How Affordable Are Pittsburgh’s Homes Really?

It’s become routine to read “Pittsburgh” and “most affordable” in the same sentence when major publications and industry groups discuss the national housing market.

One recent New York Times article, based on an analysis by real estate website Zillow, proclaimed the Steel City is the easiest place for a household earning the median income to purchase a median-priced home. The analysis found that Pittsburgh families earning the median income could still afford the median home here even if interest rates were jacked up to 8.9%, far above the current 6.3%.

Another report circulated across local media this July, compiled by Realtor.com, claimed Pittsburgh is the only place in the country where it is cheaper to purchase a starter home than to rent.

These trends should be welcome news for local prospective homebuyers, but many still face an uphill climb to ownership. And people across the country — including in the Pittsburgh region — are doing so later in life than ever, a Public Source investigation found.

So why are people having trouble buying homes in a place hailed for its low prices?

Location Matters

When national analysts or media outlets name Pittsburgh as one of America’s most affordable locations, they typically refer not to the city but to the metropolitan area.

That’s a big difference. The city contains 308,000 people across 55 square miles. The metro area includes more than 2.4 million people across eight counties: Allegheny, Armstrong, Beaver, Butler, Fayette, Lawrence, Washington and Westmoreland. It includes the bustling city of Pittsburgh, rural and farm land, affluent and middle-class sprawling suburbs, and small cities like Butler. Some parts take 90 minutes or more to reach by car from downtown Pittsburgh.

“It’s probably true that, yeah, we have some affordable housing that is priced affordably even for regional incomes,” said regional economist Christopher Briem, of the University of Pittsburgh’s Center for Social and Urban Research. “You’ve got to realize that metric is encompassing not just Lawrenceville and Shadyside, not just all of Allegheny County, but seven other counties.

“A lot of folks, that’s not what they’re looking for. Young professionals in Pittsburgh are often looking for jobs concentrated here in the city center” and housing close to work.

He said the regional view made more sense in Pittsburgh’s industrial heyday, when steel jobs spread throughout the river valleys, attracting residents to places far away from the city center.

Dale Swanton, a real estate agent and president-elect of the Realtors Association of Metropolitan Pittsburgh, said he’s seeing younger buyers look “further out into the suburbs because a lot of the areas closer to the city are becoming less and less affordable.”
And for some buyers who start out looking to buy in Allegheny County suburbs like Wexford and McCandless, he said they are often met with prices steep enough to push them farther out to places in Beaver and Butler counties like Baden, Harmony and Zelienople.

Pat and Regina Schober, a couple in their 30s who recently bought their first home in Pittsburgh’s Observatory Hill, said they were among the last in their group of friends to buy a home. Among the first did so about a decade ago — in Ellwood City, Lawrence County, more than 40 miles from the Golden Triangle.

Older Homes Abound

The median listing price for homes in the Pittsburgh area includes homes of all conditions — around here, homes are older and require more costly upgrades than in many other metro areas.

Just under half of Pittsburgh housing units were built before 1940. Across the country, that ratio is just over one in 10.
Older homes mean more costs for owners — which aren’t included in the purchase price.

“I’m going to have to put in lots of sweat equity and pay even more to renovate,” said Mary Kate Ranii, a 35-year-old Pittsburgher searching for her first home. “Can I even afford to do that? … We’ve been eyeing one home for months and months. It’s one of those houses that needs a ton of work and the price is not coming down.”

Jarrett Krause, a 32-year-old high school English teacher who recently bought his first home in Swissvale, initially wanted to buy in Regent Square for its business district and its proximity to Frick Park.

“All the places we looked at in Regent Square either had terrifying basements or were really crusty or out of our price range,” Krause said. “… Once you’ve visited enough houses that are on a 45-degree angle or are literally falling apart, it’s nice to strike gold.”

Low Inventory

Briem said a couple of factors are depressing the number of homes available for sale in the Pittsburgh area.

One is impacting the whole country: Interest rates are relatively high, and people who bought homes at rates around 3% before 2021 are hesitant to move to a new house that they would have to buy with today’s rates, which are over 6%.

“All these folks who have 2% mortgages are trapped in their homes,” Briem said. “They might want to move but they can’t sell because they can’t buy at that interest rate. That glommed up the supply of things that might be on the market for people to buy.”

He said Pittsburgh has an added quirk in that the percentage of people here who remain in their homes for 30 years or more is “off the charts” compared to elsewhere in the United States, where residents tend to move more often.

“If you’ve got a place where nobody’s moving out because they all age in place in their homes, that has a distinct impact on the supply of homes that come into market,” Briem said.

How Affordable Are We?

Even without accounting for the age of the houses, low supply and geography, Pittsburgh’s affordability is not much better than some peer cities.

Comparing the median value of occupied housing units (according to Census Bureau estimates) with median household income, Pittsburgh ranked a bit more economical than Buffalo, Milwaukee and Cincinnati, but a bit less so than Detroit and Cleveland.

Pittsburgh and its Great Lakes and Midwestern peers are clear standouts when weighed against coastal cities that are much larger. While Pittsburgh’s median value is about 3.2 times its median household income, that ratio is 9.7 in New York, 11.5 in Los Angeles and 7.3 in Boston. The ratio for the United States at large is 4.4.

Jackie Smith, a Pitt sociology professor and housing policy specialist, said the historically low number of young Pittsburghers able to buy homes today can be traced back to the regional economy’s transformation from industrial hub to an education, medicine and tech center.

“Those labor markets look different,” Smith said. “They’re not unionized for the most part. They’ve got a bimodal distribution of incomes. There’s very high-income earners and many more lower-income service sector workers.”

This story first appeared in Pittsburgh's Public Source. Read the original here.