Did You Know The City of Brotherly Love has the Perfect Combination of CheeseSteaks and CashFlow?
Why Buy Investment Properties in Philadelphia in 2014?
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- Home prices increased 3% in 2013 but still remain 16% below peak market prices (So you can still get in at the early stage of the recovery cycle)
- Market rents increased 10% over the last 4 Years (So you can have some of the nation’s best cash flow margins).
- The 2014 market-wide vacancy rate is under 5% (So rental demand for your properties remains high)
The Advantages of the Philadelphia Market
Philadelphia has the best of both worlds. Like New York and Los Angeles, Philly is one of the top 5 largest metro areas in the U.S. and will always be one of the nation’s top tourist attractions, sports towns, and college towns. But unlike New York and LA, homes in Philadelphia remain affordable, creating price-to-rent ratios that are uniquely advantageous to real estate investors. Rental rates in Philly increased 10% in the last 4 years alone and market-wide vacancy rates are below 5% in 2014. Job growth (over 33,000 new jobs created in 2013) and population growth (over 1% population increase in 2013) continue to drive rental demand and put upward pressure on rents. The health services and education sectors are the main driver of the new job creation, attracting qualified tenants with good stable incomes who are in need of properties to rent. These are also prospective home buyers, bolstering a qualified retail homebuyer market that will be advantageous when you are ready to sell your property down the road. But, in the meantime, the price-to-rent ratios in Philly are currently producing some of the most advantageous cash flow margins anywhere in the country.
In Philadelphia, home prices went up 3% in 2013, but are still 16% below peak market prices, so you are getting in the game at an early stage of the recovery cycle. But momentum is building and buyer demand is increasing so available inventory is dropping fast. According to Altos Research, in 2014 alone, available inventory in Philly has already dropped by 27% from the beginning of the year! This is a unique historical moment for Philly real estate because the price-to-rent ratios are particularly advantageous for real estate investors. With strong economic indicators such as job growth, population growth, and an unemployment rate of 6.4% (well below the national average) and dropping, Philadelphia real estate poses one of the most unique value propositions in the U.S. this year.