Pittsburgh area ranks high for affordable housing


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Although real estate prices are on the rise and wage growth is weak, the Pittsburgh region remains one of the most affordable places to own a home.

Pittsburgh is the fifth most affordable U.S. metro area for housing, according to Chicago-based Interest.com, a national real estate information website that recently analyzed the median household incomes of residents in metropolitan areas across the country compared to the cost of buying a median-priced, single-family home in those areas.

Atlanta is the most affordable metro area for housing, followed by Minneapolis, St. Louis and Detroit, according to the Top 5 list.

The reason Pittsburgh fares so well, said Interest.com managing editor Mike Sante, is that while the region's median household income of $50,489 is only slightly below the national median income of $51,371, the median home price of $137,000 is significantly lower than the national median of $203,500.

"When you crank all the numbers through the system, you find the median family in Pittsburgh can rather easily afford the median house," Mr. Sante said. "By definition, that makes Pittsburgh a pretty affordable city.

PG graphic: U.S. housing market
(Click image for larger version)

"Living in an affordable city, such as Pittsburgh makes it easier to send kids to college or save for retirement because you are not spending all your money on housing."

According to the most recent Census Bureau data, 69.8 percent of residents in the Pittsburgh metropolitan area are homeowners. The metro area includes Allegheny, Beaver, Butler, Washington, Westmoreland, Fayette and Armstrong counties.

The national homeownership rate, according to Census data released Nov. 5, was 65.3 percent.

In the least affordable metro area -- San Francisco -- the median-priced home costs $706,300. Although the median income there is notably higher -- $74,922 -- it is not enough to offset housing expenses, which makes homeownership in San Francisco much harder to attain. Only 55.1 percent of San Francisco metro residents are homeowners, according to the Census Bureau.

Whereas, homeowners in Pittsburgh can get by on spending 28 percent or less of their income on housing, residents of San Francisco who own a home will shell out 40 percent to 50 percent of their total income to keep a roof over their heads.

The difference becomes even more apparent when considering that a 20 percent down payment and closing costs for a real estate purchase would top $100,000 in San Francisco compared to about $30,000 in Pittsburgh.

Howard "Hoddy" Hanna III, CEO of O'Hara-based Howard Hanna Real Estate, said the affordability factor is one thing, but Pittsburgh also continues to be one of the top places to live in the country.

"Pittsburgh has a big city environment and a small city feel," Mr. Hanna said, pointing to the city's thriving cultural district, three major sports teams, universities and health care centers. "All of those amenities make up our lifetsyle here. You might find less expensive housing in North Dakota, but you will not have the amenities we have here."

Home sales in the Pittsburgh region were up 10.6 percent this year through September, according to data collected by RealStats, a South Side-based real estate information service. A total of 21,547 homes changed hands during that time frame compared to 19,475 homes sold during the first nine months of 2012.

Rising interest rates are likely to take a toll on the affordability of housing in most markets, including the Pittsburgh region.

"We are expecting the 30-year fixed rate to trend to 5.4 percent by the end of next year," said Walter Molony, a spokesman for the National Association of Realtors in Washington, D.C. "So with rising prices and higher rates, that will take a bit of a bite out of affordability and reduce the pool of buyers by 10 percent.

"But even with those factors, we expect sales of existing homes to hold steady next year above 5.1 million homes."

People who live in Ohio also have a good chance of being able to afford a home.

The National Association of Realtors' Affordability Index ranks how affordable housing is in a metropolitan area. A score of 100 on the index indicates a median family would make just enough to afford a median-priced home after making a 20 percent downpayment.

With an Affordability Index score of 315.2, the typical household in the Cleveland metropolitan earns three times the income needed to buy a median-priced home there. The Cincinnati area scored 299.2, while the Toledo region is considered very affordable for homeownership with a score of 392.9.

Mr. Molony said Pittsburgh is the only major metro area that does not have an Affordability Score because the National Association of Realtors is not able to publish data from the multiple listing service here. He would not elaborate on why the data is restricted.

He did say that historically Pittsburgh's Affordability Index score has fallen between 200 and 250, which makes it more affordable than Philadelphia, which has an Affordability Index of 203; and about equal to York (253.1) and Erie (270.7).

Tim Grant: tgrant@post-gazette.com or 412-263-1591.


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