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I would not try to time the market. Even the pros are only making their best educated guess.
Better to focus on where you want to be and start building your own equity, instead of someone else's.
I agree with this and would add that a person's primary residence is not an investment and shouldn't be looked at as such. For example, my husband and I have in mind a major renovation that we'd like to do to our house at some point in the future. In speaking to a RE agent friend, we determined that this particular renovation will not be financially beneficial if we sell, because it is unlikely that we would get back everything that it will cost to do it. However, we think that this will likely be our forever home and the renovation is something that will make our enjoyment of the house far better. So, we're going to do it, 'investment return' be damned.
Very true, but you can't always use the past to predict the future. The past of Philly, since the 70s or even earlier, has been rather (or very) downtrodden. Not much changed year to year... until recently. The city is booming now, so I'm not sure you can accurately apply metrics from that time to now.
Also, don't forget that while prices might have stayed similar with existing housing stock, developers have built thousands and thousand of brand new units in our city. In my neighborhood, Pennsport, in South Philly, there have been at least 300 new townhomes (I'm almost certain there are more, but I haven't done all the research to verify that) that all sold at price points between 480k and 700k+. Just five years ago, no developer would have even considered building at that price point in my area. The former Mt. Sinai hospital in Pennsport on 4th street was sitting vacant for almost two decades. Three or four years ago they razed the building and built 95 luxury townhomes from the ground up. They sold every single one of them before the nails were even in the structures. This is not a unique situation either. Every neighborhood surrounding CC has experienced the same building explosion. I don't even recognize Northern Liberties or Fishtown anymore and lived I there for quite a while.
Final point - don't just look at sales prices. The "haves and have-nots" divide is sadly growing quickly and aggressively. If more people aren't buying (i.e. don't have the means to buy), and the city is growing (which it is), it means those people are renting. The reason I hold on to my rentals even though it's a PIA to be a landlord, is because I'm getting way more overage renting than I could selling. So, even if someone buys and wants to relocate in five years, or even two years, as long as that person is willing to hire a management company and rent the place out, in Philly, he/she will make an impressive profit.
The interesting thing is that I was talking to a realtor at an open house about appreciation in the Philadelphia area. He mentioned he had a client who was trying to sell her house. She moved here two years ago, bought a house for 525k in Fairmont, and was trying to sell it because she got transferred. But she can't get a buyer for 525k. Because there's more new houses now for her to compete with and she was facing with having to cut the price (and thus losing money on the house) just to sell it.
People are buying houses, but prices are very sensitive. The boom in construction isn't leading to housing appreciation in most places, even in popular areas. More condos may be being built in Center City but it hasn't seen an appreciation in the price of 1-bedroom condos in the past 10 years (two bedrooms, on the other hand, have appreciated about 30% in the last ten years). Then there's the demand for new properties but sluggish demand for older properties distorting the overall picture.
What keeps Philadelphia prices from appreciating notably is that housing is cheap compared to other high cost cities. There's always the next cheaper neighborhood. Grad Hospital can't get more expensive because Point Breeze is right behind it. Point Breeze can't get more expensive because Gray's Ferry is right behind it. So it keeps the appreciation under control. As long as the regional job market is not exactly overly dynamic there's only a limited number of affluent buyers to prop up prices (people talking about New York money greatly exaggerate the effect, a study by the Inquirer in the Center City condo market showed virtually all the high end sales were to Philadelphia area residents, not out of towners).
What seems to drive real estate in Philadelphia is that it's a very homebound town. Compared to other places I've lived, this city has a high percentage of natives and relatively limited inflow of relocation and transfers. The people buying are likely people who are here for life. So they can plan for that. They are less affected by minimal appreciation because they'll stay in the property for 10+ years or longer. But if you are just passing through with no real roots and with one foot out the door, renting makes more sense.
Owning to rent as an investment is a different story but not relevant to the OP. I've thought about doing that myself but it's a minefield. I talked to a few realtors about investment rentals in Grad Hospital and they said the average turnaround time for finding a new tenant was close to two months. That's a bit risky for me.
I agree with this and would add that a person's primary residence is not an investment and shouldn't be looked at as such. For example, my husband and I have in mind a major renovation that we'd like to do to our house at some point in the future. In speaking to a RE agent friend, we determined that this particular renovation will not be financially beneficial if we sell, because it is unlikely that we would get back everything that it will cost to do it. However, we think that this will likely be our forever home and the renovation is something that will make our enjoyment of the house far better. So, we're going to do it, 'investment return' be damned.
And that makes perfect sense, and you're right about how one should view one's primary residence IMO.
However, the industry I cover has also promoted homeownership as a financial asset, and the banks gleefully climb on board the financial-asset bandwagon by offering home equity loans (which were unheard of back when I was a lad; back then, most people borrowed from "savings and loans" (called "building and loan" in some places) to buy houses).
No wonder everyone's confused.
The other thing to note is that houses are just about the only financial assets that are also consumables; that is to say, they require frequent investment in maintenance and repair to maintain their value, for otherwise they deteriorate.
If amount of space is not a big thing for you and just owning, you could consider a condo where you're still responsible for an association fee ( usually cheaper than rent, but you need to investigate) and costs less than many other options.
If you don't need to limit yourself to city or suburbs, that can help too.
It's understandable if you don't want to take a big risk on real estate.
About the only other thing is if you have a good friend you can trust who will sign an agreement with you and you both could own half of a place or something like that.
What keeps Philadelphia prices from appreciating notably is that housing is cheap compared to other high cost cities. There's always the next cheaper neighborhood. Grad Hospital can't get more expensive because Point Breeze is right behind it. Point Breeze can't get more expensive because Gray's Ferry is right behind it.
Actually, Point Breeze is becoming more expensive as people are priced out of Graduate Hospital (now with median house prices at $562,000):
” Last November, the median sale price for Point Breeze and Grays Ferry Homes was $345,500. This November, the median sale price was $418,000, an increase of 21% or $72,500 compared to last year. The current median sold price is 12% higher than in October.” https://marketminute.longandfoster.c...rays-Ferry.htm
Moderator cut: link removed, competitor site
Actually, Point Breeze is becoming more expensive as people are priced out of Graduate Hospital (now with median house prices at $562,000):
” Last November, the median sale price for Point Breeze and Grays Ferry Homes was $345,500. This November, the median sale price was $418,000, an increase of 21% or $72,500 compared to last year. The current median sold price is 12% higher than in October.” https://marketminute.longandfoster.c...rays-Ferry.htm
Moderator cut: link removed, competitor site
The point was Point Breeze can't get too expensive because of both Grad Hospital and Gray's Ferry. Grad Hospital can't get too expensive because of Rittenhouse and Point Breeze. It's all interlinked. Prices literally drop for every block south you go. Point Breeze, in some aspects, is catching up with Bella Vista on the other side of Broad. If you're paying top dollar for a flip in Point Breeze, it's unlikely to appreciate well because it won't outstrip Bella Vista prices or catch up with Grad Hospital. So that's something to keep in mind. And, of course, today's flips have to compete with tomorrow's flips and there's still a huge inventory of unflipped houses in Point Breeze. I'm willing to gamble and say the 350k flip in Point Breeze will sell for 350k in five years.
What would change the ratios is a sudden infusion of high earning households in a short time period. Places like DC and Boston saw rapid appreciation in the last 10 years because they also saw a rapid growth in high paying jobs, which is something not happening in Philadelphia. Nor is it going to happen.
I agree with this and would add that a person's primary residence is not an investment and shouldn't be looked at as such. For example, my husband and I have in mind a major renovation that we'd like to do to our house at some point in the future. In speaking to a RE agent friend, we determined that this particular renovation will not be financially beneficial if we sell, because it is unlikely that we would get back everything that it will cost to do it. However, we think that this will likely be our forever home and the renovation is something that will make our enjoyment of the house far better. So, we're going to do it, 'investment return' be damned.
I understand what you're getting at, but disagree a bit. Literally anything bought for hundreds of thousands of dollars has to be considered an investment to some degree. I'm not saying making a profit should be top concern for everyone, but for the large majority of people, they are still "investing" a huge percentage of their net worth into a house purchase.
The point was Point Breeze can't get too expensive because of both Grad Hospital and Gray's Ferry. Grad Hospital can't get too expensive because of Rittenhouse and Point Breeze. It's all interlinked. Prices literally drop for every block south you go. Point Breeze, in some aspects, is catching up with Bella Vista on the other side of Broad. If you're paying top dollar for a flip in Point Breeze, it's unlikely to appreciate well because it won't outstrip Bella Vista prices or catch up with Grad Hospital. So that's something to keep in mind. And, of course, today's flips have to compete with tomorrow's flips and there's still a huge inventory of unflipped houses in Point Breeze. I'm willing to gamble and say the 350k flip in Point Breeze will sell for 350k in five years.
What would change the ratios is a sudden infusion of high earning households in a short time period. Places like DC and Boston saw rapid appreciation in the last 10 years because they also saw a rapid growth in high paying jobs, which is something not happening in Philadelphia. Nor is it going to happen.
Yes, but it's all tracking higher as the city spreads. Five years ago an average Grad Hospital house was like 350k. Now it's around 650k. As such, the Point Breeze prices went through the roof (my ex bought a place in the "good" Point Breeze section for 280k five years ago - new construction, roofdeck, the whole deal - now the same house blueprint up there starts at 450k); and as such, Gray's Ferry is now being bought up and rehabbed like crazy. Same situation in northern and western neighborhoods... So while you are correct in saying all these neighborhoods are intertwined, that doesn't just keep prices down, it also raises them.
And, throughout this thread, i was specifically addressing trying to address the OP who stated that he/she lives lean and values monetary gains from smart decisions. As such, I'm assuming he/she is definitely NOT going to buy the fully rehabbed place that is the most expensive house on the block. In fact, buying an already rehabbed house to flip is not a good idea really anywhere.
What I'm getting at is there are still modestly-appointed homes in close-to-CC neighborhoods in our city that can be bought at great deals and will provide very nice financial gains - moreso that you would see in the majority of major cities or most places in general. However, I'm seeing in real time, that this situation is quickly disappearing.
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What would change the ratios is a sudden infusion of high earning households in a short time period. Places like DC and Boston saw rapid appreciation in the last 10 years because they also saw a rapid growth in high paying jobs, which is something not happening in Philadelphia. Nor is it going to happen.
Jobs is only one part of the equation, though. Keep in mind that Boston and DC are significantly smaller in land area, thus less supply, and certainly much less buildable land. All of those are major factors in appreciation, too.
Over the past decade, one of the most interesting trends in the Philly job market is that it has sped up while the aforementioned cities have somewhat slowed, so Philly is now essentially at parity on annual growth basis with DC and Boston (see the urban core divisions of the most recent Bureau of Labor Statistics numbers: https://www.bls.gov/news.release/metro.t04.htm).
Moreover, while Philly's early jobs recovery was indeed led heavily by hospitality and lower-paying service jobs, you're now the seeing high-paying professional and business services and financial sectors taking up a much larger share of growth: https://www.workstats.dli.pa.gov/Doc...ilamesa_pr.pdf
That being said, I think the 2020s will be a decade of stable but relatively slow economic growth for a number of demographic and macroeconomic reasons, but that will be the case for the vast majority of the world, including all of the major East Coast cities.
But especially with the increasingly common news of companies like Spark Therapeutics (now officially acquired by Roche), the city has never been better positioned for very lucrative economic growth in the future as it has now.
It's time to help the OP with neighborhoods still affordable yet close to CC and they can build equity. That basically is what was asked? The thread title doesn't note that subject. It's like this thread has become the replacement to the -- "Philly 2035" thread .....
Seems the thread is just going to be a Philly 2020s growth, housing and job market thread. Maybe it is time just to let the thread be a growth and positive housing return city to invest in thread for today and coming 2020's? The prices in Point Breeze for a gutted row-home is HUGE to me. As I see ..... them still as if condos as attached-rows and not exactly demanding a single-separated home price. But they are. "Kudos" to Philly's recovery then.
Philly was late in coming into the larger part of the gentrification game. But it definitely has hit. Bodes well if the economy stays steady. But the OP is looking for a good entry-level potential area. Not already gentrified or overly elevated prices.
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