The Rebirth of Housing and the Economy In Pittsburgh: 4 Reasons Pittsburgh Is A Great Place to Live And Work
This blog is a modified excerpt from my Investing In Pittsburgh’s Residential Real Estate white paper. Download your copy for more information.
Pittsburgh hasn’t always been a wonderful place to live. Although the city now regularly ranks among the most “livable” cities in the US and the rest of the world, Pittsburgh struggled after the decline of the Steel Industry in the ‘70s and ‘80s.
What was once one of the US’s most populous cities quickly found its population cut in half, with many of the remaining residents scrambling for jobs in a faltering economy.
In more recent years, however, Pittsburgh has reinvented itself.
The skies that were once thick with smog are visibly clearer.
Manufacturing jobs are returning.
Innovations in technology and automation—many of which started at the local university level—have inspired new businesses throughout the region.
And neighborhoods are collecting those blighted homes—the ones forgotten or abandoned in the ‘70s and ‘80s—and transforming them into affordable housing.
Over the last decade, this new Pittsburgh renaissance has attracted both people and business back into the region—and it’s raising property values in the process. That’s great news for Pittsburgh real estate investors!
Why Pittsburgh Is A Great Place to Live And Work Again
Here are a few of the reasons Pittsburgh is thriving once more (and why real estate investors should pay attention):
1. Pittsburgh is great for businesses across a wide range of industries.
In recent years, Pittsburgh has seen unprecedented growth in:
AI and automation (Uber, Argo, Google)
Fintech (Deloitte, Pineapple Payments)
Advanced Manufacturing (CMU Robotics, ARM Institute)
Life Sciences (UPMC, Astrobotics)
Energy (EQT, Shell)
Everywhere you look, there’s another household name or groundbreaking company moving into the neighborhood.
This sort of rapid growth is fueled by two major factors: Research & Development and tax incentives.
In 2016 alone, Pittsburgh’s per capita university research and development spending (thanks largely to universities like Carnegie Mellon University and the University of Pittsburgh) was almost 2.5 times the national average!
Such a significant investment in R&D regularly draws in leading talent, top minds, and ambitious entrepreneurs, especially as the research develops into standalone businesses (something we’ll address in the next section).
On the entrepreneurial side, Pittsburgh has incentivized rapid growth through tax policy. Two major tax incentives that have to lead to new and local businesses:
Local Economic Revitalization Tax Assistance (LERTA), which decreases real property taxes and allows municipalities and developers to revitalize deteriorated areas of the city.
Tax Increment Financing (TIF), which allows for small incremental increases in real property taxes over time, leaving greater funds for new development. TIF also creates special incentives for small manufacturing companies.
These, of course, are in addition to some of Pennsylvania’s more general tax incentives, like the Keystone Innovation Zone Tax Credits. These tax credits give fast-growing companies an opportunity to fund growth through sellable tax credits.
2. New high-paying jobs attract professional talent.
With the recent surge in businesses has come a rapid expansion of new, high-paying jobs. In fact, one report from the Pittsburgh Technology Council estimated that Pittsburgh is home to 35,000 professionals working in software- and hardware-related professions alone.
These jobs are in stark contrast to the region’s historical steel industry positions. In the past, many of Pittsburgh’s workers were employed by some arm of the steel industry, and many households earned an average median income of around $40,000-$50,000.
Historically, this low income has helped to keep housing prices relatively low and stable when compared to housing in other major cities.
But high-paying positions at companies like Google and Uber have spurred a shift in recent years.
Large salaries in Pittsburgh’s newest industries have created a demand for upper-middle-class and luxury housing throughout the region, and especially in Pittsburgh’s hottest neighborhoods—Shadyside, Point Breeze, Lawrenceville, and others.
Similar demand will soon impact neighborhoods like Garfield and North Versailles as well!
3. Universities lead the way in innovation and job development.
Pittsburgh’s education institutions have directly led to improvements in the local economy and housing opportunities. Pittsburgh is home to numerous influential colleges and universities, including:
Carnegie Mellon University
University of Pittsburgh
Duquesne University
Carlow University
Chatham University
Point Park University
Many of these universities have double-downed on their own research and development, which has directly led to growth in the tech industry within the Pittsburgh metropolitan area. Carnegie Mellon University alone has spun off 341 companies started by CMU faculty, students, and staff—all since 2008!
Creating great jobs locally has cut the brain bleed that has long infected Pittsburgh. Now, instead of the university’s best and brightest graduates leaving town for high-paying jobs in other major cities, many are choosing to stay here in Pittsburgh.
Research from 2016 showed that 50% of graduates from Pittsburgh’s higher-level institutions decided to call Pittsburgh home, beating other major cities like Phoenix (36.3%), Austin (43%), Virginia Beach (44.1%), and New Orleans (46.4%). With around 40,000 graduates every year, Pittsburgh regularly grows by about 20,000 professionals a year—just from graduates.
That’s great news for everyone in Pittsburgh, but especially people in real estate. Research shows individuals with a bachelor’s degree contribute $278,000 more to their local economies over the course of their lifetime when compared to high school graduates.
4. Neighborhoods are primed for growth and active investments.
The increase in high-paying jobs and great businesses has led to a revival in many Pittsburgh neighborhoods. Lawrenceville, for example, has seen a massive surge in property value over the last few years—a factor that’s been directly influenced by rapid investment in businesses and real estate.
Neighborhoods like Bloomfield and Garfield have seen similar revivals in recent years, sparked by many of the same influences.
In fact, Pittsburgh is home to a large number of dedicated organizations that focus on improving homes and homeownership for local residents. That includes:
The Hazelwood Initiative - Hazelwood Initiative’s Affordable Homeownership Program purchases blighted homes, renovates them, then sells them to low-income families at affordable prices. Hazelwood Initiative then goes a step further by actively teaching these members of the community how to be responsible homeowners. Incredibly, Hazelwood Initiative homes often come with mortgages of $500 or less per month!
OwnPGH - Led by Pittsburgh’s Urban Redevelopment Authority, OwnPGH has more than $20 million dedicated to lowering barriers to single-family homes throughout the city while helping low-income home buyers cover rehabilitation costs.
Rising Tide Partners - This organization partners with local communities to purchase and renovate blighted properties in a way that best meets the needs of the community.
Oakland Community Land Trust - OakCLT benefits both businesses and local community members. Businesses buy homes and properties, and then they lease the homes on those properties. This leads to lower mortgage costs for local residents while creating an additional income stream for the businesses.
Lawrenceville Community Land Trust - The Lawrenceville Community Land Trust works to keep low-income housing affordable by limiting homeowner equity in return for reduced housing costs.
These are only a small handful of the initiatives taking root throughout Pittsburgh and sparking dramatic changes. Some City of Pittsburgh initiatives, like the Pittsburgh Land Bank and the Affordable Housing Task Force have been admittedly less productive, but they’re still indicative of a larger trend: Pittsburgh leaders are focused on real estate development in Pittsburgh.
Investing In Pittsburgh Real Estate
Savvy investors know 10 years ago was the best time to invest in Pittsburgh real estate. The second best time is now. By purchasing homes in Pittsburgh, real estate investors will enjoy great ROIs in the coming years.
