Philadelphia remains one of the best cities for investing in real estate, as home values are rising and many people are looking to create portfolios with bricks and mortar. It’s not likely that prices or demand will drop drastically in the coming years, and some newer buildings are available with 10-year property-tax abatements, making luxury real estate in Philadelphia worth considering for both short- and long-term investments.
With the market as competitive as it is, sellers and buyers will need to ensure they’re working with the best real estate agents in the area. But it starts with understanding what to expect from the luxury market this year. With critical knowledge in hand and the help of a professional agent, anyone looking into Philadelphia real estate will be set up for success.
The market continues to favor sellers
Philadelphia luxury real estate has been a seller’s market for a while now, and it won’t surprise many to know that it will stay that way this season. While demand for luxury condos in Philadelphia, PA, is level, and the market for single-family homes remains strong. Home values have climbed nearly 7.2% in the past year, with peak prices expected in the summer. Over the past five years, June has seen the highest median sales prices for homes in Philadelphia, making it a lucrative time to have a property on the market.
Philadelphia investment property in the luxury sector is seeing prices in the range of $1.7 million up to $27 million, with homes . With this in mind, homeowners in Philadelphia may want to take advantage of the market and sell. With many buyers still interested in Philadelphia real estate, working with a professional realtor to get your property on the market this year could bring about a solid return on investment.
Interest rates are still on the rise
Mortgage interest rates have been climbing throughout the year, with 15-year fixed-rate options hovering around 3.5-4.7%. 30-year rates are between 4.7-5.5% and aren’t expected to fall any time soon. Fixed-rate loans are typically a buyer’s best bet, as the rates won’t change throughout the repayment period. Adjustable-rate mortgages are usually lower at the start but are subject to fluctuation as the loan is paid off.
As interest rates climb, sellers want to keep in mind that higher percentages may put off some buyers, eventually making the market less competitive. Though luxury condos in Philadelphia, PA, are still in high demand, sellers may benefit from moving on the current market instead of prolonging their decision to sell. On the other hand, buyers may want to take advantage of the current rates before they climb higher. Applying for a mortgage with various lenders can help you secure the right rate, but always be sure to account for additional fees like closing costs and commissions.
Inventory is dropping
Another critical insight into the Philadelphia investment property market this season is inventory is dropping. Compared to 2020, the number of total homes on the market has fallen over 40%. Low inventory in any city will make it harder for buyers to break into the market and secure a deal. It can cause bidding wars, which we’ve seen more and more in the past few years, where homes sell for above their original listing price. It can also keep properties from staying on the market for extended periods.
This can be good news for sellers looking to part with a second home or rental property but puts more pressure on buyers to act fast on the properties they want. Homeowners looking to sell their primary residence may also be hesitant to act, knowing the challenges when they buy again.
Competition will remain high for buyers
Speaking of buyers, with lower inventory and steady demand, competition will stay high this season. Homes in Philadelphia aren’t staying on the market long, with an average listing time of just under 40 days. Some homes sell even faster, staying on the market for only 11 days. Luxury condos in Philadelphia, PA, are expected to continue seeing multiple offers and high interest from buyers, especially if they’re close to downtown. More individuals and families have returned to the city after pursuing real estate during the pandemic. High competition means sellers will have to vet more applications than they may have initially expected, so they should not be afraid to encourage higher offers. For buyers, higher competition means working with an expert realtor who knows the Philadelphia market inside and out is even more critical.
Philadelphia real estate is a strong investment opportunity
Philadelphia investment property will remain a lucrative option for anyone hoping to receive a strong return on their investment in the coming years. If prices continue to appreciate as they did this past year, properties purchased at current market rates of around $1.7 million will grow to over $2 million in only three years. And with nearly half of Philadelphia residents renting, purchasing luxury condo spaces to use as rentals can be a wise investment move.
Though it can be challenging to break into the market or close on the perfect property, the help of an expert realtor can get you there. Douglas Pearson is a top-performing realtor in the Philadelphia area who is well-versed in the luxury market. With a solutions-focused mindset, Doug aims to walk head-first toward challenges and give his all to his clients. If you’re interested in investing in luxury real estate in Philadelphia and want to know where to start, get in touch with Doug Pearson today.
