Real Estate 101

The Best Places to Invest in Pennsylvania’s Real Estate Market

These are the 5 Best Pennsylvania Cities to Invest in Real Estate

Pennsylvania is best known for its role in building the foundations of the U.S., along with plenty of fun cultural touchstones. The Liberty Bell, the weather-predicting groundhog Punxsutawney Phil, and Hershey’s Chocolate World all come from this historical territory. While the Keystone State boasts several popular attractions, the real estate in Pennsylvania is what’s drawing the attention of investors.

The most important thing for real estate investors is finding properties where their investment dollars will go the furthest. Pennsylvania can offer that across a multitude of growing cities with excellent real estate markets.

5 Best Cities in Pennsylvania for Real Estate Investors

Looking at the state as a whole, Pennsylvania has seen a 7% year-over-year increase in the median sales price for single-family homes, reaching $305,000. Listings are up, as well, due to manufacturers looking to capitalize on the excellent labor market and influx of new residents into the state. For investors, these are key signs that Pennsylvania is a state rife with opportunities to bolster one’s portfolio. 

While the Pennsylvania housing market as a whole is doing well, investors should focus first on five key cities in Pennsylvania to invest in. These cities and towns are experiencing both job and population growth, as well as rising home values, which are all sound indicators of a smart investment. 

1. Pittsburgh

Known as Steel City, Pittsburgh, Pennsylvania is a former manufacturing headquarters that has gradually become one of the most desirable places in Pennsylvania to live, despite a tapered job market. The sales vacancy rate has declined steadily over the last several years, and the overall rental market is balanced.

With median sales prices ranging between $218,000 and $230,000, prospective homes to invest in are more affordable here compared to several other big or growing Pennsylvania cities. Since average sales prices are rising, as well, this means savvy investors can jump on the chance to grab great properties early and capitalize on their eventual appreciation.

With an average of 13 days from being put on the market to pending sales, homes in Pittsburgh tend to go quickly. Some sources even indicate that many homes are sold for significantly over their listing prices – sometimes as much as 36.4%! All this indicates that homebuyers are still looking to move to Pittsburgh, and investors would be wise to follow that trend and move their portfolios accordingly.

2. Philadelphia

Philadelphia might not be the capital of Pennsylvania, but it’s easily the most well-known. It’s also one of the best cities for real estate investors, though it might not look so at first glance.

With a median sale price of $250,000 and 1,117 homes sold, both of which are declines from 2023’s values, the Philadelphia market is best described as slowing. So, why is this a good area for real estate investors?

It’s because a slowing market is simultaneously an opportunity to buy properties at lower-than-average prices, fix them up, and sell them when Philadelphia’s market inevitably rebounds. This city is home to a variety of popular attractions and bustling job markets. Though it’s true that home sale profits are down, this trend is likely to be short-lived.

According to HUD data, Philadelphia’s economy is improving, and its rental market is balanced. Likely due to broader economic factors, people are waiting to buy in Philadelphia as they are in other housing markets – but that hesitation won’t last forever. Opportunistic investors will be able to snag quality properties at affordable prices, then sell them for significantly more than they spent.

Other sources indicate that Philly’s housing market is already starting to rebound, with reports of average sale prices increasing by 2.3% year-over-year depending on the neighborhood. Bottom line: Philadelphia’s housing market is in a state of temporary balance, so now’s the time to invest with a trustworthy financial partner.

3. Allentown

Located in the heart of Lehigh Valley, Allentown is a great area to be a landlord and investor. The third most populated city in Pennsylvania proves to be popular among investors because of the growth in its rental market, increasing rent prices and single-family home values, and its newly revitalized downtown.

The current rental market is seeing a significant boom, with rising rent prices up to an average of $1,600. This is both due to increasing demand for new residences in the area in general – Allentown has a stable job market and plenty of amenities and attractions, so it’s ideal for families and working professionals alike – and an increase in the sale price for homes, reaching $285,500 (6.3% higher than the same time in 2023).

Despite this, the number of homes sold in Allentown has decreased over time, possibly indicating greater pickiness among prospective buyers. Investors should take this into account as they explore investing possibilities in the area. It may be worthwhile to predict which properties have significant expansion or improvement potential in the next few years, especially if Allentown continues to draw new homeowners.

4. Harrisburg

Harrisburg, Pennsylvania’s capital, is a walkable metro hub with plenty of opportunities for homebuyers and investors alike. With its easy access to hiking trails and camping parks, Harrisburg is also a popular home for outdoorsy types, especially those who like to purchase big properties for long-term or seasonal residences.

 It’s proximity to major historical sites, such as Gettysburg, further explain is recent rise in media sales prices for homes.

The average single-family home sale price is $155,000, an increase of nearly 15% year-over-year. Other sources report a much higher average price, nearly $250,000 – the truth is that home prices can vary drastically across the city depending on the neighborhood.

This variability is potentially good news for investors willing to scout around for the best real estate. With a multitude of pricing entry points, there are ways for investors with smaller portfolios to get in on this market, as well as plenty of higher-priced properties for investors with a little more financial flexibility – especially with a solid financing partner.

 5. Lancaster

Boasting picturesque and beautiful rural landscapes with the convenience of an urban center for growing businesses, Lancaster offers something for everyone – which might well be why it’s among the best places to live in the Keystone state. It’s drawing new families and other prospective homeowners in droves, providing access to farms, schools, colleges, and local businesses within a few minutes’ drive.

For these reasons, it’s no surprise that the media sale price for Lancaster single-family homes has increased by about 10% year-over-year, reaching a new average of $256,000. Despite this increase, most homes that are put on the market are sold within 10 days, which is always a good sign for investors looking to purchase properties and sell them for a profit (particularly fix-and-flippers).

Reading between the lines, these statistics indicate that there’s a lot of housing demand among Lancaster homebuyers, even if they are also willing to wait for the right property to come along. Investors who have an eye for value will be well-equipped to take advantage of this temporary growing period for the area.

What Does Pennsylvania's Housing Market Mean for Investors?

Pennsylvania has many opportunities for real estate investors, especially those looking to build their portfolios.

Over the past years, Pennsylvania has prospered and seen economic growth as well as population diversification. The state’s economic growth has further translated into a higher number of homebuyers and renters – as people seek jobs in the state, they also look for places to live.

Because of its population density, economic growth, high-quality healthcare, and education access, investors of real estate in Pennsylvania can enjoy favorable returns on their investments. Having a trustworthy financing partner that can connect you to loan options is the key to acting quickly and capitalizing on limited-time opportunities.

For example, investors looking to build rental homes in Pennsylvania could benefit from Lima One’s new home construction loans. These give investors the freedom to add ground-up construction and newly built homes to their portfolios. Or if you’re considering expanding your rental property portfolio, our rental loans have the flexibility to meet your needs.

Whatever your strategy might be, Lima One can help. It’s more important than ever to have a lender capable of helping you:

• Secure a loan with the best price and maximum leverage for your next rental investment
• Close properties quickly and certainly
• Run your construction or rehab projects smoothly

We are experts in financing a variety of real estate investments, from investors looking to purchase and rehab an investment property to new home builders on urban in-fill, spec homes, model homes, and teardown/rebuild projects. Our team of experienced professionals will help guide you through funding your investment in Pennsylvania.

Get started and apply now today to scale your real estate property portfolio with Lima One, the nation’s premier lender for real estate investors.

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Editor's note: This post has been updated as of Nov 2024 for comprehensiveness.