COVID-19 has obviously had significant impacts on several economic drivers not only in
the US, but around the world. It has certainly made some investors more jittery and
cautious about where to place their investment funds. At MADA Partners we have
focused much of our energy on real estate investments in the United States, particularly
in Philadelphia. So, naturally, our concern is what effect the pandemic may have on the
Philly real estate market.
As everyone knows, like with any other type of investment vehicle, there are no
guarantees in real estate investing. However, we can look at the trends and the
activities in the market to get a sense of what’s happening and whether our investment
opportunities are likely to continue to be successful. In recent weeks we’ve been
reviewing the commentary in the US and obviously with a focus on Philadelphia to see
what the experts are saying. Below, we have summarized some of the commentary
from some of the experts we’ve reviewed, and included a link to those articles for your
To start, it is clear that the beginning of the pandemic did have a significant impact on
real estate development in Philadelphia. Many construction sites were simply shut
down for a period of time. Obviously, everyday a project is delayed means increased
carrying costs and a resulting decreases to profitability.
The lockdowns, however, were relatively short-lived and as the lockdowns were lifted
the market began to boom again. Buoyed by low interest rates, home buyers were
quick off the market to get back into the market causing sales to skyrocket. The
housing inventory dropped, as did the number of days houses on the market fall. In
most costs a house listed on the market at reasonable price levels resulted in sales
going over asking price.
Philadelphia appears to continue to be buoyed by some of its lasting key advantages,
- Strong industry in the city in: education, pharmaceuticals, biotechnology, financial services, information technology, trade, transportation and health care.
- Continuation of the city’s property tax abatement opportunities.
- Proximity of Philadelphia to other, and often more expensive urban centers, like Washington and New York, making Philadelphia an attractive bedroom community.
Of course, none of this is to say that there isn’t still risk. Aftercall, there’s always risk in
real estate development. The pandemic most certainly appears to have created some
shifts in mindsets, particularly about where people will want to live. Fewer people may
want to living in more densely populated apartment buildings, for example. It may also
be anticipated that ongoing restrictions on social distancing may slow down and create
some delays in project management.
But, even those analysts expressing some concern about a slow down, really only
describe a “slow-down” and not worse. At that, it appears even concerns about any
slow-down is anticipated to see a rebound within 2021.
The below article from the Washington Post also suggests that the real estate market
across the US, generally, should continue to fair well in 2021. One important
development in the early days of the Biden administration is the announcement the
proposed $15,000 tax credit for new home buyers. Moreover, the announcement of
various economic stimulus packages is anticipated to help the US economy overall,
creating greater opportunities for individuals and families wanting to enter the housing
Overall, Mada Partners remains encouraged about real estate investing in Philadelphia.
Above is a summary of some of the commentary about the real estate market for your
consideration. As always, we encourage you to do your own research and read as
much as possible before doing any investing. Moreover, you should always consult
your financial, tax and legal advisors prior to making your investment decisions.