Philadelphia, PA

Market Update

Philadelphia's population has shown a steady upward trend, increasing to about 6.33 million in 2024, reflecting a year-over-year growth rate of 1.35%. This growth is supported by a net migration of approximately 105,862 individuals, contributing to a diverse demographic landscape. The median household income stands at $90,850, while the unemployment rate is reported at 4.8%. Employment figures are robust, with approximately 3.24 million individuals employed in the region. The renter share is notable at 33.1%, indicating a significant demand for housing, particularly in the multifamily sector.

In terms of multifamily fundamentals, the median gross rent is currently $1,567, with year-over-year rent growth recorded at 4%. This growth is above the national median increase of 3.5%, suggesting a relatively strong rental market. The HUD Fair Market Rents for a two-bedroom unit are benchmarked at $1,771, which typically runs below the asking rents observed in the market. The current asking rent for a two-bedroom unit is $1,850, indicating a slight premium over the subsidy benchmark and reflecting ongoing affordability challenges for renters.

Capital markets in Philadelphia have demonstrated resilience over the trailing 24 months, with 686 transactions totaling approximately $381.8 million and a median price per unit of $200,000. The multifamily cap rate remains stable at 7.23%, which is roughly 19 basis points wider than the national median of 7.04%. This stability in cap rates, alongside a solid transaction volume, suggests a balanced market environment. CBRE Research notes that the multifamily sector continues to attract investor interest, driven by the region's demographic trends and economic fundamentals, which could support sustained demand in the coming quarters.