Far too often, the City Of Brotherly Love is an overlooked gem in the Northeastern Megalopolis. It is the 2nd largest city on the Eastern Seaboard, the 5th largest city in the United States. For Philly, the last 5 years have been huge in terms of development.
Despite ominous predictions of nationwide housing market slowdowns in 2019, it seems that Philadelphia is one of the cities that will continue to thrive for the foreseeable future. Read on to learn why.
Rising Interest Rates
In the past three years, 30-year mortgage interest rates have boomed from three percent to five percent. Through 2019 alone, experts predict that these rates could rise multiple percentage points. This is bad news for any prospective home buyers on a modest budget, but good news for sellers who are looking to squeeze the most out of their home’s value.
This slight boost is a far cry from the early 1980s when mortgage rates hit their peak at 18.1%. Experts predict a bump to 5.8% by the end of the year, which isn’t quite as drastic as past rate hikes, but it’s still a steady climb which anyone interested in the Philly housing market should watch out for.
Cooling Housing Markets
Through both fiscal quarters of mid-2018, home values in Philly appreciated zero percent, meaning that no significant value gains or losses were made in home costs. By comparison, home values experienced a significant 12 percent post-Recession rise from the 4th Quarter of 2016 through the 4th Quarter of 2017, indicating that present real estate values are moving toward a slowdown. However, home values in Philadelphia’s surrounding suburbs experienced a 2.2% uptick. Whether or not this rise is indicative of a continual pattern remains to be seen. Once again, this is a sign that while the local market looks murky and iffy for home buyers, it does appear to be trending toward a bright future for home sellers.
Stabilizing Rent Costs
With all the economic pressures that come with buying, maintaining, and selling a home in the greater Philadelphia, it seems that apartment living spaces or rental homes would experience an unprecedented rise in demand. While that is true to an extent, it seems that more property developments must be made before rent prices rise up with that demand. Since last year, nearly 4,000 apartment properties have been declared “in progress” according to a 2018 report, as more and more ongoing projects concurrent with city revitalization efforts are coming into fruition.
Granted, certain rental prices appear to be on the rise, but these sporadic spikes may just be a side effect of the increase in rental properties and concessions. This leveled out market means that it’s a better time than ever for renters to get in now, and when demanding renters finally meet the supply of these new residential spaces, their subsequent prices will level out, without any unexpected fluctuations.
Post-pecession unit growth has escalated higher than it ever has, but like mortgage rates, it still hasn’t ascended anywhere near it’s pre-2000 peak. And, like other real estate market trends, experts foresee this construction slowing down, for better or worse, even whilst the city invests hundreds of millions into multiple revitalization efforts. While these efforts have by and large wrought provable success stories such as Harrowgate, Fishtown, or one of many redeveloped neighborhoods to blow up in the city as of late, the construction industry is still burdened under the weight of increasing material costs and increasingly shortchanged labor to implement those materials into their construction works.
In conclusion, the Philadelphia real estate market, though facing many slowdowns like the national real estate market, is not being totally hastened by these slowdowns; remember that slowdowns aren’t necessarily synonymous with stagnation. As a matter of fact, the door is opened wider than ever for more and more renters to meet the demands of the burgeoning rental market, and new luxury developments aside, it doesn’t seem that any massive rent upticks will be a concern anytime soon.
We are proud to work with some of the foremost developments in these rental ventures, including the renowned J-Street Lofts: visit our Residential Properties Page for more information and in-depth listings.