Market Insights | Summer 2023 | Philadelphia

June 22, 2023

The Philadelphia Metro has a population of 6.2 million people, making it the seventh largest MSA in the country. The region is forecasted to see a further net inward migration of around 16,600 people from 2022 to 2026. Chester County, New Castle County, and Montgomery County are forecasted to have the largest population increase through 2026. The cost-of-living differential between Philadelphia and its nearby competitors, New York, Boston, and Washington, D.C., remains compelling.

New groundbreakings will be heavily restricted starting in late 2023 due to low levels of building permits issued in the past year. This is the result of a culmination of various factors, including (a) federally induced rate hikes, (b) elevated construction costs, (c) Philadelphia’s easing of the 10-year tax abatement, (d) labor shortages, and (e) market concerns of an imminent recession.

The Metro’s trailing 12-month rent growth peaked at 10% in late 2021 and has been slowing since as renters digest unprecedented rent hikes and are cutting costs with the growing concerns of a recession. As of Q2 2023, year-over-year rent growth has normalized to 2.6%, which is on par with the national average and the historical average.