Buyers motivated by tax credits and low-interest-rate mortgages are chipping away at the region's abundance of houses for sale. But supply still far exceeds demand.
So a large number of homes and condos have found their way onto the rental market instead, where they compete for a finite quantity of what property managers like to call "quality" tenants - primarily professionals at the upper end of the salary scale who prefer not to buy now or who don't plan to stay long.
To attract those tenants, landlords large and small, intentional or accidental, are spending time and money to upgrade their properties.
Recently, Walter Rich completed a three-month renovation of 247 S. Van Pelt St., near Rittenhouse Square in Center City, a property he's owned for more than 20 years.
"I own a few other rental properties, most with tenants who have lived there for 10 years and more," said Rich, an entrepreneur/inventor who markets products such as a "marrow scooper" for making osso bucco. "Some of my other properties are rented by Wharton students, who tend to stay the four years," he added.
When the South Van Pelt Street place became available, Rich decided to renovate it along the lines of the original 1909 architectural design, he said.
Rich is asking $2,100 a month for a one-bedroom, one-bath, 1,000-square-foot unit that has parking. Currently, the average rent in the region is $1,361, up 6 percent from 2008, according to the apartment search engine Rental.com.
"It's a desirable street," Rich said, adding that he had recently shown the unit to an investment banker and others in that income bracket.
High-end renters, many of whom relocate here for a relatively short time, are looking for "quality baths and kitchens," said Center City developer/real estate broker Allan Domb. "Most of them don't cook regularly but want the kitchen to look nice for visitors."
In a high-rise building, the high-end renter demands much more than just pretty, seeking such amenities as 24-hour security and a concierge, among others.
John Featherman, a real estate agent with Prudential Fox & Roach who invests in properties as well, has just finished renovating two units he owns - one on the third floor and one on the fourth - at the Arts Condominium at 1324 Locust St.
"Before the renovations, I got $800 to $900 a month," Featherman said. "In the past year, I gutted them completely with the exceptions of the bathrooms, which were new within the last five years. So I put in Pergo floors, new kitchenettes, new lighting, drop ceilings around the kitchen with recessed lighting, and some new walls."
Today, he's getting $1,000 for one unit, $1,100 for the other. The work cost $6,000 to $7,000 for each unit, he said, acknowledging, "That's not a realistic number for most people. I give a contractor a lot of business, and he did it at cost."
Both kinds of landlords are upgrading their properties for rent, in many cases doing wholesale renovations on kitchens and bathrooms rather than painting or making less-expensive improvements:
Professional investors like Featherman and Rich tend to upgrade in the off season rather than in the summer, when people are deciding where they will live in the coming year.
Accidental landlords - those who can't sell their homes at acceptable prices - have a different timetable.
"These sellers either are making the upgrades to sell the home or they are making the upgrades now, assuming that the tenant may buy the property or a prospective buyer will see the tenant living in a nicely upgraded property and then they will buy it," Featherman said.
Both varieties easily fit into the "small-landlord" category, compared with "managed" multiunit buildings such as Carl Dranoff's Left Bank in University City.
Yet that doesn't mean Dranoff is content to leave his properties untouched.
Six months ago, his company, Dranoff Properties, began a program at the Left Bank and other locations to upgrade units as they become available, installing new kitchens (with granite countertops, stainless-steel appliances, new floors, tile backsplashes, and other amenities), then charging $100 a month extra for them.
"We actually set up new model units with these kitchens," he said, "so customers can see what they get and then make a choice."
Dranoff Properties also has done "a great deal of freshening and upgrading of all our 'public' spaces," adding flat-screen TVs and new upholstery and furnishings in the lobbies.
This is hardly just a Philadelphia phenomenon. Landlords all over are going to similar lengths and, in many cases, expense to improve their properties.
In a survey of its 476 members, the National Association of Independent Landlords found that more than 52 percent were renovating vacant properties.
Most were either trying to attract new renters or attempting to keep the ones they had.
"With so many homes and apartments sitting empty, landlords want their properties to stand out from the competition," association president Tracey Benson said.
"Even if landlords have no rent coming in," she said, "they need to bite the bullet and make improvements to put their properties on renters' short lists."