Pittsburgh Experiencing a Boom From Residential Investors (Crafton, Hampton: renters, mortgage)

[jay5835]

Originally Posted by SteelCityRising

Do you want cash-hungry absentee landlords to be buying 40% of the homes in "The Borough"?

Within the last month, I've read about the so-called International Rich buying up all the real estate they can get their hands on in London and San Francisco. Usually they start in neighborhoods equivalent to "The Borough."

It hadn't occurred to me this would happen in Pgh, btw.

[Kippy]

Originally Posted by SteelCityRising

This "recovery" nationally has largely benefited the upper-middle-class and affluent disproportionately to the working-class stiffs, though. If you were hammered by the recession and were just squeaking by, then do you really have enough assets tied up in the NYSE to care that it's at a record high? "Investors" are doing great? Yes, they are. Those with six-figure household incomes and net worths ARE doing great. When will that trickle down, exactly?

The trickle down is that when the economy is doing well, those people are more likely to buy goods and services, such as dinner from a delivery service. The restaurants get more orders, the delivery service gets more business, and the drivers get more tips.

[gg]

Originally Posted by SteelCityRising

I AM happy our region is doing well. With that being said not all of us are 50-somethings who own a home in "The Borough", imbibe fancy imported alcoholic drinks, and drive a BMW that can handle Route 28 offramps better than "those stupid SUVs". Those of us who are just starting out and struggling to buy our first homes are facing stiff competition from those in your demographic who have cash to burn. I don't know if I'd consider almost 40% of local homes being purchased by investors (with many being turned into rentals) as being preferable to the fabric of a neighborhood vs. more of those houses being purchased by owner-occupants. Do you want cash-hungry absentee landlords to be buying 40% of the homes in "The Borough"? .

Um, you have to pay some dues in the world you know. If you want to move up, buy a duplex and rent half out. Live in it two years and buy another home to live. Planning is key to success. Real estate can be a good investment and if you buy a home, fix it up while living in it, you can sell it and move up in two years TAX FREE! Primary homes are not taxed when you sell them, unless you are taking some super high gain, which won't be the case for yourself. Pay some dues and stop complaining that others are doing well. Stop looking through the window of the store and buy something! Get in the game and do it NOW!

[steindle]

Originally Posted by North Beach Person

Don't break out the champagne quite yet. My experience, here in SoMD, is that real estate investment properties actually add to the instability of a neighborhood. People in, people out, no real sense of place.

Of course it differs from neighborhood to neighborhood, but I will say that my heart sinks a little every time I see a house in my 'hood has been sold from an individual to a real estate company. In my experience, that tends to mean that this is going to be another property that is ill-maintained because the (often transient) person renting doesn' t have the money or will to maintain it, and the actual owners won't maintain it because it's just another abstract investment in their portfolios to them, in a neighborhood where they don't live or set foot in.

I've noticed that this pillar of the community has started snapping up properties in Troy Hill, and it bothers me quite a bit: Despite indictment, Pittsburgh landlord expands his business - Pittsburgh Post-Gazette

My plan is to organize and mobilize residents and the actual developers interested in the neighborhood (primarily along Goettman and Lowrie) as an improving community rather than as a cash cow... and whose future returns are going to take a hit if slumlords like Realty Choice take hold.

[selltheburgh]

This isn't 100% correct. The "east end housing crisis" that you speak of is pricing out a lot of investors as well as cash poor first time buyers. Houses in Lawrenceville, Highland Park, East Liberty, Bloomfield, Polish Hill etc are now at a price point where buying them and renting them out isn't too great of an investment, even with rising rents. The CAP rates are lower than they were 5 years ago, which is because owner occupants are willing to pay more than investors.

There are a lot more investors out there now than in the past. On the other hand, investors typically leverage against other properties and right now it is easier and cheaper to borrow than it has been for the past 5 years. When people hear "cash buyer" it is normally a leveraged line of credit, not $300,000 cash sitting in a checking account.

[selltheburgh]

What I posted coupled with Steindle's post is proof that Troy Hill needs to get its prices up by about 75-100% before it becomes less of a landlord/investor neighborhood and more of an owner occupant neighborhood in the future. I have a very loose formula for this and it has been pretty spot on in the past when predicting outcomes of neighborhoods.

The city as a whole needs a healthy mix of rentals and owners. What it doesn't need is a bunch of landlord / investors like D o v. He's still building his portfolio before he heads to prison.

[zman63]

Originally Posted by SteelCityRising

As a segue from my usual ranting of "OMG! East End Housing Crisis!" I read with alacrity in this morning's Pittsburgh Tribune-Review an article that states that over 1/3 of the homes being bought in our city are being bought on a speculative basis by investors.

Investors put squeeze on prospective homeowners' American dreams | TribLIVE

The article profiles an early-20s couple who had qualified for a mortgage but were outbid on an attempt to purchase their first home in Bethel Park by a wealthy investor paying cash upfront. I've also recently heard through friends that their friends have been trying to buy a home and keep being outbid by cash buyers offering over the asking price.

Nationwide 14% of all home sales in September 2013 were to "investors". That's up from 9% in August 2013. Roughly 37% (about 2.5 times the national percentage) of homes in the city of Pittsburgh were sold to investors so far during 2013. Buyers paying all cash upfront accounted for a whopping 49% of residential sales in September 2013.

Where are so many people coming up with this kind of money to pay six-figures up-front while the economy is still in the garbage? How are first-time home-buyers, the VAST MAJORITY of whom aren't able to pay cash in full upfront, supposed to compete?

The article also references one "flipper" who bought a house in Mt. Lebanon for $300,000 and is now selling it for $749,000, without disclosing how much, if any, he spent on updates (I'd hazard a guess to say FAR below the $449,000 differential). People like him are gobbling up a dwindling supply of reasonably-priced properties affordable to young families and reselling them to executive-level households.

If housing prices in Pittsburgh continue their upward trajectory I fear we'll lose our competitive advantage nationally of being known as a bastion of housing affordability, and other metro areas, such as Cleveland, which offer cheaper housing, will see a boom instead. What do others think?

Here is the way I see it. With all of the good press, the carpetbaggers have moved to pittsburgh to try and flip houses and sell them at ridiculous and overblown prices. The underlying factor that most people are missing is that the wages are and were never were high or median in the Pittsburgh area.

The rest of the country, including cleveland always had higher wages and more employment growth than Pittsburgh until the recession. Pittsburgh never experienced the hangover from the recession because it never made the economic growth party back then. It is a mini housing bubble building in the Pittsburgh area and it will burst. The wages, job growth and weak population growth aren't there to keep up with it.

I think you are right about cleveland. They have a lot of development going on and seem to be rebounding. They are in the process of adding 1,700 residential units in their downtown. They may have fallen below pittsburgh in recent years, but it appears they may pass us quickly in their recovery.

Here is the growth for the cleveland federal reserve district, which includes Pittsburgh.

U.S. Federal Reserve Beige Book: Cleveland District (Text) - Bloomberg

[zman63]

In addition, if you notice, most of the new housing in the city is rental units. We have moved away from building condos and townhouses for people to buy. The demand in the city of pittsburgh is going to be for renting.

The good thing about them over inflating the housing prices in the region is that it will force more young people to live in the city because that is were most of the new apartment style and rental housing will be.

[JD984]

Compared to a lot of areas, it's seemed to me that the Pittsburgh area has a large stock of houses that have amazing exteriors, but interiors that look like they were updated in the 1960s. They no longer have the original details, but they don't look up to date, either. There are many exceptions, of course, but the contrast to other metro areas can be pretty striking. I'm not surprised some investors now see that as an opportunity. If they've bet wrong, the flipping activity will stall and prices will come down.

[zman63]

Originally Posted by JEB77

Compared to a lot of areas, it's seemed to me that the Pittsburgh area has a large stock of houses that have amazing exteriors, but interiors that look like they were updated in the 1960s. They no longer have the original details, but they don't look up to date, either. There are many exceptions, of course, but the contrast to other metro areas can be pretty striking. I'm not surprised some investors now see that as an opportunity. If they've bet wrong, the flipping activity will stall and prices will come down.

Young people buying are gobbling up most of the affordable housing left in the city limits. There are exceptions, but the trend is for the city as the median age of its residents dropped by two years while the suburbs and exburbs are aging. If you look at PMC property group they are adding new housing units in vacant buildings downtown. Those are rentals only. I truly believe the future of housing for young people is going to be renting or a rent to buy option.

Mt Lebanon is the nicest suburb south in my opinion, but again mt. lebo's median age jumped over 40 while the city's decreased to 33 years old. The young people are going for the city because of access to public transportation, walkability and new rental units.