Despite most markets in the US seeing a drop in home flips in the third quarter of 2019, flippers in the Pittsburgh region are still seeing a huge return on investment. According to ATTOM Data Solutions, home flippers in Pittsburgh had a return on investment of 132.6%. Fayette County alone had flips represent 17.9% of all home sales in the same quarter.
The region’s home-flippers are snapping up houses for a median price of $63,500 and selling them at a median of $150,325, for nearly $87,000 in average profit, according to ATTOM data for last year’s third quarter. In Beaver County, homes were purchased at a median sale price of $30,000 and flipped for $119,900 for a return of nearly 300 percent.
So why Pittsburgh?
Today, old industrial cities like Pittsburgh, Buffalo and Cleveland are among those offering the greatest returns. They have struggled to recover from the recession, but now are beginning to attract tech firms, such as Google-parent Alphabet Inc, Uber Technologies Inc, and Amazon.com Inc. The influx of new workers is boosting demand for urban homes in areas that have some of the oldest housing stock in the nation and not much new construction, creating richer opportunities for flippers than in Las Vegas or Miami at the height of the housing boom more than a decade ago.
What’s the drawback?
There are some significant risks that come along with flipping in an area like Pittsburgh. The median house in Pennsylvania was built in 1950, and it takes an average of 190 days to flip a home in the Pittsburgh region, compared with 179 days nationally, according to ATTOM. Flipping homes in Pittsburgh and hundreds of tiny suburbs often means grappling with aging properties riddled with asbestos, lead-based paint, outdated balloon framing and hazardous knob-and-tube wiring, or even more expensive problems such as structural issues, collapsing roofs and sinking foundations.
Furthermore, there is a lot of concern about how high-volume flipping is affecting current Pittsburgh residents. This trend is fuelling concerns that long-time residents may get priced out from their neighborhoods that are now in demand.
For example, in Pittsburgh’s Lawrenceville – now home to Uber’s self-driving car division – the average home price jumped from $72,993 in 2007 to $236,951 in 2017, a gain of 224 percent, according to RealSTATS, a local real estate listing firm. Long-time homeowners are more likely to invest in the community and support local businesses than an influx of new residents and renters, community advocates say. Seniors may benefit from the rising value of their homes, but could be duped into selling their home for less than its worth, said Lauren Connelly, executive director of Lawrenceville United, an advocacy group of local residents.
It doesn’t look like the house-flipping market is slowing down any time soon in Pittsburgh. With the introduction of new tech companies and reinvigorated neighborhoods around the city and suburbs, the area is just too full of possibility for potential investors. One might hope that we keep our current residents in mind and support their needs as we hopefully redevelop this city into an area that supports a positive lifestyle for all of our residents- both future and current.
Natasha Lindstrom is a Tribune-Review staff writer.