Inside The 'Innovative' Strategy Adding More Public Housing In Philly

As the nation faces an affordability crisis, one public housing agency has found a way to add thousands of homes for low-income residents for a fraction of what it would cost to build new ones.

The Philadelphia Housing Authority has acquired more than 1,700 apartments off the private market over the past 18 months to turn into public housing. It aims to bring that tally to 4,000 by October 2027.

The organization says it can buy properties for $130K to $260K per unit, a bargain compared to the roughly $600K it would cost to build new public housing units. 

“Philadelphia has been doing some really innovative things as far as providing some access to housing,” said University of Mississippi professor Jade Craig, who specializes in real estate law.

“Now, they have taken this step of purchasing market-rate apartments,” he added. “These are the kinds of aggressive steps that more jurisdictions ought to be doing.”

The initiative capitalizes on what will likely be a fleeting window of relative affordability for buying apartments. 

Philadelphia is working through a glut of multifamily projects that developers rushed to get underway to qualify for a 10-year tax abatement that expired at the end of 2021.

This has led to slow rent growth and concessions that have weighed on net operating incomes for many developers.

Some landlords have also lost income due to nonpaying tenants who can take up to nine months to evict because of renter protections enacted after the pandemic, PHA President and CEO Kelvin Jeremiah said. 

This has led apartment owners to miss mortgage payments. Jeremiah viewed this distress as an opportunity and decided to capitalize on it with the savings PHA had accumulated as part of its $6.8B Opening Doors Initiative, which included funds from bond proceeds and the U.S. Department of Housing and Urban Development.

That money wouldn't have gone as far if the city’s private multifamily market was in a more stable position.

“What we saw was a number of already stabilized deals facing some real questions around their solvency,” Jeremiah said. “So, we stepped in.”

Expanding Public Housing With Acquisitions

Buying is cheaper than building for PHA. The units also make an immediate impact on Philly’s affordable housing stock, while getting a new project approved in the city can take up to two years, Jeremiah said.

When PHA buys a building, any vacant units become part of its public housing portfolio. 

Existing tenants who predate PHA’s ownership are allowed to stay as long as they comply with the leases already in place, which a spokesperson said advances the organization’s goal of creating mixed-income communities. If these tenants choose to leave after their leases expire, their units then become available to public housing tenants. 

Not every building PHA has purchased was in distress, Riverwards Group Managing Partner Mo Rushdy said.

His company sold 440 newly constructed units to the agency across two Kensington buildings over the past year.

One at 2230-2248 E. Somerset St. went for $280.6M in May 2025, and the other at 1635 N. Fifth St. went for $49.1M last month.

“They paid the full price for it,” Rushdy said of the podium buildings with underground parking and market-rate interior finishes like quartz countertops and in-unit washers and dryers. 

He said the first building had 23 out of 220 apartments leased when Jeremiah offered to buy it. The official was so pleased that he asked Rushdy if Riverwards had anything else in the pipeline.

Jeremiah said any purchases PHA makes go through a rigorous appraisal process to make sure the agency isn’t getting duped.

“I don’t think they underpaid, I don’t think they overpaid,” Rushdy said. 

He added that for PHA, buying units at the market rate represents a significant discount to new development given the high costs of building. 

Construction costs have risen broadly in the wake of the pandemic, but Philly is near the top of the pack on that front. The region was the nation’s fifth-most expensive commercial construction market last year, according to a Turner & Townsend report.

Ground-up affordable housing is even more expensive to build than a comparable market-rate project due to cumbersome requirements in federal programs like the low-income housing tax credit.

“Affordable housing is held at a much higher standard than market-rate homes, believe it or not” Rushdy said.

Using The Strategy As A Model

While PHA’s program has been hailed as innovative, a few other public housing agencies have made similar acquisitions in recent years.

The Housing Authority of the City of Austin purchased a 452-unit building in 2019 and a 376-unit complex two years later.

The Cambridge Housing Authority made similar purchases on a smaller scale in the city across from Boston. That included dozens of units it purchased in former dormitories vacated by Lesley University starting in 2024.

But not every public housing authority has room to grow.

The Faircloth Amendment capped the number of units a public housing agency could own at the number its portfolio included in October 1999.

“Public housing programs were frozen,” Craig said. “If they were able to obtain financing from the private market or from [the Department of Housing and Urban Development] to renovate housing stock, they had to keep it within the number that set the cap.”

Jeremiah said PHA lost 7,000 units before he took over the organization in 2011, meaning it had room to grow within those restrictions. Some of those lost units were apartments that deteriorated due to disinvestment and were too far gone to repair.

PHA is one of many agencies nationwide that has knocked down large public high-rises in recent decades, giving Philadelphia and other cities the capacity to expand through acquisitions. 

Nationwide, public housing authorities collectively had room to add 233,000 units under the Faircloth Amendment caps in 2021, according to a study from the University of California Berkeley’s Terner Center for Housing Innovation. 

Of those, 25% are concentrated in five cities: Chicago, New York City, New Orleans, Atlanta and Philadelphia.

The gap is particularly large for the Chicago Housing Authority, which owns about 21,000 units, roughly 15,000 fewer than it had in 1999.

The window of opportunity PHA has capitalized on may be closing soon.

The agency gets 93% of its funding from the federal government, Jeremiah said, but uncertainty has become a staple in Washington, D.C.

“It remains to be seen what will happen with federal budgets and how that will impact PHA,” said Philadelphia Chief Housing and Urban Development Officer Angela Brooks.

Additionally, the end appears to be in sight for the supply glut that has made Philly apartments cheaper to buy.

The development pipeline in Center City has been steadily shrinking since 2023, according to CoStar data. The 1,061 units delivered in 2023 are projected to fall by more than half to 512 this year and even further to just 73 in 2027.

Rushdy expects Philadelphia will be facing a supply shortage by the end of the decade.

“From our perspective, it is not an overarching fundamental thing,” Brooks said of the multifamily distress Jeremiah has capitalized on. “We can’t count on that as a forever solution.”

Still, Rushdy is confident the ongoing wave of PHA acquisitions will reverberate around the nation in the decades to come.

“Fifteen years from now, we're going to look back on what happened in terms of that acquisition strategy, and we're going to say this was one of the smartest moves that PHA did,” he said. “I think you're going to see other housing authorities doing the same thing.”