Why Invest in Pennsylvania Real Estate?
Pennsylvania is a state where investing your time and money in buying single-family homes is well worth it, if you take into consideration key aspects of the area's economy, population, rental demand, and prices. With great cities like Philadelphia, Pittsburg, Reading, Allentown, Lancaster, and Harrisburg, fascinating history, charming nature, Hershey’s chocolate, cultural diversity, and tasty food, Pennsylvania is also the birthplace of the United States. The area is home to over 12.82 million people, yet its population has experienced a low growth rate of 0.24%, which is lower than the 0.7% national average. However, Pennsylvania is the 9th most densely populated and 6th most populous state in the country.
Over the past years, Pennsylvania has prospered and seen economic growth as well as diversification. In terms of industries, industrial machinery & equipment, broadcasting & telecommunications, fabricated metal products, food & kindred products, chemicals & allied products, and printing & publishing are the major ones attracting new companies. The state's economic growth translates into a significant number of home buyers and renters.
Thanks to its population density, economic growth, high-quality healthcare and education access, real estate investors in Pennsylvania can enjoy nice returns on their investments.
Investment Considerations for Pennsylvania Real Estate
There are a number of factors to consider, including:
- Growing rent prices - Over the past three years, the median gross rent in Pennsylvania has grown by 5.76%. Also, with the state's high population density, the rental vacancy rate has consistently fallen from 8.09% in 2006 to 5.77% in 2016. Regarding rental fraction by housing units, in 2016, 31.50% of households in Pennsylvania were renters. This means that there's a high rental demand, rent prices continuously go up, and a significant amount of population consists of renters. Moreover, the price-to-rent ratio is 16.3% in Philadelphia and 12% in Pittsburgh. This indicates that real estate investors will recoup the investment they've made in properties and begin to turn a profit fairly quickly.
- Affordable entry prices of homes - While rent prices go higher, entry prices of homes in Pennsylvania stay affordable, selling for an average of $114,100 in Allentown, $137,300 in Philadelphia, $122,600 in Pittsburg, and $64,200 in Reading. Thus, real estate investors can buy houses for a fair price and enjoy a steady stream of income year-long.
- Job growth - Over the past 6 years, Pennsylvania has experienced a 7.8% growth in average annual jobs. With companies such as Aramark, The Hershey Company, Comcast, Keystone Foods, Alcoa, Genesis HealthCare, Universal Health Services, Rite Aid, PNC, Danaher, and UPMC having their headquarters or key offices in the state, there are decent employment opportunities in the area. Also, the unemployment rate has dropped over the past 8 years by 4.3%. This means that real estate investors can choose from employed renters who can afford to pay their rent on time.
- Education hub - Hosting top universities and colleges such as University of Pittsburgh, Pennsylvania State University, University of Pennsylvania, Haverford College, and Swarthmore College, there are plenty of people who come here from out of state or move from rural areas to bigger cities to study. Moreover, the University of Pittsburgh and Pennsylvania State University are among the top employers in the state. Therefore, real estate investors in Pennsylvania have the chance to rent their properties to young professionals and recent grads looking for a place to live and start their own families.
What are the Best Markets to Invest in Pennsylvania
With rent prices are growing throughout the state, cities like Pennsylvania, Pittsburg, Philadelphia, Allentown, and Reading still have affordable entry home prices and great price-to-rent ratios. Therefore, it might be a good time for real estate investors to consider these cities. In addition, several industrial markets (such as machinery, equipment, food products, and publishing) along with tourism are expanding in these areas.
Pennsylvania offers decent opportunities for real estate investors. Economic and employment growth, affordable entry prices of homes as well as leisure options and healthcare access, make the state a cost-effective alternative with nice returns on property investments.
HomeUnion® is the leader in residential real estate investment. With the use of big data and machine learning, we analyze information on millions of single family homes in Pennsylvania; and across the United States and calculate home values RENTestimate for every property in Pennsylvania. If you’re looking for the best investment properties across the country, visit our comprehensive investment site.