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What Makes Pennsylvania a Great Real Estate Investment Market?

What Makes Pennsylvania a Great Real Estate Investment Market?

Over the previous 10 years, the Pennsylvania real estate market has been influenced by the same concerns that have affected the rest of the country.  Inventory shortages, in particular, have pushed up costs in recent years. 

Fortunately, improving economic conditions have allowed more purchasers to enter the market, but they have been confronted with a shortage of suitable properties.  As a result, the value of real estate in Pennsylvania has climbed for the past eight years.

In the first quarter, the Coronavirus threatened to halt the Pennsylvania real estate market, but the threat faded as fear and anxiety receded.  The government slashed lending rates to encourage purchase in a matter of months, and confidence began to return in droves. 

While COVID-19 did cause a momentary setback, it was only that: temporary.  The Pennsylvania real estate market is currently burning on all cylinders.  Except for inventories, everything is in place for the state to reach its full potential. Pennsylvania will be at the forefront of the national market whenever fresh listings are introduced.

Median Home Prices in Pennsylvania

Pennsylvania's median home price continues to rise, presently hovering around $211,224.  Home values are at an all-time high after nearly a decade of increase. 

Pennsylvania, on the other hand, only bottomed out roughly eight years ago during the Great Recession.  In the fourth quarter of 2012, prices reached a low of roughly $159,000.  Since then, prices have risen by around 32.8 percent across the state.

The same forces driving national trends certainly drove appreciation in the Pennsylvania real estate market: a growing economy, rising confidence in the housing market, and a marked shortage of available inventory. 

Home values increased across the country as a result of the unique combination of these factors.  The median home value in the United States has improved by around 40.0 percent since the Great Recession ended.  To put things in perspective, the United States' median home value is now $243,225.

While the Coronavirus threatened property values in the first quarter of 2020, the housing market appears to be on the mend.  In reality, the Pennsylvania real estate market is exploding, as evidenced by rising home prices. 

Although appreciation slowed at the start of the year, many variables have combined to push property prices back to historic highs.  Increasing buyer confidence, record low borrowing rates, the prospect of a vaccine, and a scarcity of available inventory have all combined to produce an outstanding stimulus for buyers.

Prices are projected to continue climbing as more active buyers compete for less inventory.  The median house value in Pennsylvania could rise by as much as 7.9% in the next year (which is in line with national averages). 

Buyers should not expect price hikes to moderate until more inventory is brought to market.  Until then, the Pennsylvania real estate investing industry should be able to take advantage of a favorable market.

Fix and Flip, New Construction, Cash Out/Refinance

There are so many hard money lenders in Pennsylvania that offer asset-based loans to both new and experienced investors for the renovation, purchase, and rehab of non-owner occupied residential real estate.

Hard money lenders can offer you with a real estate team of community businesses to support your project, thanks to a dedicated Loan Officer for the state of Pennsylvania and the local ties hard money lenders created with service providers in your area.

Investing in Pennsylvania Real Estate

The recent history of appreciation has been beneficial to investors.  The majority of investments have most likely been made viable thanks to equity from residences purchased only a few years ago. 

However, for investors, residences are becoming too pricey, and Pennsylvania is no different.  The recent price increases have made it increasingly difficult to find real estate deals with favorable profit margins.

“There are few venues where investors can locate inexpensive properties except the Pennsylvania auction market. That's not to suggest that Pennsylvania real estate investors can't keep flipping houses (they can), but the new housing market created by the pandemic is better suited for long-term investors.  Today's most important indications, in particular, tend to favor rental property owners heavily,” says Joshua Blackburn of Evolving Home.

For starters, banks have never made taking out a mortgage more appealing to borrowers.  In an effort to boost the national housing market, the Fed indicated that interest rates will remain low to make home ownership more appealing. 

According to Freddie Mac, the monthly average commitment rate on a 30-year fixed-rate mortgage was 2.83 percent in October.  Borrowing money has never been cheaper at that rate. 

Monthly mortgage obligations will be reduced due to the lower interest rates connected with today's purchases.  As a result, investors who employ today's rates on long-term rental properties may be able to enhance monthly cash flow and profit margins.

Investors who own rental properties will also see a lot of interest in their holdings.  Affordability purchasers with a price-to-rent ratio of 12.58. However, due to a severe shortage of housing in the city, more individuals will be compelled to rent (even those intent on buying). 

For the foreseeable future, demand for rental properties is expected to rise.  Landlords will be able to fill vacancies faster and likely charge higher rents as a result of the increased competition.

Investors are fortunate to have a number of feasible exit options, but none appear to be more appealing than creating a proper rental property portfolio in the aftermath of the pandemic.  There are just too many crucial market signs in Pennsylvania that indicate becoming a buy-and-hold investor.