Ahead of the homebuying season, Pittsburgh list prices return to pre-pandemic levels
Real estate experts predict that home prices in the Pittsburgh area will continue to stabilize this home-buying season after peaking amid the buying frenzy that marked the early years of the pandemic. While interest rate hikes have slowed the pace of sales, local realtors report that demand remains steady.
Last month, the median home in the Pittsburgh metro area was listed at $200,000 — a 7% drop from a year before and similar to the median list price right before the pandemic, according to Realtor.com. (Because the site tracks homes that are on the market, its analysis does not reflect final sale prices.)
“There is not the flood of people that are fighting over a house,” Coldwell Banker Realty agent Shanna Funwela said, referring to the intense competition for homes that persisted from 2020 into last summer. “You now have agents just listing realistic [prices].”
Funwela serves clients in Allegheny and Beaver Counties within an hour’s drive of Pittsburgh. While higher interest rates have dampened her business somewhat, she said demand remains strong among first-time homebuyers and that homes that are under $300,000 continue to sell at a rapid clip. “They fly off the market, as long as they're priced right,” Funwela said.
She noted that sellers now make more concessions than earlier in the pandemic to bring down the cost of purchasing a home. For example, Funwela said homeowners are now more likely to agree to appraisals and inspections before finalizing a sale while also assisting with closing costs.
Funwela predicted that more stable interest rates would reinvigorate the market, largely by quelling fears of recession.
“The biggest feedback that I've continued to get is people just saying, ‘I don't know what's going to happen. … I don't know that I'm going to have a job,’” she said.
But “once [rates] have stayed at a certain point for a certain period of time — so say they stay at 6% for two months — all of a sudden people start saying like, ‘Oh, I guess nothing's going to change. … So now we’re going to go ahead and get in the groove of doing things again.’”
On Friday, rates on the popular 30-year fixed mortgage averaged 6.55% nationally, according to Mortgage Daily News. They had fallen below 3% before the Fed began to raise its benchmark rate a year ago.
“Interest rates really matter a lot to home shoppers,” Realtor.com chief economist Danielle Hale said. It “makes sense because [interest rates] are a really powerful determinant of how much home someone can afford and what their monthly costs look like for any given home price.”
She noted that, for the typical Pittsburgh-area homebuyer, monthly mortgage payments have easily risen by a few hundreds dollars over the last year.
As a result, Hale said, the market has cooled. In Pittsburgh, a slower sales cycle has increased the supply of homes even though the share of new listings slipped by 12% over the last year. Realtor.com estimates that last month local homes stayed on the market for a median of 13 weeks — a week-and-a-half longer than a year before.
The site’s data shows that about a handful of the nation’s 50 largest metro areas experienced price drops over the last year, with only Austin and New Orleans logging larger declines than Pittsburgh.
Hale said Pittsburgh’s return to pre-pandemic prices stands out because markets in the rest of the country have not stabilized to that degree.
She noted that the median price per square foot in Pittsburgh has not fallen by as much as the overall list price, suggesting that smaller homes comprise the bulk of local inventory.
In addition, while the recent drop in prices might suggest otherwise, she said the Pittsburgh region appears to attract out-of-market buyers at an average rate compared to other U.S. cities. About half of its website views come from other metro areas, she said, with New York City, Washington, D.C., and Philadelphia topping the list. Cleveland and Columbus received a similar proportion of out-of-market traffic, Hale said.
Dominic Janidas, president of the Realtors Association of Metropolitan Pittsburgh and a broker at Berkshire Hathaway HomeServices, said he has observed an increase since the shift to remote work in the number of buyers who move to the region from other parts of the country.
Janidas primarily sells real estate within the city of Pittsburgh and said his clients have relocated from places such as New York City, Los Angeles, Atlanta, Nashville, and Malaysia.
“We’re still an affordable city,” Janidas said. “Over the last couple of years now, with remote work and people kind of reprioritizing their lives and focusing more on living in a place that makes them happy versus living in a place that they have to … I personally have seen a pretty dramatic increase in relocation to Pittsburgh since 2020.”