Monthly rents in Philly remain historically high despite slight decrease

Rents took off in the wake of pandemic shutdowns and have only started to soften.

Houses in West Philadelphia's Wynnefield neighborhood

File photo: Church Road in Philadelphia’s Wynnefield neighborhood has moved from mostly middle-class family ownership to rental properties for students. (Kimberly Paynter/WHYY)

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Monthly rents in Philadelphia are now on par with national averages, according to a new report from rental platform Zumper.

The median rent for a one-bedroom apartment is $1,499, a dollar short of the national average.

The median rent for a two-bedroom place is $1,750, about $100 off the national number.

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Both figures represent slight decreases compared to last month, but rents remain historically high as the city continues to grapple with an affordability crisis and a weak housing market.

“The pandemic, everyone was kind of cooped up from 2020 basically through 2022. So 2022 was the year where basically everyone who wanted to move moved, so there was just a lot of demand and a lot of competition,” said Zumper spokesperson Crystal Chen.

And yet Philadelphia is still one of the few cities in the country where it is cheaper to buy than rent a typical home. It’s more toss up than slam dunk these days, though, as home prices remain overvalued and mortgage rates remain high.

The average rate for a 30-year fixed mortgage is now 7.2%, according to Freddie Mac.

“I don’t expect that to continue. I do expect mortgage rates to come in. But until they do, the buy-rent decision is a pretty tough one. It’s a flip a coin,” said Mark Zandi, chief economist at Moody’s Analytics.

Like elsewhere in the country, the combination continues to create an inventory crisis, with homeowners largely staying put rather than buying a new home with a more expensive mortgage. In some cases, moving would more than double a homeowner’s monthly payments.

Even so, Philadelphia remains far more affordable than other big cities, including New York and Boston. And nationally, it has become cheaper to rent than buy, according to the Wall Street Journal.

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The average monthly mortgage payment is now 52% higher than the average monthly rent, according to the paper, which relied on data from commercial real estate firm CBRE.

Will things get any better in Philly or across the country in 2024?

Zandi is cautiously optimistic, particularly when it comes to monthly rents.

“I don’t think they’re gonna decline sharply but they’ll be softer,” said Zandi. “If you’re out looking to buy a home, I think you should have a better opportunity to negotiate a lower price over time.”

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