Pittsburgh, PA Real Estate Market Trends & Analysis [Updated 2020]

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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. The Pittsburgh real estate investing community should find itself with a lot of opportunities over the coming months, especially in the wake of the Coronavirus.

Pittsburgh Real Estate Market 2020 Overview

  • 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%)


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Pittsburgh housing market update

2020 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 sooner rather than later:

  • Interest rates on traditional loans are historically low

  • Years of cash flow can easily justify today’s higher acquisition costs

  • 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 3.31%, according to Freddie Mac. April marked the lowest average mortgage rate for an entire month ever. Consequently, mortgage rates are doing their best to bring down the cost basis of today’s properties, making them more affordable. Investors who take advantage of today’s mortgage rates could easily detract thousands of dollars from the overall cost of their purchase.

Another way to justify today’s higher prices for the Pittsburgh real estate investing community is to take a look at the potential cash flow an asset may produce. Let’s say, for example, an investor purchases a home for $179,972 (the median home value). At the same time, they put down $36,000 at the time of purchase (about 20.0%) to avoid having to pay private mortgage insurance. With an interest rate of 3.31%, the monthly mortgage payment would come out to be about $986 on a 30-year fixed-rate loan (after accounting for additional costs like principal, interest, property taxes, and homeowners insurance). It is worth pointing out, however, that the median rent price in Portland is $1,450, according to Zillow; that’s a difference of $464 each month. The unique combination of home values and the average rental rates work in favor of today’s rental property owners. As a result, it’s entirely likely that investors will be able to pay down their newly acquired mortgage with someone else’s money, all while building equity in a physical asset.

In any other type of market, the price-to-rent ratio would work against rental property owners. In fact, at 10.34, 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 simply aren’t enough homes to keep up with demand. While many shoppers would like to buy at the moment, 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 a number of viable exit strategies at its disposal, but 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.

2020 Foreclosure Statistics In Pittsburgh

The Pittsburgh real estate market has a relatively high foreclosure rate. With one in every 2,834 homes considered to be in some form of distress (default, auction or bank owned), the foreclosure rate has reached 3.5%. To be perfectly clear, the city’s ratio of distressed homes has declined significantly over the past 12 months. As recently as April, “the number of properties that received a foreclosure filing in Pittsburgh, PA was 30% lower than the previous month and 42% lower than the same time last year,” according to RealtyTrac.

Despite the drop in foreclosures, however, the Pittsburgh housing market maintains a foreclosure rate above the national average. With one in every 9,569 U.S. homes considered to be distressed, the national foreclosure rate is approximately 1.0%. Much like Pittsburgh, the U.S. foreclosure rate has also dropped a lot in the last year. “In April, the number of properties that received a foreclosure filing in U.S. was 70% lower than the previous month and 75% lower than the same time last year,” according to RealtyTrac.

Foreclosures have been on the decline for a while. However, the presence of the Coronavirus is expected to result in an influx of foreclosure filings. 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.

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

  • 15204: 1 in every 501

  • 15234: 1 in every 1,139

  • 15202: 1 in every 1,577

  • 15227: 1 in every 1,582

  • 15235: 1 in every 1,656

It is worth noting that the majority of distressed homes are auction assets. Representing 66.3% of the city’s distressed inventory, auction homes are the most abundant source of distressed properties. Pittsburgh real estate investors looking to increase their odds of acquiring a distressed home will have the best luck at local auctions.

2020 Median Home Prices In Pittsburgh

The median home value in Pittsburgh is a relatively healthy $179,972. It is worth noting, however, 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 63.6%. In the last year (alone), the median home value has increased 5.5%. which has people asking one question: Why is Pittsburgh real estate so cheap?

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

“Of the largest 50 metros, now 35 saw year-over-year gains in median listing prices, up from 30 last month. Los Angeles-Long Beach-Anaheim, CA (+14.9%), Pittsburgh, PA (+14.0 percent); and Cincinnati, OH-KY-IN (+12.1%); posted the highest year-over-year median list price growth in May,” according to market research conducted by Realtor.com.

To put things into perspective, the media home value in the United States has increased 4.1% in the last year, and is now somewhere in the neighborhood of $248,857. Consequently, the Pittsburgh real estate market has appreciated at a faster pace than the national average, and the momentum looks as if it will continue in the wake of the Coronavirus. Over the next 12 months, national price forecasts expect a 1.5% drop in home values across the country. Real estate in Pittsburgh, however, is only expected to realize a 1.1% decline.

Tempered forecasts are the result of the unexpected pandemic. If it were not for the spread of COVID-19 and “shelter-in-place” orders, there’s a good chance a busy spring selling season would have continued marching prices even higher. However, the lack of activity and listings has served to stagnate the market—even drop it—in select areas. That said, the drop is only expected to be temporary. As rumors of the “shortest recession in American history” start to spread, the economy appears ready and willing to open back up, and real estate is no exception. Therefore, it is safe to assume prices will drop over the next six months or so, but it’s also likely they will increase sooner rather than later.

For the better part of a decade, a lack of inventory has driven prices higher, and the theme looks like it will continue after the dust from the pandemic settles. If for nothing else, homebuilders haven’t been able to detract from the inventory shortage in recent months. Shutdowns have prevented any new buildings from hitting the market at all, in fact. As a result, the inventory shortage should continue a little while longer and boost home values.

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 were able to 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 beneficiary of a relatively hot market two years ago. 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, according to Zillow. 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 were expressing 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.

*The information contained herein was pulled from third party sites. Although this information was found from sources believed to be reliable, FortuneBuilders Inc. makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. Any reliance on this information is at your own risk. All information presented should be independently verified. FortuneBuilders Inc. assumes no liability for any damages whatsoever, including any direct, indirect, punitive, exemplary, incidental, special, or consequential damages arising out of or in any way connected with your use of the information presented.
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