Back in June, we wrote about the beginning of the summer “leasing season” with our report on “Philly’s Hottest Rental Neighborhoods in May”. With Labor Day rapidly approaching, let’s take a look at the rental market action so far.
While prices cooled off a bit from June to early July, the prognosis for the rental market in 2013 continues to be positive, with growth in apartment rental demand outstripping available stock, as noted in this Philly.com article. Furthermore, vacancy rates appear to be retreating after a jump earlier this summer. To meet the growth in rental demand, 2013 expects to see the addition of more rental units than last year, such as the newly opened 2116 Chestnut property that we will touch on again below. Overall, the rental market heated up through July–but which areas saw the greatest demand? Without further ado, here are the hottest Philadelphia rental neighborhoods for July:
Who’s at the top?
Rittenhouse tops the list of the most expensive rental neighborhoods in Philadelphia this time around, with a median rental price of $2.44 per square foot. Nine of the top ten priciest neighborhoods from May made it to the July list, with the sole newcomer this time being University City, which nabbed a close second place to Rittenhouse with an impressive rental rate of $2.41 per square foot. Rittenhouse saw prices rise 17.9% as vacancies decreased through the month, in part due to fewer available units in the new 2116 Chestnut building by The John Buck Company that opened earlier this summer. Previous number one Fitler Square remained in the top four, with Callowhill staying put in third place. Perennial contender Old City rounded out the top five, with prices in the top ten up overall month-to-month.
University City and Rittenhouse Rates Grew Significantly from June to July
Movers and Shakers
While rental rates rose overall across the board, the rental market in University City experienced the greatest price growth of any Philadelphia neighborhood from June to July, with median rates increasing an amazing 78.5%. Neighboring Woodland Terrace prices also grew impressively, at a 37.4% rate from June to July. Why the large change in both of these neighborhoods? As discussed previously, the seasonality of the academic year likely plays a significant role in prices in the University City area, with nearby Woodland Terrace absorbing some of the demand. The demand from the influx of students and faculty preparing for a new academic year has driven up rates as the summer leasing cycle concludes.
The impact on Woodland Terrace (unpublished June rank: 61) is particularly striking, as it vaulted 41 spots up the list to number 20. Rents in Woodland Terrace increased 37.4% from June to July on the strength of seasonal demand and dwindling vacancies.
Summer Trends in the “Top 10”
Having highlighted the recent price growth in several rental neighborhoods through July, let’s take a look at how the market has shaped up for the top ten hottest rental neighborhoods in Philly so far this summer.
Prices adjust to decreased listings, but lag supply changes
We can see that prices climbed into May, fueled by increased demand as “leasing season” began. The stock of listings increased markedly in May, likely driven by the addition of new units as well as seasonal leasing cycles bringing more apartments onto the market. This surge in rental listings is reflected in swooning prices through June into July, despite reduced availability of units. However, prices rallied from July, adjusting to the decreased number of units on the market. Nevertheless, there is a perceptible time-lag between changes in listing supply and price adjustment (a good reason to adopt Competitive Intelligence!).
Methodology Note: The constituents of the “ten hottest” rental neighborhoods in Philadelphia change somewhat from month to month. To track how the rental market for the top ten most expensive neighborhoods evolves from month to month, the prices given in the chart above are the weighted average of the median rental rates of the members of the top ten priciest neighborhoods for each month. This provides an approximation for a “characteristic” price for the ten most expensive neighborhoods in Philadelphia in a given month.
Check back for future updates as we continue to follow the hottest rental neighborhoods; we’re constantly keeping an ear to the ground to track neighborhood pricing movements.