Boomers Are Driving Housing In Philadelphia’s Suburbs. Developers Are Hitching A Ride

Philly’s urban center might be teeming with young people.

But real estate stakeholders say housing projects in the suburbs should be catering to baby boomers first and foremost, with the silver tsunami set to hit its peak in the coming years as seniors increasingly age in place and have the financial wherewithal to spend money on property.

In Montgomery County, just outside the city, developers and planners are expecting more multifamily units and more age-restricted units to come online, reflecting the 3% growth in the 55-and-up population it has seen since 2021, according to U.S. Census data.

The county isn't an outlier.

The move of millennials to the suburbs has not been nearly as strong as baby boomers' desire to stick around and downsize to a smaller home or rental unit, said Arcadia Land Co. President Jason Duckworth at Bisnow's The Future of Philadelphia Suburbs event at The Alloy Hotel in King of Prussia.

“There's sustainable demand for suburban multifamily from long-established boomers who don't want to leave where they now live,” Duckworth said at Wednesday's event, adding that the age cohort's desire to stay near their families, religious communities and jobs is creating a huge demand for more multifamily units and single-family homes.

“Nobody's producing the product in sufficient quantities,” Duckworth said.

Philadelphia's suburban population is growing even as City Centre is shrinking, according to census numbers released in March. While Philadelphia proper saw the nation's sixth sharpest population decline, Montgomery (+3,698), Chester (+3,146), Delaware (+847) and Bucks (+427) all saw an increase in residents between July 1, 2022 and July 1, 2023. That was an anomaly in Pennsylvania where 57 of 67 counties saw population declines over the same period.

And that population is skewing older, with about 1 in 7 residents above the age of 65 as of 2022. In line with national trends, boomers last year overtook millennials as the largest segment of the home-buying population, an honor millennials had laid claim to since 2014, Philadelphia Magazine reported.

Nationally, the generation born between 1946 and 1964 own 28% of homes with three bedrooms or more, while millennials with kids own 14% and Gen Z families own just 0.3%, a Redfin study found.

Few of those homeowners are incentivized to give up their homes in the current environment, according to Redfin, and those that do are preferring to stay near home and scoop up more than their fair share of multifamily and condo units.

The housing demand from older residents will continue to grow as boomers age, panelists said. But rising construction costs and high mortgage rates married with prior decades of municipal red tape have stopped new supply from matching up with growth. 

Meanwhile, those people who must move to the region due to a job change or growing families are competing hard for newly-constructed homes, said John Dean, division president for home building company Toll Brothers.

“They have been coming to new construction because the inventory of existing homes for sale is nearly nonexistent,” Dean said. “So, we have been gaining market share, even in a 7% interest rate environment.”

Toll Brothers is building single-family homes but is also building specifically for baby boomers, too. The firm's Ambler and Downingtown homes, each an hour outside of Philadelphia and reserved for those aged 55 and older, start at almost $650K and almost $760K, respectively.

The median home price across the Philadelphia metro is $265K, according to Redfin.

Some younger, growing families are still relocating out of Philadelphia to suburbs that offer the “downtown experience,” said Lauren Coughlin, director of strategy and culture for D2 Groups, a local design and architecture firm.

That is simultaneously growing the multifamily market in some areas, she added. There is so much demand for rentals that her firm is looking for conversion opportunities.

“We have evaluated and are, actually, currently evaluating some office spaces for multifamily,” said Coughlin. “Oftentimes, it requires a lot of structural changes because office spaces tend to have deeper floor plates in the suburbs, so not as fun for multifamily as urban buildings are. But it can happen if the zoning is right [and] the structure is right.”

In one instance, D2 Groups helped Equus Capital Partners build out Ellis Preserve's mass-timber office project in Newtown Square, just north of the West Chester Pike. The multi-use project wrapped up with a new condo complex opening a year ago.

The resort-like upscale apartments draw renters with an average age of 58, according to the Philadelphia Business Journal.

Yet, points within Philadelphia's city limits remain extremely attractive for younger people, Duckworth noted.

“So even though we're here today talking about how great things are in the suburbs and all the opportunity that exists, Philadelphia is going to continue to be a very significant part of the home market,” Duckworth said.

“I think that we have to realize that there's still going to be people who elect not to have children, defer marriage and child-rearing. There's a longer period of time for younger folks where an urban lifestyle makes sense.”