Covering rent is a little easier in Pittsburgh
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Rents nationwide have been climbing in recent years in response to the growing demand for rental housing, and Pittsburgh is no exception.
But the city remains a bargain compared with what renters pay in some parts of the country.
The average cost of an apartment in the city of Pittsburgh runs about $838 a month, while the average rent is $2,985 a month in New York, $1,970 in San Francisco and $1,045 in Chicago, according to Reis Inc., a New York-based real estate research firm.
And those rental dollars go further here.
"You can get a better apartment for less money in Pittsburgh than you can in Chicago or New York or San Francisco," said Jon Pastor, CEO and co-founder of Rent Jungle, a North Shore-based company that collects data on rental rates nationwide.
"It's not just more square footage you get in Pittsburgh," he said. "But also you'll get a location in a neighborhood where young professionals want to live, with lots of access to bars, restaurants and activities like movies and shopping."
Since the Great Recession, Pittsburgh has been consistently rated as one of the nation's strongest housing markets. Still, rent in even the most desirable neighborhoods -- Shadyside, Oakland, the South Side and Downtown -- remains a far cry from what landlords are charging, on average, in other major cities.
Even looking just at cities near Pittsburgh, Reis data show the cost of renting outside the Alleghenies is much higher. For instance, average rents in Baltimore are $1,043; Washington, D.C., rents average $1,488; while Philadelphia's average is $1,058. An exception would be Cleveland, where the average rent is actually lower -- $731. The figures include apartments of all sizes.
The large disparities among various major U.S. cities have a lot to do with income levels.
U.S. Census Bureau data show the median household income for Pittsburgh in 2011 was $37,161, while the median household income was $72,947 in San Francisco; $61,835 in Washington, D.C.; $67,204 in New York City; $54,525 in Las Vegas; and $47,371 in Chicago.
The U.S. Department of Housing and Urban Development recommends that renters spend no more than 30 percent of their gross income on housing and utilities.
That means a person earning $37,000 -- Pittsburgh's median income -- should not be spending more than $925 per month on rent and utilities. A person earning the median income of $67,204 in New York would be able to afford $1,680 in rent and utilities based on federal government recommendations and someone in Chicago earning the median income of $47,371 there would be able to afford monthly housing costs of $1,184.
People who live in high-rent cities, however, may need to allocate more of their income toward rent -- sometimes up to 50 percent in large metropolitan areas.
Individuals in rural areas -- such as Knoxville, Tenn., where the average rent is $601 a month -- may be able to allocate less than the recommended 30 percent of their income.
A ranking of nationwide apartment costs by Reis indicates that costs are lowest in Wichita, Kan., where average rents are $517 a month; Oklahoma City, where rents average $564; and Tulsa, Okla., where rents average $575.
"These are lower cost-of-living areas," said Brad Doremus, a senior analyst at Reis. "Incomes are lower, so you wouldn't see apartments in these areas get bid up like they would in higher income areas."
Not only are median incomes in New York City among the highest in the nation, the forces of supply and demand also play a role in pushing rental prices higher.
"There are more job opportunities in New York, but there's a lot more competition for those jobs and you have to pay more to live there," Mr. Pastor said. "A young professional may make 20 percent more in New York, but pay twice as much rent."
According to Rent Jungle, the more expensive rental communities in Pittsburgh include Oakland, Shadyside, South Side and Downtown.
Mr. Pastor said there are still bargains to be found in East Liberty, where rents have not caught up with the amenities in that neighborhood, such as restaurants and shops, which have improved in recent years.
Douglas E. Culkin, president and CEO of the National Apartment Association in Arlington, Va., said several considerations influence rents in any given location.
"Beyond the basic economic principle of supply and demand, factors including market-specific cost of living, the local job market, quality of life and available housing options all exert upward or downward pressure on average rents," he said.
"Whether it's the flexibility to move for employment opportunities or the luxury of living a maintenance-free lifestyle, we are also seeing nationwide that now more than ever, Americans are making the decision to choose apartment living for their housing."
The rental market in Pittsburgh has been expanding with the conversion of office buildings and other under-utilized industrial properties, said Jim Eichenlaub, executive director of the Apartment Association of Metropolitan Pittsburgh.
He points to several landmark buildings that have been converted to apartments, such as the Cork Factory in the Strip District, Heinz Lofts on the North Shore and the former State Office Building and the former Verizon Building, Downtown.
"Even with all the positive factors, it's still a competitive market [in Pittsburgh], especially with multi-family rentals," Mr. Eichenlaub said. "Tenants can move. You always have that possibility. They still have to be competitive with each other."
Mark Popovich, senior managing director at Downtown-based HFF Inc., a commercial real estate broker with a national footprint, said the demographic that Pittsburgh is attracting to its rental market is young people who have graduated from college or who are fairly new in their careers -- usually between the ages of 23 and 30.
"What we have now are jobs and a growing economy," he said. "A lot of graduates coming out of Carnegie Mellon University and the University of Pittsburgh and other colleges now have the ability to stay in Pittsburgh and work, whereas previously -- in the 1990s or early 2000s -- there weren't a lot of employment opportunities in Pittsburgh.
"Our economy wasn't as robust then as it is now," he said. "Today there are opportunities for employment in high-tech jobs, corporate banking, accounting and energy-related fields, to name a few."
While Mr. Popovich acknowledged that Pittsburgh rents are on the rise, he said the fairly low cost of housing in the city limits how much landlords can charge.
"When you look at the monthly rental rates for Class A apartments, you could afford a mortgage payment on a nice house," he said.
"But the younger demographic would rather live in an urban rental in Shadyside, the South Side, the Strip District or Downtown. They don't want to be tied to the burdens of home ownership."
First Published January 11, 2013 12:00 am