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1) Philadelphia's "livability score" of 76 indicates a good quality of life
Signal strength: moderate
The livability score of 76 in Philadelphia indicates a favorable environment for residents, which is a positive signal for real estate investment.
One reason for this good score is the vibrant arts and culture scene that attracts both locals and tourists, enhancing the city's appeal. Additionally, Philadelphia boasts diverse dining options and culinary experiences, which contribute to a high quality of life for its residents.
Moreover, the city has a strong sense of community and neighborhood pride, which fosters a welcoming atmosphere and stable property values. These factors combined make Philadelphia an attractive place to live, thereby supporting the assumption that buying property here is a wise investment.
If the livability score were to drop below 65, indicating a decline in these positive attributes, it might suggest a less favorable environment for real estate investment.
Source: AreaVibes
2) Philadelphia's 2025 infrastructure projects, like the "Roosevelt Boulevard Multimodal Project" and "Bellwether District," are expected to increase real estate values
Signal strength: moderate
Philadelphia's 2025 infrastructure projects, such as the Roosevelt Boulevard Multimodal Project and the Bellwether District, are poised to boost real estate values in the city.
The Roosevelt Boulevard Multimodal Project, set for completion in 2025, aims to improve safety and accessibility for various modes of travel, including walking, transit, and cycling. By installing new median barriers, realigning crosswalks, upgrading traffic signals, and adding new transit lanes, this project could enhance the livability and safety of surrounding neighborhoods. Such improvements often lead to increased demand for housing, potentially boosting real estate values in the area.
Meanwhile, the Bellwether District is transforming a 1,300-acre industrial wasteland in Southwest Philadelphia into a commercial and industrial complex. With the initial phase expected to be completed by early 2025, this redevelopment includes a logistics campus and a life sciences campus, projected to create over 19,000 jobs. The influx of new economic opportunities and the improved environment could significantly boost real estate values in the area, making it an attractive investment opportunity.
These projects highlight the potential for increased property values due to boostd infrastructure and economic development, suggesting that buying property in these areas could be a wise investment.
Sources: Keystone Newsroom, Billy Penn, Philadelphia Government
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3) Airbnb's "cash-on-cash return" of 5.0% in Philadelphia is fairly appealing
Signal strength: moderate
The cash-on-cash return on Airbnb in Philadelphia is 5.0%, which is considered moderately attractive for investors. This percentage indicates that the income generated from short-term rentals is relatively healthy, suggesting that investing in property here could yield decent returns.
Philadelphia attracts a diverse range of short-term tenants, including business travelers attending conferences and meetings, as well as tourists exploring the city's rich history. The city is home to iconic landmarks like the Liberty Bell and Independence Hall, which draw history enthusiasts and families looking for educational experiences.
Additionally, Philadelphia hosts numerous events and festivals throughout the year, attracting visitors who seek cultural and entertainment experiences. This steady influx of tourists and business travelers creates a consistent demand for short-term rentals, making it a potentially lucrative market for property investors.
If the cash-on-cash return were to drop below 3.0%, it might indicate that the investment potential is less favorable.
Source: Mashvisor
4) Philadelphia's "cash-on-cash return" of 4.0% is reasonably appealing
Signal strength: moderate
The cash-on-cash return of 4.0% in Philadelphia indicates that the property can generate a reasonable return on the cash invested. This percentage is a sign that the rental income is likely to cover expenses and provide some profit.
Philadelphia attracts long-term tenants such as students, young professionals, and families due to its diverse job market and educational institutions. These groups often seek stable housing, ensuring a consistent demand for rental properties.
Moreover, the city's affordable cost of living compared to other major cities makes it appealing for renters who plan to stay for extended periods. This stability in tenant demand can lead to lower vacancy rates and steady rental income for property owners.
If the cash-on-cash return were to drop below 2.0%, it might suggest that the investment is less attractive, as the returns would not sufficiently cover the investment risks and expenses.
Source: Mashvisor
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5) Philadelphia's median home price is significantly lower, at 49% below the national average
Signal strength: minimal
The fact that Philadelphia still has a median home price 49% below the national average suggests that there is significant room for property value appreciation. This makes it an attractive market for investors looking to capitalize on potential growth in property values over time.
In Philadelphia, the most expensive properties are likely to be luxury townhouses in areas like Rittenhouse Square, where demand is high and amenities are abundant. On the other hand, the cheapest properties are often small rowhouses in neighborhoods like Kensington, which are still undergoing revitalization and development.
Investors might find these lower-priced areas appealing for long-term investment opportunities, as they may offer higher returns as the neighborhoods improve. The disparity in property prices across different areas of Philadelphia creates diverse opportunities for various investment strategies.
If the median home price in Philadelphia were to rise significantly above the national average, it might indicate a saturated market with less potential for future growth, making it less attractive for new investments.
Source: Zillow
6) A local in Philadelphia could afford a house in about 3.7 years, which is reasonable
Signal strength: minimal
In Philadelphia, it would take around 3.7 years for a local to buy a house, which is a reasonable timeframe. This suggests that the housing market is accessible and not overly inflated, making it a potentially good investment opportunity.
The median household income in Philadelphia is approximately $60,302, which indicates that residents have a decent earning capacity. With a median home price of about $222,483, homes are relatively affordable compared to the income levels.
This affordability ratio means that people can realistically save and purchase homes, supporting the idea that real estate is a sound investment in this area. When locals can buy homes without excessive financial strain, it often leads to a stable and growing market.
If the time to buy a house were to increase significantly, say to over 5 years, it might suggest that the market is becoming less accessible and potentially overvalued.
Source: USCensus
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So, is it a good time to buy in Philadelphia? Absolutely, it is.
Philadelphia offers a compelling case for real estate investment, thanks to its favorable living conditions and promising economic prospects.
With a livability score of 76, the city provides a high quality of life, supported by a vibrant arts scene and diverse dining options. This makes it an attractive place to live, which in turn stabilizes property values. Additionally, upcoming infrastructure projects like the Roosevelt Boulevard Multimodal Project and the Bellwether District are set to boost real estate values, creating a ripe environment for investment.
Moreover, the cash-on-cash return of 5.0% on Airbnb and 4.0% on long-term rentals indicates healthy returns for property investors. The city's median home price is 49% below the national average, offering significant room for appreciation. With locals able to afford a house in about 3.7 years, the market remains accessible and stable, making Philadelphia a smart choice for real estate investment.