Pittsburgh is quickly becoming one of the most affordable and desirable real estate markets in the Northeast. A recent article from Forbes notes that median listing prices are up by 23% while the number of homes for sale is down nearly 36% compared to the same time last year.
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.
“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 could be an attractive investment for rental property investors in 2021.
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 300,000 people and 2.3 million residents in the Pittsburgh metropolitan area.
- Last year the population of Pittsburgh declined by 0.37% while since 2010, the population of Pittsburgh has changed by about 1%.
- Median household incomes in Pittsburgh have increased by 2.03% year-over-year.
- 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.
- 61% of the population in Pittsburgh is between the ages of 18 and 64.
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. The economy in Pittsburgh is slowly but surely recovering from the recession.
According to the most recent report from the U.S. Bureau of Labor Statistics (BLS Oct. 2020), employment sectors showing the fastest signs of recovery include trade and transportation, financial activities, professional and business services, and education and health services.
Key Employment Stats:
- GDP of Pittsburgh is more than $145.5 billion, an increase of more than 215 over the past ten years.
- Unemployment in Pittsburgh dropped to 6.9% through October 2020.
- Employment growth in Pittsburgh has increased by 0.51% year-over-year.
- 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.
- 94.2% of the people in Pittsburgh are high school graduates or higher, while 36% hold a bachelor’s degree or an advanced degree.
- 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
Despite the pandemic and resulting recession, the housing market is still getting hotter in Pittsburgh. According to the Pittsburgh Quarterly, suburban interest is growing as buyers look for more space and less density.
Both local and remote real estate investors are making offers sight unseen, while Native New Yorkers are migrating to Pittsburgh after realizing they can work from anywhere. As one real estate agent observed, “We’re getting a lot more renters calling in and wanting to get into houses.”
Key Market Stats:
- Zillow Home Value Index (ZHVI) for Pittsburg is $195,195 as of November 2020.
- Home values in Pittsburgh have increased by 10.6% year-over-year and are predicted to grow by another 11.1% in the next 12 months.
- Over the last five years home values in Pittsburgh have increased by more than 43%.
- Median list price of a single-family home in Pittsburgh is $219,000 according to the most recent report from Realtor.com (Nov. 2020).
- Median listing price per square foot for a home in Pittsburgh is $149.
- Days on market (median) is 70.
- Median sold price of a single-family home in Pittsburgh is $229,000.
- Sale-to-list price ratio is 98.88%, meaning that homes in Pittsburgh are selling for 1.12% below the asking price on average.
- Pittsburgh is becoming a buyer’s market because there are currently more homes on the market for sale than there is demand for homes.
- Of the 81 neighborhoods in Pittsburgh, Point Breeze is the most expensive with a median list price of $549,900.
- Most affordable neighborhood for buying a home in Pittsburgh is Sheraden where the median listing price is $117,500.
Strong Renters’ Market
Pittsburgh is one of the top 35 cities in the U.S. for renters, according to WalletHub. The city receives high ratings for many of the factors rental property investors look for, including activity in the rental market, affordability, and quality of life. Those may be some of the reasons why more people rent in Pittsburgh than own a home.
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:
- Average rent in Pittsburgh is $1,246 based on the most recent research from RENTCafé (as of Oct. 2020).
- Rents in Pittsburgh have remained steady year-over-year.
- Over the past three years the average rent in Pittsburgh by a total of 8.2%.
- 37% of the rental units in Pittsburgh rent for between $1,001 and $1,500 per month while another 39% have monthly rents of $1,000 or less.
- Renter-occupied households account for 56% of the total occupied housing units in Pittsburgh.
- Neighborhoods in Pittsburgh with the lowest rents include Carrick, Perry North, and Perry South where average rents are less than $736 per month.
- Pittsburgh neighborhoods with the highest monthly rents include Homewood West, Larimer, and Morningside where rents average $1,654 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 Freddie Mac Home Price Index (FMHPI) is published monthly and reports the monthly change in home prices in every metropolitan area in the U.S. According to the most recent FMHPI report for the Pittsburgh MSA:
- October 2015 HPI: 150.93
- October 2020 HPI: 199.10
- 5-year change in home prices: 31.9%
- One-year change in home prices: 11.2%
- Monthly change in home prices: 1.2%
Home price data from ATTOM Data Solutions was recently analyzed by Kiplinger to determine the housing affordability in Pittsburgh. The most recent 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.
SmartAsset recently took a close look at Pittsburgh to learn why the Steel City 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.