If you’ve never had a panini from Rybrew on Girard, you’re missing out. It’s one of my favorite spots to grab a quick bite when I’m visiting my friend and fellow investor, Andrew, over in Brewerytown, and their New York sandwich is something else. Andy is something else, too. He learned how to invest in real estate at a young age and has been going strong for more than a decade. In fact, other than myself, I consider him the go-to guy in town when it comes to determining which Philadelphia neighborhoods are up and coming each year and, therefore, worth investing in. With the new year upon us, we recently got together to discuss the areas we believe are poised for the greatest amount of growth in 2019—and, to have a few bites of some pretty good paninis. If you’re a Philadelphia investor looking ahead at where you should invest, you’re not going to want to miss what we discussed.
Up and Coming Philadelphia Neighborhoods Poised for Growth
Philadelphia is not often discussed in national media circles as one of the most promising cities to buy, renovate, and sell houses in and, when looking in from the outside, it’s easy to see why. Though employment across Philadelphia County has steadily grown in the last two years, both the county and the city itself maintain a higher unemployment rate than the national average at 5.7% and 5.2% respectively, according to the Bureau of Labor Statistics. Crime is also high, frequently also ranking higher than the national average and above other major metropolitan areas of the same size. And, the City of Brotherly Love rarely makes any news outlets’ top ten—or even top twenty—list of best places to live. So, at first glance, it appears that not only might it be difficult for existing residents to afford housing in Philadelphia, anyone who can afford the housing, simply may not want to. That doesn’t usually make for a housing market worth investing your money, or your time, on.
But, as it turns out, Philadelphia is rising in the ranks of comeback cities, like Detroit, as a place that deserves a second chance and, if you’re an investor, maybe another glance. After all, employment is up and crime is down overall. In addition, despite not making any ‘best places to live’ lists, people are buying homes in Philly—and, they are paying well for the privilege to do so. Home values have been on the rise during the last year, as have median home sales prices. Inventory, on the other hand, has started to diminish, likely due to increased demand. So, Philadelphia’s housing market has clearly been strengthening. And, many market analysts are expecting that home price growth to jump quite a bit more in 2019.
Of course, it’s helpful to keep in mind that not every neighborhood is created equal. Some areas, like hipster neighbors Northern Liberties and Fishtown, have been on everyone’s radar long enough to bump them from transitioning to pretty-well established neighborhoods. Others, like some of those listed below, seem to be just on the cusp of experiencing substantial growth in the coming year. So, if you’re a Philadelphia investor who’s in the market for opportunities that are most likely to yield potentially good returns, you might want to give these communities a look:
Like Northern Liberties and Fishtown, Brewerytown began its transition into up-and-coming status several years ago, finally getting labeled as Philly’s next ‘hot spot’ by multiple local media outlets by 2017. It is close to Fairmount Park and Center City, which helps the area appeal to both professionals and families. Brewerytown also offers ready access to public transportation so that residents can get to those, and other, surrounding areas easily. Even though this neighborhood is growing in popularity, the timeline for getting in on some of the investment action hasn’t passed. In fact, real estate investment opportunities still abound if you have a solid lead generation strategy that gets you in touch with motivated sellers of undervalued homes. The median listing price for houses in the area have skyrocketed in the last three years and the median closing price has kept pace. And, those numbers are expected to continue rising. If you want to get there before it’s too late, you may want to jump into investing in Brewerytown sooner rather than later.
Strawberry Mansion, once associated with poverty, drugs, and riots is slowly transforming into a playground for young families and upstart businesses. Being in such close proximity to the gentrifying Brewerytown, it’s not surprising. Though efforts to rehabilitate the entire area started almost twenty years ago with the Neighborhood Transformation Initiative (NTI), few of Strawberry Mansion’s demolished, abandoned and vacant buildings were ever replaced. Now that new schools, shops, homes, and family-friendly amenities have been proposed for the neighborhood by the city—creating new jobs and a more attractive location for new home ownership—NTI’s vision may yet come to fruition. In fact, on the expectation alone I expect that this once-dangerous neighborhood will soon become the next coolest place to live. People are already moving in and expanding the demand for housing. And that, in turn, has helped Strawberry Mansion’s median home sales prices jump faster than most other communities in the city. To still get in on the ground floor of this neighborhood’s rising status, the time to invest is now.
The northern Philadelphia neighborhood of Olney is one of the more ethnically and culturally diverse sections of the city and, as the population of immigrants continues to rise, that isn’t likely to change anytime soon. As it stands, some local news outlets have already started calling the area the most linguistically varied of all Pennsylvania neighborhoods. Thanks to ongoing revitalization efforts, like those being implemented by groups like the North 5th Street Revitalization Project, the media has also started to call it the next up-and-coming neighborhood to watch. Commercial vacancy rates are low, community outreach is high, and median home values are up significantly since last year. That, of course, comes as no surprise with demand for living in the area—particularly from immigrants—on the rise. And, since immigrants are one of the fastest-growing populations of homebuyers in the nation, helping to meet that demand should become one of your top investing priorities.
Germantown, also considered to be one of northern Philadelphia’s most diverse neighborhoods, is proud to be labeled as one of the city’s most integrated neighborhoods as well. Although many people who live outside of the city’s limits still think of Germantown as riddled with poverty and crime, the reality is quite different and it continues to change—for the better. The number of middle class, and even affluent residents, is growing across all racial and cultural boundaries. With this slow and steady shift in the economic landscape of the neighborhood’s residents has come a renewed interest in rejuvenating the area. Hip espresso bars and barbershops have moved in, creating jobs and cool hangouts for young and old alike. Home buyers priced out of other areas around town have moved in, too. Though the demand for housing hasn’t caused median home sales prices to skyrocket like other neighborhoods in the city, they are on the rise. Your potential returns could be as well, if you choose to buy single-family homes as investment property in this up-and-coming neighborhood.
Even as promising as these Philadelphia neighborhoods are, the best investment opportunities are almost always going to come from buying houses from distressed homeowners who need to sell quickly. And, the number of homeowners under financial duress is likely to rise in the coming year—in every neighborhood. The most recent property assessments done by the city increased the median market value of single-family homes throughout Philadelphia by more than 10% for 2019, reports local news outlets. For some neighborhoods, like Powelton and Chestnut Hill, values are expected to jump above 30%. In Northern Liberties/Fishtown, home values are going up by about 20%. These reassessments will create a hike in the median tax bill of anywhere between $500 and $1,750 or more. While many homeowners may initially rejoice at the increased value of their home, their moods—and their ability to afford their houses—may shift when the tax bill comes due.
In fact, we’re already seeing evidence of homeownership distress in the city. Philadelphia is one of a handful of major metropolitan areas experiencing year-over-year increases in foreclosure starts, according to ATTOM Data Solutions. It also ranks among the top five cities with the highest foreclosure rates, with one out of every 851 homeowners losing their houses back to the banks.
But, because the timeline to foreclosure is longer than ever before, if you can reach property owners before they lose their homes, you’ll have a chance at helping them get out of a bad situation before it gets worse and of potentially securing a good deal for yourself. Although there are plenty of ways to find leads from distressed homeowners, the best leads will not only be those off-market, they will be from homeowners who come looking for you.
Position Yourself for Getting the Best Leads in Every Neighborhood
As independently owned and operated HomeVestors® franchisees, Andy and I have that kind of access to motivated sellers of distressed homes throughout Philadelphia. Thanks to HomeVestors® marketing tools and resources, including the nationally-recognized “We Buy Ugly Houses®” advertising campaign, when homeowners can no longer afford their homes, they come to franchisees like us. And, because we’re able to provide “solutions for ugly situations®” by buying the houses that have become their burdens, our relationships with sellers are stronger and our conversion rates are better. Just ask any franchisee in one of the 46 states where we have, collectively, bought over 100,000 investment houses since 1996. Better yet, join Andy and me as Philadelphia-based franchisees so that you can see for yourself what a potentially great position you’ll be in when you help distressed homeowners improve theirs.
If you want your investment career to be poised for growth, contact HomeVestors today to inquire about your franchisee options in the City of Brotherly Love.