When examining leasing trends, it’s important to take a look at different parts of the city to determine which neighborhoods are excelling when it comes to rentability.
The above graph shows the total number of settled listings, average monthly rent and the average number of days on market (DOM) for the zip codes within our property management coverage areas.
When examining leasing trends, it’s important to take compare different parts of the city (by zip code) to determine which neighborhoods are thriving when it comes to rentability. When discussing Q3 leasing statistics, we examined how DOM can provide valuable insight when correlated to settled rentals and average monthly rent. The importance of these factors remains important not only in Q4, but as we continue into 2018.
Center City, (19102) has the highest average DOM at 84 days with only 38 settled rentals in Q4. However, it also has the second highest average rent at approximately $2,400 a month. On the opposite end of the spectrum, Port Richmond (19134) has the lowest average DOM at 32 days, with nearly the same amount of settled rentals at 33. Alternatively, though, the average rent in Port Richmond is only $1,000 a month.
Examining these two neighborhoods above, we can draw some conclusions that rising rents could be pushing tenants to more affordable neighborhoods, however, taking Port Richmond’s 33 settled rentals into account, we can also assess that while low rent is desirable, the neighborhood is still not in the highest demand.
Falling directly in the middle with an average 54 DOM is Point Breeze/Grad Hospital (19146). With 96 settled rentals and an average rent of $1800, this neighborhood is doing very well. Its proximity to Center City and the expansion of businesses have made this part of the city very desirable, and rent prices here are about average for the city of Philadelphia as a whole still making it affordable.
The vast differences in neighborhoods demonstrate just how important it is to work with an agent who knows the trends and can provide the appropriate market price from the start, not under or overvaluing your property causing you to lose money or allowing the unit to sit on the market longer than necessary.
To draw the best conclusions across the city, looking at the highest number of settled rentals with lowest number of days on market will tell you which neighborhoods are currently doing the best.
Next to consider – How does the Philadelphia Rental Market in Q4 of 2017 compare to Q4 of 2016?
Because the real estate market is so seasonal, we need to compare the current quarter with the same one of the previous year. Doing so provides insight into the overall health of the rental market.
Below, the graph demonstrates overall averages, taking all zip codes into consideration:
Overall, the total number of settled rentals increased by nearly 300 properties. The average monthly rent increased by $100.00, and the average days on market increased by 11 days. The DOM increase is worth paying attention to as significant increases can directly correlate to an oversupply of available rentals. However, with average monthly rent increasing by $100, which translates into 6%, hesitation with tenants to commit could also be a factor if they’re expecting to pay rents that they were seeing during their last renewal cycle in December 2016. The settled rentals increasing by almost 300 reassures us that even if there is a hesitation in committing, or taking longer to shop around, tenants are still leasing at higher rates than a year ago.
Q4, October – December, is typically the slowest quarter for rentals. While year over year, stats have improved, in comparison to Q3, settled rentals dropped significantly (nearly 700) which is expected as the market is very seasonal.