In 2022, the city of Philadelphia is set to break records for the number of new apartments built.
Developers could build a large number of rental units in Philadelphia in 2022.
Based on the volume of building permits approved by the city’s Department of Licenses and Inspections in 2021, the city could peak at 10,000 — more than triple the average annual total of 3,000 to 4,000 new apartments. This is a massive wave of new construction and is something no one has seen ever before.
It’s unclear if all 10,000 units will be built in 2022, or even in the years ahead. Developers may have filed permits preemptively, to take advantage of the city’s existing 10-year tax abatement for new construction before changes to the program take effect.
Starting in 2022, the value of the abatement will shrink by 10% each year after the first year. But property owners with building permits in hand as of Dec. 31, 2021, can still avoid paying 100% of the building’s real estate taxes for the full 10 years.
Either way, the surge is indicative of developers being “very bullish” on Philadelphia’s rental market.
But as developers pounce on market opportunities, homeowners and those seeking to buy are seeing the other side of the coin.
Last summer, home prices were up 20%. They’re now up just 10%, a noteworthy drop and a potential sign that prices could level out sooner rather than later.
There is a dip in prices to the historically low number of houses listed for sale in Philadelphia right now and has caused some homebuyers, especially the fatigued ones, to hit pause on their search until they can be more certain they’ll get their bang for their buck and not have to settle for a lesser property after multiple bidding wars.
Others may be reevaluating because life has gotten more expensive overall, thanks to the U.S. inflation rate nearing a 40-year high. And still, others can no longer consider buying a home because prices are still outpacing income growth, a fact that squares with a decades-old trend in Philadelphia.