Now that 2021 has passed, it’s time to start looking forward. What factors will influence the Philadelphia real estate market in 2022?
Here are some themes that industry insiders believe will significantly impact the market’s direction in the following months.
Purchasers who have retreated from the market may choose to rethink their positions, with lesser finished and ongoing sales as well as declining demand. Philadelphia and its surrounding areas are still seller’s markets. The median sales price of single-family houses in the Philadelphia housing market was $304,000, with the price increasing 8% year on year.
While the indicators are favorable, one concern lingers on every investor’s mind: What does this year have in store for the Philadelphia housing market? Will home prices fall? Will there be an increase in home inventory this year? That is what this post will go into detail about. But before that, let’s take a look at Philadelphia as an overall investment destination.
Overview of the Philadelphia Real Estate Market 2022
Philadelphia is the sixth-most populous city in the United States, with over 1.5 million people residing there. Philadelphia has a robust economy with strong ties to the food, education, and healthcare industries. Its rich historical monuments and locations make it a famous migration destination and a great tourism destination for many Americans.
The diversity of the Philadelphia real estate market makes it a worthwhile location for real estate investors. It draws people from all backgrounds, including students from all around the country. The plethora of schools and universities in the town, such as the University of Pennsylvania, Indiana University of Pennsylvania, Temple, Vilanova, and others, is proof of this.
One of the Hottest Real Estate Markets in 2021
Last year, Philadelphia was one of the hottest real estate markets in the country, and its market popularity remains high. It signifies that buyer demand exceeds the current supply of available properties for sale. With low inventory and low loan rates for purchasers, Philadelphia and its neighboring cities are currently in a seller’s market.
The Philadelphia real estate market will be almost the same—competitive no matter where you buy. Home prices are rising higher in the new stage, making it more appealing to sellers. The intensity of competition, on the other hand, can differ from county to county or city to city. Essentially, the Philadelphia metro region’s home prices will rise due to a lack of supply and growing demands.
Related: Buyers Market vs Sellers Market in Real Estate—Everything That You Need to Know
Philadelphia Housing Demand
Buyer demand for properties in the Philadelphia metro area remained constant in October of 2021. The home demand index stayed at 111, suggesting moderate buyer interest. Despite being steady month-over-month, the index was almost 13% lower than last year. For a few months, buyer interest has been smallest for lower-priced single-family houses and largest for higher-priced single-family properties.
Interest for higher-priced single-family houses declined 5% month-over-month, beating only the already small interest for lower-priced single-family properties. Other types of housing demand remained constant. The months’ worth of home inventory ranged from 1.3 for mid-priced single-family houses to 5.8 for higher-priced condominiums. Months’ worth of supply for each property category generally stayed consistent during the month, apart from higher-priced condos, which climbed from 4.9 to 5.8 months.
Forecast for the Philadelphia Real Estate Market in 2022
The Philadelphia housing market is expected to maintain its recent pattern of being one of the hottest markets. Philadelphia’s most frequent housing units are three and four-bedroom row residences and attached houses. Big apartment complexes, single-family detached properties, duplexes, and residences transformed into flats are other common housing types in Philadelphia.
Consider the price patterns reported by Zillow over the last few years. Since November 2011, the average property value in the Philadelphia metro area has increased by approximately 48%. For nearly three years, from 2013 to 2016, property prices remained stable with no growth. Housing prices have been steadily rising since mid-2016, with a 16% increase in the last year.
First-time home buyers will continue to be a powerful force in the housing market, but younger Gen-Z buyers are also anticipated to play an increasing role. Both Generation Z homebuyers and New Yorkers looking for more value for their money will keep Philadelphia real estate moving.
The real question is, should you invest in the Philadelphia real estate market? Well, the answer is yes. Let’s break down why.
Philadelphia Real Estate Is Reasonably Priced
Philadelphia real estate has a median selling price of roughly $208,000. These rates vary greatly based on the neighborhood’s overall security and appeal. The fact is that there are single-family houses available in the $40,000–$60,000 range that can be rented out to single women with no kids who prefer privacy. There are condos and older properties that might be repaired and flipped for a small profit. More than 10% of real estate transactions in many zip areas in the Philadelphia housing market are “flipped sales.”
Do you want to get more insight into the selling prices, see if it’s worth the investment, and learn how to invest in real estate? Mashvisor is here to help.
Searching for Properties
When looking for properties to invest in, Mashvisor has many tools and features that make the process quicker and easier than ever before.
Related: The Ultimate Investment Property Search Tool
Investment Property Search and Heatmap
The Investment Property Search is the first feature you’ll notice when using Mashvisor. This page includes a map function and various filters and adjustment tools to help you narrow down your search and locate the ideal investment property that meets your criteria. The Heat Map tool is yet another tool offered on Mashvisor’s Investment Property Search.
This real estate heatmap provides a color-coded overlay of the map that displays how each section of the market is behaving for the criteria that you have selected. This allows you to quickly choose the best areas in a market based on parameters such as the Cap Rate, Cash on Cash Return, Occupancy Rate, Rental Income, or Listing Price.
This is Mashvisor’s Investment Property Search showing results on the Philadelphia real estate market. The real estate heatmap is also set to highlight the lowest to highest traditional cash on cash return.
Rental Property Analytics Page
Additional analytics for managing your investment can be found on the second tab of every listing page uploaded on our website. Comparable Rental Properties and Insights are examples of these. And if you’ve wondered how to find rental comps, you can do it easily with these analytics.
Related: The Best Comparative Market Analysis Tools for Beginner Investors
There are plenty more Mashvisor tools, but if these sound interesting and of help for you, try them out by clicking here.
Now moving on with Philadelphia real estate.
Every listing page contains a section featuring Rental Comps & Insights. It lists traditional rental and Airbnb properties similar to the listed property and their metrics as well as our AI’s insights on the neighborhood, Airbnb occupancy, and overall investment valuation, among others.
Philadelphia Has Extensive Real Estate Value
By now, you know the possible return on investment you’d experience as a landlord. The other side of the equation is the rising value of the asset, which you would recover if and when you sell it. According to Zillow, Philadelphia real estate market prices increased by about 11% in the last year, and it estimates that prices will rise again in 2022. Philadelphia’s appreciation rates remain among the highest in the country, including the larger metropolitan area, where the months’ worth of supply has fallen to 1.1 months.
One of the best investment opportunities in the Philadelphia real estate market is in locations where everyone wishes to live. The Graduate Hospital neighborhood, for instance, is extremely popular. The zip codes 19118 and 19106 have the highest property assessments and price rises.
Surprisingly, there are zip codes nearby that have witnessed flat or decreasing values; if you acquire houses in the flat or falling value zip codes of 19132 or 19125 and attract folks looking to live in 19121 or 19133, you could see good cash on cash return. This implies you don’t have to conduct extensive studies or make educated guesses to earn from the Philadelphia real estate market.
Best Neighborhoods for Traditional Rentals in Philadelphia in 2022
Here are some of the top locations for traditional rentals in the Philadelphia real estate market this year, according to the latest Mashvisor’s Philadelphia real estate data research, which is based on the success of actual rental comps in the area.
Dickinson Narrows
- Median Property Price: $381,971
- Price per Square Foot: $288
- Monthly Traditional Rental Income: $2,015
- Traditional Cash on Cash Return: 3.86%
- Price to Rent Ratio: 16
- Walk Score: 95
West Passyunk
- Median Property Price: $283,649
- Price per Square Foot: $258
- Price to Rent Ratio: 16
- Monthly Traditional Rental Income: $1,454
- Traditional Cash on Cash Return: 3.78%
- Walk Score: 92
Old Kensington
- Median Property Price: $443,912
- Price per Square Foot: $290
- Monthly Traditional Rental Income: $2,140
- Traditional Cash on Cash Return: 3.74%
- Price to Rent Ratio: 17
- Walk Score: 93
Graduate Hospital
- Median Property Price: $567,888
- Price per Square Foot: $330
- Monthly Traditional Rental Income: $2,138
- Traditional Cash on Cash Return: 2.87%
- Price to Rent Ratio: 22
- Walk Score: 94
Washington Square
- Median Property Price: $899,291
- Price per Square Foot: $599
- Monthly Traditional Rental Income: $1,641
- Traditional Cash on Cash Return: 2.67%
- Price to Rent Ratio: 46
- Walk Score: 99
Best Philadelphia Neighborhoods for Airbnb Rentals in 2022
If you want to invest in short-term rentals like Airbnb in the Pennsylvania real estate market, we’ve conducted our Philadelphia real estate market study and looked at the MLS database and verified Airbnb listings, among others, to compile the most lucrative neighborhoods for Airbnb investment.
West Passyunk
- Median Property Price: $283,649
- Price per Square Foot: $258
- Monthly Airbnb Rental Income: $2,764
- Airbnb Cash on Cash Return: 6.26%
- Airbnb Daily Rate: $155
- Airbnb Occupancy Rate: 64%
- Walk Score: 92
Sharswood
- Median Property Price: $302,145
- Price per Square Foot: $222
- Monthly Airbnb Rental Income: $2,395
- Airbnb Cash on Cash Return: 6.04%
- Airbnb Daily Rate: $133
- Airbnb Occupancy Rate: 53%
- Walk Score: 82
Newbold
- Median Property Price: $360,682
- Price per Square Foot: $256
- Monthly Airbnb Rental Income: $2,967
- Airbnb Cash on Cash Return: 5.70%
- Airbnb Daily Rate: $149
- Airbnb Occupancy Rate: 64%
- Walk Score: 97
Dickinson Narrows
- Median Property Price: $381,971
- Price per Square Foot: $288
- Monthly Airbnb Rental Income: $3,157
- Airbnb Cash on Cash Return: 5.04%
- Airbnb Daily Rate: $133
- Airbnb Occupancy Rate: 64%
- Walk Score: 95
Old Kensington
- Median Property Price: $443,912
- Price per Square Foot: $290
- Monthly Airbnb Rental Income: $3,099
- Airbnb Cash on Cash Return: 4.28%
- Airbnb Daily Rate: $137
- Airbnb Occupancy Rate: 53%
- Walk Score: 93
Philadelphia Is Generally Landlord-Friendly
Numerous real estate investors want to know if a neighborhood is landlord- or tenant-friendly. The Pennsylvania housing market is typically favorable to landlords. Philadelphia, on the other hand, is a little stricter. In 2018, the City Council debated legislation that would restrict evictions to cases of reasonable cause. Failing to pay rent, disruptive behavior, and violation of the lease are all examples of cause.
However, it is simply not possible to evict someone to repair the property. When extending the lease, the tenant must be offered to accept a new lease or pay a higher rent rather than being evicted.
Specific laws are substantially more favorable to landlords. For example, while there is no such thing as a payment time limit, late fees have no upper limit. There are no pet laws in place, either. While the state of Pennsylvania does not require a license to lease out a home, anyone purchasing a home in the Philadelphia housing market must obtain a commercial activity license as well as a housing rental permit.
Conclusion
What’s next now that you know what’s coming in the Philadelphia real estate market for an investment property in 2022? Using real estate investing tools, like Mashvisor’s rental property calculator, will help you find the most lucrative homes for sale in Philadelphia is one of the first steps.
Remember, purchasing or selling real estate is one of the most crucial decisions for many investors. Picking a real estate professional/counselor is still an essential element of the whole process. They are well-versed in crucial market elements affecting your market sectors, such as market changes, projections, customer perception, optimal places, timing, and interest rates.
To gain access to our real estate investment tools, sign up for a 7-day free trial of Mashvisor today, followed by a lifetime discount of 15%.