Philadelphia Multifamily Loans in 2024
At Select Commercial, we specialize in Philadelphia apartment building loan financing. Our team is dedicated to offering the most competitive rates and tailored solutions for multifamily investments in the area. If you're interested in a multifamily loan outside of Philadelphia, be sure to check out our Pennsylvania multifamily loans page. For comprehensive rates on all loan products available across the 48 states, visit our commercial mortgage rate page, where we offer competitive rates for loans starting at $1,500,000. Explore our insights on the 2025 Philadelphia multifamily loan market.
Philadelphia Multifamily Loan Rates - updated 12/21/24
| Multifamily Loan > $6Million | Get Free Quote | ||
|---|---|---|---|
| Loan Type | Rate* | LTV | |
| Multifamily 5 Yr Fixed | 5.36% | Up to 80% | |
| Multifamily 7 Yr Fixed | 5.36% | Up to 80% | |
| Multifamily 10 Yr Fixed | 5.34% | Up to 80% | |
| Multifamily Loan < $6Million | Get Free Quote | ||
| Loan Type | Rate* | LTV | |
| Multifamily 5 Yr Fixed | 5.80% | Up to 80% | |
| Multifamily 7 Yr Fixed | 5.74% | Up to 80% | |
| Multifamily 10 Yr Fixed | 5.73% | Up to 80% | |
Philadelphia Multifamily Loan Benefits
Philadelphia Apartment Loan rates start as low as 5.36% (as of December 21st, 2024)
• A commercial mortgage broker with over 30 years of lending experience
• No upfront application or processing fees
• Simplified application process
• Up to 80% LTV on multifamily financing
• Terms and amortizations up to 30 years
• Multifamily loans for purchase and refinance, including cash-out
• 24 hour written pre-approvals with no cost and no obligation
Our Reviews
2025 Philadelphia Multifamily Loan Market Overview
As the Federal Reserve initiated rate hikes in 2022, the apartment and Philadelphia multifamily loan markets transitioned from rapid growth to a more restrained environment. By late 2024, signs of stabilization emerged; however, the outlook for 2025 remains cautious. Select Commercial Funding continues to monitor conditions closely, especially as higher Treasury yields and tightening financial conditions shape the landscape for apartment and Philadelphia multifamily loans.
Sales Market Recovery with Caution
Following a prolonged decline in sales volume and values, the apartment sales market has shown signs of thawing, though challenges persist. The Federal Reserve's September 2024 rate cut initially sparked renewed activity; however, the 10-year Treasury yield has risen to 4.469% as of November 5, 2024, adding uncertainty. While some sellers are accepting price adjustments from 2021 highs, higher borrowing costs could temper momentum. We are carefully evaluating Philadelphia multifamily loan opportunities as these dynamics evolve.
Debt Financing and Access to Capital
Improved financing conditions in mid-2024 allowed for a slight easing in apartment financing, as reflected in NMHC's survey where respondents reported better availability of debt options. However, with the 10-year Treasury yield climbing, access to affordable financing remains a concern. We offer a range of multifamily loan products and Philadelphia apartment loans, helping clients navigate these complexities amid fluctuating debt markets.
Apartment Demand in a Shifting Labor Market
Apartment demand continues to benefit from a stable labor market, though recent economic indicators highlight potential headwinds. The ongoing retirement of Baby Boomers has created opportunities for younger generations, but elevated borrowing costs may constrain affordability. Despite these challenges, Select Commercial Funding has observed steady interest in Philadelphia apartment loans and multifamily loan options, reflecting the need for housing solutions that adapt to changing labor and economic conditions.
Absorption Rates and Occupancy Projections
High demand for apartment units has driven strong absorption rates in 2024, and while forecasts suggest continued demand, the rate of absorption may moderate if borrowing costs remain high. Moody's projects that 2025 will remain a relatively strong year for demand, yet caution may prevail in high-supply areas. We are prepared to support clients in navigating multifamily loan needs, especially in a potentially tempered demand environment.
Operational Efficiency Amidst Rising Costs
As supply increases in certain regions (such as Downtown Nashville, Austin, Seattle, and Charlotte), effective management and strong branding will be essential to attract residents. We recognize that rising operating costs could impact net operating income (NOI), particularly in light of constrained financing conditions. In this environment, properties facing operational challenges may present opportunities for experienced buyers who can optimize performance with apartment loan options.
Outlook: Gradual Stabilization Amid Interest Rate Pressures
While the initial outlook for 2025 was optimistic, higher Treasury yields have introduced caution to market expectations. With interest rates still elevated, a more gradual stabilization may unfold. Select Commercial Funding remains focused on supporting investors with a variety of Philadelphia multifamily loan options to help manage in this dynamic market, where success will likely favor well-prepared, flexible operators.
Philadelphia Apartment Loan - Rental Information
As of October 2024, the average rent in Philadelphia, PA is $1,709 per month, which is 10% higher than the national average of $1,556. This increase of 0.6% over the past year indicates a stable rental market.
When renting an apartment in Philadelphia, you can expect to pay about $1,402 for a studio, $1,709 for a one-bedroom apartment, and around $2,148 for a two-bedroom apartment. For larger families, a three-bedroom rental averages $2,945 per month, making an Philadelphia apartment loan an appealing option for those looking to invest in this vibrant city.
Most rental prices in Philadelphia fall between $1,001 and $1,500, suggesting that a Philadelphia apartment loan could be beneficial for renters seeking to buy in this area.
2024 Philadelphia Multifamily Market: Record Supply Additions and Suburban Stability
City Set for Record Year of Supply Additions; Suburban Fundamentals to Hold Steadier
The expiration of a tax abatement in 2022 triggered a wave of multifamily development within the city, with developers rushing to break ground before the program ended. This supply surge will culminate in a record-breaking delivery schedule in 2023 and surpass it in 2024, increasing urban vacancy. While over 80 percent of the wider metro's net absorption came from within city limits last year, the rapid supply influx will intensify competition among existing Class A and B properties, impacting the market for Philadelphia apartment loans and Philadelphia multifamily loans. In contrast, suburban Pennsylvania and New Jersey submarkets will face significantly less supply pressure, aided by sustained hybrid work models. This leaves renters with little incentive to move closer to the city, supporting demand in these areas.
Investment Trends: Expanded Renter Base in Affluent Suburban Locales Keeps Buyers Active
Though transaction volume has slowed since 2022, investors remain active in the northern and western suburbs of Philadelphia. The renter population in these areas swelled after the pandemic and is expected to remain. Markets like Gloucester County and the Outer Wilmington area may attract more buyers due to limited supply expansion and above-average rent gains. Once the current supply wave ends, the substantial volume of new developments in Philadelphia may draw larger investors to these newly completed properties, enhancing the appeal of Philadelphia apartment loans and Philadelphia multifamily loans.
2024 Multifamily Market Forecast for Philadelphia
- EMPLOYMENT: After a swift recovery and growth in 2023, job gains will stabilize to a more typical level. Roughly 25,000 positions will be added in 2024.
- CONSTRUCTION: For the second consecutive year, a record number of units will come online, increasing inventory by 2.9 percent. Most new developments will be within Philadelphia city limits.
- VACANCY: Despite the record supply surge, solid absorption in Philadelphia's urban zones and robust suburban demand will hold vacancy to just 5.0 percent.
- RENT: Increased concession activity in Philadelphia will slow rent growth, but strong suburban demand will still bring the average effective rent to $1,834 per month.
- INVESTMENT: The groundbreaking in October 2023 on the first private housing project at the Philadelphia Navy Yard in over 30 years may signal new long-term investment opportunities in Philadelphia apartment loans and Philadelphia multifamily loans.
Latest Expert Insights from Stephen A. Sobin
Stephen A. Sobin, the president of Select Commercial Funding LLC, is a renowned expert in the field of multifamily financing. His insights and perspectives are regularly sought by leading industry publications. Here are his latest contributions that highlight his deep understanding of the multifamily financing landscape and his commitment to providing clear, insightful analysis on key industry issues.
Persistent Inflation and Its Effects on CRE
In an article featured in Multi-Housing News, Stephen Sobin highlighted that while inflation is still a challenge for the Federal Reserve, there are many positive signs for the commercial real estate industry. The headline Consumer Price Index rose 3.2 percent for the year ended Feb. 29, a figure 20 basis points lower than the Dec. 31, 2023, rate. read the full article.
Commercial Spotlight: Mid-Atlantic Region In this four-state powerhouse, smaller metros are thriving.
In a feature in Scotsman Guide, the Mid-Atlantic Region's real estate dynamics are explored, highlighting its resilience and growth amidst the pandemic.
Stephen Sobin of Select Commercial Funding LLC shared insights on the New York market's allure and the challenges buyers face. He noted the shift from primary urban areas to tertiary markets due to evolving preferences and financial conditions. For a deeper dive into Sobin's analysis, read the full article.
What the New Jobs Report Means for CRE
In an article titled "What the New Jobs Report Means for CRE" in Commercial Property Executive, Stephen Sobin shared his perspective on the latest jobs report and its implications for the Commercial Real Estate (CRE) sector. He highlighted the challenges posed by high interest rates and the prevailing uncertainty in the market. Sobin remarked, "Sellers aren’t selling, buyers aren’t buying... Everyone is waiting because no one knows what to expect." For a detailed analysis and more of Sobin's insights, read the full article.
Decoding "Junk Fees" in Rental Housing
In another latest contribution to Multi-Housing News, Sobin provided expert commentary in an article titled "What's Next for Junk Fees? The Industry Weighs In". He clarified the difference between legitimate fees collected for various third-party services and so-called "junk fees". Sobin emphasized the importance of borrowers understanding their rights in negotiating all loan terms and the obligation of lenders to disclose all fees.
Understanding the Impact of Federal Reserve's Decisions
In a recent article titled "How the Fed's Pause on Interest Rates Impacts Multifamily" published by Multi-Housing News, Sobin shared his expert insights on the Federal Reserve's decision to pause interest rate hikes. He accurately predicted that the Fed would not raise rates in June, citing recent bank failures and lingering concerns about a potential recession.
Stay tuned for more expert insights from Stephen A. Sobin on the evolving multifamily financing landscape.
Frequently Asked Questions
What’s going on with commercial mortgage rates as we near the end of 2024?
The Federal Reserve’s Federal Open Markets Committee cut the federal funds rate by 50 basis points at its September 18, 2024, meeting. This was the first rate cut since March 2020, when the Fed began a long series of rate hikes to curb the high rate of inflation. The Fed’s decision shows that they believe that inflation is under control and moving into the 2% range that the Fed has set as its goal. The Federal Reserve took this decisive action to prevent further declines in the labor market. The Fed has further hinted at further cuts at its two remaining meetings in 2024, followed by additional cuts in 2025. This rate cut, along with possible future rate cuts, may create positive investor demand for commercial real estate, and may provide aid for commercial mortgage customers, as well as consumers in general. We must caution, however, that the Federal Reserve cuts affect short term interest rates directly and long-term rates only indirectly. The Prime Rate, which is a short-term rate, dropped from 8.50% to 8.00% with the Fed’s recent action. However, most commercial mortgage rates are based on the 5-, 7-, or 10-year treasury rates, and not the Prime Rate. We have seen these treasury rates actually rise since the Fed took its action. On September 18th, the 10-year treasury was roughly 3.70%. Three weeks later, this rate had jumped to 4.03%. Investors are still concerned about future inflation and are adopting a wait and see attitude.
There are many different types of lenders offering a myriad of different loan products to finance the acquisition or refinance of apartment properties nationwide. These lenders include agency lenders (Fannie Mae and Freddie Mac), local and national banks, insurance companies, credit unions and private lenders.
Most lenders write apartment loans for five, seven or ten years (fixed) with a 30 year amortization. It is also possible to obtain loans that are fixed for up to 30 years, although this is not the norm. Rates are typically based on a margin over the corresponding US Treasury rate.
Lenders offer non-recourse to strong borrowers and solid properties. The borrower will be expected to have strong credit, good net worth and liquidity, and experience owning and managing similar properties. The property will be expected to demonstrate solid long term positive cash flow, be in good to excellent condition, and be located in a strong market with low vacancy rates.
Apartment loans are typically screened and pre-approved in 2-3 days. Since lenders require appraisals, environmental and property condition reports, and title, closings will usually take 45-60 days from application.
Apartment Loan Types We Serve
If you are looking to purchase or refinance a Philadelphia apartment building, don't hesitate to contact us. We arrange financing in the city of Philadelphia for the following:
- Large urban high-rise multifamily buildings
- Suburban garden multifamilycomplexes
- Small multifamily buildings containing 5+ units
- Underlying cooperative multifamily building loans
- Portfolios of small multifamily properties and/or single-family rental properties
- Other multi-family and mixed-use properties
Apartment Loan Helpful Articles
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How To Get The Best Rates On An Apartment Refinance
Recent Multifamily Loan Closings
Whether you are purchasing or refinancing, we have the right solutions available for your multifamily mortgage loans. We will entertain apartment loan requests of all sizes, beginning at $1,500,000. Get started with a Free Commercial Mortgage Loan Quote.
Philadelphia Apartment Loans
Select Commercial provides apartment loans throughout Philadelphia, Pennsylvania including, but not limited to, the areas below. We provide apartment loans in most major cities throughout the United States.