Philadelphia has long been an attractive destination for real estate investors, thanks to its affordability, strong job market and population growth. As one of the oldest cities in the U.S., Philadelphia also benefits from steady demand and rich culture. Investing in rental properties and other real estate in Philadelphia can generate stable income and strong appreciation over time. Here are some of the key factors that make Philadelphia a smart choice for real estate investors.
Philadelphia’s real estate market remains affordable compared to other major cities
Despite seeing home prices increase in recent years, Philadelphia’s real estate market remains relatively affordable compared to other major U.S. cities. The median home price in Philadelphia is around $270,000, while nearby New York and Washington D.C. have median prices above $500,000. Rents in Philadelphia are also about 20-30% cheaper than in those cities for comparable units. This price advantage gives investors strong potential for cash flow from rentals. Properties can be purchased at attractive capitalization rates.
Philadelphia’s economy and job market continue to expand
With major employers like Comcast, Aramark and The Children’s Hospital of Philadelphia, the city has a diverse economic base. Professional services, healthcare, education and hospitality are major industries. Philadelphia’s unemployment rate hit a record low of 3.9% in 2019, and has remained low despite the pandemic. Ongoing development across industries is supporting job and wage growth. As more people move to the city for work, demand rises for both owner-occupied housing and rentals.
Philadelphia’s population is growing rapidly
After decades of decline, Philadelphia’s population has been growing since 2006. The city now has over 1.5 million residents, the largest since 1950. Millennials in particular are flocking to Philly for its affordability, job opportunities and vibrant culture. The downtown area has attracted many new luxury apartment buildings catering to young professionals. Strong demand from this key demographic bodes well for future price growth and rents.
Philadelphia offers opportunities in diverse neighborhoods
Center City has seen the bulk of development, but many other neighborhoods also hold promise for investors. Areas like Fishtown, Brewerytown and University City have experienced rapid growth and gentrification as they become more desirable places to live. Developing neighborhoods can provide big rewards for investors willing to take on more risk. Focusing on locations along transit lines can pay off as accessibility attracts residents.
With its relative affordability, expanding economy and population growth, Philadelphia offers an attractive environment for real estate investing. Investors should consider properties in up-and-coming neighborhoods as well as established areas to take advantage of Philadelphia’s strong fundamentals.