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November 19th, 2018 by Marco Santarelli
Philadelphia Real Estate Market Predictions 2019
Philadelphia is one of the oldest and largest cities in the United States. It is too often written off as a has-been, a historical city that has joined the Rust-Belt. However, this city is on the rebound and the Philadelphia real estate market predictions show us an excellent opportunity for investors in 2019 and upcoming years. Philadelphia is the largest city in Pennsylvania and the second largest on the East Coast. It is the fifth biggest city in the United States. And unlike many other big cities, its population is slowly growing. Its population has grown every year for at least seven years, and it is the second fastest growing county in the region.
How big is the Philadelphia Housing Market? Well, more than one and a half a million people live in Philadelphia proper. Philadelphia is in the hub of the Delaware Valley. That is the sixth largest metropolitan area in the United States. That metro area is home to around six million people. If you only look at Philadelphia and its immediate suburbs, then the Philadelphia housing market still includes four million people.
Philadelphia Real Estate Market Forecast 2019
While we are still seeing a positive housing trends in growth on average, the explosive acceleration we’ve seen over the past few years is clearly softening, market by market. US housing markets that have been headlining the recent growth cycle are decelerating dramatically, bringing their growth more closely inline with historically stable MSAs. As per Zillow, the median home value in Philadelphia is $152,800. Philadelphia home values have gone up 11.0% over the past year and Zillow predicts they will rise 12.8% within the next year. The median list price per square foot in Philadelphia is $163, which is higher than the Philadelphia-Camden-Wilmington Metro average of $143. The median price of homes currently listed in Philadelphia is $214,900 while the median price of homes that sold is $146,600. The median rent price in Philadelphia is $1,422, which is lower than the Philadelphia-Camden-Wilmington Metro median of $1,525.
Philadelphia Real Estate Market Trends 2018
As per Trulia, Philadelphia real estate market trends show an increase of $14,250 (8%) in median home sales and a 0% rise in median rent per month over the past year. The average price per square foot for this same period rose to $166, up from $158. The median rent per month for apartments in Philadelphia for Sep 22 to Oct 22 was $1,300. Average price per square foot for Philadelphia was $166, an increase of 5% compared to the same period last year. The median sales price for homes in Philadelphia for Jul 18 to Oct 17 was $194,250 based on 4,020 home sales.
Philadelphia Real Estate Market Trends – Summary
As per Neighborhoodscout.com, row houses and other attached homes are the single most common housing type in Philadelphia, accounting for 58.61% of the city’s housing units. Other types of housing that are prevalent in Philadelphia include large apartment complexes or high rise apartments ( 17.97%), duplexes, homes converted to apartments or other small apartment buildings ( 15.10%), and a few single-family detached homes ( 8.04%). This particular housing mix is relatively uncommon and characteristic of cities that are compact and walkable, and which often have a lively downtown.
As per Movoto.com, the median list price in Philadelphia is $229,999. The median list price in Philadelphia went down 2% from October to November. Philadelphia’s home resale inventories is 4,422, which decreased 2 percent since October 2018. The median list price per square foot in Philadelphia is $169. October 2018 was $171.
Philadelphia Real Estate Market Trends – Home Prices And Appreciation Rates
Appreciation rates for homes in Philadelphia have been tracking above average for the last ten years, according to NeighborhoodScout’s data. The cumulative appreciation rate over the ten years has been 15.89%, which ranks in the top 40% nationwide. This equates to an annual average Philadelphia house appreciation rate of 1.49%. Appreciation rates are so strong in Philadelphia that despite a nationwide downturn in the housing market, Philadelphia real estate has continued to appreciate in value faster than most communities.
Looking at just the latest twelve months, Philadelphia appreciation rates continue to be some of the highest in America, at 7.05%, which is higher than appreciation rates in 77.21% of the cities and towns in the nation. Based on the last twelve months, short-term real estate investors have found good fortune in Philadelphia. Philadelphia appreciation rates in the latest quarter were at 1.67%, which equates to an annual appreciation rate of 6.86%.
10 Highest Appreciating Philadelphia Neighborhoods Since 2000: By Neigborhoodscout.com
Philadelphia Foreclosures Market Trend 2018
The percent of delinquent mortgages in Philadelphia is 3.0%, which is higher than the national value of 1.1%. With U.S. home values having fallen by more than 20% nationally from their peak in 2007 until their trough in late 2011, many homeowners are now underwater on their mortgages, meaning they owe more than their home is worth. The percent of Philadelphia homeowners underwater on their mortgage is 13.3%, which is higher than Philadelphia-Camden-Wilmington Metro at 10.0%.
On RealtyTrac, there are currently 6,186 properties in Philadelphia, PA that are in some stage of foreclosure – default, auction or bank owned bank owned homes in philadelphia. The number of homes for sale in Philadelphia, PA on RealtyTrac is 3,097. In October, the number of properties that received a foreclosure filing in Philadelphia, PA was 14% higher than the previous month and 6% lower than the same time last year. Home sales in Philadelphia, PA for September 2018 were up 0% compared with the previous month, and down 100% compared with a year ago. The median sales price of a non-distressed home in Philadelphia, PA was $0. The median sales price of a foreclosure home in Philadelphia was $0, or 0% higher than non-distressed home sales.
Should You Invest In Philadelphia Real Estate Market In 2019?
We’ll focus on real reasons to invest in the Philadelphia housing market instead of giving you vague appeals to buy a house or an investment property because of general ambiance and mere promises of future growth. Here are our top 10 reasons for real estate investment in Philadelphia, PA.
1. Density Provides Opportunity
One downside of a thoroughly built-up market is that you cannot expand out – everything else is already built out. This means you can only really build up, redevelop or subdivide. The relative lack of supply compared to demand also keeps rents and property values strong, too. More than half of the jobs are in Center City and University Center, meaning that nearly everyone wants to live in and around these areas. If you can find properties to convert into multi-family housing or luxury housing, you’ll earn a significant return on the investment.
2. It Is Historically Affordable
The median selling price for Philadelphia real estate is $200,000. These prices vary wildly depending on the perceived safety and desirability of the neighborhood. The fact remains that you can find $40-$60,000 single family homes for sale that you can rent out to single mothers with children who would value a little privacy. You can find condos and older homes that could be renovated and flipped with a modest profit margin. In several zip codes within the Philadelphia housing market, more than 10% of real estate transactions are “flipped sales”.
3. The Near Certain Capital Gains
We’ve addressed the ROI you’d likely see as a landlord. The other half of that equation is the increasing value of the property you’d recoup if and when you sell it. According to Zillow, Philadelphia properties saw a roughly 11% price increase in 2018, and they expect prices to go up around 13% in 2019.
4. The High Return on Investment
The traditional rental income from properties in the Philadelphia housing market is $1300 a month, though this value includes everything from two bedroom single family homes to five bedroom three bath luxury properties. If you use the median property value of $200,000, the traditional cash-on-cash return for these properties is 2.6%. Find a deal or upgrade a home to cater to an upscale market, and you’d see better rates of return.
There is another reason to expect better ROI, and that is the fact that rents in Philadelphia are rising. The median rent for properties in the Philadelphia housing market is estimated to be $1400 a month, though that’s lower than you’d see in the surrounding suburbs. There is only room to go up.
5. The Large General Rental Market
Around 40% of housing units in the Philadelphia housing market are rented out, somewhat higher than the national average. This is driven in part by the relatively poor urban population and in part by the higher than average number of singles living alone. Center City has a large, carless population that will prioritize living by public transit and, because they don’t have a vehicle, cannot move out to the suburbs. Do your legal research before you buy rental properties in the Philadelphia real estate market, because you’ll be subject to taxes and fees that aren’t mandated by Pennsylvania state law.
6. The Strong Short-Term Rental Market
While other major cities have waged war on AirBnB and other short term rental sites, Philadelphia realizes this is a good way to cater to tourists and help local home owners earn income. This is why Philadelphia stands out as friendly to short-term rental sites like AirBnB. One of the few conditions to meet is payment of the 8.5% tax on all profits and you don’t make the property not look like a home. Note that these rules apply to primary residences. As a non-resident landlord, you can rent out homes via AirBnB, too, but you have to apply for a visitor accommodations variance. Multi-family housing can also be rented out via AirBnB in Philadelphia if you fill out the right paperwork.
7. Philadelphia Is Diverse Student Market
Nearly every large city is home to universities, themselves home to a large population of renters – students. Philadelphia as both an old and large city contains a number of universities. There are twenty four year universities alone in Philadelphia, several of which are in Center City. There are another dozen two year and tech schools in Philadelphia. And adding to the diverse Philadelphia student rental market are the medical schools and seminaries in the city.
8. Philadelphia Foreclosures Make It A Large Distressed Seller Market
We’ve mentioned the possibility of getting a deal in the Philadelphia real estate market, but the data shows that’s actually fairly likely. For example, about 3% of home owners are delinquent on their mortgage payments. In comparison, about 1% of the general population is behind on house payments. This provides many opportunities to find deals in the Philadelphia real estate market.
9. Known Hot Markets
One of the best investment opportunities in the Philadelphia housing market are those areas you already know everyone wants to live. For example, the Graduate Hospital neighborhood is hot. The 19118 and 19106 zip codes are seeing the greatest property valuations and price increases. Interestingly, there are zip codes next to these that have seen flat and declining values; if you buy properties in the 19132 or 19125 zip codes that have flat or falling values and attract those wanting to live in 19121 or 19133, you could see significant returns. This means you don’t have to do deep research or guess to know how to profit from the Philadelphia real estate market.
10. It Is Relatively Landlord-Friendly
Many real estate investors want to know if an area is landlord friendly or tenant friendly. Pennsylvania itself is generally landlord friendly. Philadelphia, though, is somewhat stricter. In early 2018, the City Council discussed laws that would limit evictions to those cases with just cause. Just cause does include failure to pay rent, nuisance behavior, and breach of lease. You simply cannot evict someone to renovate the property. The tenant would have to be given a chance to accept a new lease or higher rent when renewing the lease, rather than being evicted.
Other laws are much more land-lord friendly. There is no payment grace period law. There aren’t limits on late fees. There are no pet laws. While the state of Pennsylvania doesn’t require a license to rent out a house, anyone buying properties in the Philadelphia housing market does have to get a commercial activity license and housing rental license.
Investing In Philadelphia Housing Market In 2019: The Conclusion
If you are a beginner in the business of real estate investment, it very important to read good books on real estate. You must also learn from successful real estate investors who have retired early on in their lives by investing in some of the hottest US real estate markets. The strong US real estate market shows no signs of slowing, and is slated to remain among the world’s top performers in 2019. The Philadelphia real estate market offers an ideal mix of affordable properties you can snap up and a large population of renters who aren’t going to buy homes any time soon. You won’t face the same hostility as a landlord as you might in New Jersey or New York, whether renting to long-term tenants or tourists.
Similarly, the San Jose real estate market forecast 2019 is that it is going to be a hot investment destination for new real estate investors. San Jose real estate market trends indicate an increase of $140,000 (16%) in median home sales and a -1% drop in median rent per month over the past year. The average price per square foot for this same period rose to $697, up from $600. Big Tech makes San Jose one of the hottest real estate markets in the country. While the intense pressure is driving some companies and people out, the strong financial numbers continue to make the San Jose housing market a good place to invest. The unique redevelopment opportunities should not be overlooked. In January, 2018, Redfin ranked the ten hottest neighborhoods in the United States. Nine of the ten were in San Jose. When single home prices fall from 1.2 million to 1 million, homes now sit on the market for several days instead of being snapped up immediately. The median price for a new home or condo was $750,000 in 2018, down from a record of nearly $800,000 a few months prior. If you want to invest in the San Jose housing market, you should do it now while things are – relatively speaking – affordable.
Another hot market for investors in 2019 is going to be the Phoenix real estate market. The Phoenix housing market predictions for 2019 are that it is going to be a hot investment destination for new real estate investors. Phoenix real estate market trends indicate an increase of $16,000 (7%) in median home sales and a -3% drop in median rent per month over the past year. As per Trulia, the average price per square foot for this same period rose to $162, up from $148. Phoenix deals with a large retiree population, both permanent and seasonal. To accommodate aging in place, they’ve loosened the rules on building “accessory dwelling units”, commonly known as mother-in-law suites. The city also recognizes the need for affordable housing, and they allow people to build and rent out ADUs as affordable housing, especially if the property is within walking distance of public transit. Buy a house, rehab it and build a granny flat, and you have two rental properties for not much more than the price of one. And the city is almost certain to approve it, because they want denser development.
Let us know which real estate markets you consider best for real estate investing! If you need an expert investment advise, you can fill up the form given here. One of our investment specialists will get in touch with you. Norada Real Estate Investments helps take the guesswork out of real estate investing. We can help you succeed by minimizing risk and maximizing profitability of your real estate investments.
Urban population / renters
Population trends / about the city / density
appreciation of property, lower metro area rents
Flip sales http://www2.philly.com/philly/business/real_estate/residential/20170122_ For_profitable_flipping__few_places_are_hotter_than_Philly_area.html
Known hot markets
Market Trends And Forecasts https://www.zillow.com/Philadelphia-pa/home-values https://www.realtytrac.com/statsandtrends/pa/philadelphia-county/philadelphia https://www.trulia.com/real_estate/Philadelphia-Pennsylvania https://www.neighborhoodscout.com/pa/philadelphia/real-estate https://www.movoto.com/philadelphia-pa/market-trends
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