A research report from Delta Associates shows that 2014 was a strong year for the apartment market in Philadelphia, according to Philadelphia Business Journal‘s Natalie Kostelni. Rents in Class A apartments rose by 3.7% to $2,128/month and vacancy was down.
That’s great news, right? Well, it all depends on if Millennials and Empty Nesters continue to flock into the city for apartments. Delta counts 4,014 units in the pipeline to be completed within the next three years, which could saturate the market and increase vacancy rates.
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Kellie Patrick Gates parses a hefty city planning commission survey at PlanPhilly this morning. Among the findings that might surprise you if you still subscribe to antiquated notions about renters: they are “highly committed” to their neighborhoods; many choose to rent despite their ability to buy; and the most highly committed renters in Philly appear to live outside Center City.
Among the findings that night not surprise you:
Other factors that respondents said kept them from buying included some Philadelphia-specific criticisms: School quality (31 percent), taxes (29 percent), the feeling they could get more house for less money outside the city (27 percent).
The report also found that Center City renters love exactly what you think they’d love. Restaurants, amenities and walkability. Renters in neighborhoods outside Center City cited closeness to friends and family as behind their decisions to rent where they do.
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The Harvard Joint Center for Housing Studies (JCHS) has taken a big pot and stirred in some Census data, Freddie Mac survey results and National Association of Realtors info and come up with this conclusion: In some metros in this great nation of ours, people between the ages of 25 and 34 who are currently renting could actually afford to own a house.
How is this defined? Glad you asked. According to JCHS:
Affordable owner costs are monthly mortgage payments, insurance, and taxes that do not exceed 35% of incomes. Mortgages assume a 5% downpayment, a 30-year fixed-rate mortgage at 2013 interest rates on the median priced home for that metro.
The problem is that these young renters, as JCHS calls them, can’t afford to buy a house in the first place.
In the Philly metro area, it’s not as though this is a crushing problem to begin with, as the share of renters who can afford to own is only 43.4 percent. This isn’t too much higher than the percentage rate of homeownership among the same demographic, which is 39.8 percent. Other stats:
Overall Homeownership Rate (Percent) 67.7
Median Income, Renters Aged 25-34 40,586
Median Home Price (Dollars) 217,700
Monthly Owner Costs (Dollars) 1,378
Many Young Renters Can Afford Monthly Cost of Owning a Home in Their Metro [JCHS]
Photo of rooftop pool at 2116 Chestnut by Laura Kicey.
It might not be surprising that a survey conducted in early spring yielded “outdoor amenities” as the number-one goal for people on the market for a new place. In May, we all want gardens and pools and greenery. By September we could do without the weed killers and the leaf skimmers. By February we don’t ever want to go outside again. But even if the pole position isn’t surprising, the rest of the list is worth some parsing.
Urban Igloo, a real estate resource that pairs renters with landlords in D.C., Marlyand, Virginia and Philly, surveyed 1,010 people last month and asked them to rank amenities they considered important when searching for new homes. Outdoor amenities came away the clear winner with 47 percent of respondents ranking them first. The feature that came in second? “Pet amenities.” Leaving aside the ambiguity of the term for a moment, we have to admit to being surprised that more people want pet services than want fitness amenities, which came in a lowly third. Though if you aren’t interested in walking your dog, you might not be interested in the gym.
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1728 Chestnut Street, Philadelphia, PA.
Just a block from Rittenhouse Square and hidden among a collection of retail and commercial establishments is this bi-level condo rising above one of Philly’s most pedestrian-filled streets. It has a balcony overlooking Chestnut, and should new tenants not feel like making dinner, there’s Di Bruno Bros. right next door.
The apartment’s interior consists of walnut flooring, exposed brick, and polished concrete, industrial details complemented by the exposed air duct that runs through the open living and dining area. In the kitchen are SS appliances, a Sub Zero refrigerator, and granite countertops. Upstairs, the master bedroom includes walk-in closets and a balcony.
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While the for-sale market experiences up and downs in a post-recession world, things are looking pretty good for the luxury rental market in Philadelphia. What are the factors determining this success?
Relatively cheap real estate, for one. Though the Inquirer’s Alan J. Heavens notes that “by Philadelphia standards, prices locally are recovering to pre-housing-downturn levels,” real estate investment professional Spencer Yablon tells Heavens that “by comparison to other markets, [Philadelphia] real estate is still cheap.”
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Exterior of 338 Queen Street, Philadelphia, PA.
There must be something in the air in this modest Queen Village duplex for it to have — within the span of a decade — three consecutive couples move in, and then decide to take the next step in their union. The last of these couples is now expecting.
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The prospects for new multifamily construction in Philly look good in the long run, a panel of insiders say – but there are some matters that need to be addressed for the market to truly blossom. The millennial generation (pictured at left) is getting tired of living with its parents and is ready to strike out on its own. Developers and investors are now giving them the apartments to rent here, and are ready to supply even more if the jobs they need materialize.
That was the rough consensus of the panelists who spoke on the state of the Philadelphia rental property market at the RealShare Philadelphia conference at the Union League Feb. 27.
Things are picking up on the multifamily front, said panel moderator Jerald M. Goodman, partner at Drinker Biddle & Reath LLP. In fact, he said, “Multifamily is hot.”
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Last months’s national rental rates rose by 3 percent year-over-year — but not in Philadelphia. According to Trulia, the city’s rents actually decreased by .1% percent (hey, it’s something) and the city is among the top 25 rental markets in the country.
The above map is the result of a year’s worth of collected data and shows median prices according to zip code. Those colored in red are the highest, while green displays the lowest. The highest rentals appear to have clustered around Center City ($1,850) and Rittenhouse Row ($1,750).
Last July, Kwelia (which did a rental-market heat map before it was cool) named Logan Square and Northern Liberties as the areas with highest rental medians. Back then Logan Square averaged to $1,765, while NoLibs came in at $1,700. Trulia’s map says the current median for those neighborhoods are $1,700 and $1,225, respectively.