Top 3 Investment Areas In Pittsburgh Over The Next 4-7 Years

[Account Closed]

"Oh, THAT neighborhood? It's definitely going to be the next Lawrenceville."

I hear this said ALL. THE. TIME. And yet somehow it always seems to be a different neighborhood. Sure there's some overlap in answers. But there's never one consistent answer provided amongst local real estate investors in Pittsburgh. And of course that makes sense since no one can truly predict "the next Lawrenceville" with 100% certainty, but still, why can't all the true local investors come to a general consensus on this topic? Surely there's enough empirical data out there to be able to narrow it down to one solid area that beats out the rest? No?

So here's my question and challenge for all of you. In your opinion, what are your predictions for THE top investment area in Pittsburgh based on overall return over the next 4–7 years? No, strike that, what are your top THREE area picks? That'll help you from having to narrow it down to just one. But here's the challenge, try to support your picks using actual facts and data (NOTE: if you must rely on observation then that's fine, but only as a last resort... observation meaning "I've seen a bunch of XYZ happening, etc, etc, etc"). 

Looking forward to reading everyone's answers and getting this interesting topic going! 

[Nicholas L.]

@Taylor E. thanks for the insights.  It will be interesting to get the 2020 census data and see if Pittsburgh or Allegheny County are still declining in population.

[Taylor E.]

Originally posted by @Nicholas L.:

@Taylor E. thanks for the insights.  It will be interesting to get the 2020 census data and see if Pittsburgh or Allegheny County are still declining in population.

You're welcome! :) And same here. You do have to keep in mind that the Pittsburgh area has alot of transient residents. Many students, medical residents, etc. are here for only about 4-6 years. So even if they register a new home address and voter registration here, they aren't going to be individuals you can count on, so using their demographical data as part of your strategy wouldn't be wise unless, like I said before, you're investing in Oakland and Shadyside (maybe Squirrel Hill). 

Any neighborhood outside of that and you're going to be dealing with actual Pennsylvanians.  Those are the populations you want to watch. Not sure exactly what the census data will include, but if you get your hands on migration data (by neighborhood or zip code), ignore the Oakland/Shadyside areas. It's unreliable for long term planning. 

[Jason H.]

@Taylor E.. You have very good insight into boiling PGH down to its reality.  While there has been quite some change since I was there back in the mid-to-late 90s, you’re pretty much on point.  I was one of those 4-6 year transients who went to CMU for college and left back to my hometown after graduation.  Fast-forward almost two decades later, I am also one of those individuals that you suggest go to the south hills for long term buy and hold (have been in that sub market for a few years now). Honestly, I went back to some place I was familiar with...and of course the lower cost of entry that you can find in PGH.  So far it’s been good, but I do agree with your long-term outlook on the area in general.

[Taylor E.]

Originally posted by @Jason H.:

@Taylor E.. You have very good insight into boiling PGH down to its reality.  While there has been quite some change since I was there back in the mid-to-late 90s, you’re pretty much on point.  I was one of those 4-6 year transients who went to CMU for college and left back to my hometown after graduation.  Fast-forward almost two decades later, I am also one of those individuals that you suggest go to the south hills for long term buy and hold (have been in that sub market for a few years now). Honestly, I went back to some place I was familiar with...and of course the lower cost of entry that you can find in PGH.  So far it’s been good, but I do agree with your long-term outlook on the area in general.

Thank you so much for the feedback! :) CMU is a wonderful school. I remember going to educational programs there as a kid haha. Pittsburgh has great investment potential, just a different kind than what people typically think when they look at urban areas. I'm fortunate enough to be native to a size-able market with multiple kinds of investment possibilities with a such a low cost to entry. It's definitely some good luck! I think Pittsburgh will live as it always has, so I don't want to scare away any investors. It just takes a different mindset, that's all. 

Aside from my personal experience, I also think about how Pittsburgh was affected by every other modern economic change (the dot.com bubble, rise of Silicon Valley/FAANG, etc.). The bulk of the money has always gone to Philadelphia or New York. The city gets the ripples 5-10 years after them, but it's nothing to turn the culture here. At its heart, Pittsburgh is a beer and pizza city that loves football and hockey. 

[Robert Kohnfelder]

Hard to make a top three with so much uncertainty, but a few areas I'm confident will increase in value are Beechview, Crafton, Carnegie, Brentwood, Allentown, South Side Slopes... just to name a few. Born & Raised in Mount Lebanon, always tracking neighborhood trends (especially in the South Hills) and friends with some great local realtors who can say the same. I currently reside/invest in Mount Washington -- it's been an awesome area thus far, but I wouldn't call it "under the radar" anymore. I just closed on a FSBO home behind my house this weekend, and I'm very intrigued (excited) to see what a few repairs + improvements can net me in rental profit a few months down the road. And as someone who lives just up the road from Allentown and South Sides Slopes, I get a real sense of hope and potential from these spots. Crime is still far too frequent, but from an investment standpoint, I feel there are still plenty of cheap run-down properties in the area that are ripe for the picking for rentals or flips.

[Nicholas L.]

@Account Closed are you still investing in Pittsburgh?

@Jim K. fun fact - according to the 2020 Census, Allegheny County grew in population for the first time since 1960, while Pittsburgh again lost a few thousand more residents (but just barely managed to stay above 300,000).  Can Allegheny County continue to grow while Pittsburgh continues to shrink?

[Jim K.]

Originally posted by @Nicholas L.:

@Account Closed are you still investing in Pittsburgh?

@Jim K. fun fact - according to the 2020 Census, Allegheny County grew in population for the first time since 1960, while Pittsburgh again lost a few thousand more residents (but just barely managed to stay above 300,000).  Can Allegheny County continue to grow while Pittsburgh continues to shrink?

Hi, Nicholas, thanks for following up on this. My answer is that YES, I suspect the trend will continue until about 2050. Allegheny County will grow slightly in population, Pittsburgh will consistently decrease.

I think what's happening is that many of the surrounding areas of Greater Pittsburgh are continuing to empty out into Pittsburgh, and the movement from the far exurbs back to the city is intensifying. Have you been to Kittanning, New Castle, or Johnstown? These towns are dying quickly. There are very few jobs. Nowhere near the geriatric health care opportunities of Pittsburgh. And the geriatric populations of these towns, as they get worse, get transferred to nursing homes within Allegheny County from less-capable assisted care facilities outside the county. It's a push-pull -- newer nursing care centers have to be within Allegheny County for quick transportation to the many intensive-care hospital beds, but typically not in the city proper because property values are too high. So you have the young people moving here for jobs and elderly moving here just to stay alive. Look at the 2010-2020 changes in population for all the counties surrounding Allegheny County, with the understanding that in my hypothesis the rest of Southwestern PA is also funneling in people to the Pittsburgh area (Johnstown is in Cambria County, which lost 10,207 people in the last ten years, New Castle is in Lawrence County, lost 5,038 population).

Allegheny County 2020 - 1,250,578, 2010 - 1,223,348, increase 27,230

Beaver 2020 - 168,215, 2010 - 170,539, decrease 2,324

Washington 2020 - 206,712, 2010 - 207,820, decrease 1,108

Westmoreland 2020 - 354,663, 2010 - 365,169, decrease 10,506

Armstrong 2020 - 65,558, 2010 - 68,941, decrease 3,383

Butler 2020 - 193,763, 2010 - 183,862, increase 9,901

After 2050, enough old people will have died to effect a demographic shift: geriatric care will stop being the powerhouse of employment it is today in the city. When that happens, barring vast changes, health care will become a shrinking industry in this town. I intend to be out of here well before 2050.

Is tech going to save the day? No. I think advances in telecommuting, the electric car's increasingly growing range and cheapening mileage costs, and of course autonomous driving technology will continue to change the game a lot for commuters. Look at the change in numbers for Butler County (tagging @Jay Hinrichs here).

I think Cranberry (in Butler County) and the few other tax-haven satellite communities that attract Pittsburgh's tech workers, as they are just over the border from Allegheny County, will continue to do well and probably grow modestly as Allegheny County jacks up its property taxes, which it will not be able to avoid in order to pay for increasingly critical infrastructure repair and maintenance.

[Nicholas L.]

@Jim K. thanks for the response!  I find your posts and insights invaluable.  

I continued to be fascinated by the huge shift in population in the US to the south and mountain west, and the slowing growth / decline in the midwest and northeast.  

[Jim K.]

@Nicholas L.

Personally, I'm fascinated by dying communities. The denial, the forced optimism, the groundless hope, the inability to look squarely at the facts, the flights of fancy, alternating with bouts of despair. The biggest part of how this grew up in me was selling my home in Athens, Greece for 120,000 euros in 2007 and getting out. At the time, everyone thought I was crazy, but I was convinced that something so corrupt and such an obvious Ponzi scheme as the Greek economy was never going to make it.

I was angry and I was bitter in those years. I had not been happy in Greece. I had seen a lot to despise in the country and in the people. The guy who bought my house was a classic Greek loser, always rah-rah-rah-ing about the country when it was on the rise (on borrowed money and junk credit), insisting that Greece was the best place in the world and would never go back to being a European backwater.

So in 2011, during the worst part of the initial Greek debt crisis, I picked up my phone here in western Pennsylvania and called the guy I had sold my house to back in Greece. I offered to buy my house back from him for 35,000 euros.

He started crying on the phone, and then I heard him cursing me, but weakly, and in an undertone through the sobs. I offered cash. The sobbing intensified. I told him to think about his family, his aging parents, what they could do with the money. Grown man crying and crying and crying...

And I laughed and drank up his tears across the ocean before I hung up.

[Darnell Smith]

I think, millvale, enta,sharpsburg are the next to be on the rise good family oriented, there's room to bring in new housing, new restaurants,  you have the water front

[Gary Tucker]

Wow never thought I would see Moundsville, WV as a contender in a discussion like this!

I live just up the road from Moundsville. I'm an investor and a mortgage loan originator. I've been involved in real estate for 20+ years in the upper ohio valley (Chester, WV down to New Martinsville, WV). 

There is a lot of optimism surrounding the cracker plant. There was also a large influx of pipeline workers in the area which created a huge demand for rental housing. It lasted a few years but has slowed down.

If you look at Beaver Falls it is almost an identical layout as Moundsville. Small town just across the river from the cracker plant. I've visited Beaver Falls during and after the cracker plant was being built. Whatever demand came from the cracker plant in Beaver county, you can expect about the same in Marshall county. 

Weirton will be a good turn around story. They've got a new factory coming in and a ton of cheap housing. Closest town to Pittsburgh in WV just out 22. Wheeling is also seeing a turn around. They are revitalizing downtown but it's years from being completed. Lots of the old victorian houses are getting bought up and modernized. Downtown condos are being built and seeing a strong demand as well. 

I'm not as familiar with others about the Pittsburgh market, but I like the comments so far. I am planning on investing in the Pittsburgh market soon!

[Wade Savage]

In my analysis, considering the data available up to 2022, the Pittsburgh real estate market appears to hold promising investment prospects, particularly in the realm of rental properties. Over the next 4-7 years, my research points to the following as the top three areas for potential investment in Pittsburgh's real estate market:

1. Downtown Revitalization Projects: It's worth noting that ongoing revitalization initiatives in Pittsburgh's downtown area are set to convert former industrial spaces into vibrant mixed-use developments. This transformation is expected to escalate the demand for rental properties, particularly among young professionals and millennials who seek the allure of urban living. I believe that participating in these projects could yield substantial long-term returns owing to the increasing demand for centrally located rental properties.
2. Suburban Residential Development: The suburban regions surrounding Pittsburgh have experienced a notable surge in residential development, driven by the escalating need for affordable housing and a tranquil suburban lifestyle. Investors are eyeing the construction of single-family homes, townhouses, and apartment complexes in these areas, recognizing the potential for lucrative returns in the rental property market. I recommend focusing on suburban developments to tap into the rising demand for rental housing outside the city center.
3. Student Housing Near Educational Institutions: With Pittsburgh being home to several prestigious universities and colleges, the consistent influx of students has created a robust demand for affordable rental housing in close proximity to these institutions. It would be wise to explore investment opportunities in the development or acquisition of rental properties that cater to the needs of the student population. The stability and consistent demand in the student housing market make it a particularly attractive avenue for investment.

In conclusion, keeping a close eye on these trends and conducting thorough market analyses will be crucial in identifying lucrative opportunities for rental property investments in Pittsburgh. Given the city's population and the evolving preferences of the local demographic, these investment areas show strong potential for long-term success."

[Alex Hileman]

If I had to pick 3 areas in Pittsburgh I would say...

Manchester - Data from the MLS shows that from 2022 to 2023, average home prices in Manchester rose 37% from $235,000 to $322,000. There are plans to extend the light-rail system through the neighborhood on its way to Bellevue and Emsworth.

Sharpsburg - It's the only affordable area left in the Fox Chapel school district after Aspinwall has been built up and is no longer accessible. 

Verona - People who are priced out of Oakmont spill over into Verona, and they share a school district. Verona's downtown area is slowly being revitalized and several new breweries and restaurants have opened recently.