Does Pittsburgh really need more housing?
March 17, 2024
In a city where population is decreasing , do we really need more housing? Yes! Our constrained housing supply is pushing people out of the city! Unless we build more to keep up with the increase in demand, prices will continue to rise and more people will be forced out.
After all, our population is decreasing! Surely, that's a sign that we have plenty of housing.
The reality is that as households get wealthier, they tend to get smaller. Imagine a family of six moves out of the city and two wealthy couples move in. The population went down but now we need an extra housing unit. And when your housing supply is constrained, wealthier, smaller households end up bidding out poorer, larger households for the same homes - resulting in those larger households being pushed out of the city, thus decreasing population.
Councilwoman Deb Gross gave an excellent example of this phenomenon on Thursday’s Post Agenda hearing on the Broken Zoning code, where she talks about a “$30,000 house that had five graduate students or […] five voucher holders, Section 8 […] are gone, and the house sold for $500,000 to just one Tech family.”
Below is a simple supply and demand graph using data points from the 2023 Housing Needs Assessment to illustrate this argument.
In 2015, when Pittsburgh had 306k people and 132k households, the median home price was $167k.
By 2019, we had built more homes! We had 6,000 more households living in the city!
But those households were smaller and richer - median income had climbed 20%, from $40k to $49k, and the resulting massive jump in demand meant that prices rose dramatically. The median house price jumped 30%, from $167k to $218k, and the vacancy rate dropped from 6% to 4.9%.
So yes, supply increased - but demand increased more. And unless we build enough housing to keep up with the increase in demand, we’re going to see prices continue to go up and lower income households continue to be forced out.
Since the pandemic, things have only gotten worse - the House Price Index in Pittsburgh (home prices) is up 38% since fourth quarter 2019.
Source: Federal Reserve Economic Data, All-Transactions House Price Index for Pittsburgh
We are in desperate need of more housing. If we do not remove restrictions on building quickly and start building fast, we will continue to displace poorer households from the city.
