Pittsburgh, PA Real Estate Market Trends & Analysis [Updated 2021]

by Than Merrill | @ThanMerrill
Published on Tue, May 4 2021

Jump To Another Year In The Pittsburgh Real Estate Market:

The Pittsburgh real estate market has ebbed and flowed along with the rest of the country for the better part of a decade. While there are certainly indicators people would like to see turned around, real estate in Pittsburgh has rebounded nicely from the Great Recession. Foreclosures, for example, remain a problem in The Steel City, but the same distressed inventory people associate with poor performance can represent a great opportunity for local entrepreneurs. As a result, the Pittsburgh real estate investing community should find itself with many opportunities over the course of 2021, as long as they know where to look. Several indicators, for example, would suggest this is a good year to start building out a rental property portfolio or at least adding to one.

Pittsburgh Real Estate Market 2021 Overview

  • Median Home Value: $204,313
  • 1-Year Appreciation Rate: +12.2%
  • Median Home Value (1-Year Forecast): N/A
  • Median Rent Price: $1,450
  • Price-To-Rent Ratio: 11.74
  • Unemployment Rate: 7.5% (latest estimate by the Bureau Of Labor Statistics)
  • Population: 300,286 (latest estimate by the U.S. Census Bureau)
  • Median Household Income: $48,711 (latest estimate by the U.S. Census Bureau)
  • Percentage Of Vacant Homes: 16.04%
  • Foreclosure Rate: 1 in every 4,932 (2.0%)

Pittsburgh housing market update

2021 Pittsburgh Real Estate Investing

Investors should place a priority on building out their rental property portfolios, or perhaps even starting one altogether. If for nothing else, several of today’s most prominent market indicators suggest the best local exit strategy may have finally transitioned from rehabbing to longer-term buy-and-hold strategies. Here are some of the reasons today’s investors should look into becoming rental property owners in Pittsburgh:

  • Interest rates on traditional loans are historically low
  • Years of cash flow can easily justify today’s higher acquisition costs
  • Lower borrowing costs will increase monthly cash flow from properties placed in operation
  • The price-to-rent ratio suggests high home prices will increase rental demand

Investors have made very attractive returns by rehabbing properties over the last decade, and there’s no reason they can’t continue to do so moving forward. However, the market indicators which made rehabbing so attractive in the past are shifting. In particular, home prices have increased dramatically, effectively reducing profit margins on many homes.

Long-term investors, however, are awarded the ability to navigate today’s higher prices with lower interest rates. As of April, the average rate on a 30-year fixed-rate loan was 3.06%, according to Freddie Mac. While up year-to-date, interest rates are still near record lows. More importantly, mortgage rates are doing their best to bring down the cost basis of today’s properties. Investors who take advantage of today’s mortgage rates could easily detract thousands of dollars from the overall cost of their purchase. At the same time, lower rates reduce monthly mortgage obligations, allowing rental property owners to increase cash flow from operations.

In any other type of market, the price-to-rent ratio would work against rental property owners. In fact, at 11.74, it’s much more affordable to buy a house than to rent one, which would usually hurt rental priority demand. However, inventory levels are insufficient; there aren’t enough homes to keep up with demand. While many shoppers would like to buy, the lack of listings created by the Coronavirus and years of inadequate inventory will see to it that rental demand remains strong. Consequently, rental property owners may find themselves with an influx of applications from potential renters.

The real estate investing community is lucky to have several viable exit strategies at its disposal. Still, none appear more attractive than building a proper rental property portfolio at the moment. Too many important market indicators are pointing towards becoming a buy-and-hold investor to ignore.

2021 Foreclosure Statistics In Pittsburgh

The Pittsburgh real estate market has a relatively high foreclosure rate. With one in every 4,932 homes considered to be in some form of distress (default, auction or bank-owned), the foreclosure rate has reached 2.0%. At that rate, real estate in Pittsburgh boasts a much higher foreclosure rate than the country. For context, one in every 11,396 homes in the United States is distressed, making the country’s distressed rate somewhere in the neighborhood of 0.8%. That said, the foreclosure rate in Pittsburgh is more than twice the national average.

Those investors who are looking to acquire a distressed home may want to look in the following neighborhoods with the highest distributions of foreclosures:

  • 15225: 1 in every 638 is distressed
  • 15226: 1 in every 1,135 is distressed
  • 15233: 1 in every 1,711 is distressed
  • 15204: 1 in every 2,003 is distressed
  • 15209: 1 in every 3,042 is distressed

It should be noted that the majority of Pittsburgh foreclosures are merely at risk of defaulting. Otherwise known as pre-foreclosures, most of the city’s distressed inventory is in possession of owners who are behind on payments. Thus, while some may come current, those who aren’t able to are at risk of foreclosure. More importantly, however, Pittsburgh real estate investors may be able to help those who can’t keep up with their mortgage obligations.

While it’s still too soon to tell how big of an impact COVID-19 will have on the local housing market, there’s a good chance the number of foreclosures will increase. Therefore, those who position themselves well today and line up financing could find the latter half of 2020 to be a great time to acquire a deal.

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2021 Median Home Prices In Pittsburgh

The median home value in Pittsburgh is $204,313. However, it is worth noting that the median home value has come a long way over the course of a decade. At the end of the Great Recession, when the median home value bottomed out around the halfway mark of 2012, the median home value was approximately $110,000. Thanks—in large part—to a strengthening economy, improving buyer sentiment, and a lack of available inventory, the median home value has increased 85.7%. In the last year (alone), the median home value has increased by 12.2%, which has people asking one question: Is Pittsburgh a good place to invest in real estate?

To be clear, Pittsburgh is a great place to invest for investors who can find deals below market value or are interested in long-term investment strategies. Median home values have driven up listing prices over the last year. In fact, listing prices have posted some of the highest year-over-year gains across the country in recent memory. If, for nothing else, prices are higher today than in recent history, which will require some precision navigating.

To put things into perspective, the median home value in the United States has increased 10.6% in the last year, and is now somewhere in the neighborhood of $276,717. The Pittsburgh real estate market has appreciated faster than the national average, and the momentum looks as if it will continue in the wake of the Coronavirus. Prices will increase across the country as long as inventory is tight, but real estate in Pittsburgh appears to have more room to run.

Pittsburgh Real Estate Market: 2020 Summary

  • Median Home Value: $179,972
  • 1-Year Appreciation Rate: +5.5%
  • Median Home Value (1-Year Forecast): -1.1%
  • Median Rent Price: $1,450
  • Price-To-Rent Ratio: 10.34
  • Unemployment Rate: 16.3% (latest estimate by the Bureau Of Labor Statistics)
  • Population: 300,286 (latest estimate by the U.S. Census Bureau)
  • Median Household Income: $45,831 (latest estimate by the U.S. Census Bureau)
  • Percentage Of Vacant Homes: 16.04%
  • Foreclosure Rate: 1 in every 2,834 (3.5%)

Pittsburgh Real Estate Investing 2020

Pittsburgh real estate market trends followed in the footsteps of their national counterparts. Not unlike the rest of the country, real estate in Pittsburgh was firing on all cylinders heading into 2020. In particular, demand was ramping up in the face of rapid appreciation. The economy was strong enough to support more purchases despite local home values testing new highs regularly. That said, Pittsburgh’s housing market received its first real threat in nearly a decade: the pandemic. By the end of the first quarter, fear and uncertainty had brought the local market to a standstill. Underwriters weren’t in their offices, sellers took their homes off the market, and buyers refused to tour the homes of strangers. For a brief period, it looked as if the impact of COVID-19 on the real estate market was going to be severe.

It is important not to downplay the lasting impact of the Coronavirus on the Pittsburgh real estate market. However, the immediate Fed reaction to the pandemic actually served as a stimulus. In an attempt to spur activity, the Fed dropped interest rates to their lowest point ever in 2020. The resulting borrowing costs encouraged more buyers to return to a market where inventory was still lacking. In a matter of weeks, demand turned into competition, and homeowners responded by increasing asking prices. Therein lies the foundation of lasting Pittsburgh real estate market trends in 2020: pent-up demand and rising prices.

The median home value in Pittsburgh increased 7.6% from when the Fed initially dropped interest rates to the end of the year; that’s in addition to the eight consecutive years of appreciation leading up to 2020. Simply put, home values were growing at a fast pace, and investors needed to adjust their strategies. In 2020, indicators led a lot of investors to the rental market. Lower borrowing costs simultaneously helped offset high acquisition costs and increased monthly cash flow from properties in operation. Additionally, high home prices and low inventory levels relegated more people to the rental pool. All things considered, 2020 was a great year to become a long-term investor.

Pittsburgh Real Estate Market: 2018 Summary

  • Median Home Value: $142,800
  • 1-Year Appreciation Rate: 11.7%
  • Median Home Value (1-Year Forecast): 7.2%
  • Median Rent Price: $1,295
  • Number Of Foreclosures: 1,660
  • Homes For Sale: 1,160

Pittsburgh Real Estate Investing 2018

The Pittsburgh real estate market had strong fundamentals in place in 2018, and savvy real estate investors could capitalize on them. Not only did median home values increase at a clip nearly two times the national average, but Zillow’s one-year forecast suggested real estate in Pittsburgh would continue to outpace the rest of the country, and it did. There’s no doubt about it: the Pittsburgh real estate market was about as healthy as it had been in quite some time, and it’s only gotten better since then.

Home prices and values were the beneficiaries of a relatively hot market two years ago. According to Zillow, following a year in which prices increased by as much as 11.7% (July 2017 through August 2018), real estate in Pittsburgh proceeded to boast a median home value of $142,800. To put things into perspective, the median home value across the United States increased 6.5% over the same period.

Pittsburgh real estate investing became the subject of growing interest, and for good reason: few cities across the country were more generous to real estate entrepreneurs.

According to Attom Data Solutions, “Among the 136 metropolitan statistical areas analyzed in the report with at least 50 home flips completed in Q1 2018, those with the highest average gross flipping ROI were East Stroudsburg, Pennsylvania (164.1 percent); Pittsburgh, Pennsylvania (146.6 percent); Atlantic City, New Jersey (133.3 percent); Reading, Pennsylvania (120.8 percent); and Philadelphia, Pennsylvania (110.2 percent).”

Pittsburgh Real Estate Market: 2015 Summary

  • Median Sales Price: $114,000
  • 1-Year Increase In Sales: 6.2%
  • Population: 308,003
  • Unemployment: 5.2%
  • Median Household Income: $36,019

Pittsburgh Real Estate Investing 2015

According to Pittsburgh real estate news, The Steel City managed to carry over a lot of momentum from 2014 into 2015. In fact, experts suggest that local real estate was firing on all cylinders. Home sales were up in nearly every region, dollar volume was up, and homebuilders expressed a lot of confidence. For all intents and purposes, 2015 marked a turning point for the Pittsburgh housing market.

The good news could be traced back to October 2014, as home sales took a noticeable step forward. As recently as the first quarter of 2015, the increase was supported by a 6.2% increase in sales. Moreover, the dollar volume of said transactions also saw a significant spike, 14.2% to be exact.

The median sales price in the Pittsburgh real estate market was $114,000 at the time. That was a far cry from the national average and down slightly from the previous year. The median list price, on the other hand, was $128,450. Over the course of a year, the listing price dropped 1.12%, or about $1,450.

Pittsburgh real estate investing was responsible for an average gross profit return of 55.0% per flip. That was the third-highest in the country at the time, behind Baltimore and Tampa. The national average was about 35.2%. And yet, so-called home flips were a fraction of overall sales—just 2.9% in the first quarter, compared to 4.0% across the United States.

Pittsburgh County Map:

Map of Pittsburgh neighborhoods

Pittsburgh Real Estate Market Summary

Pittsburgh real estate investing is firing on all cylinders, and nothing seems to suggest that things won’t continue going well for the foreseeable future. Increases in median home values are expected to outpace the national average in the coming year, and demand remains intact. More importantly, the Pittsburgh real estate market appears more capable of weathering the current storm than many cities across the country.

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