Philadelphia Real Estate Market Analysis

The Philadelphia housing market promises not only affordable real estate but significant property appreciation as well. Since Q1 of 2000, Philadelphia home values have experienced a total appreciation of 141% at an average annual rate of 4.7% (according to NeighborhoodScout). Zillow forecasts that Philadelphia real estate will continue to appreciate by 9.4% over the next year. This combination of cheap real estate and high natural appreciation makes Philadelphia investment properties a great option for investors.

Property investors should keep in mind, however, that the Philadelphia real estate market is currently a hot seller’s market. This is mainly due to the low inventory of homes for sale. As a result, property prices are rising in the market even though they are still affordable compared to most major metro areas in the US housing market.

Because Philly offers unique historical attractions to tourists, it comes as no surprise that the vacation rental industry prospers in the city. In fact, Airbnb growth as been so great in the Greater Philadelphia region (a five-county area) that local hosts made over $6.2 million in additional income in 2018. Airbnb Philadelphia alone welcomed the most guests bringing with them $47.7 million in revenue for hosts in the city. This is all thanks to the legalization of Airbnb in Philly in 2015. The city hoped to capitalize on the upcoming visit of Pope Francis through short-term rentals. So zoning laws were changed and Airbnb rental properties have since been allowed to operate in residential areas. This makes it one of the best cities for Airbnb investment.

Even though the practice is legal, if you wish to rent out a non-owner occupied property, you will have to apply for a visitor’s accommodation variance. Beside that, to operate legally, Airbnb Philly hosts will have to pay an 8.5% hotel tax. There is also a cap on the days an Airbnb rental can be occupied by guests- up to 30 days at one time and up to 180 days in a year. The property cannot be occupied by more than 3 people who aren’t related at one time. There are also safety regulations hosts must abide by such as installing smoke alarms on every floor, in each bedroom, and in hallways near bedrooms of the Airbnb rental property. Carbon monoxide alarms must also be installed.

In addition to those Airbnb regulations, a Philadelphia host cannot make changes to the rental property for the purpose of renting it out on a vacation rental website nor can you advertise using lawn signs or the like.