Is Harrisburg, Pennsylvania a good place to invest in real estate? Before we answer this question, let’s learn more about the city. Then we’ll address factors like its job market, housing market and quality of life that allow us to determine if it is a good choice for real estate investors. We’ll compare it to other large cities in Pennsylvania as well as the national housing market.
Harrisburg is the capital of Pennsylvania. Unfortunately, it is often overshadowed by Philadelphia. Harrisburg is home to around fifty thousand people. Yet the Harrisburg PA real estate market is much larger than this. Harrisburg is the center of the Susquehanna Valley metro area, home to more than half a million people. That makes it the fourth largest metro area in the state.
One of the goals of investing in real estate is to get a positive return on the investment when the investor decides to sell the property in the future. If the appreciation rate is high enough, the extra value of the house in a few years will offset the upfront costs of buying. If the appreciation rate is too low then it won’t. The home prices are expected to flatten nationwide, increasing by just 0.8%, according to Realtor.com. The Harrisburg PA real estate market is an underappreciated gem on the East Coast. It is affordable to locals and investors alike while offering steady returns.
In Harrisburg, the real estate appreciation rate in the latest quarter was around 2.38% which equates to an annual appreciation rate of roughly between 9% to 10%. Even small changes in the appreciation rate can change the long-term value of buying considerably. For sellers, a nice profit is on the horizon. If you’re thinking about selling your property in Harrisburg, now is a great time to make your move. You’ll likely earn the greatest return on your investment by selling now before the prices may start to normalize next year.
Let’s learn more about the factors that make Harrisburg a good place to invest if you’re considering real estate investment. Real estate prices are deeply cyclical and much of it is dependent on factors you can’t control. Please note that there are many variables that can potentially impact the value of a home in Harrisburg (or any other market) and some of these variables are impossible to predict in advance. In this article, our focus will be on the current state of the Harrisburg real estate market and how it can affect the investors and home buyers.
Harrisburg PA Real Estate Market Forecast 2020 – 2021
What are the Harrisburg real estate market predictions for 2020? Let us look at the price trends recorded by Zillow over the past few years. In the past year, the Harrisburg real estate appreciated by 1.4%. The latest Harrisburg real estate market forecast is that the home prices will continue to increase by 4% – in the next twelve months. The latest real estate data from Zillow shows that the current median home value in Harrisburg is $56,446. Harrisburg is currently a hot seller’s real estate market. The demand is exceeding the supply, giving sellers an advantage over buyers in price negotiations. In other words, there are less homes for sale than there are buyers in the marketplace. Zillow reports that only 8.5% of the listings in Harrisburg had a price cut in Jan 2020.
Here is the Harrisburg, PA real estate price appreciation graph by Zillow. It shows us the current home price appreciation forecast of 4% till Feb 2021.
Harrisburg Housing Market Forecast 2021
Here is a short and crisp Harrisburg housing market forecast for the 3 years ending with the 3rd Quarter of 2021. The accuracy of this forecast for Harrisburgis 83% and it is predicting a positive trend. The LittleBigHomes.com estimates that the probability for rising home prices in Harrisburg is 83% during this period. If this price forecast is correct, the Harrisburg home values will be higher in the 3rd Quarter of 2021 than they were in the 3rd Quarter of 2018.
Check this page each quarter for updates to the Harrisburg Housing Market Forecast..
Harrisburg PA Real Estate Market Trends
Analyzing real estate data from multiple sources gives us a much broader perspective of the direction in which a market is moving. We shall now discuss some of the most recent housing trends in the Harrisburg area from multiple sources and compare it with past couple of years. We shall mainly discuss about median home prices, inventory, economy, growth and neighborhoods, which will help you understand the way the local real estate market moves in this region.
Harrisburg is a fairly walkable city in Dauphin County with a population of approximately 49,359 people. In the past ten years, the annual real estate appreciation rate has amounted to -8.6% in Harrisburg, according to NeighborhoodScout.com. After cooling off, the Harrisburg housing market bounced from 2017 onward when prices started rising. High demand and low inventory is leading to the rise in home prices in 2020. Currently, the inventory remains very tight and the prices will continue to rise for the next twelve months.
On average, homes in Harrisburg, PA sell after 65 days on the market. The trend for median days on market in Harrisburg, PA has gone down since last month, and slightly down since last year. In a healthy, balanced market, it would take about six months for the supply to dwindle to zero. In terms of months of supply, the Harrisburg market can tip to favor buyers if the supply increases to more than six months of inventory. However, looking at the current trends, we don’t see things stopping anytime soon. The inventory will decrease further and there may be an increase of 4 to 5 percent in home prices.
Following the housing market decline in 2007, single family rental properties became favorable options for investors, saving in construction or refurbishment prices. The quick turnaround for an owner to rent out their property means cash flow is almost immediate. Single family rental homes have grown up to 30% within the last three years. Almost all the housing demand in the US in recent years has been filled by single family rental units. With 2020 being, theoretically, in the middle of a boom, there’s still 4 years for residential construction to surge. Most likely, a housing shortage will remain in 2020, keeping home prices high.
According to Neighborhoodscout.com, a real estate data provider, one and two bedroom row houses and other attached homes are the most common housing units in Harrisburg. Other types of housing that are prevalent in Harrisburg include large apartment complexes, duplexes, single-family detached homes and homes converted to apartments. The median house price in Harrisburg is $89,759, which indicates that home prices in Harrisburg are well below the national average for all cities and towns in the United States.
Here is a snapshot that shows the median home values in the some of the popular neighborhoods in or around Harrisburg.
Harrisburg Real Estate Inventory And Sales Data
Harrisburg has a mixture of owner-occupied and renter-occupied housing units. In the past month, 172 homes have been sold in Harrisburg on Redfin.com, a national real estate brokerage. Additionally, there were also 5 condos, 252 townhouses, and 33 multi-family units for sale in Harrisburg last month. The median listing price is around $165,000. The average sale price of a home in Harrisburg was $155,000 last month, up 12.4% since last year. The average sale price per square foot in Harrisburg is $78, down 8.2% since last year.
According their statistics, the Harrisburg housing market is very competitive. Homes sell for about 3% below list price and go pending in around 25 days. A hot listing in the market can sell for around list price and go pending in around 6 days.
At present, Trulia has 673 resale and new homes for sale in Harrisburg, PA including open houses, and homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process. The median sales price of homes in Harrisburg is $163,000 and homes are selling for about $105/sqft.
Currently, there are 38 homes for sale in Harrisburg on Zillow, an online real estate database company. Additionally, there are 14 homes for rent. Under potential listings, there are about 2 Foreclosed and 39 Pre-Foreclosure homes. These are the delinquent properties that may be coming to the market soon but are not yet found on a multiple listing service (MLS).
- The median list price per square foot in Harrisburg is $48, which is lower than the Harrisburg-Carlisle Metro average of $126.
- The median price of current listings in Harrisburg is $75,000.
- The median rent price in Harrisburg is $950, which is lower than the Harrisburg-Carlisle Metro median of $1,195.
There are currently 661 homes for sale and 132 homes for rent in Harrisburg on Realtor.com, a real estate listings website. According to their statistics, in February 2020, the Harrisburg housing market was a balanced real estate market, which means there was a healthy balance of buyers and sellers in the market. Ideally a buyer would prefer a sale to asking price ratio that’s closer to 90%. The sellers in Harrisburg have managed to hold good leverage in these negotiations in the past month. On an average, they could sell homes for 98.7% of the asking price. A seller would always prefer scenarios which can yield a ratio of 100% or higher.
- In February 2020, the median list price of homes in Harrisburg was $169,900, trending up 13.3% year-over-year.
- The median sale price was $171,000.
- The median listing price per square foot was $87.
- The median rent price was $1,100.
The asking price of single family homes in Harrisburg can start from $37,000 and can go up to $3.7M for a luxury property in an expensive neighborhood with zip code 17112. Linglestown has a median listing price of $220K, making it the most expensive neighborhood in Harrisburg. Allison Hill is the most affordable neighborhood, with a median listing price of $47,900.
|Homes For Sale||661|
|Homes For Rent||132|
|Median Listing Price||$169,900|
|Median Sale Price||$171,000|
|Sale to Asking Price Ratio||98.7%|
|New Construction Houses||296|
|Median Listing Home Price/Sq Ft||$87|
|Home Price Range||$5K to $3.8M|
|Most Expensive Neighborhood||Linglestown|
|Most Affordable Neighborhood||Allison Hill|
Harrisburg Foreclosures And Bank Owned Homes Statistics 2020
As per the Harrisburg foreclosure data by Zillow, the percent of delinquent mortgages in Harrisburg is 2.4%, which is higher than the national value of 1.1%. The percent of Harrisburg homeowners underwater on their mortgage is 30.1%.
There are currently 137 properties in Harrisburg, PA that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 235. In January 2020, the number of properties that received a foreclosure filing in Harrisburg, PA was 775% higher than the previous month and 169% higher than the same time last year.
|No. of Foreclosures in Harrisburg||137 (RealtyTrac)|
|Homes for Sale in Harrisburg||235|
|Median List Price||$129,900 (10% drop vs Dec 2018)|
In Harrisburg, the zip code with the highest foreclosure rate is 17103, where 1 in every 1347 housing units is foreclosed. 17109 zip code has the lowest foreclosure rate, where 1 in every 2246 housing units becomes delinquent.
Is Harrisburg a Good Place For Real Estate Investment?
Now that you know where Harrisburg is, you probably want to know why we’re recommending it to real estate investors. Investing in real estate is touted as a great way to become wealthy. Is Harrisburg a Good Place For Real Estate Investment? Many real estate investors have asked themselves if buying a property in Harrisburg is good investment? You need to drill deeper into local trends if you want to know what the market holds for the real estate investors and buyers in 2020.
If you are looking to make a profit, you don’t want to buy the most expensive property on the Harrisburg real estate market and expect to make a good profit on rents. Perhaps you are looking for a slightly different hold-over, an investment property in Harrisburg that you might move into or sell at retirement in the future. Either way, knowing your profit potential and purpose is the first thing to consider.
Let’s take a look at the number of positive things going on in the Harrisburg real estate market which can help investors who are keen to buy an investment property in this city.
Job Growth in Harrisburg
The Harrisburg housing market is bolstered by the large government employers in the area. The state itself employs around twenty thousand people. The federal government employs nearly as many. Because Harrisburg is the center of the large metro area, it is home to the largest medical centers in the region as well as resorts and hotels. Hershey is based here. There are a number of manufacturers located in the area, as well.
The area has an unemployment rate of around four percent. That is slightly lower than the state average and a full point lower than the Philadelphia average. And as the state capital, it is home to a number of universities. This contributes to the higher than expected rents in the Harrisburg PA real estate market. It also means that you can find many potential Harrisburg real estate investment properties catering to college students, and your portfolio will be more diverse than if you simply invested in a college town.
Harrisburg Property Prices
The median home price in the Harrisburg housing market is around 180,000 dollars. The average home has a price of nearly 90 dollars per square foot. In the broader Harrisburg-Carlisle metro area, the average price per square foot is around 130 dollars. Real estate in downtown Harrisburg is much cheaper than the suburbs. The Harrisburg PA real estate market is rapidly appreciating. Homes that cost 170,000 dollars in 2015 cost roughly 190,000 dollars now. Furthermore, the housing market truly spans a wide spectrum.
There are five thousand dollar trailer homes, fifty thousand dollar World War 2 era apartments turned into condos and three million dollar lakefront mansions. More importantly, there is a dearth of affordable homes in the 100,000 to 350,000 dollar price range. That is causing properties in the lower to middle price range in the Harrisburg housing market to appreciate even faster than the rest of the Harrisburg PA real estate market. And there isn’t much construction. That’s resulted in homes selling in forty days that took two months to sell in 2017.
The relative lack of affordable homes and a large renter population keep rents high. The median rent on a Harrisburg real estate investment in downtown Harrisburg is around a thousand dollars a month, and a property in the suburbs averages 1200 dollars a month. These are high rates of return given the low cost of property in downtown. Furthermore, downtown Harrisburg’s real estate market offers a number of opportunities. The mortgage delinquency rate in the area is 2.4 percent, twice the national average. Another third of residents have negative equity. This means you could find Harrisburg real estate investment properties to fix and flip quite cheaply.
What if you want to invest in the suburbs? The suburban Harrisburg housing market remains a bargain. The average home in Camp Hill costs around two hundred thousand dollars, roughly ten percent below the national average. Homes in New Cumberland cost around 160K. While you will see decent returns on any property in the Harrisburg PA real estate market, you’re not going to see much in terms of capital gains. The area is expected to appreciate two to three percent in 2020.
Quality of Life
The Harrisburg housing market as a whole was given a B- by Niche.com. It gets points for being relatively affordable and being safer than other large metro areas in Pennsylvania. Taxes are high, while school performance is average. It offers the amenities of a major metro area while having a small town feel. And you’re within reach of rural areas, including those dominated by the Amish. This is why the Harrisburg housing market was ranked among the top fifty places to both live and retire in the United States by US News and World Report. And it outranked every other Pennsylvania city in the process.
The Tax Climate
Pennsylvania is a high tax state. It has the lowest flat income tax of any state with such a tax; it is roughly 3 percent. The state has a higher than average property tax rate. The statewide average is 1.6 percent, half a point higher than the national average. The tax rate for counties in Pennsylvania approaches two percent. However, you’ll pay roughly 1.6 percent of the value of a Harrisburg real estate investment property in taxes each year.
The Legal Climate
Pennsylvania is notable for being landlord friendly in a part of the country known for tenant’s rights. There are some limits on deposits, but there aren’t limits on late fees and they don’t have to be written into the lease. You can evict people who are behind on rent or violated terms of the lease. Notice of eviction for breaking terms of the lease range from 30 to 90 days depending on the lease terms, but this is much faster than the process in neighboring states like New Jersey or New York.
If someone leaves or is evicted, they have 30 days to claim abandoned property, but you can charge storage fees after day 10. The state doesn’t require you to give notice of entry for emergency or non-emergency repairs. The favorable legal climate for Harrisburg real estate investment property owners makes it a better choice than larger cities like Philadelphia. While Pennsylvania doesn’t have statewide rent control, politicians in Philadelphia are calling for it.
Investing in Harrisburg Real Estate: Advice For New Buyers
Maybe you have done a bit of real estate investing in Harrisburg, PA but want to take things further and make it into more than a hobby on the side. It’s only wise to think about how you can and should be investing your money. In any property investment, cash flow is gold. Harrisburg has a more favorable legal and tax climate, and it is stable. That makes it a good choice for real estate investors as long as you are investing for rental income instead of massive capital gains. And you could still earn a lot of money with fix-and-flip in the Harrisburg housing market.
A good cash flow from Harrisburg investment properties means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt. Therefore, finding a good Harrisburg real estate investment opportunity would be a key to your success. If you invest wisely in the Harrisburg real estate, you could secure your future.
The three most important factors when buying a real estate anywhere are location, location, and location. Location creates desirability. Desirability brings demand. There should be a natural and upcoming high demand for rental properties. Demand would raise the price of your Harrisburg investment real estate and you should be able flip it for a lump sum profit.
The neighborhoods in Harrisburg must be safe to live in and should have a low crime rate. The neighborhoods should be close to basic amenities, public services, schools and shopping malls. Some of the best neighborhoods in or around Harrisburg are Progress, Uptown, Hampden, East Harrisburg, Capital Heights, Allison Hill, Wormleysburg, East Pennsboro, Lower Allen, Midtown, Shipoke, Enola, Lemoyne and Downtown Harrisburg.
As with any real estate purchase, act wisely. Evaluate the specifics of the Harrisburg housing market at the time you intend to purchase. Hiring a local property management company can help in finding tenants for your investment property in Harrisburg. If it is your first time to invest in Harrisburg real estate, then you would have to be aware of common beginner’s mistakes. Beginners would usually follow the media, buy a property and wait for its value to increase. This could be risky. Real estate investing requires research. We recommend doing your own research or hiring a real estate investment specialist for guidance.
Other Good Markets To Invest in Real Estate in 2020
Another housing market to invest in real estate is Aurora in Colorado. Aurora, Colorado is more than a growing suburb. It is a large, thriving city in its own right. It has a bright future, and it is poised for rapid appreciation and increasing rental rates. This is a good time to make an investment in the Aurora housing market.
Del City is another hot market to choose for real estate investing in 2020. It is an excellent place to invest in real estate if you’re looking for an affordable entry point. Properties are affordable, rents offer decent but modest returns, and the housing market is certain to appreciate. It isn’t as romantic as saying you bought homes in San Francisco or New York City, but you don’t have to worry about sky-high tax bills or rent control limiting your returns.
Let Us Help You In Buying Your First Investment Property In Harrisburg
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market area, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing and interest rates.
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*Remember, caveat emptor still applies when buying a property anywhere. The aim of this article was to educate investors who are keen to invest in Harrisburg real estate in 2020. Purchasing an investment property requires a lot of studies, planning, and budgeting. Not all deals are solid investments. We always recommend to do your own research and take help of a real estate investment counselor. The information contained in this article was pulled from third party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, the Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
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