How is the philadelphia real estate market?

[Graham Huber]

How is the current real estate market in Philadelphia? Are home prices trending up or down, and is it a good time to buy or invest? Also, how competitive is the market for first-time homebuyers and investors right now? Any insights or recent experiences would be appreciated!

[Pat Aboukhaled]

Hey Graham,

I've been watching the Philly market pretty closely...it always has its unique ebb and flow. Recently, I noticed that while some neighborhoods are steady, others are seeing a slight dip in prices. My cousin actually lives in Philly and was telling me how the area around Fishtown is still buzzing, but some other parts are cooling off.

For first-time homebuyers and investors, the competition isn't as fierce as it was last year. A good friend of mine just helped a client get a duplex in South Philly. They had more room to negotiate than exepcted. I'm happy to make the intro to that agent there if you would like.

But I've got to share what's happening here in Phoenix... it's pretty exciting. The city's experiencing massive population growth...from what I've heard, people are moving here for the booming job market and, well, the great weather doesn't hurt. Companies like TSMC and Intel are investing billions into new facilities, and it's creating a real surge in housing demand.

One of my clients was set on investing in Philly but decided to explore Phoenix after we talked.

From what I read in The Wall Street Journal, Phoenix is one of the fastest-growing cities right now. I genuinely think Phoenix offers a strong potential for ROI given all the growth. If you're open to it, I'd love to share more about what we're seeing here.

Just thought I'd pass along some insights.

Pat & Jasper

Turning investment visions into REALITY in Phoenix, AZ - Ranked #1 for residential real estate growth and opportunity by PwC

[Stuart Udis]

@Graham Huber Philadelphia is a city if neighborhoods. Some are fairing better than others but I am optimistic about the overall city outlook because the fundamentals are strong. Excellent Ed's and Med's, international airport, port city, close proximity to NYC and DC. City government under new Mayor administration is already showing signs of improvement over past administration which is encouraging as well. 

Some neighborhoods such as Fishtown, Northern Liberties and the surrounding areas are struggling with absorption because of an influx of new housing that was built over the course of the past few years. That may take a few years to settle itself, but that's not a neighborhood fundamentals issue and will correct itself naturally, especially as more neighborhood commercial and amenities continue to infill to meet the new population. I invest exclusively in NW Philadelphia, primarily Mount Airy (19119 zip) and have faired well in recent years. The neighborhood definitely is one of the more challenging to understand with more nuance than most Philly neighborhoods but those who understand the neighborhood have also faired well. 

 I would avoid the North Philadelphia and SW Philadelphia neighborhoods. They may seem attractive on a spreadsheet if you are chasing cash flow, but the fundamentals are not as strong and these properties are  disproportionately impacted by capex and operating costs. This will hold true in any lower cost inventory neighborhood, not a Philadelphia specific problem but resist the temptation particularly if you are not a local hands own operator. Very few succeed with this model and those who do are the contractor types who are driving around in their work truck putting out fires all day. Not a business I care to be in. 

[Sheryl Sitman]

@Graham Huber I have been invested in Philly since 2016. I agree with the excellent summary of @Stuart Udis At this moment, and note that things change FAST these days in RE, there seem to be great ROI plays to be had. The glut in new apartment inventory is definitely impacting the small multi market in some parts. In general, if you are in Philly, know Philly and take the steps to learn how to smartly invest and create a strategy, you can acquire some good opportunities. I recommend to newer investors to find good coaching. I run a large group of Philly small landlords and see the big trouble folks run into only because they lack experience and a good coach if you can find one will help you avoid costly rookie mistakes. Good luck!!

[Alan Asriants]

Quote from @Stuart Udis:

@Graham Huber Philadelphia is a city if neighborhoods. Some are fairing better than others but I am optimistic about the overall city outlook because the fundamentals are strong. Excellent Ed's and Med's, international airport, port city, close proximity to NYC and DC. City government under new Mayor administration is already showing signs of improvement over past administration which is encouraging as well. 

Some neighborhoods such as Fishtown, Northern Liberties and the surrounding areas are struggling with absorption because of an influx of new housing that was built over the course of the past few years. That may take a few years to settle itself, but that's not a neighborhood fundamentals issue and will correct itself naturally, especially as more neighborhood commercial and amenities continue to infill to meet the new population. I invest exclusively in NW Philadelphia, primarily Mount Airy (19119 zip) and have faired well in recent years. The neighborhood definitely is one of the more challenging to understand with more nuance than most Philly neighborhoods but those who understand the neighborhood have also faired well. 

 I would avoid the North Philadelphia and SW Philadelphia neighborhoods. They may seem attractive on a spreadsheet if you are chasing cash flow, but the fundamentals are not as strong and these properties are  disproportionately impacted by capex and operating costs. This will hold true in any lower cost inventory neighborhood, not a Philadelphia specific problem but resist the temptation particularly if you are not a local hands own operator. Very few succeed with this model and those who do are the contractor types who are driving around in their work truck putting out fires all day. Not a business I care to be in. 

 This is a great explanation of the market.

I will add to the City of Neighborhood parts; that the market can be so drastically different less than a mile apart.

Point breeze is struggling, while Fitler Square is a fast paced market. Even though they could be walking distance apart.

There is a lot of construction happening near the area that Stuart mentioned and that is certainly affecting values and rental metrics. 

Personally I think the Suburbs of Philadelphia is a stronger market with less hoops to jump through, strong rental demand, and a great pool of tenant applicants. (Of course not every part of the suburb - but just generalizing)

Doesn't mean there aren't solid spots in Philly to invest in like: Upper NE Phila and part of NW Phila. Its all about knowing your neighborhoods!

[Joseph Scorese]

Graham,

The Greater Philadelphia real estate market has experienced notable changes in recent years, reflecting broader national trends while retaining some unique local dynamics. The Greater Philadelphia Counties remain strong.

The Greater Philadelphia presents a unique mix of affordability, growth potential, and solid rental demand. The city's relatively lower entry costs compared to other East Coast cities make it appealing to investors especially section 8. While some neighborhoods are seeing some appreciation, others still offer value and future growth potential (Kensington, Germantown), especially in areas undergoing revitalization. However, investors should consider property taxes, local regulations, and neighborhood trends carefully before making decisions. (Very Tough)

Regards Joe

[Devin Conley]

Hey @Graham Huber here's a couple charts on Philadelphia compared to other nearby major cities. This highlights recent trends in home value and rent-to-price ratio over the past decade