Has the Philadelphia Rental Market Gone Mad?
In the past, I would be upset when a current tenant would call and say they were leaving one of our investment properties that we owned. I would be concerned that the rental amount might go down and even worse it might take a month or two to rent it out. There is nothing worse than having a vacancy (or two) as a property owner!
However, in the last 6 months, when a tenant has said they are leaving, no worries! In every single case, the property was rented out immediately, with multiple applications and a higher rent amount!! In a few cases, the rent amount went up for my properties as much as 20 percent!

This is also the case for the rental properties that are listed on the MLS. It is amazing the number of Realtors that are working the rental circuit on the tenant side as often times there is no loyalty with an extremely fragmented market. A potential tenant can see 10 properties with a Realtor all over town and then find a property on Craigslist. We specialize on the listing side of the equation due to all of the investors that are clients as well as some "accidental landlords". Once listed, the competition is fierce...
A few observations from the fierce market:
- Rental amounts keep going higher, with no end in sight
- The inventory of properties available for rent remains low which drives prices higher
- The demand for these properties is insanely high as folks remain skittish to buy
- When a new rental property comes up, there is a race to get to it!
- There are multiple applications for each property with very little negotiation on the rental price
- The Rental amounts are much higher than what the mortgage would be if the folks decided to buy instead
- Some Realtors are creating a nice niche in this field, while others are just being run around
For much of the younger generation, when all they have seen is the housing market go down down down every year since 2006, perhaps many of these people can only have a rental mindset as they are taught not to buy. And others struggle to get financing since the credit markets are still tight, especially for self-employed people. Add that on top of your regular rental market, and you get one of these situations where rents are escalating...a perfect storm, per se.
It is certainly benefiting investors who have been waiting for higher rents for some time. And some savvy investors are buying up properties monthly in the very strong Philadelphia rental markets such as Fishtown, Northern Liberties, Port Richmond, Fairmount, Point Breeze and South Philly. In addition to higher rents, the other benefit will be appreciation when the market eventually turns for at some point these renters will ask themselves that age old question "Why Rent When You Can Own?".
And when they start doing that, the pent-up demand that is building up will not only stabilize the Philadelphia housing market in 2012 but in my opinion, will send the market higher in 2013 for the first time in many years.
And as always, if you are looking to search for Philadelphia rentals, go to our award winning website - Search Philadelphia Rentals and Search by Philadelphia Lifestyle .