Reading’s rental rates draw investors

Rent prices in Reading rose 25% in the fourth quarter of last year, catapulting it to the top of the national real estate investment market. 

Home365, a tech-enabled platform for real estate investing and property management, today released its quarterly Market Investing Report showing the average rent increase across the country was up only 9%. 

Chad Gallagher, chief investment and growth officer for Home365 in Lancaster, said the Reading market is hot for investors. “I don’t have all the answers,” he said, “but it seems to be a trifecta.” 

The city, which experienced a lot of job losses a few years ago, has recovered as is evidenced by the unemployment rate decrease of 34%, he said. More workers mean more demand for housing. 

And Reading had the lowest rental rates in the area, which Gallagher said, were impacted by inflation, which has made nice equity growth for investors as rates increased.  

Lastly, he said, there has been no increase in crime in Reading, making it an attractive place to live. 

“All of this adds to the equation and results in interesting growth,” he said. “Investors see good results and stable returns.” 

Gallagher, who said his team has been as busy as it was at this time last year helping investors find property, predicts that there will be a slight decline in the market over the next six months, but then expects to see a 10% to 15% increase.  

 In its report, Home365 calculated real estate trends across the US, indicating rents have increased by an average of 9% and are growing in demand while unemployment plumets.  

The data also shows mortgage rates in each market have skyrocketed to over 106% and new home listings decreasing across most markets at double digits percentages. 

Reading’s housing market has seen some of the lowest drops in sales compared to similar markets, holding on relatively well considering the national market with home sales only slipping by 10% and new listing dropping by only 12%, Gallagher said.  

This data proves to show Reading is a unique market for investors to watch going into the new year, Gallagher said. 

“For the first time in nearly a decade, we are seeing a slow housing market. Interest rates are high, and homeowners are yearning for someone to purchase their current homes,” said Gallagher.  

“Even though renting can be seen as a safer option, this does not mean it’s time to take your money and run away from real estate.  Sellers who need to move their home quickly are very much open to negotiations for the first time in 2-3 years, with less active buyers in the market.  This quarterly report indicates how to approach each of our markets. We are looking forward to seeing how this continues in 2023,” he said. 

Gallagher said Home365 has seen some homeowners, even if they have to move, opt to rent out their property because they are holding low-interest mortgages. “That adds to the rental market as well.” 

Gallagher, who owns property in Reading, said, “The dark cloud has changed, and Reading is a place where you get a rental property and get cash flow from day one. We are seeing more investment happening.” 

According to the report, Baltimore is going to be a market to watch in 2023, although rents saw some of the lowest increases across the board at 5%. The market also had the highest drop in home sales at 55% and a decrease in new listing of 39%. 

 With such a stark drop in the housing market, investors can anticipate rents to rise to the national average in Q1 of 2023. Baltimore will see rental interest spike in the coming months as the market will slowly catch up to national trends. The data proves the market has become ever more investor friendly entering the beginning of 2023.