Several factors influence a successful real estate investment in Pittsburgh, including price and location. The property should also be in a condition that matches your budget while being negotiable in a hot housing market. This article will give you a few tips on purchasing your dream house in Pittsburgh.
Demand for Real Estate in Pittsburgh
Pittsburgh regularly appears in most “best-of” lists that highlight positive features such as good cuisine and favorable living conditions. Its population may not be growing significantly, but the demand for housing keeps going up.
While Pittsburgh is a world-class city, house prices are still attractive because they’re lower than the national average. In 2019 it had a median listing price of $200,000 and a median sales price of $144,200. This makes it a buyer’s market. The following is a breakdown of the city’s real estate market by different price points:
1. Homes under $100,000: While they’re more affordable, the few ones you’ll find require extensive repair work. Some need a complete makeover.
2. Homes ranging from $100,000 to $200,000: Other than requiring some repair work, these are in high demand. They usually sell a few hours or days after getting listed.
3. Homes ranging from $200,000 to $400,000: They don’t have strong demand but are move-in ready and require minimal modifications. Such listings are generally on the real estate market for weeks to months.
4. Homes over $400,000: These listings last longest, although the actual time depends on their location. Some are possibly overpriced, with most being ready for immediate occupation.
The most popular segment of Pittsburgh real estate listings falls in the $100,000 to $200,000 range. According to Zillow, in 2019, the median home value in the city was $149,500. These properties are bought quickly, no matter how much repair work they need.
Pittsburgh real estate has also witnessed a steady appreciation over the years, making it a substantial investment for buyers. Last year property value saw annual growth of 6.2%. Average appreciation was 23% over five years and 32% in the previous decade.
Fees, Financing and Closing
Finding your ideal home and having your offer approved are just two steps in a long process. Others include seeking bank approval, closing, and conducting inspections. Closing costs are hard to determine accurately because of the many associated costs that are rarely discussed.
They include a down payment, which is usually a 5% minimum for most loans. If it’s lower than 20%, you’ll probably have to cover private mortgage insurance costs. A competent realtor will provide a detailed breakdown of all closing costs associated with the price range of your house.
However, you’ll still have to grapple with many other added fees. These include a credit report, attorney, notary, title insurance, escrow, appraisal, homeowner’s insurance, and title transfer fees, among others. A seller’s credit is one way of lowering closing costs. It allows you to finance these expenses without increasing the actual amount the seller receives.
Also known as a seller’s assist or seller’s concession, it’s commonly offered in a buyers’ market. Let’s say you’re buying a $200,000 house with a 5% (or $10,000) seller’s credit. The concession will be added to the offer price, bringing the total amount to $210,000. Once you receive a $210,000 loan, the seller will only get the original $200,000. The $10,000 will go towards covering your closing costs.
Tax Re-Appraisals in Pittsburgh
Once you successfully close a real estate deal in Pittsburgh, you’ll have to deal with tax reappraisal. This can happen in either of two ways:
- The city can re-evaluate all homes, which is rare
- The school district can request for your house to be adjusted if you bought it at a higher value.
While the city might take decades to re-evaluate homes for tax purposes, school districts are more aggressive in doing so. If your local school board initiates a spot readjustment, you could pay more than your realtor estimated. Most banks and real estate agents calculate mortgage payments based on current taxes.
Tax reappraisals vary from one buyer to the next. Generally, if there’s a huge gap between your purchase price and the last one, you’ll pay significantly higher taxes. It might take years before you’re notified of a readjustment based on your purchase price.
Once it happens, you can either pay the new tax or challenge the school board’s decision through a lawsuit. This situation makes it harder to predict your tax obligations when planning a purchase.
To avoid getting a rude shock, visit the Pittsburgh school district, city, and county tax websites for more information. This will give you a more accurate estimate of how much more you’ll have to pay for your dream home.
Hopefully, these pointers will come in handy while planning your next Pittsburgh real estate investment. A house is a long-term investment, so you must take serious precautions before purchasing one to prevent negative consequences.
If done right, you’ll not only have a cozy home but also possess an asset that appreciates. All the best in your search!