As the weather turns cooler and people start getting ready for the holidays, the real estate market in the City of Brotherly Love is expected to stay its current course, which means that it will likely finish off the year in a positive note.
Philadelphia has been a surprising real estate market in 2017. Right before the summer, financial news outlet CNBC published a report that cited statistics compiled by Econsult, a local market research firm that has been keeping a respected proprietary index over the last few years. In May, the Econsult housing index indicated that property values had appreciated 20 percent on a year-to-date basis, and it represented a 32 percent increase since April 2017.
The positive figures presented by Econsult were boosted by a healthy job market; it so happens that Philly is known as a region where higher education and healthcare are major industries, and these two occupational fields are currently experiencing great demand across the United States.
Real Estate Optimism
In early October, real estate analytics firm Zumper published its Annual Renter Survey, which covers topics such as consumer expectations and feelings about the housing economy. When it comes to future plans of purchasing a home, the Philadelphia region is the fifth most optimistic in the region. This can be taken as a sign of overall optimism towards the real estate market, but there is more to consider.
Philadelphia tenants are among the most financially balanced in the U.S. with regard to their housing-to-income ratio. Most economists recommend tenants to keep their monthly rent payments under 30 percent of their total household income; in Philadelphia, the average rent burden is only 24 percent.
Some prospective landlords may think that the Zumper survey makes Philadelphia a renters’ market that does not allow too much room for profit; this is a flawed assumption. While it is true that Philly is a renters’ market, this does not mean that monthly payments are scraping the bottom; it just means that tenants are making enough money to feel comfortable and play the market. This also means that Philadelphia landlords are less likely to experience issues such as late payments since tenants have more financial solvency.
Institutional investors are paying close attention to the rental market. Real estate investment firm Equus Capital recently went to the closing table on 22 apartment properties totaling $467 million; most units were located in Philadelphia.
A Bright Outlook
Speculation is high about Philadelphia as a potential home for a new Amazon headquarters office; after all, this city seems to meet the criteria that the online shopping colossus is looking for, and this prospect has created considerable among real estate professionals.
The third quarter housing report issued by the Lindy Institute for Urban Innovation at Drexel University indicates that the Philadelphia market is still very active; however, buyers may enjoy a break from rising prices during the winter.
In the end, market conditions in Philly are still pretty good for those looking to acquire properties; as usual, consulting with local real estate professional is a must before taking the plunge or making a commitment (cough, cough…Point Acquisitions)