Philadelphia is experiencing a significant boost in its housing inventory, which is bringing some much-needed relief to the city’s rental market. According to a report from Zumper, a notable surge in new apartment constructions was observed in 2024, with over 13,000 units projected to have been completed by the end of the year. This growth, as analyzed by RealPage, is contributing to a more balanced rental market where renters have more options and potentially lower prices to choose from.

The Effect on Rental Prices Amidst Increased Supply

The increase in housing supply in Philadelphia is beginning to reflect in rental prices. Zumper’s report highlighted a slight reduction in the cost of one-bedroom apartments when compared to the previous year. As of December, the median rent for these units was $1,520, marking a decrease of 1.3% from December 2023. This trend is a positive sign for renters who have been facing escalating costs over the years. Moreover, landlords are becoming more competitive by offering various incentives such as waiving application fees and reducing security deposits to attract tenants.

Contrast With Neighboring States

While Philadelphia renters enjoy some respite, the scenario is quite different in neighboring regions like New Jersey and Delaware, where rental markets are tightening. The scarcity of available rental properties in areas such as Trenton, New Jersey, has led to a dramatic 27% increase in one-bedroom apartment prices from the previous year. Limited construction space and growing demand are driving this trend, pushing apartment costs upward and intensifying competition among renters.

Rental Price Trends Across Nearby Locations

Beyond Philadelphia, the broader region is experiencing varied trends in rental prices. In Pennsylvania, cities like Allentown and Reading are witnessing their price adjustments. Allentown, in particular, saw its median rent for a one-bedroom apartment increase by more than 6%, although it still remains among the more affordable markets in the region. Reading’s rental prices for one-bedrooms also rose by approximately 5.6% compared to the previous year. Conversely, in New Jersey, Princeton continues to be the priciest city for renters, with significant rent for one- and two-bedroom apartments, though these prices have seen a reduction of 4% to 11% from 2023.

Future Projections and Market Stabilization

Looking forward, the rental market in Philadelphia is expected to experience mild increases in rental prices during the more active spring and summer months. However, the continued development of new apartment units should help moderate these potential price hikes. Crystal Chen from Zumper reassures that while there may be some upticks in rental costs, they are unlikely to be severe, attributing this stability to the sustained increase in apartment supply. This ongoing addition of new living spaces is crucial for maintaining affordability and accessibility in Philadelphia’s rental market.