Philadelphia County, PA Cap Rates by Neighborhood

The County-Wide Gross Yield: A Starting Point, Not an Answer

Philadelphia County's computed gross yield sits at 9.15%, derived from a $236,768 median home price and $1,806 monthly median rent. That number looks attractive relative to most Northeast metros, but taking it at face value would be a mistake. The $236,768 median blends Chestnut Hill at $848,628 against Fairhill at $72,288, and the rental market segments just as sharply. The aggregate yield masks a two-tier market: cash-flow assets in North and West Philadelphia priced below $150K versus appreciation-plus-moderate-yield plays in Fishtown, Point Breeze, and Brewerytown priced between $250K and $450K. Where you buy inside this county determines whether you own a 12%+ gross yield asset or a 6% one.

Property Tax Drag: Working the Dollar Math

Before analyzing neighborhoods, establish the tax baseline. Philadelphia's combined 2025 rate is 1.3998% on assessed value. On a $237K property, that produces a $3,318 annual tax bill, or $276 per month. Against $1,806 monthly gross rent, taxes alone consume 15.3% of gross income before vacancy, insurance, maintenance, or management fees.

On a $424,900 Fishtown property, the tax burden rises to $5,948 annually ($496/month), consuming 22.9% of gross rent if that property rents near the county median. Deep-value North Philadelphia assets priced near $75,000 carry a $1,050 annual tax bill, preserving far more of their gross yield in net operating income.

The 2025 reassessment raised residential assessed values an average of 19%, adding $330 to the average homeowner's annual bill. Investors who purchased in 2023 or 2024 should re-underwrite their tax line now. The city skipped the 2026 reassessment due to a backlog of 32,000 appeals, creating a one-year frozen window, but reassessment risk returns in 2027. Underwrite a second step-up.

Neighborhood-by-Neighborhood Breakdown

North Philadelphia: Maximum Gross Yield, Maximum Execution Risk

The 19132 ZIP and Fairhill sit at medians of $75,889 and $72,288 respectively. If rents in these corridors approach even $900–$1,000 per month (well below the county ZORI), gross yields on acquisition price range from 15% to 17%. After 1.3998% tax on a $75K assessed value ($1,050/year), net yield compression from taxes alone is under 120 basis points. These assets can pencil at 12%+ net of taxes on paper.

The risk is not the math; it is the operational reality. Vacancy, deferred maintenance, and collection losses in these submarkets erode net yields faster than in stabilized corridors. Investors pricing these deals should stress-test vacancy at 10–12% rather than the metro's 5–7% aggregate, and add a management premium for higher-touch tenant situations.

Fishtown and Northern Liberties: Compressed Yields, Stabilizing Rents

Fishtown's median listing price of $424,900 against county median rents produces a gross yield of about 5.1%. Even if rents in Fishtown run 15–20% above the county median given the submarket's desirability, gross yields sit in the 5.8%–6.2% range. After taxes ($5,948 annually on a $424,900 assessed value), net yield before other expenses lands near 4.5%–5%.

A Lindy Institute researcher characterized the current Fishtown and Northern Liberties rental market as a "Goldilocks situation," with rents stabilizing as new supply absorbed demand. That stabilization signals that rent growth will not rescue a compressed entry yield in the near term. The investment case here is appreciation continuity, not cash flow. Point Breeze's decade-long +404% appreciation trajectory is the comparable precedent, not the yield math.

Point Breeze, Brewerytown, Port Richmond: The Risk-Adjusted Sweet Spot

The brief identifies these three neighborhoods as offering the best combination of risk-adjusted appreciation and cash flow. None carry individual price data points, but their profiles sit between the Fairhill floor and the Fishtown ceiling, likely in the $200K–$350K range. At $250K and county-median rents, gross yield is 8.7%. At $300K, it falls to 7.2%. After taxes (1.3998% on $250K = $3,500), net yields before other operating costs are in the 7%–8% range on lower-priced entries.

Port Richmond and Brewerytown are in active gentrification phases, meaning current rents likely understate market rents for renovated units. Investors buying and improving assets in these corridors can underwrite to higher rents than the county median suggests.

The planned SEPTA Trolley Modernization (130 new Alstom Citadis vehicles, manufacturing beginning 2026) runs through West and South Philadelphia corridors. Transit upgrades historically support rent premiums near modernized stops, which benefits Brewerytown and Point Breeze assets near those lines.

Neighborhood Comparison Table

Gross yield uses county ZORI of $1,806 as baseline rent; Chestnut Hill and Fishtown likely rent above this, but exact submarket ZORI data is not available.

Flood Insurance Adjustment

Properties near the Delaware and Schuylkill riverbanks and in low-lying South and Northeast Philadelphia pockets that fall inside FEMA Special Flood Hazard Areas require mandatory flood insurance. Flood premiums vary by elevation certificate and coverage level, but even a $1,500–$2,500 annual flood policy on a $237K property adds 65–110 basis points of yield drag. On a Fishtown property near the Delaware waterfront, that narrows an already thin net yield into the low 4% range. The Philadelphia Water Department and DVRC have published flood mapping tools; verify FEMA SFHA designation before closing any riverfront or low-elevation asset.

Cap Rate Compression vs. Decompression

Philadelphia County's home price YoY change is 0.81%, close to flat in real terms. The ZORI of $1,806 with a 3.0% metro rent growth forecast means rents are outpacing prices at this moment. That is a rare condition: when rent growth exceeds price growth, cap rates expand. Investors buying today are entering a period where the earnings yield on existing assets is improving, not compressing.

The caveat is supply timing. Multifamily starts fell 36.8% in 2024, and 2025 completions were projected to drop 60% from 2024 levels. That supply trough will support the 3.0% rent growth forecast through 2026 and likely into 2027. When starts recover, the cap rate expansion window closes. The 4.578% transfer tax means buying, watching cap rates compress, and selling quickly is an expensive strategy. The math rewards holding through the rent growth cycle.

Cap Rate Outlook

The structural setup for 2026–2028 favors net yield expansion in the Class B and C workforce housing segment. Occupancy at 96.7% metro-wide, a supply drought projected through at least 2025, and annual rent growth forecast at 3.0% all push NOI upward while home prices stay flat to modest growth. The 2027 reassessment risk is the clearest near-term threat to net yields; a second 19% step-up in assessed values would add $465 annually to the average $237K property tax bill.

Mayor Parker's $2 billion housing initiative targeting 30,000 units adds long-run supply risk in affordable corridors but also signals subsidy access opportunities for compliant investors. The port expansion's projected 9,000 jobs in South Philadelphia and Navy Yard-adjacent areas create new rental demand in exactly the neighborhoods, Point Breeze and Passyunk Square, where appreciation-plus-yield profiles are currently strongest.

Model your specific deal with our investment property calculator to stress-test these assumptions against your actual acquisition price, financing terms, and target neighborhood.