Friday, February 24, 2012

Pittsburgh Real Estate Boom Keeps Getting Better

The Urban Institute ranks US metro housing affordability:

According to this index, Pittsburgh, Wichita, Syracuse, Buffalo, and Youngstown were the most affordable metros in 2010 (rent burdens of 13 percent and homeownership burdens of 11-12 percent). Los Angeles, Honolulu, San Francisco, San Diego, and San Jose were least affordable (rent burdens of 18-23 percent and homeownership burdens of 34-42 percent). Overall, the figures reflect a high level of affordability. In all but the costliest 8 of the largest 99 metro areas, costs amounted to less than a quarter of income. In 81 areas, cost burdens were under 20 percent.

Pittsburgh is the most affordable metro in the entire country. However, being grouped in with the likes of Buffalo and Youngstown will not entice civic boosters to jump up and down. Never fear, Pittsburgh's real estate market (both residential and commercial) is impressively healthy:

Jeffrey Ackerman, the national director of the private capital group for CBRE, detailed how much outside investment was being made in Pittsburgh-area real estate, presenting a graphic detailing how real estate acquisitions were being made by companies and investors from far-flung places such as Arizona and 10 other states, as well as Germany.

In the process, he sees the region’s reputation undergoing a change as Pittsburgh becomes better known as a good real estate investment.

“I really think the secret is out,” he said. “And the secret is out in the institutional world.”

Most interesting to me is the expectation that shale gas companies located in the suburbs (e.g. Southpointe) will start cramming into an already crowded downtown office market. Where job density is increasing, higher rents can't be far behind. That's driving the speculative investment from far afield. Everyone is betting on Pittsburgh to win.

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