Home Prices in Pittsburgh Are Up 22%, Making It The Fastest Gainer in the U.S.—Here’s Why Prices There are Exploding

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Pittsburgh has the hottest housing market in the country. Who knew? According to Redfin, Pittsburgh housing prices were up a mighty 22% from February 2023 to February 2024, making it the city with the fastest-growing house prices in the country. 

Formerly the heart of the Rust Belt, the city has recently reinvented itself as a tech town, welcoming major players like Google, Facebook, Amazon, Uber, Apple, and Microsoft. It’s not by luck. The city’s Carnegie Mellon University boasts one of the country’s most coveted computer science degrees, which turn out some of Silicon Valley’s top tech talent.

A Chronic Housing Shortage

However, you might have a tough time if you want to invest in Pittsburgh. Part of the city’s problem is a chronic shortage of housing inventory. 

That said, the average sales price for homes in Allegheny County was a palatable $275,000 in February, considerably less than the national median price of $412,227 according to the West Penn Multi-List as quoted in local paper the Post-Gazette.

The scarcity of inventory has resulted in bidding wars and an overheated market, with 26% of homes selling above listing price, according to Redfin’s data—up by 2.7% on the previous year.

John Petrack, vice president of the Realtors Association of Metropolitan Pittsburgh, told the Post-Gazette: “I’ve been around the industry for over 45 years, and I’m seeing the sales prices in certain neighborhoods in the city of Pittsburgh now exceed so many suburban locations.”

Pitt’s Tech Titans Bring in Big Money

One of the early tech pioneers in Pittsburgh, Google launched its HQ2 in Pittsburgh in February 2018, 12 years after first arriving in the city to take advantage of its engineering talent, opening a small office at Carnegie Mellon. Now a shuttle bus runs between the university and their expanded Bakery Square offices. 

Two years ago, the company announced it was investing a further $15 million into Pennsylvania, with a large chunk of that money expanding its Pittsburgh footprint. Additionally, smaller tech companies in the city raised more than $3 billion in funding. They attracted 57 new investors last year, dominated by autonomous vehicle startups Aurora and Stack AV—a 203% increase from 2022.

Downtown Is a Problem

However, despite shiny new tech hubs in downtown Pittsburgh, causing rents and home prices to spike, more conventional office buildings nearby have faced the same post-pandemic headwinds as other American downtowns, remaining vacant amid the increase in remote working and vagrancy. 

Amid concerns that 50% of offices could be vacant by 2028, there are proposals to “save downtown” by converting office space to residential living, easing inventory issues. However, such conversions do not happen overnight, are pricey, and would still not help ease the city’s affordable housing and increased homelessness issues.

Pittsburgh Still Cash Flows

Despite the increase in home prices, because the median home prices are lower than in other competitive markets, it’s still possible to cash flow if you can find a home.

Also worth bearing in mind is that the city of Pittsburgh only comprises a small section of the greater urban area that is often included when people refer to the Pittsburgh market. These diverse municipalities are often far cheaper than the trendier city neighborhoods such as Lawrenceville, Mexican War Streets, and South Side Flats, as well as the long-established Oakland, Squirrel Hill, Shadyside, and Mount Lebanon neighborhoods. 

A Population Problem

Like many Northern cities, the pandemic and remote work blindsided Pittsburgh, and recent census data showed Allegheny County experiencing a sharp population decrease, which caused alarm. However, the loss might not be telling the entire story. 

The older demographic of Rust Belt cities like Pittsburgh means a more significant loss of residents than in many other areas. With the aftershocks of the pandemic subsiding, Pittsburgh’s generally affordable housing and charming brick homes in historic neighborhoods outside the city mean it’s an attractive place to live and invest financially and aesthetically compared to other major American cities. The census data backs that up, with the suburbs showing real growth, fueled no doubt by house prices. 

Pricier Cities Are Losing Residents to Pittsburgh

According to Redfin’s data, Pittsburgh is attracting more residents from other pricier coastal cities than it is losing them to the Sunbelt (mainly Florida). While Pittsburgh’s tech nucleus has undoubtedly been a draw, a survey conducted last year by Rocket Homes and featured in the New York Times showed that Pittsburgh was one of the best 10 places to buy a home on a budget and, crucially, had by far the largest population out of all 10—a key metric for potential investors.

The Reasons to Invest in Pittsburgh Could Be Changing

For many years, Pittsburgh was a place for cash flow. Its steady 2% annual appreciation meant no one would get rich quickly buying and selling homes. However, the recent price boom means the city has added another investment string to its bow.

“The lack of inventory has meant that merely holding on to your real estate, claiming the tax benefits and appreciation, far outweighs the cash flow you can make these days,” John Walker, a long-term house flipper and real estate agent in the city, told BiggerPockets. “When people ask me about investing now, I first tell them not to expect to get rich on cash flow. That takes time. However, if you buy right, you could increase your net worth substantially.”

Final Thoughts

Any city needs to be diversified to be considered successful. While Pittsburgh’s tech companies grab the headlines, it also has other established long-term draws, such as its sports teams (the Steelers, Pirates, and Penguins), multiple well-regarded universities, hospitals, and financial services (PNC Bank is headquartered here). 

Diversification is the key to the city’s continued growth. While appreciating home prices might make existing homeowners and investors feel good, when the population is stagnant, it can create a false narrative. If people aren’t moving out of their homes because high interest rates won’t allow them to, that is quite different from people moving into the city due to job growth. 

That said, Pittsburgh is still affordable and has solid hubs of employment that aren’t going anywhere. However, it urgently needs to fix its downtown problem. This means investing here makes sense, especially if you have a long-term vision.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.