Are rental prices declining in Philadelphia? After years of massive rent growth, the market shifted significantly in the second half of 2022. If you are a landlord with a vacant property or an upcoming lease renewal, understanding these trends is critical to avoiding long vacancies.

Watch our full 2022 Philadelphia Rental Market Update below, or read on for the key data points and our recommended strategies for landlords.

The Market Data: Rents and Demand Are Dropping

Multiple national real estate reports confirmed a nationwide slowdown in the rental market during the third quarter of 2022:

  • RealPage Report: Found that average rents decreased by 0.6% in October 2022 compared to previous months.
  • The Wall Street Journal: Reported that the 3rd quarter of 2022 saw the worst drop in rental demand in 30 years.
  • Apartment List: Noted that out of the top 100 major cities in the US, 89 of them experienced a decline in rental demand and pricing.

Why is this happening?

The market is experiencing a shift in both supply and demand. Supply is increasing because the sales market has slowed down, causing many homeowners to rent out their properties instead of selling them. At the same time, demand is decreasing. Due to inflation and economic uncertainty, many people are choosing to save money by moving back in with their parents or finding roommates rather than renting their own apartments.

3 Strategies to Get Your Vacant Property Rented

If your property has been sitting on the market without applications, the decreasing demand means you have to adjust your strategy. To get your property rented sooner rather than later, consider doing the following:

  1. Reduce the Asking Rent: The longer a property sits vacant, the more money you lose. Dropping the rent slightly to meet current market demand is often more profitable than holding out for a higher price and suffering a multiple-month vacancy.
  2. Offer Move-In Incentives: If you don't want to lower the monthly rent, consider offering a move-in special, such as a reduced security deposit requirement or the first month free.
  3. Accept Housing Programs: Consider opening your property up to tenants with housing vouchers, such as the Philadelphia Housing Authority (PHA) Section 8 program, which provides guaranteed rent payments.

Looking Ahead: If you have lease renewals coming up, do not expect to implement massive rent increases. In some cases, to keep a good tenant, you may even need to keep the rent flat or slightly decrease it to match the cooling market.