Of the many real estate markets that are looking hotter by the day the Philadelphia real estate market is a top one. The abundance of amenities and attractions that the city has to offer has brought in many new residents and real estate investors alike. Because the city has a low crime rate and is characterized by overall economic growth, more real estate investors are selecting it for their long-term investments. Families, on the other hand, continue to move to Philadelphia for the excellent educational system and enabling environment for raising a family. Not to neglect the affordability factor that plays into the game. The Philadelphia real estate market remains a more affordable housing market as compared to New York and other metropolitan markets.
Related: Advice for Real Estate Investors: Buy or Rent a House?
Here we have collected data drawn from various sources to provide to you with insights into the Philadelphia real estate market. The article below will focus on the strengths and weaknesses of the Philadelphia housing market right now. As we go on, we further propose three top neighborhoods for buying a Philadelphia investment property at the moment. We hope that you accumulate more knowledge as you read this blog and explore our knowledge center at Mashvisor.
Growth and Stability
First and foremost, Philadelphia has been seeing a substantial growth in the job market and the local economy overall. Philadelphia, in fact, ranks as one of the top large metropolitan areas with the most improved economy driven by job growth. Reports say that Philly saw one of the greatest increases in year-to-year job growth. Sectors such as IT, services, and education continue to boom and strike as compared to others. This job growth that has been accompanied by strong population growth has consequently caused more demand for housing.
Fortunately for real estate investors, despite the increasing population and the increased demand for housing, home values have been increasing only steadily. Of the many neighborhoods that continue to experience a housing boom with home values steadily rising are South Philly and Kensington, where home values went up from 2016 by 5.2% and 4.4%, respectively. Rent, moreover, continues to rise steadily. It is important to note that although median rent showed a decrease at the start of 2017, it has been on the rise slowly ever since. The average monthly rent for a two-bedroom apartment is around $1,600 today. Whether you are looking to rent or own a home, Philadelphia real estate remains to accommodate to your demands.
Related: All You Need to Know About a Mortgage for Rental Property
No Property Tax
Did you know that you get to be exempt from property tax under certain conditions? In the 1990s, Philadelphia was not doing so great, certainly much worse than any surrounding areas, and with population, jobs, and homeownership decreasing substantially. To assuage the dilemma, the City Council offered 10-year tax abatement for commercial and residential real estate. The law became effective in the 2000s and aimed at waiving property taxes for both new construction and improvements to preexisting structures. This means that, by Philadelphia’s provincial law, there’s no property tax on constructions for the first ten years. Since the new law’s stipulation, the tax abatement has been reflected into major boon to the city, increased homes valued, and more tax revenue and construction. The positive effects continue to be seen today as more people have been choosing Philadelphia real estate given the prolific ease and tax breaks the city offers.
Airbnb in the Philadelphia Real Estate Market
You might have often heard of the stricter regulations that state governments are enforcing on Airbnb rentals. New laws regarding short-term rentals have made it more difficult for Airbnb landlords to rent their homes. This is not the case in Philadelphia; in fact, Airbnb is fully legal making Philadelphia real estate more attractive for real estate investment opportunities. In July 2015, the Philadelphia City Council unanimously passed new laws legalizing Philadelphia Airbnb. Some restrictions, however, remain to exist. For example, the City Council limits the maximum days of renting via Airbnb to under 180 days per year, while a city license is mandatory if you are renting out for more than 30 days. Although there are some restrictions, they are much fewer than in other major cities and states. We recommend that you further look into Philadelphia Airbnb rentals, if you are looking for quick cash and lax procedures.
Related: Cities With The Least Airbnb Legal Issues
Top Neighborhoods in the Philadelphia Real Estate Market
Below we provide you with a glimpse of the three top neighborhoods in the Philadelphia real estate market today. If you find yourself leaning towards a neighborhood, you might as well plan a visit. Before that though, make sure to check out the best real estate investment opportunities in your neighborhood of choice through Mashvisor’s property search engine.
Logan Square
Median rental price for 1-bedroom apartment: $1,830/month
Median purchase price: $528,000
Year-over-year growth index: 15.3%
Logan Square remains to be a vibrant neighborhood in the Philadelphia real estate market as it enjoys a mix of historic buildings, high-rise museums, and parks. Although median rental prices and homes values are much higher than in other parts of Philadelphia, Logan Square is more desirable and affordable as compared to other similar neighborhoods in cities such as NYC.
Grays Ferry
Median rental price for 1-bedroom apartment: $1,400/month
Median purchase price: $140,000
Year-over-year growth index: 96.6%
Located in South Philly, Grays Ferry is yet another affordable neighborhood in terms of property prices. The town has, in addition, the second highest rental yield in the Philadelphia real estate market. If you are looking for a passive income, we strongly recommend investing in Grays Ferry.
Chestnut Hill
Median rental price for 1-bedroom apartment: $1,698/month
Median purchase price: $624,000
Year-over-year growth index: 12.6%
Located in the Northwest of Philadelphia, Chestnut Hill is a high dynamic place to live in. The neighborhood ranked the 2nd best neighborhood in Philadelphia this year given its high incomes, rising real estate value, and excellent educational system. Chestnut Hill takes pride in itself for having intelligent and elegant residents.
Philadelphia real estate continues to be promising given the job and population growth the city has been witnessing. More IT corporations are moving their headquarters to Philadelphia, creating more jobs which are being translated into more demand for real estate properties. Despite the high demand, Philadelphia real estate prices remain to be increasing only steadily. We recommend that you further look into the Philadelphia real estate market if you are looking for a city to invest in this year. Hurry before property prices rise too much.