Pittsburgh's Residential Real Estate Market Shows Exceptional Strength
“Pittsburgh’s real estate market is pretty strong,” declared Megan Stearman, Oxford Development’s Director of Marketing and Innovation. “What those of us who live here and see every day is backed up by the Urban Land Institute’s annual report, Emerging Trends in Real Estate.”
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Walnut Capital has tackled both commercial and residential development in East Liberty’s Bakery Square. Images courtesy of Walnut Capital.[/caption]
Stearman also pointed out that prices in the Pittsburgh area remain lower than the national average despite high levels of appreciation in select neighborhoods over the past decade, such as Lawrenceville (324% from just under $73,000 to $237,000), Squirrel Hill (41.8% from $281,000 to almost $400,000), Fineview, located on the North Side (168% from $62,300-$168,000), Polish Hill (145% from $94,654 to $232,246) and Manchester (145% from $76,106 to $186,861).
“As with the commercial market, the stability of residential real estate has made Pittsburgh a great place to invest,” said Stearman. “Being close to New York City and having easy access to a significant percentage of the U.S. population has made Pittsburgh more attractive to businesses that want to be in the eastern part of the country.”
In her experience, millennials are staying in Pittsburgh in larger numbers than in previous decades after graduating from area colleges and universities. Additionally, young people who went to college elsewhere are attracted to Pittsburgh because of jobs in education, robotics, healthcare and film production that pay well relative to the cost of living. Regardless of how people in the 25-35 age group (millennials) arrive, with few exceptions they like to live close to where they work, and to amenities such as restaurants, cultural venues, recreational outlets and professional sports facilities.
“Among millennials, Pittsburgh is one of their top-choice cities because of our great cultural and recreational amenities,” said Stearman. “The majority of those people are renters, which is driving up demand for apartments.” Such properties include Oxford’s second phase of 3 Crossings, a seven-acre site that Oxford Development is converting to mixed use.
The property is in the Strip District at 29th and Railroad Streets, near the banks of the Allegheny River. Upon completion, it will feature 600,000 square feet of office space, 300 Class A
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Artist rendering of The Stacks in Pittsburgh’s Strip District.[/caption]
apartment units, 50,000 square feet of retail, hundreds of bicycle spaces, a multimodal transit facility, trail access and two public plazas.
The project’s anchor tenant is Smith & Nephew. The UK-based medical technology company will move next year from its current location on Liberty Avenue in the Strip to The Stacks.
Oxford Development’s recently completed residential projects include The Yards at 3 Crossings in the Strip District and Coda on Centre in the East End.
In the East End, Todd Reidbord, Principal and President of Walnut Capital, has experienced the same dynamic growth that has led Oxford Development to be a major player in the Strip.
“With Laurel Communities, we built 52 townhomes [across from Bakery Square] and they sold quickly,” said Reidbord. “Our apartments are full and command high rents because people want to live close to where they work and play,” he continued.
Although growth is occurring at a rapid pace, Reidbord cautioned that slow and steady growth is more typical in the Pittsburgh market. He also said that, over the long-term, population growth is necessary because “we need new people to fill jobs that demand creates in our new economy, which in turn creates the demand for continued growth in our housing.”
While Stearman and Reidbord focus primarily on rental properties, Pamela Tracy, an agent for Piatt Sotheby’s International Realty in Downtown Pittsburgh, focuses her efforts on assisting buyers and sellers.
“Today’s home buyers want move-in-ready spaces, amenities and walkability,” said Tracy. “Most millennials are looking for the turnkey types of properties they see on HGTV, with lots of high-end craftsmanship. While their parents wanted a large home on a big piece of land in the suburbs, young people today are willing to trade size for accessibility, such as being walking distance to work and recreational opportunities.”
Because of affordability, Tracy is seeing increased demand for homes, which has created high levels of appreciation and the current sellers’ market, with houses selling above list price in days, and sometimes with inspection contingencies waived. “People are looking for homes because it’s still possible to buy something in Pittsburgh for a reasonable price compared to most other major cities. Homebuyers are also looking for yards or rooftop decks, even in the city, because at least 75 percent of buyers I work with have dogs and want a space where their pets can run around.”
She also pointed out that the Commonwealth of Pennsylvania has first-time home buyer programs that give people the opportunity to become part of the property-owning class. Piatt Sotheby’s International Realty helps to educate individuals and groups on home ownership by offering its own lunch-and-learn seminars. Topics include first-time home buyers, using property as a financial tool, managing new construction, investing in real estate, and buying and selling to right-size one’s home. The firm also rebates a portion of its commissions to Pittsburgh Technology Council members who use Piatt Sotheby’s for their real estate transactions.
As for how long the strong market is likely to continue, Tracy said, “It’s anyone’s guess, but it’s always a great time to purchase a home. Home ownership is an excellent way to build equity for the future while creating wonderful memories in a place of your own.”
As prices continue to rise, a shift in the economy could force lenders to tighten their standards. Regardless of how the economy fares over the next couple of years, Tracy believes that turnkey properties located near amenities will remain in high demand.
Module: A New Approach to Home Building
Frustrated with how homebuilding has been geared toward the best interests of homebuilders/contractors instead of homeowners, Brian Gaudio was inspired to start Module in Pittsburgh.
Module is redesigning homeownership to be more sustainable and accessible. Its design platform and construction technology significantly speeds up the process, which means that homebuilders can start small and easily add on as needed.
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Module’s first house in Pittsburgh’s Friendship neighborhood. Photos by Ed Massery.[/caption]
“This enables homebuilders to provide a flexible entry point for homeownership and allows homebuyers to purchase the right amount of space at the right time,” said Gaudio.
With expandable upgrades and layouts specifically designed for flexibility, Module houses can change with homeowners’ needs. Its houses are manufactured off-site, which means tight quality control and major reductions in build times, according to Gaudio.
Module ensures that from floor to finishes, its houses are healthy, resource-conscious and environmentally sustainable. Module has design-build capabilities and is able to provide architectural services (schematic through construction administration), digital marketing and sales (through Module’s online platform), as well as construction estimation services.
Module also has strategic partnerships with a local general contractor, smart home and appliance providers, panel manufacturers, modular manufacturers, and a preferred lender, all of which service the Pittsburgh area.
Its first home – Lathlam House – was built in the Pittsburgh neighborhood of Friendship. And other homes are now in the pipeline. Tours of Lathlam House are available for potential homeowners and the curious to experience a Module house.
“The typical reaction is ‘Wow, this is bigger than I thought,’” said Gaudio. “Visitors really enjoy the natural light and finish materials.” Learn more at www.modulehousing.com.