Neighborhoods $43,747 $38,085 -13% $75,702 $92,500 22% Citywide $42,319 $38,253 -10% $72,812 $96,500 33% Note: All figured adjusted to 2015 dollars

Unemployment Rate 2000 2015 Change Black Middle Neighborhoods 11.1% 14.9% 3.8% White Middle Neighborhoods 7.8% 12.6% 4.8% Hispanic Middle Neighborhoods 9.8% 16.7% 6.8% Mixed Middle Neighborhoods 9.5% 13.4% 4.0% All Middle Neighborhoods 9.8% 14.2% 4.4% Citywide 10.5% 13.9% 3.4%

Unemployment Rate 2000 2015 Change High Foreign Born 8.6% 12.9% 4.3% Middle Neighborhoods Low Foreign Born 10.0% 14.5% 4.5% Middle Neighborhoods All Middle Neighborhoods 9.8% 14.2% 4.4% Citywide 10.5% 13.9% 3.4% Note: Employment rates are measured among the civilian population aged 16 years or old

20 Housing Stock, Vacancy, and Tenure Trends Vacancy Rate Homes Built Since 2000

Share of Number of 2000 2015 Change Homes Homes Black Middle Neighborhoods 9.3% 13.1% 3.8% 2.0% 1,644 White Middle Neighborhoods 6.7% 10.2% 3.5% 1.8% 680 Hispanic Middle Neighborhoods 8.4% 10.8% 2.5% 1.2% 392 Mixed Middle Neighborhoods 8.8% 11.4% 2.6% 4.3% 4,629 All Middle Neighborhoods 8.6% 11.7% 3.1% 2.8% 7,345 Citywide 10.8% 13.3% 2.5% 4.2% 27,987

Vacancy Rate Homes Built Since 2000 Share of Number of 2000 2015 Change Homes Homes High Foreign Born 7.0% 10.0% 3.0% 2.2% 1,076 Middle Neighborhoods Low Foreign Born 9.0% 12.1% 3.1% 3.0% 6,268 Middle Neighborhoods All Middle Neighborhoods 8.6% 11.7% 3.1% 2.8% 7,345 Citywide 10.8% 13.3% 2.5% 4.2% 27,987

Owner Occupied Homes as Change Share of all Housing Units 2000 2011-15 Black Middle Neighborhoods 63% 59% -4% White Middle Neighborhoods 72% 66% -6% Hispanic Middle Neighborhoods 70% 54% -16% Mixed Middle Neighborhoods 59% 51% -8% All Middle Neighborhoods 64% 56% -8% Citywide 59% 53% -7%

Owner Occupied Homes as Change Share of all Housing Units 2000 2011-15 High Foreign Born 65% 51% -14% Middle Neighborhoods Low Foreign Born 64% 57% -6% Middle Neighborhoods All Middle Neighborhoods 64% 56% -8% Citywide 59% 53% -7%

21 Purchase Mortgages, Foreclosures, and Evictions Home Purchase Purchase Acceptance Home Cash Mortgage Mortgage Rate Purchases Sales Applications Originations 2014-15 2014-15 2014-15 2014-15 2014-15 Black Middle Neighborhoods 3,060 69% 2,108 4,655 55% White Middle Neighborhoods 2,099 79% 1,667 3,138 47% Hispanic Middle Neighborhoods 1,326 74% 976 2,167 55% Mixed Middle Neighborhoods 3,815 71% 2,724 6,188 56% All Middle Neighborhoods 10,300 73% 7,475 16,148 54% Citywide 25,045 73% 18,249 40,418 55%

Home Purchase Purchase Acceptance Home Cash Mortgage Mortgage Rate Purchases Sales Applications Originations 2014-15 2014-15 2014-15 2014-15 2014-15 High Foreign Born 1,601 72% 1,148 2,842 60% Middle Neighborhoods Low Foreign Born 8,699 73% 6,327 13,306 52% Middle Neighborhoods All Middle Neighborhoods 10,300 73% 7,475 16,148 54% Citywide 25,045 73% 18,249 40,418 55%

Foreclosures Filings as Eviction Filings as a Share of Sales share of Renter Units 2015 2015 Black Middle Neighborhoods 35% 10% White Middle Neighborhoods 21% 5% Hispanic Middle Neighborhoods 33% 7% Mixed Middle Neighborhoods 28% 8% All Middle Neighborhoods 29% 8% Citywide 22% 7%

Foreclosures Filings as Eviction Filings as a Share of Sales share of Renter Units 2015 2015 High Foreign Born Middle Neighborhoods 24% 6% Low Foreign Born Middle Neighborhoods 31% 8% All Middle Neighborhoods 29% 8% Citywide 22% 7%

22 School Performance and Educational Attainment Reading Percent Prof/Adv Math Percent Prof/Adv in Grades 3 to 5 in Grades 3 to 5 Black Middle Neighborhoods 25% 11% White Middle Neighborhoods 44% 30% Hispanic Middle Neighborhoods 28% 16% Mixed Middle Neighborhoods 34% 23% All Middle Neighborhoods 33% 20% Citywide 31% 17%

Reading Percent Prof/Adv Math Percent Prof/Adv in Grades 3 to 5 in Grades 3 to 5 High Foreign Born 37% 27% Middle Neighborhoods Low Foreign Born 31% 18% Middle Neighborhoods All Middle Neighborhoods 33% 20% Citywide 31% 17%

Reinvestment Fund has published a range of reports about related to housing and market impact. For details, please visit the Reinvestment Fund’s Policy Publications site at:

WWW.REINVESTMENT.COM/IMPACT/RESEARCH-PUBLICATIONS

2012 2014 What if Pennsylvania Had Philadelphia Residential Not Had HEMAP? Mortgage Foreclosure Diversion Program: Update

2014 2016 Strategic Property Code West Philadelphia Scattered Enforcement and its Impacts Site Model: An Affordable on Surrounding Markets Housing Impact Study

REINVESTMENT FUND is a catalyst for change in low-income communities. We integrate data, policy and strategic investments to improve the quality of life in low-income neighborhoods.

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