With its diversified economy, affordable housing market and business-friendly environment, Philadelphia has emerged as an attractive real estate investment destination in recent years. As one of the largest cities on the East Coast, Philadelphia real estate market presents lucrative opportunities for investors in 2023. This article will provide an overview of Philadelphia real estate investment landscape and offer useful tips for investing in Philadelphia real estate market.
Strong job growth and population influx benefit Philadelphia real estate
Over the past decade, Philadelphia has experienced robust job growth in education, healthcare, life sciences and technology sectors. Major employers like University of Pennsylvania, Jefferson Health System and Comcast Corporation are headquartered here. The city’s diversified economy and business-friendly policies have led to an influx of new residents. Philadelphia’s population grew by over 60,000 between 2010 and 2020. A growing population increases demand for housing and bodes well for both residential and commercial real estate investors.
Relatively low home prices attract real estate investors
Contrary to many other major East Coast cities, Philadelphia offers relatively affordable housing. As per Zillow, the median home price in Philadelphia is around $250,000, significantly lower than other nearby metros like New York City ($690,000) and Washington D.C. ($550,000). First-time homebuyers and real estate investors alike are attracted to Philadelphia’s reasonable home prices. Investors can achieve better cash flow by buying lower-priced properties and benefit from appreciation as the market grows.
Strong tenant demand for rentals
Philadelphia has a large population of renters – about 46% of households rent their homes. Rental vacancies have hit new lows during the pandemic due to an influx of remote workers. Rising rents and low vacancies signal a landlords’ market. Investors can capitalize on strong tenant demand by purchasing multi-family properties in up-and-coming Philadelphia neighborhoods. With the right property selection and management, rental real estate can deliver stable cash flow.
Focus on neighborhoods undergoing revitalization
Many Philadelphia neighborhoods like Fishtown, Passyunk Square and Callowhill have undergone extensive revitalization in recent years thanks to public and private investment. Identifying and investing early in neighborhoods on the cusp of renewal can be highly rewarding. As infrastructure improves and amenities increase, property values and rents tend to rise in developing areas. Real estate investors should research Philadelphia neighborhoods and target those with growth potential.
Leverage incentives for new construction and rehabilitation
Philadelphia provides attractive incentives to boost real estate development and rehabilitation. The 10-year property tax abatement eliminates taxes on new construction or improvements for a decade. Historic preservation tax credits up to 20% are available for rehabilitating historic buildings. Opportunity Zones offer tax benefits for investing in lower-income areas. Leveraging these incentives can enhance returns on real estate investments in Philadelphia.
With its stable economy, affordable housing, and business-friendly environment, Philadelphia offers lucrative real estate investment opportunities. Investors should target properties in high-growth neighborhoods, leverage incentives, and utilize smart management to capitalize on this market.