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. Is Philadelphia going to be one of the hottest real estate markets for investors in 2020? Let’s take a deep look at the latest Philadelphia housing market trends to come to a conclusion.
Philadelphia Real Estate Market Forecast 2020
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 $157,500. The median home value in Philadelphia is $157,500. Philadelphia home values have gone up 4.0% over the past year and their Philadelphia real estate market prediction is that the prices will rise 0.0% within the next year. The median list price per square foot in Philadelphia is $180, which is higher than the Philadelphia-Camden-Wilmington Metro average of $150.
The median price of homes currently listed in Philadelphia is $229,900 while the median price of homes that sold is $175,900. The median rent price in Philadelphia is $1,500, which is lower than the Philadelphia-Camden-Wilmington Metro median of $1,600.
Here is the Philadelphia, PA real estate price appreciation graph by Zillow. It shows us the current home price appreciation forecast of 0% till Aug 2020.
Philadelphia Housing Market Forecast 2019 – 2021
The Philadelphia housing market forecast for the 3 years ending with the 3rd Quarter of 2021 is also positive. The Accuracy of the Trend Prediction for Philadelphia is 74%. Accordingly, LittleBigHomes.com estimates that the probability for rising house prices in Philadelphia, PA is 74% during this period. If this Housing Market Forecast is correct, 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 Philadelphia, PA Real Estate Market Forecast.
Philadelphia Real Estate Market Trends
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, 2017 to Oct 22, 2018 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.
At present, Trulia has 6,914 resale and new homes for sale in Philadelphia, PA, including open houses, and homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process. The median sales price is $218,052. Homes are selling for about $182/sqft.
The North Central, Philadelphia is quite affordable to invest in real estate. The median sales price in North Central, Philadelphia, PA is $101,500. The price per sqft is $86. In contrast, the West Poplar, Philadelphia is a very expensive neighborhood with a median sales price of $397,000 and a price per sqft of $257.
As per Redfin.com’s data, the Philadelphia housing market is somewhat competitive. Homes in Philadelphia receive 1 offers on average and sell in around 37 days. The average sale price of a home in Philadelphia was $223K last month, up 6.0% since last year.
The average sale price per square foot in Philadelphia is $161, up 4.5% since last year. Homes typically receive 1 offer. Homes in the Philadelphia housing market sell for about 3% below list price and go pending in around 37 days. Hot homes in Philadelphia, PA can sell for around list price and go pending in around 12 days.
There are 6,914 homes for sale in Philadelphia, PA on Realtor.com. 686 of which were newly listed within the last week. Additionally, there are 3,642 Philadelphia rentals for sale, up to $19.5K per month. In August 2019 the Philadelphia housing market was a buyer’s market, which means there were roughly more active homes for sale than there were buyers.
According to Realtor.com, in August 2019, the median list price of homes in Philadelphia, PA was $229K, trending up 6.4% year-over-year. The median listing price per square foot was $165. The median sale price was $240K. On average, homes in Philadelphia, PA sell after 70 days on the market. The trend for median days on market in Philadelphia, PA has gone up since last month, and slightly up since last year.
As per Movoto.com, the median list price in Philadelphia is $259,900. The median list price in Philadelphia went up 4% from August to September. Philadelphia’s home resale inventories is 4,559, which increased 5 percent since August 2019. The median list price per square foot in Philadelphia is $192. August 2019 was $188. Distressed properties such as foreclosures and short sales remained the same as a percentage of the total market in September.
Philadelphia, PA Single Family And Multi-Family Homes
Following the real estate market decline in 2007 in the U.S., single family rental homes 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 properties 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.
As per the real estate company called Neigborhoodscout.com, the median house price in Philadelphia, PA is $171,341, which indicates that home prices in Philadelphia are near the national average for all cities and towns in the United States. Row houses and other attached homes are the single most common housing type in Philadelphia, accounting for 58.99% of the city’s housing units.
Other types of housing that are prevalent in Philadelphia include large apartment complexes, duplexes, homes converted to apartments and a few single-family detached homes.
The most common building size and type in Philadelphia are three and four bedroom dwellings, chiefly found in row houses and other attached homes. Philadelphia has a mixture of owners and renters, with 50.56% owning and 49.44% renting.
Currently, there are 795 single family homes for sale in Philadelphia, PA on Zillow. Additionally, there are 813 single family homes for rent in Philadelphia, PA. Under potential listings, there are about 21 Foreclosed and 5,010 Pre-Foreclosure homes. These are the properties that may be coming to the market soon but are not yet found on a multiple listing service (MLS).
Philadelphia, PA Foreclosures And Bank Owned Homes 2019
As per the Philadelphia foreclosure data by Zillow, 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%.
|Foreclosures in Philadelphia||5,320|
|Homes for Sale in Philadelphia||3,614 (RealtyTrac)|
|Median List Price||$219,900 (2% ⇓ vs Jul 2018)|
There are currently 5,320 properties in Philadelphia, PA that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 3,614. In August 2019, the number of properties that received a foreclosure filing in Philadelphia, PA was 14% lower than the previous month and 27% lower than the same time last year.
Best Neighborhoods to Invest in Philadelphia Rental Real Estate
If you are looking to invest in the Philadelphia rentals, you should know the best places to invest in. The three most important factors when buying a real estate anywhere are location, location, and location. Location creates desirability. Desirability brings demand. Demand would raise the price of your Philadelphia rental real estate and you should be able flip it for a lump sum profit.
When looking to invest in Philadelphia real estate, you need to find places where the expected property appreciation forecast is positive. The running costs for owning and managing an Philadelphia investment property should be low. The neighborhoods in Philadelphia must be safe to live in and should have a low crime rate.
The neighborhoods should be close to basic amenities, public services and shopping malls. There should be a natural and upcoming high demand for rental properties and a low supply of income properties. There are 219 elementary schools, 190 middle schools, 98 high schools and 309 private & charter schools in Philadelphia. There are 143 neighborhoods in Philadelphia.
Some of the best neighborhoods in or around Philadelphia, Pennsylvania are Bustleton, Point Breeze, Northern Liberties, Brewerytown, Fishtown, Port Richmond, Center City, West Oak Lane, Germantown, Washington Square West, Logan Square, East Falls, Society Hill, Stanton, Rittenhouse, Elkins Park, and Francisville.
Rittenhouse Square has a median listing price of $599K, making it the most expensive neighborhood. Olney is the most affordable neighborhood, with a median listing price of $124.9K.
Here are the best neighborhoods to invest in Philadelphia rental real estate because they have the highest appreciation rates (List by Neigborhoodscout.com).
E Girard Ave / N Delaware Ave
E Norris St / Aramingo Ave
E Girard Ave / E Palmer St
S Columbus Blvd / Packer Ave
Pattison Ave / S Broad St
S 6th St / Dudley St
S 10th St / Mifflin St
S 5th St / Mifflin St
Should You Invest in Philadelphia Rental Real Estate?
Now that you know where Philadelphia 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 Philadelphia a good place to invest in real estate?
Many real estate investors have asked themselves if buying a rental property in Philadelphia is good investment? You need to drill deeper into local trends if you want to know what the market holds for the year ahead.
We have already discussed the Philadelphia housing market 2019 forecast for answers on why to put resources into this market. Although, this article alone is not a comprehensive source to make a final investment decision for Philadelphia but we have collected ten evidence based positive things for those who are keen to invest in the Philadelphia rentals in 2019.
Investing in Philadelphia rentals will fetch you good returns in the long term as the home prices in Philadelphia have been trending up year-over-year. Let’s take a look at the number of positive things going on in the Philadelphia real estate market which can help investors who are keen to buy an investment property in this city.
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.
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. Philadelphia Real Estate 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.
Philadelphia appreciation rates continue to be some of the highest in the nation, at 7.05% (last 12 months), 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.
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. Philadelphia is a Known Hot Market
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.
Philadelphia Real Estate Investment
Maybe you have done a bit of real estate investing in Philadelphia, 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.
A good cash flow 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 Philadelphia real estate investment opportunity would be a key to your success. If you invest wisely in Philadelphia rental real estate, you could secure your future. If you are a beginner in the business of cash flow real estate investing, it very important to read good books on real estate.
The less expensive the Philadelphia rentals are, the lower your ongoing expenses will be. Roughly a $150,000 property is what some experts recommend starting with.
Most investors naturally gravitate to residential property investment. When looking for the best real estate investments in Philadelphia, you should focus on neighborhoods with relatively high population density and employment growth.
Both of them translate into high demand for housing. If housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable.
You must also collaborate and learn from savvy real estate investors who have retired early on in their lives by investing in some of the best real estate markets like Philadelphia, PA. 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.
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.
NORADA REAL ESTATE INVESTMENTS strives to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in the U.S. growth markets. We can help you succeed by minimizing risk and maximizing profitability.
The aim of this article was to educate investors who are keen to invest in Philadelphia real estate in 2019. 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.
Other Best Places To Invest in Real Estate in 2019
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 may fill up the form given here.
One of our investment specialists will get in touch with you to discuss all facets of searching for, buying, and owning a turnkey investment property.
*Remember, caveat emptor still applies when buying a property anywhere. 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.
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 Prices, Trends & Forecasts