As an agent, it’s always in your best interest to know your market. Philadelphia is one of the largest cities in the United States and the largest city in Pennsylvania. As such, it’s a huge part of the Pennsylvania real estate market.
Let’s break down the Philadelphia real estate trends for 2020.
Philadelphia is the sixth-largest city in the United States. When you look at the median home price in Philadelphia and compare it with median home prices in other cities with similar populations, Philadelphia comes in far below its comparables:
Population: 1.5 million people
Median Home Price: $165,000
San Antonio, TX
Population: 1.5 million people
Median Home Price: $240,000
San Diego, CA
Population: 1.4 million people
Median Home Price: $700,000
Population: 1.7 million people
Median Home Price: $260,000
The low home prices are drawing more people to the city, especially investors. Investors are also drawn to the 4% property price growth from 2019. License holders should keep an eye on investment properties so they can offer the best advice to investor clients.
Because of the low property prices, investors are flocking to Philadelphia. There are several popular and profitable ways to invest in Philadelphia:
Philadelphia is home to a large number of new constructions popping up in several areas, such as University City and East Market. Investors may be interested in buying up land and building new constructions to sell for a high return.
Philadelphia is more lenient about Airbnbs and leased properties. Many investors buy up residential properties, especially townhomes, to sell and lease out.
License holders should keep tabs on properties close to universities and student-dense areas, as Philadelphia has an extremely high student population and students will be looking to lease residential units.
Townhomes (or townhouses) are incredibly popular and common in Philadelphia. These are also called “rowhomes.” They make up a large percentage of home sales in Philadelphia. This is because of their frequency, but also because they make good Airbnb and rental properties for investors.
License holders would be wise to monitor areas with rowhomes for clients looking to rent, buy, and invest. They check all the boxes for many types of clients.
Property types can be confusing. Read more about the differences between co-ops, condos, and townhomes.
Appreciation is the increase in a property’s value. Properties have been appreciating at an above-average rate in Philadelphia and it looks like that trend will continue in 2020.
This is encouraging for investors because it means that any purchase they make now will likely get them a high return on their investment if they sell in a few years. It also makes house flipping more attractive. Check out our ultimate guide to house flipping or determine if your market is good for house flipping.
Economic and Demographic Factors
There are a few factors worth considering when looking at Philadelphia’s real estate economy and projected trends.
More employers are moving to suburban areas surrounding Philadelphia’s city center. License holders should identify large employers and know the markets that surround those employers. Most people want a short commute to work. Location is always important.
While Philadelphia is growing, it has a relatively high unemployment rate. This means there may be more investor buyers than single-family home buyers.
Philadelphia has a huge student population, housing around 350,000 students. Some of the notable Philadelphia-area universities include:
University of Pennsylvania
Agents should not underestimate the profitability of practicing as a leasing agent. Keep an eye on apartments with student perks, properties near universities, and complexes that help with roommate matching.
Other Markets Affect Philadelphia
Many factors impact real estate trends, and real estate trends vary city to city, county to county. Keep an eye on the specific trends in Philadelphia, but also monitor the national housing market and mortgage market.
Having a full, holistic understanding of all markets will help you anticipate upcoming changes and cater to your strategy accordingly.