Low inventory, higher prices and intense bidding wars tighten grip on Pittsburgh’s spring real estate market

When Jason Conlogue listed his McKeesport house for sale in January, buyers submitted four competing offers on the first day it hit the market.

“I wasn’t surprised,” he said. “I knew the house was listed under what it was going to sell for.”

The two-bedroom, one-bathroom house had been in his family for 73 years and three generations. The bidding war pushed its sales price over the $132,900 asking price.

Meanwhile, 22-year-old Leylah Yeniceri started looking at homes around the Penn Hills and Forest Hills areas in January and faced intense competition for the properties available to buy.

“I kind of expected it to be bad because of stories I’ve heard,” she said. “I just didn’t expect so many people would be fighting over every single house we looked at.”

The spring home selling season kicked off early this year in the Pittsburgh region, with a noticeable uptick in buyers trying to take advantage of mortgage rates dipping from more than 8% in October 2023 to the mid-6% range in January.

Since then, the 30-year fixed mortgage rate has jumped back above 7% — just in time for spring, when home prices and the number of home sales typically get a boost from higher buying activity. Economists now expect mortgage rates to hold steady for the time being and even come down a bit in the second half of 2024 when the Federal Reserve is expected to cut the benchmark interest rate.

‘There’s no where for them to go’

The rising interest rates over the past two years have had a chilling effect on home sales in the region. In Allegheny County, the number of home sales in 2023 fell to levels not seen since the 1980s when high inflation pushed mortgage rates close to 20%, according to West Penn Multi-List data.

Home sales in the county fell by 25% from 2021 to 2023, hitting a near all-time record low of 12,640 homes in 2023 compared to the 16,646 homes sold two years prior in 2021, according to the West Penn Multi-List Service.

Higher mortgage rates and high prices have made homeownership less affordable for buyers, made homeowners less willing to list their homes for sale, and left real estate agents with have a smaller housing inventory.

“I could sell 20 houses today if people would move. But they can’t move because there’s no where for them to go,” said Roz Neiman, a Howard Hanna Real Estate agent who specializes in luxury home sales.

Ms. Neiman said her empty nest clients in Sewickley, Squirrel Hill, Shadyside and Fox Chapel want to downsize, but the pickings are slim.

“There’s no apartments in the city, no carriage houses, no houses with first-floor master bedrooms,” she said. “And so, the baby boomers who have big gorgeous houses are sticking.”

Normally around the end of February and the beginning of March, an influx of houses hits the market.

She’s not seeing it this year.

Fewer homes were sold last year region-wide — and that includes Allegheny, Butler, Beaver, Washington and Westmoreland counties.

Despite the lower number of sales, houses sold at a faster pace than in 2022, and average sale prices increased in all but Washington County.

“What you are seeing right now is consumer confidence is rising,” said Dennis Cestra Jr., head of Howard Hanna Real Estate’s Pennsylvania division.

“Buyers feel more confident in the mortgage rate,” he said. “They feel like this is what it’s going to be, and rates won’t be moving dramatically from one Fed meeting to the next.”

‘Prices will continue to go up’

Average home prices in several of the most desirable neighborhoods in Pittsburgh and Allegheny County shot up in the 12-month period between January and February 2023 and the first two months of 2024, according to West Penn Multi-List data.

Shadyside home prices jumped to an average $571,000 from $491,000; Squirrel Hill average home prices went to $678,000 from $508,000; Ross Township prices increased to $302,000 from $260,000; and Fox Chapel average prices hit $1.1 million from $588,000.

Home prices in Mt. Lebanon, Lawrenceville, Highland Park and Bethel Park remained flat. Pine Township, Monroeville, Oakland and Downtown average home prices declined.

If the beginning of this year’s spring season is any indication, Pittsburgh’s housing market is starting off strong.

“I do think that 2024 is going to be a very strong year,” Mr. Cestra said. “I can’t tell you if we’ll be up in listings year-over-year or things like that. But overall prices will continue to go up considerably.”

Across the country, homes hitting the market are seeing intense competition because of housing inventory shortages.

“Multiple offers are still occurring, especially on starter and mid-priced homes, even as price concessions are happening in the upper end of the market,” said Lawrence Yin, chief economist at the National Association of Realtors based in Chicago.

Several buyers recently fought over a run-down house in the eastern Allegheny County suburb of Blackridge, said Charlene Haislip, an agent at ReMax Realty Brokers in Squirrel Hill.

With a $105,000 list price, the poor condition of the house has not scared away younger buyers who want to fix it and live there, she said.

“I’m telling you it needs everything inside,” Ms. Haislip said. “The plaster is coming down from the ceiling. This is camping. But I guess that’s how desperate people are for something affordable.”

The previous owner was an elderly man who is now in a nursing home.

“I’m actually quite pleased that young first-time buyers are willing to roll up their sleeves and do some work in order to get themselves an affordable place to live,” Ms. Haislip said.

This article is written by Tim Grant from Pittsburgh Post-Gazette and was legally licensed via the Tribune Content Agency through the DiveMarketplace by Industry Dive. Please direct all licensing questions to [email protected].