The Pittsburgh real estate market has ebbed and flowed along with the rest of the United States for more than a decade. Even when the global pandemic extremely changed the residential housing landscape, real estate in Pittsburgh has successfully mimicked national trends. This means that prices continue to be higher while demands remain intact.
It is worth noting that while trend lines in Pittsburgh are heading in the same direction as their national counterparts, they are doing it at a slower pace. Relatively higher foreclosure and unemployment rates are weighing on the local housing market and contributing to a higher rental population. As a result, the Pittsburgh real estate investing community has switched to long-term exit strategies after new dynamics.
The competitive demand in Pittsburgh real estate has started to slow down, creating potential chances for investing in rental properties in this city nicknamed the Steel City. The biggest reason why the competition is getting slower is because many home buyers are postponing their plans, according to local real estate experts. But in the meantime, home prices in the most popular and desirable neighbourhoods are still increasing and selling quicker than ever before.
The vice president and senior regional officer of the Pittsburgh branch of the Federal Reserve Bank of Cleveland said in 2019 that the city is on a slow and steady course. Overall, Pittsburgh real estate market outlook is favourable, with moderate and persistent growth ahead. Real estate investors looking for cash-flowing housing to hold for the long term have known that Pittsburgh may be a great place to purchase rental properties.
Pittsburgh Real Estate Market Overview
Despite the global pandemic and resulting recession, the housing market in Pittsburgh remains strong. Based on the Pittsburgh Post-Gazette, instead of 20 people making an offer on the same house, today’s number is 5. South Suburbs like Lawrenceville and Dormont are especially competitive, with a lot of offers and fast sales.
The housing market is especially difficult for first-time buyers, which is perhaps one of the reasons why 50 percent of the households in Pittsburgh are occupied by renters. If you want to make a profit, you should not purchase the most expensive property on the Pittsburgh market and hope for making a nice profit on rents. You probably seek a slightly different hold-over, an investment property in Pittsburgh that you might sell or move into when you are retired.
Either way, figuring out your purpose and profit potential is the first thing you have to consider. Let’s take a look at some positive things in real estate Pittsburgh that are helpful for real estate investors who wish to purchase a property in this city. There are around 300,000 people calling Pennsylvania a home. But the real estate market in Pittsburgh is way bigger than this.
The entire Pittsburgh metropolitan area is home to more than 2 million people. This city ranked at the top of Nationwide’s 2015 Health of Housing Market Report. It is also home to approximately 90 eclectic, various neighbourhoods. Moreover, many of them provide convenient access to urban facilities and downtown.
The overall stability of Pittsburgh’s economic outlook has given a significant contribution to the gains in the real estate market. You can see it in 2 different areas, which are employment rates and median household incomes. Some neighbourhoods in Pittsburgh are seeing an influx of growth that is driving new construction and contributing to retail growth. Below are some stats of the housing market in Pittsburgh.
- Home values in Pittsburgh have gone up by 14.5 percent over the past year.
- Home values in Pittsburgh have risen by more than 63 percent over the past 5 years.
- Pittsburgh homes for sale spend averagely 57 days in the market from listing to contract.
- The median list price of a single-family home in Pittsburgh is $225,000 as of November 2021, according to the report from Realtor.com.
- Of the 83 neighbourhoods in the city, the most affordable one is Sheraden with a median listing price of $130,000. While the most expensive neighbourhood to buy a home is Squirrel Hill North where the median listing price is $267,000.
Pittsburgh Real Estate Market Trends
The real estate market in Pittsburgh has been majorly shaped by the global pandemic and its long-term impact on the housing sector. Mainly, the effects of the pandemic on the Pittsburgh housing market can be summed up in one metric, which is supply and demand. As the Fed lowered mortgage rates to soften the effects of the coronavirus, activity significantly increased.
However, there are not nearly enough homes in the city’s housing market to meet demands. As a result, both the competition and price are soaring up at the same time. This unique environment has created these following trends on the Pittsburgh housing market.
- Supply Trends
The real estate market in Pittsburgh has around 6,352 active listings. The listings today will last around 12.5 weeks if the market continues its sales pace, which is far from a balanced market. If for nothing else, balanced markets typically have around 6 months of inventory. As the result, Pittsburgh has very low listings when demands are running hot.
Moreover, it is expected that the inventory will remain low for the upcoming years, which will drive the price even higher than they already are.
- Investor Trends
The Pittsburgh housing market has a relatively high distribution of foreclosures. With around 1,056 foreclosures on the market, the local real estate investing community continues to make flips a proper exit strategy. However, regardless of the ability to flip distressed homes, home prices in the city are more expensive than before.
The resulting profit margins have made many real estate investors switch to long-term strategies like rental properties. With low borrowing costs, rental properties let investors take benefits of low borrowing costs, more rental demand, and increasing cash flow opportunities at the same time.
- Home Price Trends
The Pittsburgh real estate market has been a follower of the same trend line as the rest of the nation. Since the beginning of the pandemic, housing prices in the city have continued to test new highs every month. In that time, the median home value has soared by almost $56,000. Moving forward, the shortage of inventory and high levels of demands are predicted to raise the city’s home prices by as much as 8.3 percent.
- Interest Rate Trends
Home buyers have experienced ups and downs for the past 2 years due to borrowing costs. The median commitment rate on a 30-year fixed-rate mortgage dropped to its lowest point ever as the pandemic was officially declared as a global emergency. However, with inflation going crazy, the Federal Reserve has managed to raise rates to their highest point over the past few years.
Now more than 5 percent, rates will begin to affect demands. Mortgage applications have already decreased and should continue to do so as long as home values and rates increase.
The real estate appreciation rate in Pittsburgh in the latest quarter was about 4.73 percent, which equals to an annual appreciation rate of 20.32 percent. Even tiny changes in the appreciation rate are able to change the long-term value of buying significantly. For sellers in this city, they can expect a good profit this year.
Pittsburgh Real Estate Market Forecast
The Steel City has been among the hottest real estate markets in the United States for years. It is also one of the best real estate markets to invest in rental properties. So, what are the predictions for the Pittsburgh real estate market? Since March 2012, the median home prices in Pittsburgh have appreciated by roughly 104 percent, from $111,000 to $226,443, according to the Zillow Home Value Index.
Home value in Pittsburgh has increased by 13 percent over the past 12 months and will continue to increase this year. The typical home value in the Pittsburgh metropolitan area is $203,384. It has risen by 13.5 percent over the last year and it is predicted that the home value will increase by 16.3 percent next year. Home value in Pennsylvania has increased by 1.46 percent over the last year and it is also predicted to continue increasing this year.
Population Growth in Pittsburgh
Pittsburgh is located in Allegheny County whose population grew for the first time in 60 years, outperforming pre-census estimates. Over a decade, Allegheny County added more than 27,200 new residents while the city’s population lowered by more than 2,700 people, based on the latest census. Though there has been a decline in the past few years, the population in Pittsburgh is the most stable in nearly a century, as the Pittsburgh Post-Gazette claimed.
The population of the city has decreased since its mid-20th century peak because Pittsburgh continues to transition from a manufacturing economy to the one that welcomes high-tech companies, such as Apple and Google. Here are some stats about the population growth in Pittsburgh.
- Pittsburgh is the 2nd largest city in Pennsylvania, right behind Philadelphia.
- The population in Pittsburgh city is almost 303,000 people and nearly 2.4 million residents live in the Pittsburgh metropolitan area.
- According to the US Census Bureau, the city’s population decreased by around 1 percent over the last 10 years. While the population of Allegheny County grew by slightly more than 2.2 percent.
- The median household income in Pittsburgh has risen by 4.9 percent from year to year while the property value has gone up 3.5 percent.
Job Market in Pittsburgh
Pew Research records that despite 4 percent fewer people living in Pittsburgh since 2000, the per capita income rose by 24 percent during the same year. The city’s economy is slowly, yet definitely recovering from the recession. The latest report from the US Bureau of Labour Statistics shows the employment sectors showing the rapidest signs of recovery include professional and business services, leisure and hospitality, information, and construction.
- GDP of Pittsburgh is more than $153.3 billion, rising more than 31 percent over a decade.
- The unemployment rate in the city dropped to 4.8 percent through October 2021.
- The employment growth has decreased by 0.04 percent from year to year.
- The living cost in Pittsburgh is 13 percent under the national average, as Forbes reports.
- According to a report from Pew Research, Pittsburgh has more jobs in science, technology, engineering, and math industries than any other cities with a declining population.
- Major corporations situated in the Pittsburgh metropolitan area include the RAND Corporation, Deloitte Touche Tohmatsu, Thermo Fisher Scientific, GlaxoSmithKline, Mylan Buyer USA, and Allegheny Technologies.
- The biggest employer in Pittsburgh is the University of Pittsburgh Medical Center, with around 92,000 employees across the globe.
Life Quality in Pittsburgh
The University of Pittsburgh made a survey named Pittsburgh Regional Quality of life. From this most recent report, it is found that 68 percent of the residents in Allegheny County rated the region as an excellent place to live. Pittsburgh is getting so popular nowadays.
- Bus service is free in the North Shore areas as well as Downtown Pittsburgh.
- Compared to the rest of the country, rents and housing in Pittsburgh are affordable. 50 percent of the residents in Pittsburgh prefer to rent rather than own.
- Art lovers should visit Pittsburgh as it has the Andy Warhol Museum and Carnegie Museum of Art.
- Another nickname of Pittsburgh is the City of Bridges as it has 446 bridges, which are more than any other cities in the world.
- Pittsburgh is also a perfect city for sports lovers as it has NHL Pittsburgh Penguins, NFL Pittsburgh Steelers, and MLB Pittsburgh Pirates.
Pittsburgh Real Estate Market FAQs
- Is Pittsburgh Landlord Friendly?
The real estate market in Pittsburgh can be considered landlord friendly. There are regulations regarding security deposits. Depending on the circumstances, tenants may have to pay rent on the security deposit.
- Should I Invest in the Pittsburgh Real Estate Market?
Traditional loans and interest rates are relatively low and rising. Pittsburgh also offers lower borrowing costs that will push the monthly cash flow up from properties placed in operation. Today, investors prefer to invest in rental properties.