Don't Sell at the Bottom

Over the last 30 days, eleven Otter Property Management clients have told me they intend to sell one or more rental properties.

More are exploring it.

I get it. From 2021 through 2025, Philadelphia landlords endured an unusually difficult operating cycle. Expenses rose, leasing became more competitive, and rental income often failed to keep pace.

But I think many owners are leaving at exactly the wrong moment.

*I am not saying Philadelphia property prices are at the bottom. I cannot tell you what price your Realtor may get, particularly if a vacant rowhouse can be sold to a homeowner.

I am talking about the bottom of the operating cycle.

And I am making a prediction:

I am already feeling the change in 2026. There is more appetite for higher asking rents. Renewal increases are becoming easier to support. Tenants remain price-conscious, but they do not seem to have the same abundance of competing choices they had over the last several years.

The data is beginning to show the same thing.

Philadelphia single-family rents increased 4.7% year over year in March 2026, compared with only 1.3% nationally. That was the second-highest increase among the ten largest metropolitan markets tracked by Cotality’s Single-Family Rent Index.

That measurement is particularly relevant to Philadelphia landlords because it includes houses, rowhomes, condominiums, and smaller rental properties that make up so much of our market.

In 2021, Philadelphia authorized 25,257 housing units as developers rushed to qualify projects before changes to the city’s tax abatement.

In each of the next four years, the city authorized only about 3,000 to 4,000 units:

The full series is available through the Federal Reserve Bank of St. Louis using U.S. Census Bureau permit data.

^look at this chart. and you'll understand why there has been an abundance of rental inventory in Philly in recent years suppressing rents.

That extraordinary 2021 spike produced much of the inventory delivered during 2023, 2024, and 2025. But that wave is receding.

Philadelphia recorded only 1,502 market-rate apartment starts in 2025, down from nearly 7,000 three years earlier and the city’s lowest total since 2013. Deliveries had already fallen 37% from their 2024 peak, according to Yardi data reported by Bisnow.

The apartments that will compete with landlords in 2027 generally need to be under construction now.

Most of them are not.

Rent is ultimately determined by where supply and demand meet.

For purposes of this argument, I am not assuming a dramatic change on the demand side. I am not projecting a sudden population boom, extraordinary net migration, or a major surge in household formation.

I am making a simpler argument about supply.

Philadelphia has already absorbed the high-water mark of the recent construction cycle. The extraordinary volume of new inventory that entered the market during 2023, 2024, and 2025 is declining, and the pipeline behind it is much smaller.

At the same time, units continue to disappear from the bottom of Philadelphia’s rental market.

Older affordable units are lost through deterioration, abandonment, fire, demolition, conversion to owner occupancy, substantial renovation, or rent increases that move them out of the affordable category. Some remain physically present but are no longer functional, licensed, or economically viable as low-cost rentals.

New construction and office conversions will add units, but they are not replacing that lost inventory at the same price points. A newly constructed studio renting for more than $2,000 is not a substitute for an older two- or three-bedroom rowhouse serving a working family.

That means Philadelphia can add new apartments while still losing the inventory that matters most to ordinary renters.

The supply curve has already reached its recent high-water mark and is now moving back. New construction starts are down. Deliveries are declining. Affordable units continue falling out of the bottom of the market.

If demand remains even reasonably stable, rents have to adjust.

That is why I expect 2026, 2027, and 2028 to tell a different rent story than 2023, 2024, and 2025.

Many landlords are selling because the last several years exhausted them.

They remember the vacancy that took too long to fill. The rent reduction. The expensive turnover. The roof, sewer line, insurance renewal, water bill, and legal costs.

They are looking backward at the worst operating years of the cycle.

The potential buyer is looking forward.

The buyer sees Philadelphia single-family rents already rising 4.7%. The buyer sees construction starts at their lowest level since 2013. The buyer sees a much smaller supply pipeline for 2027 and 2028.

Not every owner should hold. Selling may still make sense if a property needs major capital work, has chronic tenant or licensing problems, carries dangerous debt, or can receive a substantial owner-occupant premium.

But owners of fundamentally sound rentals should recognize where we are in the cycle.

They have already endured most of the pain.

Now, just as the supply-and-demand equation begins moving back in their favor, many are preparing to leave.

Philadelphia rents are going to increase in 2026, 2027, and 2028 in ways they did not in 2023, 2024, and 2025.

These owners may receive a perfectly respectable sale price.

Operationally, I still believe they are selling at the bottom.

They paid for the downturn.

The next owner will collect the recovery.

See more in my short data-packed video below

Rentals were really dragging through the winter, hitting a massive peak of 75 days on market back in January. Since then, the pace has picked up significantly, and we're back down to a much faster 43-day turnaround as the summer market stays hot.

The data shows Philly rents are on a steady climb, even with a temporary spike in inventory earlier this spring. Now that the number of available rentals is starting to dip again, it’s looking like landlords have plenty of room to keep pushing those prices up through the rest of the year.

Great headline for Mamdani and his base. Not great for the long term supply of safe & affordable housing in NYC. These policies always have heartwarming headlines and rent-warming long term implications.

Manayunk is about to get a massive face-lift with over 800 new homes coming to Venice Island, which is basically building a whole new neighborhood on just 30 acres. It’s a wild mix of townhouses and duplexes that’s going to completely change the vibe

If you are a Philadelphia landlord with individually metered gas service at your rental units, you should participate in PGW’s Landlord Cooperation Program.

The program can be extremely valuable. It helps protect a registered property from a lien caused by unpaid gas usage while the account is in the tenant’s name. Without that protection, a tenant’s unpaid balance can become a problem for the property owner.

But PGW is now requiring more, and requiring it faster, from landlords who want to keep those protections. New terms taking effect at the end of August create stricter compliance requirements and shorter response windows.

The takeaway is simple: enroll every eligible property, keep your rental licenses current, and make sure someone is actively monitoring PGW notices.