Pittsburgh Real Estate Market: What a Bottom Looks Like
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What does it look like when a housing market hits bottom? I would direct your attention to the Pittsburgh real estate market as a good example. Home-price data suggests that the Pittsburgh metro area is starting to bottom out (not that it had very far to fall). The city will likely see stable home prices through 2012, with a chance for steady appreciation over the next couple of years. But this is just me talking. Let’s look at some data.
The chart below shows home prices in Pittsburgh going back to 2008, with a few neighborhoods thrown in for good measure. This chart includes data through November 2011, the most recent information available at the time of publication. It tracks the midpoint for Pittsburgh home values, as estimated by Zillow. It’s not the price range I want to point out (though it too is significant). Rather, it’s the overall trend line for the last few years.
In March 2007, before the housing market crashed, the midpoint home price was $72K. It rose to $80K by the end of 2008. Zillow’s latest data places the midpoint price at around $78K – $79K. Not much of a crash there, in terms of home prices. From a data standpoint, it appears to be a market that is bottoming and rebounding.
Home Price Stability in 2012
According to Lender Processing Services, a data and analytics company serving the mortgage industry, Pittsburgh is one of the strongest of the larger metro areas in terms of home prices. Their pricing data shows that, since the beginning of 2012, the largest gains nationwide have occurred in Detroit (+5.8%) and Pittsburgh (+2.0%). The company also states that: “Pittsburgh is the only MSA that, with seasonal variations, has seen its average price rise continuously since January 2005.”
Home prices in the Pittsburgh real estate market are nearing a bottom, if they haven’t found it already. The housing boom of the early to mid 2000s raised prices by around 16% in the metro area, but they haven’t fallen by much since then. This is one of the keys to housing recovery in this city. Employment is another…
At the end of 2011, the unemployment rate in Pittsburgh was 6.6%, compared to more than 8% at the national level. There is job growth underway in this metro area, as well. So we can expect the jobless rate to fall even more in 2012. This will increase the size of the buyer pool, thereby reducing inventory and giving an added boost to Pittsburgh home prices over the coming months. It’s no wonder the city recently made MarketWatch’s list of “5 best U.S. housing markets, long term.”
Employment is a key requirement for housing recovery. We’ve already seen that low mortgage rates alone are not enough. Rates have been at historical lows for many months now, but that has not spurred anything remotely resembling a recovery at the national level. Job growth is what’s missing in most cities. When you consider the improving employment picture in Pittsburgh, alongside the home-price stability mentioned earlier, you could easily make a prediction for rising home prices over the next couple of years.
Pittsburgh a “Highest Performing” Real Estate Market
Here’s some more good news for the Pittsburgh housing market. On February 6, 2012, real estate data firm Clear Capital released its Home Data Index, with home-price trends and data through January 2012. They reported flat and declining prices for most of the country. But they also showcased some of the best-performing markets. The Pittsburgh metro real estate market showed up at #10 on the list (see below).
The image above shows how Pittsburgh home prices have performed, compared to other strong markets in the U.S. It’s not surprising to see cities like Washington, D.C. and Dallas on this list. (In November 2011, I described Dallas as one of the strongest real estate markets in the country.) The pricing stability in Pittsburgh comes as more of a surprise. According to Dr. Alex Villacorta, Clear Capital’s research director: “several specific markets are bucking the trend and seeing appreciation, suggesting that recoveries could be occurring.”
A Good Time to Buy a House in Pittsburgh?
Given all of these trends, is now a good time to buy a house in the Pittsburgh real estate market? It depends. Purely from a pricing standpoint, buyers might be wise to wait another couple of months. But you could also make an argument for buying now, while mortgage rates and home prices are incredibly low.
Many people are moving to cities like Pittsburgh from higher-priced areas, often for retirement. Such was the case with Carolyn Kauffunger, a retiree who moved to Philly from Boston. “The housing stock is very affordable here,” she said. “We would never be able to afford our house in Boston.”
But home buyers need to consider their own financial situations, and not just the current state of the housing market. They need to ask those all-important questions: How stable is my employment situation right now? Can I afford the down payment on a mortgage loan? What is the resale potential of homes in the area? Can I even qualify for a home loan, given my income and credit situation?
With that being said, the Pittsburgh real estate market is looking good in 2012. It’s one of the few places where I would consider buying a home right now.
Disclaimer: This article makes forward-looking statements about the Pittsburgh housing market. This statements are not to be viewed as facts or guarantees. This information is provided for educational purposes only. We make no assertions about the future of this market, or any other. Please do not make any financial decisions based solely on the information presented herein.