Vacant Houses in Philadelphia

a case study to visualize and identify policy reform

Yiming MA

August 28, 2020

Executive Summary

This is a case study reviewing the history and current situation of the long-term vacant house issue in Philadelphia, identifying policy reforms and program innovations to reclaim vacant properties, discussing Philadelphia’s capacity and challenges for adapting to ever-shifting vacant property problems.

Problem Scale

Abandoned houses are a common sight in residential neighborhoods hardest hit by the mortgage crisis. Philadelphia is one of many American cities (e.g., Chicago, Detroit, Baltimore) that has been suffering from vacant and abandoned houses for a very long time. Vacant house usually show following traits: poses a threat to public safety, the owners or managers neglect the fundamental duties of property ownership (e.g., fail to pay taxes or utility bills). As of 2020, there are over 130,000 vacant houses in Philadelphia, clustering in North, South, and West Philadelphia. This long-term issue is gradually damaging the environment of the neighborhood and intriguing more and more troubles. Efficient and detailed policy is needed to combat this problem.

Visualize Vacant Houses in Philadelphia

Vacant House Density Map- Citywide

Let's take a overview of the vacant houses distribution in Philadelphia. Using the vacant indicator dataset from City of Philadelphia, the map shows that, as of 2016, vacant houses were widespread throughout the city, with clear clusters in North, West, and South Philadelphia.

North Philadelphia

Take a closer look at North Philadelphia, vacant houses clustered in two neighborhoods: Allegheny West and Kensington.

Allegheny West is primarily a poor African-American enclave that has suffered post-industrial decline and disinvestment. It faced one of the largest population losses of any neighborhood in Philadelphia between the 1990 and 2000 census. Vacant industrial sites are so eye-opening that the area was used for a movie set.

Kensington has traditionally been known as one of the great working class centers of Philadelphia. Deindustrialization eventually took its hold on the neighborhood in the 1950s, leading to a significant population loss, high unemployment, economic decline, and the abandoning of homes in the neighborhood. Now, the neighborhood is full of safety issues such as crime and drug.

West Philadelphia

Vacant houses were spreading all over West Philadelphia, especially in the far west neighborhood, Haddington.

A significant number of vacant houses exist in Haddington. Majority of the Haddington residents living below poverty level.

South Philadelphia

In South Philly, most vacant houses are in the Grays Ferry neighborhood.

In 2004, the city administration began to remove blighted, high-density, crime-ridden housing projects and replace them with low-density, townhome public housing, which disqualified many residents for the housing for income requirements.

In January 2019, part of a house came tumbling down in Philadelphia's Grays Ferry section. The entire side of the house crumbled into a vacant lot next door. Read the full news here .

The Distribution of Vacant Houses shows Socioeconomic Patterns

Distribution of Race (Black/White) in Philadelphia

Using the data of Census 2010, the comparison of black and white population proportions are expressed by the darkness and the size of the circles. Those tiny dark circles represent black dominant census tracts, while the light large circles represent white dominant census tracts.

Philadelphia is an ethnically diverse city. Vacancy and abandonment are far more concentrated in in black dominant neighborhoods.

Distribution of Income Level, Philadelphia

In Philadelphia, neighborhoods with lots of vacant houses generally have lower median household income.

The map illustrates the median household income (in 2010 dollar) of each census tract. Red represents tracts above average city income level, while green represents tracts below average level.

Distribution of Median Rent, Philadelphia

In Philadelphia, neighborhoods with heavy vacancy generally have lower rent level. Low-cost rent houses were clustering in West, South and North Philly, while high rent houses were in Center City, Northwest and far Northeast Philly.

The Spillover Effects of Vacant Houses

Decrease Housing Value

A 2001 study in Philadelphia found that houses within 150 feet of a vacant or abandoned property experienced a net loss of $7,627 in value.

Increase Crime

Vacant properties often become a breeding ground for crime, tying up an inordinate amount of police resources.

The nature of the physical environment that leads to an increase in criminal activity. A crime-prevention tactic that has gotten much attention in recent years is directly related to vacant, neglected, and abandoned property. According to George Kelling and James Q. Wilson, “ The Broken Window Theory ” holds that “If the first broken window in a building is not repaired, more windows will be broken… The disorder escalates, possibly to serious crime.”

On the other hand, a study conducted in Philadelphia by Columbia University’s Mailman School of Public Health found that cleaning and restoring vacant land can lead to a significant reduction in overall crime in the surrounding area.

Arson and Accidental Fires

The US Fire Administration reports that over 12,000 fires in vacant structures are reported each year in the US, resulting in $73 million in property damage annually. Fires are likely in vacant properties because of poor maintenance, faulty wiring, and debris.

Vacant buildings are a primary target of arsonists. More than 70 percent of fires in vacant or abandoned buildings are arson or suspected arson. Such fires strain the resources of fire departments. Because vacant buildings often contain more open shafts, pits, and holes that can be an invisible threat to firefighters, the cost of fighting those fires is more than financial. The National Fire Protection Association (NFPA) estimates that 6,000 firefighters are injured every year in vacant or abandoned building fires.

Lost Tax Revenue & Extra Expense for Local Government

Vacant properties reduce city tax revenues in three ways: they are often tax delinquent; their low value means they generate little in taxes; and they depress property values across an entire neighborhood. Lower property values mean lower tax revenues for local governments.

According to Frank Alexander, at Emory University Law School, “failure of cities to collect even two to four percent of property taxes because of delinquencies and abandonment translates into $3 billion to $6 billion in lost revenues to local governments and school districts annually.”

Vacant properties are an expense that local governments simply cannot afford – and that the expense grows with every year a property remains vacant or abandoned. Such properties produce no or little property tax income, but they require plenty of time, attention, and money.

According to a study conducted by Econsult Corporation, the city has to bear significant costs to maintain all the vacant parcels within the city, costs over $20 million per year.

Costs to Homeowners

Living in a neighborhood with many vacant and abandoned properties exacts many costs on homeowners. As discussed above, it leads to decreased property values, which can devastate a family’s financial security.

The proximity of vacant and abandoned properties makes obtaining homeowner’s insurance, mortgages, and loans for home improvements more difficult. Insurance companies pay attention to what is going on in a neighborhood; this can mean increased premiums or even policy cancellations for those homeowners living close to an abandoned property.

Vacant properties degrade quality of life for remaining residents. With abandoned buildings comes social fragmentation. Individuals who live in communities with an increasing number of vacant buildings begin to feel isolated, weakening the community as a whole. A large number of vacant buildings in a neighborhood symbolizes that no one cares, increasing the likelihood that property values will continue to decline and that further abandonment will set in. In the case of vacant properties, the problem is out in the open, for all to see. The aesthetic impact of abandoned properties, while not easily quantified in dollars, is another cost.

History and Background

Like many cities in the Northeast, Philadelphia experienced a thriving industrial sector in the 19th and early 20th centuries. Known as the “ workshop of the world ,” Philadelphia was home to a growing manufacturing economy that spurred population growth, which in turn sparked private investment in the housing market and municipal services. By the 1950s, Philadelphia was the fourth largest city in the United States, with a population of roughly 2.1 million . Manufacturing industries employed nearly 50 percent of its workforce. However, Philadelphia then experienced a well-documented decline of industry and flight of the middle-class and affluent into the suburbs. Between 1967 and 1987, for example, Philadelphia lost over half of its industrial sector, approximately 160,000 manufacturing jobs and experienced a significant population loss .

In recent years, a number of Philadelphia neighborhoods have undergone significant transformation, with higher-income residents moving in, real estate prices rising, new businesses replacing old ones, and racial and ethnic compositions changing. Such shifts often seen as part of a trend known as gentrification.

Gentriﬁcation describes the socioeconomic upgrading of a previously, low-income central city neighborhood, characterized by the inﬂux of residents of a higher socioeconomic status relative to incumbent residents and rising home values and rents. Philadelphia is one of seven cities responsible for nearly half of the nation’s gentrification, a new study reports. According to the gentrification map conducted by Governing, River Ward, Lower North Philly, South Philly, and several tracts in West Philly gentrified since 2000.

A study conducted by Philadelphia Federal Reserve Bank shows that Philadelphia has experienced increased rental housing affordability challenges in recent years, especially in neighborhoods that have undergone gentrification. the city lost one out of five units with rents that fell below this cost threshold. These losses were especially acute in gentrifying neighborhoods, as these neighborhoods lost low-cost units at nearly five times the rate of non-gentrifying neighborhoods.

Low-Cost (Under $799) Unit Percentage, 2000 (left) v.s 2018 (right)

Gentrification Caused Displacement for Communities

While increased investment in an area can be positive, gentrification is often associated with displacement, which means that in some of these communities, long-term residents are not able to stay to benefit from new investments in housing, healthy food access, or transit infrastructure. Another impact of displacement to consider is cultural displacement: Even for long-time residents who are able to stay in newly gentrifying areas, changes in the make-up and character of a neighborhood can lead to a reduced sense of belonging, or feeling out of place in one’s own home.

Historic Conditions

Over the last century, many policies and practices have created racialized patterns of disinvestment in city centers that have left low-income communities of color particularly susceptible to gentrification.

Redlining

From the 1930s through the late 60s, standards set by the federal government and carried out by banks explicitly labeled neighborhoods home to predominantly people of color as “risky” and “unfit for investment”. This practice now known as redlining meant that people of color would denied access to loans that would enable them to buy or repair homes in their neighborhood.

According to the Philadelphia Redlining map from the University of Richmond Digital Scholarship Lab, in 1940s, neighborhoods such as South Philadelphia, North Philadelphia, north part of West Philadelphia were marked as "hazardous", characterized by undesirable population and detrimental influences. Lenders were not recommended to make loans to these areas.

On the other hand, areas graded as "best" were the places good mortgage lenders willing to make maximum loans. Lenders were still willing to invest in "still desirable" areas, where the commitment and appraisal were lower than "best" areas. The third grade area were characterized by obsolescence and infiltration of lower grade population. Lenders were more conservatives on those areas.

White Flight

Other housing and transportation policies of the mid-20th century fueled the growth of mostly white suburbs, and the exodus of capital from urban centers, in a phenomenon often referred to as “white flight.”

Take the GI Bill as an example. The program guaranteed low-cost mortgage loans for returning World War two soldiers. But discrimination limited the extent to which black veterans were able to purchase homes in the growing suburbs.

In fact, the Federal Housing Administration largely required that suburban developers agreed to not sell houses to black people in order the developers to access these guaranteed loans.

Urban Renewal

Left behind in central city neighborhoods, low-income households and communities of color bore the brunt of highway system expansion and urban renewal programs, which resulted in the mass clearance of homes, businesses, and neighborhood institutions, and set the stage for widespread public and private disinvestment in the decades that followed.

Foreclosure Crisis

In more recent history, the foreclosure crisis also contributed to making places vulnerable to gentrification. In low-income communities of color, disproportionate levels of subprime lending resulted in mass foreclosures, leaving those neighborhoods vulnerable to investors seeking to purchase and flip homes.

The Cause of Vacancy and Abandonment - Contagion

Abandonment results from the inability or lack of incentive of an owner to invest in maintenance and therefore begins years before an owner walks away from a property.
Abandonment often seems beyond the control of local officials, thus it rarely incites a sense of urgency beyond the neighbors on the block where it occurs.
Rather than the inevitable result of forces outside the control of Philadelphia, housing abandonment is shaped by public policy and practices of financial institutions and is itself a cause of housing market deterioration and population loss.

Policies and Programs

Policy interest and programs focusing on vacant and abandoned properties and foreclosure has certainly gained momentum in the recent past, both statewide and in Philadelphia.

Philadelphia 2035: The Comprehensive Plan

Philadelphia Planning Districts

Philadelphia 2035 is a comprehensive plan for managing growth and development in the City of Philadelphia, which includes citywide broad plan and 18 strategic district plans recommend specific physical improvements and zoning changes. The citywide plan is comprehensive and over-arching, covering areas such as neighborhood development, public transportation, economic growth, land management, etc.

The citywide goal regarding vacant properties contains three objects:

First, create a transparent and market-based land disposition policy for the City with a comprehensive vacant property database.
Second, adopt polices which prevent further abandonment.
Third, discover creative ways to reuse vacant land and structures.

Progress update as of 2018: The Division of Housing and Community Development made 1,769 home repairs, saved 900 homes from foreclosure, approved $1.5 million in Land Bank sales, helped 11,985 families receive housing counseling, and awarded funding to seven developments with 364 units.

West District Plan

Top planning issues include:

Existing row homes are affordable for young families and there is a large area of new housing in Mill Creek.

The high vacancy rate of homes and parcels contributes to crime problems, disinvestment and a lack of home equity.

South District Plan

Redevelop obsolete industrial buildings for affordable housing. Sell discounted conveyances for workforce affordable housing, in accord with City Land Bank Policy.

Lower North District Plan

Top planning issues include:

Reducing vacancy and increasing the variety of affordable housing options.

Pennsylvania Land Bank Act

The PA Land Bank Bill authorizes counties and municipalities with populations of 10,000 or more to establish land banks, a flexible and optional governmental tool to systematically remove problem properties from an endless cycle of vacancy, abandonment, and tax foreclosure, and return them to productive use. The major tasks of land banks are: title acquisition, liability elimination, and property transfer.

Credit: Philadelphia Land Bank Strategic Plan , Figure 13

Philadelphia has it's own Land Bank since 2013. The purpose of the Philadelphia Land Bank is to return vacant and underutilized publicly-owned property to productive use and thereby to assist in revitalizing neighborhoods, creating socially and economically diverse communities, and strengthening the City's tax base.

In 2018, Philadelphia-bred brothers Max and Zachary Frankel utilized Land Bank and built 26 affordable workforce houses to Philadelphians who have been long left out of the housing equation in West Poplar neighborhood. City officials are already hoping they could be a model for workforce housing in the future. Read the full story here .

Philadelphia Real Estate Tax Abatement

In essence, tax abatement program is a reduction of a property tax bill to spur development of residential properties in specific neighborhoods or regions. Philadelphia enacted its 10-year property tax abatement program in 2000 and the city has seen steady new home starts and redevelopments in the 20 years since. As of 2017, over 15,000 properties in Philadelphia were abated.

Some studies have concluded that the tax abatement is a net gain for the city. After all, developers are building homes on empty land that would not otherwise produce income from property taxes. On the other hand, tax abatement can be unfair to long-term property owners. The argument is that it allows affluent buyers to get a tax break on their new residential construction while next-door neighbors have to pay taxes in full on their older homes. Plus, the average Philadelphian simply cannot afford to purchase a new construction home that offers an abatement.

Recently, due to increasing scrutiny over the fairness of the abatement, Mayor Jim Kenney signed a bill passed by city council members that will effectively cut the value of the abatement in half starting in 2021. As such, we anticipate more competition for homes with a tax abatement in 2020, before the benefit decreases.

What's Next?

Just like virus, vacant houses absorb social resources, and can be contagious. The spread of vacant houses can be partially explained by the lack of urgency and the emerging spots being ignored in the first place. Thus, the nature of this issue calls for target, purposeful policies and programs to make periodical progress. Partnership with and from municipalities, county, and the communities are essential for policies and programs to operate efficiently.

Reference List

Data Source

Census Tracts 2010 SHP . 2015. OpenDataPhilly.

Planning Districts SHP . 2014. OpenDataPhilly.

US Census American Community Survey

Vacant Property Indicators - Buildings. 2016. City of Philadelphia.

Robert K. N. et al. Mapping Inequality, American Panorama.