New construction in Philadelphia is a highly lucrative opportunity for investors and builders to take advantage of the city's exceptional real estate potential. Many investors in the Commonwealth of Pennsylvania have chosen to move their projects to larger cities like Philadelphia precisely because of this new construction trend.

In 2021-22, the Department of Licenses and Inspections issued a large number of permits that resulted in the construction of approximately 10,000 new rental units, 300 percent more than the year before.

So now is the time to take a look at the city's rapidly growing skyline and explore the possibilities of new construction in Philadelphia.

What You Need to Know About New Construction in Philadelphia

To shed light on the current trend of construction activity, let's review some first-hand statistics and understand the dynamics of the city's expansion. While the pandemic slowed the permitting and construction process for a time, we soon regained momentum.

The number of permitted construction projects in Philadelphia over the past two years exceeded the number of approvals from 2016 to 2018. According to the most recent density clusters based on mapping new construction in Philadelphia over the past four years, the neighborhoods around Greater Center City have experienced the highest density in construction.

Kensington, Brewerytown, and Point Breeze, for example, were among the neighborhoods with the highest number of constructions between 2018 to 2021. Although, mapping density reveals that the distribution of permits is highly uneven across the city's gentrifying and adjacent neighborhoods.

Why Investing in Philadelphia Real Estate Is a Brilliant Idea?

With market changes and construction trends, does invest in Philadelphia real estate still make sense? Absolutely YES! If you want to gauge the potential of an investment, you need to go beyond local trends and look at the big picture. So let's explore how investors and homebuyers can benefit from new construction in Philadelphia.

Philadelphia, The Symbol of Steady Growth

Philadelphia is one of the oldest and most historically significant cities in the United States. While you can admire the historic landmarks here and there, Philadelphia is a city that is eager to grow. As such, the Philadelphia real estate market offers excellent opportunities for investors in 2023.

Philadelphia is the second largest city on the East Coast. Plus, Delaware Valley's urban hub is Philadelphia, the nation's sixth-largest metropolitan area in the United States. Philadelphia and its immediate suburbs are home to about four million people, and the population is slowly growing.

So, you can imagine how big the Philadelphia housing market is and how it is bound to grow even more. This is a perfect opportunity for investors looking for long-term, guaranteed, steady gains.

Population Means Opportunity

When you have a well-developed market, there is little or no room for expansion. The only remaining option is to build, reconstruct, or subdivide, which explains the current trends of new construction in Philadelphia. On the other hand, supply and demand are quite strong in populous areas, which keeps property values high.

Many Philadelphia residents need to commute to downtown and College Center every day to reach their jobs. As a result, the demand for housing in and around these areas is incredibly high.

If you are lucky enough to find properties that you can convert into multi-family residences, multi-dwelling units (MDUs), or even luxury housing, you will make a substantial profit in the medium and long term.

Philadelphia Is Fairly Affordable

While Philadelphia's real estate market experienced a price spike during the pandemic, the city maintained its reputation as a relatively affordable place to live compared to other major cities. According to a recent study, Philadelphia saw the smallest increase in the income needed for households to buy a median-priced home among 93 metropolitan areas.

As of December 2022, the median home sale price in Philadelphia was $255,000. However, prices can vary significantly depending on the safety, accessibility, and desirability of the neighborhood.

Condos and older homes are excellent investments if you can afford to renovate and convert them into more modern buildings. But keep in mind that while old properties can offer many opportunities for people, new construction in Philadelphia is of greater value in the long run.

Strong Appreciation Value of Real Estate

As an investor or landlord, the appreciation value of a property is a critical factor in your decision-making. Appreciation means that the value of an investment property increases over time. The rising value of a home can cause your investment to grow and put more equity into your home.

The typical value of a home in Philadelphia is $246115, and that value has increased 7.1% in the past year. All surveys and studies predict that prices continue to go up in 2023 by 0.8%.

According to the Neighborhood Scout website, the most valuable Philadelphia neighborhoods since 2000 are

Fishtown - Lower Kensington
East Kensington
N Delaware Ave / N Columbus Blvd
Fishtown Lower Kensington West
Sepviva St / E Dauphin St
Port Richmond
Greenwich
Delaware Ave / Pattison Ave
Stadium District West
Riverfront

3 Tips for Buying a Property in Philadelphia

If you are considering buying your first investment property in Philly, we can help you make the right decision. Here are 3 tips to consider when purchasing new construction in Philadelphia:

#1 Know the Market

Wherever you invest in real estate, it's essential to understand the contours of your market. Start by reviewing the listings, reading the descriptions of the house and neighborhood, and analyzing the photos. If the property is in need of renovation, consider how much time and money it'll take to prepare.

Create a checklist and explore the neighborhood on a map. Make sure the property is close to public amenities (e.g., nearby highways, shopping centers, and public transportation) and private amenities (e.g., a grocery store, or restaurants).

#2 Be Patient

With real estate investments, you can not expect to make a big profit overnight. It takes time and patience. So be prepared to play the long game. In the short run, your income might suffer from temporary gaps like insurance, taxes, and mortgages, but rest assured it will pay off in the long run.

#3 Find a Reputable Real Estate Company

Last but not least, finding a reliable real estate company is always a crucial factor for a lucrative investment. Conduct comprehensive research and look for developers or companies with a compelling portfolio. Or save yourself some time and check out our website to find the best options in the city.

Bottom Line

Real estate investing at first may not seem that complicated. But once you start analyzing the property’s location, the estimated value of the property, housing market predictions, and other variables, the complexity increases.

While many people prefer to play a safe game with little risk and reward, we are here to help and encourage you to level up your game. Our team of experts will stand by your side throughout the process and help you find the best place to invest your money.

Interested in buying new construction in Philadelphia? Browse listings in your favorite neighborhoods and find your house of dreams.

Call Jim Onesti Today

Whether you’re looking to invest in commercial real estate or searching for luxury homes for sale in Philadelphia, Jim Onesti is your real estate expert. Jim Onesti has been one of the most successful real estate sales professionals in Philadelphia; focusing largely on luxury homes and large-scale commercial real estate and high-end developments. For further information, contact Jim today to schedule your appointment.

The Boom of New Construction in Philadelphia: A Look at the City's Rapidly Expanding Skyline