How a real estate slowdown affects the city budget | Real Estate Newsletter

When you hear about a slowdown in the real estate market, you might immediately think about what that means for buyers and sellers. Especially if you yourself are looking to be a buyer or seller.

But governments watch the market closely, too. And taxes, of course, are part of the reason why.

The real estate market in Philadelphia — and across the region and the country — lost momentum last year compared to the frenzied markets of a couple years ago.

Revenue from the tax that Philadelphia collects when property is sold or transferred is down 26% compared with what the city thought it would pull in. That could mean Mayor Cherelle L. Parker will have less cash to work with in her upcoming budget proposal.

Keep scrolling for that story and to learn about the latest housing trends in Center City and why they matter, find out why a building built for short-term rentals is now apartments, and peek inside a sustainable 3,500-square-foot house in West Chester.

📮 If you’ve taken steps to make your home more energy efficient and/or environmentally friendly, what have you done? For a chance to be featured in my newsletter, email me.

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Philadelphia is expecting to bring in $110 million less in realty transfer taxes by the end of this fiscal year than it thought it would, thanks to the slowdown in the real estate market.

City officials say that luckily for Philly, the city is pulling in more revenue than expected from other taxes. Still, the city thinks total revenue will take a hit.

Elevated mortgage interest rates and rising home prices have helped slow the housing market. Not enough homes are for sale — both existing and newly constructed homes.

An official at the Building Industry Association of Philadelphia, which represents residential developers and contractors, also blamed the hit to the city’s transfer tax revenue on the weakening of the real estate tax abatement, which has slowed construction.

Keep reading for more details about the realty transfer tax, including how it compares to other city taxes and what the rest of the fiscal year might bring.

We all know that Philadelphia is more than just Center City.

But its overall health is pretty important to the entire city, and it’s where a lot of the city’s homes are being built.

The area in and around Center City makes up about 6% of Philadelphia. But 37% of the homes built in the city last year were built there. That’s according to a report released this week by Center City’s business improvement district.

A key stat: More housing units were completed in greater Center City in 2023 than in any of the last five years.

For the last decade, Center City’s population growth has kept pace with its growth in housing units, a trend the Center City District hopes will continue.

Since 2020, more people have moved into greater Center City than have moved out.

So who lives there? The population has gotten younger over the last decade. Most residents have a college degree and make a lot more money than Philadelphians overall. And a lot of singles and empty-nesters live downtown.

Read on for more details from the Center City housing report, including how many homes have been built lately and how many more are in the pipeline.

Nadia and Kevin Young were living in Hawaii when they decided to end years of home hopping around the country. They chose to put down roots on 13 acres in West Chester.

The Youngs had wanted a house that was low maintenance and environmentally friendly but couldn’t find what they were looking for. So they built it.

The couple and their 10-year-old son now live in a 3,500-square-foot sustainable house.

Solar panels generate 80% of the energy the family uses. The home has geothermal heating, energy-efficient appliances, and LED lighting. Windows are positioned so they’re most efficient. On the first floor, they let in lots of natural light, so “you almost feel like you’re outside,” Nadia said.

In the actual outside, the family planted 200 trees and a garden, where they grow vegetables and herbs.

Peek inside the Youngs’ home and learn how a contractor who pours concrete parking garages contributed to the design of their home.

Mid-Century Furniture Warehouse, a beloved antique furniture store in Port Richmond, is closing after this weekend. Owner Brian Lawlor cited COVID changes, his age, an expiring lease, and the cost of rent.

“There used to be a lot of reasonably priced warehouse space, but that cheaper space in Philadelphia is gone away,” Lawlor told my colleague Jake Blumgart.

Question: How much has Lawlor been paying per month for the warehouse?

A) $2,500

B) $4,000

C) $7,000

D) $9,000

This story has the answer.

Do you know the location this photo shows?

📮 If you think you do, email me back. You and your memories of visiting this spot might be featured in the newsletter.

Shout out to Brian O., who knew that last week’s photo showed the new playground at FDR Park in South Philly.

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This week, a renter who has grown a big social media following by sharing cute photos of the Philly apartment that she’s made her own gave me a tour for a story I’m working on. Keep an eye out for that piece coming soon.

Enjoy the rest of your week.

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