Many investors are well aware of the positive trends happening in major metropolitan areas that capture a lot of the headlines, but multiple “second cities” are reinventing themselves and will shape the future of business and the economy. Pittsburgh is one of these cities with a story to tell.
Google moved into Pittsburgh in 2004 in an effort to get access to some of the best computer science minds in the country. Carnegie Mellon (CMU) shares the #1 ranking with MIT, Stanford, and UC Berkeley for computer science schools. Between CMU and the University of Pittsburgh, there has been more than $10B in research funding. In large part because of Pittsburgh’s strong education institutions, Google’s presence has grown to include more than 500 high-paying jobs and is expected to continue to grow.
Following Google’s success, other big tech companies such as Uber began building a presence in Pittsburgh. They now employ over 1,000 people. And it’s not just domestic companies and investors that Pittsburgh has captivated. The international investing sensation Softbank recently made a $93M investment in Petuum Inc., a firm that is revolutionizing how companies leverage Artificial Intelligence.
So, what does all this mean for demographics and real estate investing? The biggest trend is how the population is becoming younger and more highly educated. According to a 2016 Census Study, the city of Pittsburgh had a 23.4% increase in residents aged 25-34. This is compared to a 3.8% increase for the rest of the country. In the same study, they found that the percentage of residents holding a bachelor’s degree increased by 30.9%, compared to 11% for the rest of the country. The city also saw a reduction in poverty rates more than 5 times greater than the rest of the country.
The result of all of this has been a positive trend for real estate. Real estate values have been on the rise over the last 5 years, including 5.5% over the last year, but the median home price is still under $200,000. Still, this is only half the story. One of the more appealing parts of real estate investing in Pittsburgh is what the infrastructure of the city offers. The city converges around three rivers, meaning that it is somewhat landlocked. If you work in the city, and want to avoid the inescapable traffic caused by the bridges and tunnels, you must live on the right side of those rivers, where land and housing is limited.Lucky for Pittsburgh residents, the city was very well designed when initially settled. There are some 80 individual neighborhoods within the city limits, each with their own “main street” populated by mixed-use retail and commercial.
This is all to say that Fund That Flip is very optimistic on the prospects of Pittsburgh. While prices are up over the last 5 years, the affordability with mean prices under $200,000 still remains very reasonable considering the rising incomes of a younger, more educated demographic that is defining the future of the city.
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