Investors looking for cash flowing housing to hold for the long term may find that Pittsburgh, Pennsylvania is the perfect place to buy rental property. According to the Federal Reserve Bank of Cleveland, unemployment is low, home values are rising and the regional economy is strong.
“Pittsburgh is on a slow and steady course,” said Mekael Teshome, vice president and senior regional officer of the Pittsburgh branch of the Federal Reserve Bank of Cleveland. “All in all, Pittsburgh’s outlook is favorable, with persistent and moderate growth ahead.”
But there’s a lot more to Pittsburgh than its strong and steady real estate market. From plentiful shopping areas, amazing restaurants, and outstanding views of the Allegheny, Monongahela, and Ohio Rivers, many people find the city the perfect place to call home.
Here’s a closer look at why Pittsburgh is a smart investment for rental property investors in 2020.
Although there’s been a decline in recent years, the population of Pittsburgh is the most stable it’s been in almost a century, according to the Pittsburgh Post-Gazette.
Nicknamed the “Steel City,” the area’s population has declined since its mid-20th-century peak as Pittsburgh continues to transition from a manufacturing economy to one that’s home to high-tech firms like Google and Apple.
Key Population Stats:
- Pittsburgh is the second-largest city in Pennsylvania, just behind Philadelphia.
- The City of Pittsburgh has a population of about 310,000 people and 2.6 million residents in the Pittsburgh metropolitan area.
- Since 2010, the population of Pittsburgh has changed by about 1%.
- According to a regional economist from the University of Pittsburgh, the region is gaining young adults and Asian immigrants, while the percentage of elderly residents is lower than the national average.
- With an average age of just 33, the population in Pittsburgh is 51.9% female and 48.9% male, according to PittsburghPA.gov.
Pew Research notes that despite 4% fewer people living in Pittsburgh since 2000, the per capita income increased by 24% during the same time period. In fact, the Post-Gazette recently described the job market in Pittsburgh as being “red hot” with paychecks rising while unemployment sinks to historic lows.
Key Employment Stats:
- GDP of Pittsburgh is more than $131 billion, an increase of more than 21% over the past ten years.
- Unemployment in Pittsburgh dropped to 3.8% this year, the lowest figure since the state began tracking jobless numbers back in 1976.
- Job growth in 2018 was 1.1% and 0.7% year-to-date.
- Cost of living in Pittsburgh is 7% below the national average, according to Forbes.
- Pew Research reports that Pittsburgh has more STEM (science, technology, engineering, and math) jobs than any other city with a declining population.
- World-renowned companies such as Amazon, Facebook, Bossa Nova Robotics, and IAM Robotics are driving the demand for skilled employees in the Pittsburgh metro area.
- Five key business sectors of technology and robotics, advanced manufacturing, financial and business services, energy, and healthcare and life sciences have created more than 7,660 new jobs, according to the Annual Pittsburgh Region Business Investment Scorecard.
- Last year, Glassdoor named Pittsburgh #1 among the hottest job markets in the U.S.
- Fortune 500 companies in Pittsburgh are PNC Financial Services, PPG Industries, U.S. Steel, The Kraft Heinz Corporation, WESCO International, and Dick’s Sporting Goods.
- Major companies located in the Pittsburgh metropolitan area include Allegheny Technologies, Mylan Bayer USA, GlaxoSmithKline, Thermo Fisher Scientific, Deloitte Touche Tohmatsu, and the RAND Corporation.
- University of Pittsburgh Medical Center is the largest employer in Pittsburgh, with about 87,000 employees around the world.
- Some of the most well-known colleges and universities in Pittsburgh are the private research institution Carnegie Mellon University, founded by Andrew Carnegie and Andrew Mellon, the University of Pittsburgh, and Duquesne University.
- Nicknamed “The Pitt,” the University of Pittsburgh has one of the largest research programs in the U.S.
- Nearly 42% of the people in Pittsburgh hold a bachelor’s degree or higher compared to the nationwide average of 30%.
- More than 92% of the residents in the city 25 years or older are high school graduates or higher.
- Numerous Interstate Highways run through the Pittsburgh metro area, including I-376, I-76, I-79, and I-80.
- The Port of Pittsburgh moves more than 35 million tons of cargo each year, and is the second-busiest inland port in the U.S. and the 17th-busiest port of any kind in the country.
- Freight railroad operators CSX and Norfolk Southern have major operations in Pittsburgh.
- Pittsburgh International Airport (PIT) serves nearly nine million passengers while PIT cargo service provides shipping with airlines such as FedEx and UPS, Qatar Airways, and British Airways.
Real Estate Market
Pittsburgh has one of the tightest housing markets in the U.S. More millennials are migrating to the area, attracted by the strong job market and the region’s tech center status, according to CNBC.
In fact, over the past year the supply of housing in Pittsburgh decreased by 16%, making it harder to find a home than in Austin, Orlando, and Phoenix. At the same time, short supply and strong demand for rental property from millennials makes Pittsburgh very attractive for rental property investors.
Key Market Stats:
- Median home value in Pittsburgh is $149,500 according to Zillow (as of Oct. 2019).
- Home values in Pittsburgh have increased 0.7% over the past year and are forecast to grow by another 1.3% over the next year.
- Median listing price of a house in Pittsburgh is $219,000 and the median selling price is $154,500.
- Per square foot median list price in the City of Pittsburgh is $142 compared to the Pittsburgh metropolitan average of $125 list price per square foot.
- Average days on market is 70.
- More than 20% of the homes for sale in Pittsburgh have a price cut during their listing period.
- 8.4% of the homes in Pittsburgh have negative equity vs. 8.2% U.S. average.
- 1.1% of the homes in Pittsburgh have a delinquent mortgage vs. 1.1% nationally.
- The 30% difference between asking and selling prices signal a strong opportunity for the deal-seeking investor in Pittsburgh’s healthy housing market.
Strong Renters’ Market
Over the past ten years the Pittsburgh housing market has dramatically changed, with more people choosing to rent than own despite the low cost of homeownership in the region. That’s a market statistic that every rental property investor likes to hear.
Investors who focus on affordable housing may also like the opportunity that Pittsburgh presents. According to the Pittsburgh Community Reinvestment Group, of the 7,500 new housing units coming to the market in the next three years, fewer than 1,500 are affordable units.
Key Market Stats:
- Median rent in Pittsburgh is $1,237 in the city and $1,172 in the metropolitan area (as of Oct. 2019).
- Over the last year, rents in Pittsburgh have increased by 2%, according to RENTCafé.
- About 55% of the housing units in Pittsburgh are renter-occupied.
- 35% of the housing units in Pittsburgh rent for between $701 and $1,000 per month, while another 34% have a rental range of between $1,001 and $1,500 per month.
- Neighborhoods in Pittsburgh with the lowest rents include Carrick, Overbrook, and Perry North where average rents are less than $750 per month.
- Pittsburgh neighborhoods with the highest monthly rents include Morningside, Strip District, and Downtown Pittsburgh where rents range between $1,642 and $1,671 per month.
Historic Price Changes & Housing Affordability
When real estate investors analyze the viability of investing in rental property in Pittsburgh, two metrics commonly used are historical price changes and the level of housing affordability. Along with other financial measurements, price history and affordability help to determine the future demand for rental housing in Pittsburgh.
The FHA Q2 2019 House Price Index report shows that since the first quarter of 1991 house prices in Pittsburgh have increased by more than 162%. Over the past 12 months, housing prices in the Pittsburgh metro area have risen by more than 26%, while over the last quarter alone prices have increased by nearly 1%.
Home price data from ATTOM Data Solutions was recently analyzed by Kiplinger to determine the housing affordability in Pittsburgh. The research found that:
- Since the peak of the last real estate cycle, home prices in Pittsburgh have increased by 16.5%.
- Since the last real estate cycle market bottom, home prices in Pittsburgh have grown by more than 32%.
- Housing affordability in Pittsburgh is ranked as 2 out of 10, meaning that the Pittsburgh metro area is one of the more affordable places to own a home in the U.S.
Quality of Life
The most recent Pittsburgh Regional Quality of Life Survey by the University of Pittsburgh found that 68% of the residents in Allegheny County (where Pittsburgh is located) rated the region as either an excellent or very good place to live.
Last July, SmartAsset looked at why Pittsburgh is becoming so popular with so many people:
Key Quality of Life Stats:
- Housing and rents are affordable compared to the rest of the U.S., with more than 50% of the residents in Pittsburgh choosing to rent rather than own.
- Bus service is free in Downtown Pittsburgh and the North Shore areas.
- Carnegie Museum of Art and the Andy Warhol Museum make the city perfect for art lovers.
- With 446 bridges, Pittsburgh is nicknamed the “City of Bridges” and has more than any other city in the world.
- Heinz Ketchup hails from Pittsburgh, the Big Mac was created here, and the first emoticon (think smiley face) was created by a Carnegie Mellon computer science professor.
- MLB Pittsburgh Pirates, NFL Pittsburgh Steelers, and NHL Pittsburgh Penguins all make people proud to live in Pittsburgh.
Get Out the Map
Where to begin your search? Roofstock created a heat map of Pittsburgh based on our Neighborhood Rating, a dynamic algorithm that enables you to make informed investment decisions by measuring school district quality, home values, employment rates, income levels and other vital investment criteria.
DARK GREEN: 4-5 star neighborhood
LIGHT GREEN: 3.5-4 star neighborhood
YELLOW: 2.5-3 star neighborhood
ORANGE: 2 star neighborhood
RED: 1 star neighborhood
Ready to invest in the Pittsburgh market? If you haven't already done so, create your free Roofstock account and set up alerts. We'll notify you when we have a Pittsburgh investment property that matches your search criteria.