Pittsburgh_Housing_Needs_Assessment_Final_Report_01312022_(1)_(2)_(1).pdf

HOUSING NEEDS

ASSESSMENT

Final Report | January 2022

Andrea Lavin Kossis, City Planning Andrew Dash, City Planning Ali Tomich, Pennsylvania Housing Finance Agency, Western Region Becky Mingo, Planning Commission Bill Gatti, TREK Development Cassandra Collinge, Allegheny County Economic Development Christopher Corbett, City Planning Dave Breingan, Lawrenceville United

Erin Dalton, Allegheny County Department of Human Services Fred Brown, Planning Commission Gale Schwartz, Housing Alliance of Pennsylvania Jam Hammong, Commission of Human Relations Jennifer Rafanan-Kennedy, Pittsburgh United Jessica Smith-Perry, URA Laura Poskin, Age-Friendly Greater Pittsburgh Linda Metropulos, ACTION-Housing, Inc.

Lindsay Powell, Office of Mayor William Peduto Marc Masterson, The Northside Community Development Fund

Monique Pierre, Housing Authority of the City of Pittsburgh Phyllis Chamberlin, Housing Alliance of Pennsylvania Robert Damewood, RHLS Sabrina Dietrick, Planning Commission Sam Williamson, Western Pennsylvania Shad Henderson, Neighborhood Allies Tamara Dudukovich, BNY Mellon Vethina Hage, URA Whitney Finnstrom, OMB

Acknowledgements – ForgingPGH Working Group

People 7 Housing 14 Neighborhoods 20 Barriers to Development 28 Recommended Strategies 36

Demographics 48 Employment 60

Housing Programs 68 Rental Housing 84 Ownership Housing 92

Current Housing Need 101 Future Housing Need 113

Methodology 123 Glossary 126

Pittsburgh Housing Needs Assessment 3

Demographics and Employment

Housing Stock

Housing Needs

Pittsburgh Housing Needs Assessment 4

CHAPTERS

• People • Housing • Neighborhood • Recommended Strategies

The City of Pittsburgh engaged HR&A Advisors to conduct an assessment of current and anticipated housing needs in Pittsburgh. The Pittsburgh Housing Needs Assessment seeks to (1) provide a comprehensive understanding of housing needs and conditions across all household incomes and housing typologies, and (2) establish an objective, data-driven resource on the housing market to guide future policy decisions. Key findings and needs are identified which should inform future phases of housing-related work in the City. This document also recommends specific programs and policies that the City and its partners should pursue to address these needs.

The Pittsburgh Housing Needs Assessment is organized around four sections: an Executive Summary and assessment sections for Demographics and Employment, Housing Stock, and Housing Needs. The Executive Summary condenses the results of the assessments into three needs narratives for People Needs, Housing Needs, and Neighborhood Needs. Recommended Strategies address all three needs, with each need integral to the City’s continued economic growth, quality of life, and social welfare.

People Needs The needs of City residents, including how housing issues are affecting Pittsburgh families and how housing relates to larger demographic trends.

Housing Needs The needs of the City’s housing stock, including the condition and vacancy status of housing, the affordability of housing for current and future residents, and current investments into the stock.

Neighborhood Needs

The needs of Pittsburgh neighborhoods, including how housing affects the health of these neighborhoods, and how neighborhoods are changing as a result of housing-related issues.

Pittsburgh Housing Needs Assessment 5

Housing Needs Assessment | Introduction

Strategies

EXECUTIVE SUMMARY

Acknowledges major policy-related barriers and recommends strategies using a combination of Tools to address major housing Challenges.

Tools are the programs and policies available to the City for action.

Challenges are barriers limiting a healthy housing market within the City.

Executive Summary Structure

Pittsburgh Housing Needs Assessment 6

Housing Needs Assessment | Changes Since 2015

EXECUTIVE SUMMARY

2015 2019 Change

POPULATION 306k 302k -3.8k

HOUSEHOLDS 132k 138k +5.7k

MEDIAN INCOME $40k $49k +$9k

OWNER OCCUPANCY 48.8% 47.0% -1.8%

SUPPLY GAP FOR RENTERS UNDER 30% AMI 14.2k 8.2k -6k

RENTERS EARNING UNDER 30% AMI 22k 19k -3k

MEDIAN HOME PRICE $167k $218k +$51k

INDEFINITE VACANCY 6% 4.9% -1.1%

The demographics and housing market in Pittsburgh has experienced significant changes since 2015. Below, we’ve highlighted some of the most important changes that have occurred from 2015 to 2019 (the time period for which data is available to reflect many of these changes). This data is explored in greater depth within the document.

Note: 2019 is the latest year for which American Community Survey data has been published Source: American Community Survey, American Community Survey Public Use Microdata Sample

People Needs | Key Findings

Pittsburgh Gaining Households, Mostly Upper Income While Pittsburgh’s population is declining, there has been accelerating household growth in recent years, with an additional 5.2k households added between 2016 and 2019, outpacing the region and primarily driven by increases in high-income renter households.

Low-Income Renters are Leaving Pittsburgh The number of renter households earning less than 30% AMI decreased by over 3k between 2015 and 2019. Given that incomes for less educated households grew more slowly than more educated households, this suggests many low-income renters are leaving the city.

Greatest Housing Need for Low-Income Renters Housing needs are greatest for renters earning less than 30% AMI – there is a supply gap of 8.2k housing units priced affordably to this group. The supply gap drops to 2.9k for renters earning less than 50% AMI, with a 4.6k surplus for renters earning less than 60% AMI.

Shrinking Supply Gap Caused by Fewer Low-Income Renters, Higher Regional Incomes While the supply gap remains high in 2019, this represents a decrease from the 14.1k gap in 2015, though this decrease does not indicate improving affordability, as it is primarily driven by many low-income renters leaving the city and a large increase in regional incomes.

Losing Existing Black Households Black households were the only racial or ethnic group to experience a decline in the number of households in Pittsburgh since 2015.

This decline is driven by the significant loss of existing middle-income and low-income Black households across both renters and homeowners.

Black Homeownership Falling, Rising Elsewhere Since 2015, Pittsburgh lost nearly 700 Black homeowners, a decline of 7%, greater than the proportional loss in black renters. In the same period, the number of homeowners has risen amongst nearly every other racial and ethnic group.

PEOPLE

NEEDS

Pittsburgh Housing Needs Assessment 7EXECUTIVE SUMMARY

Defines the needs of Pittsburgh residents, including how housing issues affect Pittsburgh families and how larger demographic trends can impact housing and affect the lives of existing residents.

PEOPLE

NEEDS

Pittsburgh Housing Needs Assessment 8

While Pittsburgh’s population is declining, there has been accelerating household growth in recent years, with an additional 5.2k households added between 2016 and 2019, outpacing the region and primarily driven by increases in high-income renter households.

Losing Population, Growing Households

The growth in households in Pittsburgh has primarily been fueled by high-income renter households. As of 2019, Pittsburgh has 138k households living in the city.

Since 2010, 118% of net new households are 1-to-2 person renter households.

Additionally, these households have significantly higher incomes and greater degrees of educational attainment compared to city-wide figures, indicating that these new households moving to the City of Pittsburgh do not necessarily mirror the existing demographics of the city.

Household growth in Pittsburgh has been concentrated near Downtown and in a few adjacent neighborhoods. The CBD, Strip District, Allegheny Center, and South Oakland all experienced household growth over 20% since 2010. These trends indicate that the new residents moving to the city tend to prefer neighborhoods closer to the core of the city, in line with many trends seen amongst high-income renters, nationally. This partially explains Pittsburgh’s household growth rapidly surpassing the region as there is greater demand for more urban and denser locations from these renters.

EXECUTIVE SUMMARY

Household Growth Rate (From Previous Year), 2011 - 2019

-0.6%

1.3%

0.2%

0.7%

0.3%

0.6%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2012 2013 2014 2015 2016 2017 2018 2019

Pittsburgh Allegheny County Pittsburgh MSA

Pittsburgh lagged regional growth until 2016

Accelerated growth in Pittsburgh

Source: American Community Survey; HR&A Advisors

Pittsburgh Housing Needs Assessment 9

The number of renter households earning less than 30% AMI decreased by over 3k between 2015 and 2019. Incomes for less educated households grew more slowly than more educated households, and many low-income renters left the city.

Low-Income Renters are Leaving Pittsburgh

Gross rents grew 16% since 2015, less than the growth rate in household income of those with at least some college education. However, rents in Pittsburgh are still unaffordable, as average gross rent is still unaffordable to the average Pittsburgher without a college degree. As such, many households in Pittsburgh struggle with affordability, and thus may be competing with new households for existing housing causing many residents to leave the city even if not necessarily priced out entirely.

EXECUTIVE SUMMARY

22K

10K 4K 7K 5K 6K

15K 19K

11K 4K

9K 5K 5K

20K

30% AMI 30%-50% AMI 50%-60% AMI 60% to 80% AMI 80% to 100% AMI 100% to 120% AMI Over 120% AMI

2015 2019

Renter Households by AMI, 2015-2019

Gross Rent +16%

No College Degree +10%

Some College +18%

College Degree +19%

Gross Rent and Household Income Increase by Educational Attainment, 2015-2019

Loss of 3k low-income renters since 2015

Pittsburgh Housing Needs Assessment 10

Housing needs are greatest for renters earning less than 30% AMI – there is a supply gap of 8.2k housing units priced affordably to this group. The supply gap drops to 2.9k for all renters earning less than 50% AMI, with a 4.6k surplus for renters earning less than 60% AMI.

Greatest Housing Need for Low-Income Renters

The most critical supply gap is for under 30% AMI households as these units are harder for the market to produce at scale without subsidy. Many renters within this income range may have a history of eviction that makes it difficult to find quality housing.

Cumulatively, there are approximately 3,000 households earning under 50% AMI that are paying more than 30% of their income for housing related costs. This trend is most acute for households earning under 30% AMI.

Over 2 in 5 renters in Pittsburgh are cost-burdened, spending more than 30% of income on housing, with over a quarter qualifying as extremely cost-burdened, spending over 50% of income on housing.

These high figures are driven by the number and share of cost-burdened renters earning under $35K annually. More than 7 of 10 renter households earning less than $35k annually are paying more than 30% of their income in rent. This group comprises 82% of all cost-burdened renters and 95% of all extremely cost-burdened renters. For households earning between $35k and $50k, 4 in 10 renters are currently cost-burdened. However, the number of cost-burdened renters in Pittsburgh has decreased slightly from 2015.

EXECUTIVE SUMMARY

Rental Supply/Demand Gap by AMI Level, 2019

11K 16K

12K 17K

9K 5K 4K

19K

11K 4K

9K 5K 5K

20K

30% AMI 30%-50%

AMI

50%-60%

AMI

60% to

80% AMI

80% to

100% AMI

100% to

120% AMI

Over 120%

AMI

Supply DemandSupply Gap of 8,200 Units

11K 26K

38K 55K

64K 69K

19K 29K 34K

43K 48K 53K

Up to 30% Up to 50% Up to 60% Up to 80% Up to 100% Up to 120%

Supply Demand

Cumulative Rental Supply/Demand Gap, 2019

Supply Gap of 3,000 Units

Pittsburgh Housing Needs Assessment 11

While the supply gap remains high in 2019, this represents a decrease from the 14.1k gap in 2015, though this decrease does not indicate improving affordability as the decrease is primarily driven by many low-income renters leaving the city and a large increase in regional incomes.

Shrinking Supply Gap Caused by Fewer Low-Income Renters

On the supply side, the number of units affordable to 30% AMI has increased due to an increase in the number of subsidized units and a substantial rate of income growth compared to rents in the City of Pittsburgh. From 2015 to 2019, median income (which is used to set all AMI thresholds) grew 15% while median gross rents for lower-income households increased 10%. As such, there are some housing units that were not affordable at 30% AMI in 2015 that became in reach of under 30% AMI households simply because median income growth outpaced rent growth for many units.

The loss of low-income households in Pittsburgh has led to decreased demand for units at 30% AMI. Since 2015, the number of low-income households in Pittsburgh earning under $35K a year shrank nearly 4%, indicating that many of the lowest-income Pittsburghers are leaving the city entirely. As such, the shrinking of the affordable supply gap is indicative of residential displacement of existing lower-income households (who have left the city) with higher-income households (whose incomes are driving the increase in area median income).

EXECUTIVE SUMMARY

8K

11K

22K

19K

2015 2019

Supply Demand

-3K Households

+3K homes

Supply Gap of 14,176 Units

Supply Gap of 8,200 Units

Supply/Demand Gap for Renters Under 30% AMI, 2015 -

Pittsburgh Housing Needs Assessment 12

Black households were the only racial or ethnic group to experience a decline in the number of households in Pittsburgh since 2015. This decline is driven by the significant loss of existing middle-income and low-income Black households across both renters and homeowners.

Losing Existing Black Households

Since 2015, Pittsburgh has lost nearly 350 Black renter households – the only racial or ethnic group to experience a decline. These losses were most pronounced at the lowest income levels, as the City lost over 1,000 Black renters earning under $50K annually, with some gains of Black renters at the highest income levels. What these trends indicate is that there is a loss of existing, low-income Black renters in the city who are being displaced by renters moving to Pittsburgh from elsewhere. In analyzing County data, the number of Black renters in the County grew by 2,000 indicating that many Black renters relocated from the City to the County.

Pittsburgh lost nearly 700 Black owner households since 2015 – also the only racial or ethnic group to decline since 2015. As indicated by both renter and owner trends – Black household loss was most significant amongst households earning under $75K, who are more likely to be existing, longer-term residents, with a loss of over 2,000 households.

EXECUTIVE SUMMARY

Change in Black Households by Income, 2015-2019

-817 -681

-504

Pittsburgh Housing Needs Assessment 13

Since 2015, Pittsburgh lost nearly 700 Black homeowners, a decline of 7%, greater than the proportional loss in black renters. In the same period, the number of homeowners has risen amongst nearly every other racial and ethnic group.

Homeownership Falling for Black Households, Rising Elsewhere

The loss of Black homeowners was amongst low- to moderate-income owner households. Since 2015, Pittsburgh lost nearly 950 Black homeowners earning under $75K a year, more than the total number of Black homeowners lost. Over the same time period, Pittsburgh experienced some minimal growth in higher-income Black homeowners.

Of these 950, about half had incomes between $50K-$75K a year, indicating that the loss is most pronounced amongst middle-income Black homeowners. In many cases, these homeowners are likely selling their homes to flippers who are then re-selling or renting these properties to other residents.

The increase in white homeowners was greater than the increase in homeowners overall, indicating that while nearly all minority groups saw homeowner increases, white high-income homeowners were the primary driver. Since 2015, Pittsburgh added nearly 2,700 white homeowners earning over $150K annually, more than the total number of white and total number of overall homeowners added in Pittsburgh.

The dualling trends of loss of middle-income Black homeowners and gains in high-income white homeowners are indicative of the changing household dynamics in Pittsburgh.

EXECUTIVE SUMMARY

Growth in Homeowners by Race/Ethnicity, 2015-2019

1,506

2,116

-699

-83

146 124

Housing Needs | Key Findings

Subsidized Housing Expands, Shifts Away From Public Housing There are 22.6k subsidized housing units in Pittsburgh today, or roughly one unit available for every two qualifying households. Since 2012, the number of subsidized units in Pittsburgh has increased by 14%, or 2,816 units.

New Housing is 90% Multifamily New construction has shifted sharply to luxury multifamily rental, which comprises 90% of all new construction since 2015. While these new units are not affordable to most renters, multifamily remains the largest source of affordable housing to low-income households.

Majority of Single-Family Investment Activity is “Flipping” While single-family construction has remained low since 2011, annual home “flipping” activity more than tripled with prices remaining stable around $200k per home. In 2019, 3x as many homes were “flipped” as built new, though more than half of flipped homes are sold to investors.

Market-Related Vacancy at Lowest Rate Since 1980 Vacancy has consistently trended downward since the Great Recession, with market-related vacancy decreasing by more than half in this time. Indefinite vacancy, an indication of abandonment, has been slower to recover, but began to decrease in 2015 after 30 years of consistent upward trajectory.

Multifamily Rental Dominates Future Housing Need Pittsburgh is projected to add 9,700 households over the next ten years, with almost ¾ as renters. In total, about half of all new Pittsburgh households will be looking to rent multifamily, placing additional price pressure on this housing type.

HOUSING

NEEDS

Pittsburgh Housing Needs Assessment 14EXECUTIVE SUMMARY

Defines the needs of the City’s housing stock, including the condition and vacancy status of housing, and the affordability of housing for current and future residents, and current investments into the housing stock.

HOUSING

Pittsburgh Housing Needs Assessment 15

There are 22,641 subsidized housing units in Pittsburgh today, or roughly two units available for every three qualifying households. Since 2012, the number of subsidized units in Pittsburgh has increased by 14%, or 2,816 units.

Subsidized Housing Expands, Shifts Away From Public Housing

EXECUTIVE SUMMARY

The increase in subsidized units since 2012 has primarily been due to over 1,409 LIHTC units and 2,646 Project Based Voucher units being constructed or rehabilitated in the city. This large increase has more than made up for loss of 1,635 Public Housing units in the same period. This shift from Public Housing to Project Based Vouchers is partially explained by the Pittsburgh Housing Authority’s embrace of the Department of Housing and Urban Development’s RAD program, which converts Public Housing to Project Based Voucher housing. The amount of housing subsidy available to renters through either of these programs is functionally the same, offering deep affordability to those earning less than 30% AMI.

Housing Choice Vouchers (HCV) saw a moderate increase of 5%, or 396 vouchers, since 2012. 11k households are currently on the HCV waiting list. While the number of families attempting to access HCV is high, only 3 out of 10 families that receive an HCV are able to find a rental and a landlord willing to accept the voucher within the allowed 120-day search period.

The Housing Opportunity Fund, which began in 2019, has allocated $10M annually to support affordable housing in Pittsburgh. As of 2021, about $19M of funds have been spent, helping to support the construction of LIHTC units, down payment assistance, home renovation, and for-sale home development.

7,033 7,429

4,700 3,065

3,307 5,953

4,785 6,194

2012 2020

Housing Choice Vouchers Public Housing

Project Based Vouchers LIHTC

Change in Share of Subsidized Housing, 2012 - 2020

LIHTC

Project Based Vouchers

Public Housing

Housing Choice Vouchers

+1409 +29%

+2646 +80%

-1635 -34%

+396 +5%

Source: Department of Housing and Urban Development; HR&A Advisors

Pittsburgh Housing Needs Assessment 16

New construction has shifted sharply to luxury multifamily rental, which comprises 90% of all new construction since 2015. While these new units are not affordable to most renters, multifamily remains the largest source of affordable housing to low-income households.

New Housing is 90% Multifamily

Housing construction has reversed a decades long decline, with housing stock shifting to less single-family and more multifamily. The 2010s was the most substantial construction period in Pittsburgh since the 1970s, which has largely consisted of multifamily rental. 90% of all new construction units over the past decade have been multifamily rental.

Multifamily rental development has increased significantly the past decade, especially since 2016. Since 2010, 7,750 multifamily units have been built in Pittsburgh, roughly equal to the number of units that were built between 1980 and 2010. Rents for newly constructed one-bedroom units average around $1,800, making them only attainable to households earning above 120% AMI. 66% of new construction multifamily units are one-bedroom or studio units, compared to 61% for those built prior to 2010.

New multifamily development in Pittsburgh has been well received by the market. Since 2010, net absorption in Pittsburgh generally kept apace with new deliveries, as vacancy stayed relatively stable over the past decade, averaging around 6.7%. Approximately half of all units that delivered in the Pittsburgh MSA since 2010 delivered in the City. However, the region still lags other fast-growing markets in multifamily construction, like Philadelphia and Atlanta.

Multifamily units comprise a majority (55%) of units affordable to households earning less than 30% AMI. This percent declines as incomes rise. For example, only 31% of households earning between 30% and 60% AMI rent in a multifamily unit.

Housing Units By Type and Year Built

EXECUTIVE SUMMARY

9451,4543,974 9,128

20,436

45,942

1,790

3,274

3,981

11,187

7,750 2,579

5,466

9,656

6,289

9,020

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2010 or Later

2000 to

1980 to

1960 to

1940 to

1939 or Earlier

Single-Family 2 to 4 Unit Multfamily

Multifamily

Pittsburgh Housing Needs Assessment 17

While single-family construction has remained low since 2011 with prices doubling, annual home “flipping” more than tripled with prices remaining stable around $200k per home. In 2019, 3x as many homes were “flipped” as built new, though more than half of flipped homes are sold to investors.

Majority of Single-Family Investment Activity is “Flipping”

Annual construction of single-family attached and detached homes has remained steady in the past decade while the average price of a new home has more than doubled. Home construction in both the City and Pittsburgh MSA has yet to recover from the Great Recession. In 2020, new construction housing permits were almost 1/3 of Philadelphia’s and 1/9 of Atlanta’s.

The number of homes professionally acquired, renovated, and sold (“Flips”) increased every year from 2011 to 2019, with prices remaining affordable to Pittsburgh homebuyers earning 80% AMI. Prices of flipped product have remained steady around $200k since 2015 while annual production has continued to increase.

Nearly 2x as many homes were flipped between 2016 to 2020 as in 2011 to 2015.

The neighborhoods of Brookline, Sheraden, Brighton Heights, and Mount Washington saw the largest percent increases.

Homeowners continue to drive most of the home flipping market, but investors still play a significant role. From 2016 to 2019, investors purchased 43% of flipped properties, which were usually around $70k less than properties purchased by homeowners. More than half of flipped homes are unpermitted. Lower priced homes located in south Pittsburgh are most likely to be unpermitted, which could carry risks for those living in these properties.

Volume and Average Price of “Flipped” Homes, 2011 - 2019

EXECUTIVE SUMMARY

95 96

125 131

170 173 181

$140k $131k

$167k $177k

$211k $194k

$211k $216k

$194k $192k

$0

$50,000

$100,000

$150,000

$200,000

$250,000

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Homes "Flipped" Average "Flipped" Sales Price

Source: Allegheny County Treasurer Office; HR&A Advisors

Pittsburgh Housing Needs Assessment 18

Vacancy has consistently trended downward since the Great Recession, with market-related vacancy decreasing by more than half in this time. Indefinite vacancy has been slower to recover, but began to decrease in 2015 after 30 years of consistent upward trajectory.

Market-Related Vacancy at Lowest Rate Since 1980

Vacancy in Pittsburgh peaked during the Great Recession and has steadily declined since, driven by a mix of demolitions, decreasing total vacant units, and increasing total occupied units. Total vacancies declined from 26k in 2010 to 19k in 2019 while total occupied units increased from 135k to 138k. In this same period, the total number of housing units in Pittsburgh declined from 161k to 157k, indicating roughly 4k units were demolished.

Market vacancy peaked during the Great Recession and has declined rapidly since. Indefinite vacancy peaked in the period after the recession and has been slower to decline. An important distinction to understand is the difference in market and indefinite vacancy. Market vacancy is defined as vacancy due to supply and demand changes while indefinite vacancy is vacancy driven by property conditions with indefinitely vacant properties not inhabitable in current conditions. Since 2015, there are 1,196 fewer indefinite vacant homes in Pittsburgh, driven by 886 demolitions. This change in indefinite vacancy indicates that there are now fewer homes becoming abandoned than being repurposed or demolished per year. As market conditions in Pittsburgh improved, there was a shift from focusing on demolitions of indefinitely vacant property to a focus on repurposing vacant properties into new homes.

EXECUTIVE SUMMARY

2.8% 2.4%

5.0%

7.3%

4.5%

7.4% 7.0%

7.8% 4.9%

7%

10%

12%

16%

12%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

1980 1985 1990 1995 2000 2005 2010 2015

Indefinite Vacany Market Vacancy

Total Vacancy Rate

Total Vacancy = Market Vacancy + Indefinite Vacancy

Vacancy Rate by Type of Vacancy, 1980 - 2019

PEAK

9.2% PEAK

8.3%

Pittsburgh Housing Needs Assessment 19

Pittsburgh is projected to add 9,700 households over the next ten years, with almost ¾ as renters. In total, more than half of all new Pittsburgh households will be looking to rent multifamily, placing additional price pressure on this housing type.

Multifamily Rental Dominates Future Housing Need

Strong demand for new multifamily development is projected to continue. As previously discussed, the reversal in the decades long household decline in Pittsburgh was primarily driven by younger, affluent households, the vast majority of which are renters. Assuming these trends continue, with Pittsburgh continuing to attract these households based on continued strong job growth, the city will need to ensure that the robust multifamily development trends of the past five years continue into the future.

Strategies to help support and promote multifamily development are discussed later in this report.

There is also strong demand for “missing middle” rental housing. Together, the need from single-family (nearly entirely single-family attached housing) and plex rental housing is approximately 1,900 units, equating to about a third of total rental housing. This illustrates that there is a need for a diversity of rental housing in Pittsburgh – particularly larger units serving families and other households requiring additional space. It should be noted that demand for housing by type may be somewhat overlapping – for example, households that have rented a single-family may also be interested in renting a larger (three-bedroom or larger) multifamily unit or plex unit if available.

EXECUTIVE SUMMARY

7,000 New Renters

1,150 Single Family

Plex (2-4 Unit)

5,200 Multifamily

Source: University of Pittsburgh Center for Social and Urban Research, Social Explorer, HR&A Advisors

NEIGHBORHOOD

Neighborhood Needs | Key Findings

Home Prices Increase Throughout City Since 2016, home price growth in Pittsburgh has outpaced the MSA, with 4 out of 5 neighborhoods demonstrating moderate to strong price growth. Markets closest to the CBD, Strip District, East Liberty, and Lawrenceville demonstrated the most market momentum.

Renters Displaced by Rising Rents in Hottest Neighborhoods Displacement of low-income households due to increasing rents was concentrated most heavily in Lawrenceville, Brookline, Mount Washington, and the Hill District, all neighborhoods with quickly accelerating housing markets.

Poor Housing Conditions Also Displacing Residents Neighborhoods with declining housing markets and high vacancy, like Allentown, Knoxville, and Mt. Oliver, are also seeing large losses in low-income populations due to worsening neighborhood conditions.

Concentrated Poor Conditions Associated with Vulnerable Populations The homeless and the low-income elderly residents vulnerable to shifts in the housing market are found near poor quality housing.

Many Neighborhoods Lack Income-Restricted, Affordable Housing Income-restricted, affordable housing is concentrated in just a few neighborhoods. 12 neighborhoods contain over half of Pittsburgh’s total affordable housing stock, with over half of the city’s residential neighborhoods containing less than 10% of the total stock.

Rental Supply Gap Most Severe in High-Priced, Single-Family Areas Traditionally high-priced neighborhoods like Squirrel Hill and Shadyside have the greatest affordable housing gap. Other quickly gentrifying portions of the city, like Lawrenceville, Bloomfield, Brookline, and Mount Washington, also show signs of a growing supply gap.

Pittsburgh Housing Needs Assessment 20EXECUTIVE SUMMARY

Defines the needs of Pittsburgh neighborhoods, including how housing affects the health of these neighborhoods, and how neighborhoods are changing.

Pittsburgh Housing Needs Assessment 21

Since 2016, home price growth in Pittsburgh has outpaced the MSA, with 4 out of 5 neighborhoods demonstrating moderate to strong price growth. Markets closest to the CBD, Strip District, East Liberty, and Lawrenceville demonstrated the most market momentum in this time.

Home Prices Increase Throughout City

Growth in high-income households and increased flipping activity has been the key drivers of market momentum in neighborhoods with escalating home prices. Since 2015, neighborhoods near the CBD, Strip District, East Liberty, and Lawrenceville have seen a significant influx of higher-income households earning over 100% AMI, with Lawrenceville and the Strip District experiencing nearly 20% increases in these households.

Relatedly, while Lawrenceville and the surrounding neighborhoods experienced significant flipping activity since 2011, this activity has intensified over the past five years with the number of annual flips increasing 31% and average sales prices increasing 31% to an average sales price of $301K, highest in the city. As such, the market momentum experienced in these neighborhoods is a result of new, higher-income households buying recently flipped homes at higher prices than found elsewhere in the city.

Conversely, only neighborhoods in southeast Pittsburgh saw consistent declines in home values, which when taken with accompanying trends in depopulation and vacancy, indicates a declining housing market.

EXECUTIVE SUMMARY

Market Momentum Score, 2020

*Market Momentum Score combines average sales price percentage increase and absolute increase from 2015 to 2020 into a single score, accounting for the increase in sales prices relative to a neighborhood’s existing market.

Source: Allegheny Tax Assessor; HR&A Advisors

Market Momentum Score, 2020

LEGEND

Market Momentum Score

<12 13 - 24 25 - 34 35 - 44 45 - 64 65+ N/A

Pittsburgh Housing Needs Assessment 22

Displacement of low-income households due to increasing rents is concentrated most heavily in Lawrenceville, Brookline, Mount Washington, and the Hill District, and other neighborhoods with accelerating housing markets.

Renters Displaced by Rising Rents in Hottest Neighborhoods

Pittsburgh has experienced rapid change in the household composition of the city as low-income households are forced out while high-income households immigrate from elsewhere. Lawrenceville in particular has seen significant new multifamily development that tends to serve the highest income renters, potentially driving up rents in the surrounding neighborhoods.

EXECUTIVE SUMMARY

LEGEND

Low-Income Household Loss*

< -15% -15% - -10% -10% - -5% -5% - 0% 0% - 5% (gain in HHs) 5% – 10% (gain in HHs) >10% (gain in HHs)

Loss of Households Earning Under $25K, 2015-2019

*Measured as total decrease in the number of households earning less than $25k annually between 2015 and 2019 as a percent of the that neighborhoods total number of households.

Pittsburgh Housing Needs Assessment 23

Neighborhoods with declining housing markets and high vacancy, like Allentown, Knoxville, and Mt.

Oliver, are also seeing large losses in low-income populations due to worsening neighborhood conditions and increasing vacancy.

Worsening Housing Conditions Also Displacing Residents

While much attention is given to displacement caused by rising rents, deteriorating housing stock in many neighborhoods is also forcing households out of Pittsburgh. While the city-wide indefinite vacancy rate has started to decrease since 2015 after a 30-year increase, many neighborhoods have experienced continued growth in indefinite vacancy. These neighborhoods often have the lowest median household incomes in the city and have not experienced the same amount of investment as other neighborhoods over the past five years. As housing conditions continue to deteriorate, many households, particularly low-income households who do not have the means to make needed repairs, have been forced to leave Pittsburgh in pursuit of safe, habitable housing elsewhere.

Investor-owned, rental single-family, townhome, and ‘plex units are 2.5X as likely to be in poor condition compared to owner-occupied properties of the same type. Neighborhoods where a large number of owner-occupied properties are being replaced by rentals, like Allentown, Mt. Oliver, and St. Clair, are experiencing greater population loss as a result of deteriorating housing conditions.

EXECUTIVE SUMMARY

LEGEND

Percent of Indefinite Vacant Homes*

>15% 10% - 15% 6% - 10% 3% - 6% 0% - 3%

Percent of Homes Indefinitely Vacant, 2019

Pittsburgh Housing Needs Assessment 24

The low-income elderly and non-white residents vulnerable to shifts in the housing market are found near poor quality housing.

Worsening Housing Conditions Also Displacing Residents

The heat map to the right shows areas in yellow that are the highest concentrations of poor, very poor, and unsound buildings, overlaid with areas that show the highest concentrations of elderly homeowners. These areas should be the highest priority for targeted programs aimed at assisting elderly homeowners with home maintenance to avoid blight.

Areas with high concentrations of poor, very poor, and unsound building also tend to be located near neighborhoods with large non-white populations. This current pattern also illustrates historical patterns of underinvestment in non-white neighborhoods. As such, programs to address blight are critical to addressing racial inequity.

EXECUTIVE SUMMARY

Concentration of Housing in Poor Condition, 2016

Source: eHoldings Inc

Pittsburgh Housing Needs Assessment 25

Worsening housing conditions, in additional to economic and market forces, are drivers of homelessness.

Worsening Housing Conditions Also Displacing Residents

In 2020, there were 887 people found to be experiencing homelessness in Allegheny County, an increase of 113 from 2019. Blacks account for 55% of the homeless population. There were an additional 163 persons found to be living in locations not meant for habitation.

There are 11 homeless shelters currently located within the City of Pittsburgh. A new shelter is set to open in 2022, featuring a 42,000 sq ft, 5-story facility that will accept adults, their pets, and possessions year-round. It will offer 95 beds as part of the shelter, along with 45 units of single-occupancy housing, and a daily program connecting people to medical services, food, showers, mail, and other necessities. One of the big barriers for people accessing current resources is pets – most places do not allow pets. This facility will be the first of its kind in Pittsburgh.

EXECUTIVE SUMMARY

Source: Shelterlist, eHoldings Inc

Location of Existing/Planned Homeless Shelters, 2022

Pittsburgh Housing Needs Assessment 26

Income-restricted housing is concentrated in just a few neighborhoods. Twelve neighborhoods contain over half of Pittsburgh’s total affordable housing stock. Over half of the city’s residential neighborhoods contain less than 10% of the total stock.

Many Neighborhoods Lack Income-Restricted Affordable Housing

Income-restricted housing is defined as federally subsidized public housing, units associated with tenant- or project-based vouchers, and LIHTC units.

Almost 1 in 3 housing units in these 12 neighborhoods contain some kind of subsidy. These include units subsidized through Public Housing, Housing Choice Vouchers, Project Based Vouchers, or LIHTC. This is a much higher concentration than most of the city, but especially when compared to some of Pittsburgh’s highest income neighborhoods. For the 43 neighborhoods containing less than 10% of the city’s total subsidized affordable housing stock, about 1 in 30 housing units is subsidized.

Efforts to deconcentrate subsidized housing have been only partially successful. The 704 new LIHTC units that were built in Pittsburgh between 2015 and 2017 were all built within the 12 neighborhoods already containing the highest concentration of subsidized housing. Attempts to introduce a more diverse mix of incomes into neighborhoods with high concentrations of subsidized units have been only partially successful. From 2010 to 2019, about half of the 12 neighborhoods with the highest concentration of affordable housing had an increasing population.

EXECUTIVE SUMMARY

Subsidized Affordable Housing Unit Concentration, 2019

LEGEND

Neighborhoods containing over 50% of Pittsburgh’s Subsidized Affordable Housing Stock Neighborhoods containing less than 10% of Pittsburgh’s Subsidized Affordable Housing Stock

Source: Department of Housing and Urban Development; HR&A Advisors

Pittsburgh Housing Needs Assessment 27

Traditionally high-priced neighborhood likes Squirrel Hill and Shadyside have the largest affordable housing supply gap. Other quickly gentrifying portions of the city, like Lawrenceville, Bloomfield, Brookline, and Mount Washington, also show signs of a growing supply gap.

Supply Gap Most Severe in High-Priced Single-Family Areas

Established, high-end residential neighborhoods have the most severe supply gap for low-income households. The neighborhood cluster centered around Squirrel Hill and Shadyside contains many low-income households who are not adequately served by the higher-end and high-priced housing stock that comprise much of these neighborhoods. Additionally, there has been less new development

– both rental and for-sale – in these neighborhoods which has limited the growth in total housing stock and further exacerbated the neighborhoods’ supply gap.

Quickly-gentrifying neighborhoods also have significant supply gaps, illustrating that new supply alone will not fully address the housing supply gap for low-income households. The neighborhood cluster centered around Mount Washington/Brookline and the cluster centered around Lawrenceville also have severe supply gaps for low-income households, despite experiencing significant new housing development. Much of this development has targeted high-income households, which can increase the overall housing supply in these clusters, but only serves a limited household base. As such, addressing the housing supply gap in these neighborhoods will require promoting a wider array of housing types and price points, in addition to other strategies detailed later in this report.

EXECUTIVE SUMMARY

LEGEND

Severity of Supply Gap*

Low Moderate Severe Very Severe

Severity of Supply Gap for 30% AMI Households by Neighborhood Cluster, 2019

*Measured as the total supply gap in rental units priced affordably for households earning less than 30% AMI as a percent of the total demand

RECOMMENDED

STRATEGIES

28Pittsburgh Housing Needs Assessment EXECUTIVE SUMMARY

Strategies | Barriers to Development Defines the major regulatory or systemic barriers limiting greater market-rate and affordable housing development in high-demand locations within Pittsburgh.

Multifamily Zoning Multi-unit residential (i.e. buildings with 4 or more units) development is restricted to just 23% of the City’s total land area. Much of that lies in mixed use districts, such as the industrial mixed use, specially planned, and riverfront zoning districts.

Minimum Lot Size and Parking Requirements Residential zoning districts have minimum lot size per dwelling unit requirements, which in many cases, severely restricts the ability to develop parcels. Minimum parking requirements can also be prohibitive to developing affordable housing.

History of Redlining The effects of redlining are still apparent today, with many of the neighborhoods deemed “definitely declining” and “hazardous” from 1937, reflecting today’s predominantly Black neighborhoods, where multi-unit residential development is permitted, and areas with concentrations of housing in poor condition.

Historic Preservation Historic preservation guidelines are often misunderstood by local residents, property owners, and developers, which can complicate redevelopment and introduce new costs. Additional, renovation of historical buildings into multi-unit residential buildings is only permitted in a limited number of historical districts.

Real Estate Economics The costs associated with developing and operating newly constructed rental housing necessitate rents at these properties that often are only affordable to higher-income households.

Pittsburgh Housing Needs Assessment

Multi-unit residential (i.e. buildings with 4 or more units) development is restricted to just 23% of the City’s total land area. Much of that lies in mixed use districts, such as the industrial mixed use, specially planned, and riverfront zoning districts.

Multifamily Zoning

By-right new construction multifamily is mostly limited to Pittsburgh’s urban core. Areas that permit multi-unit residential development by-right, meaning that if the project meets the requirements of the zoning code, it is approved, are shown in dark green on the map. Multi-unit residential is permitted in several residential development districts, ranging from very low density to very high density, and a number of industrial mixed use, specially planned, and riverfront zoning districts. To a lesser extent, multifamily is also permitted as a special exception in some zoning districts (shown in light green), which requires an application and review process by the Zoning Board of Adjustment (ZBA). This process requires a public hearing, adjacent landowner notification, a longer review process, and possibly a Development Activities Meeting with the neighborhood Registered Community Organization (RCO). The final option for multifamily is through an administrator exception (shown in purple), which is similar to the Special Exception process.

Pittsburgh does not offer a TOD zoning district and multi-unit residential buildings are only permitted on 37% of land area located within a half-mile of a transit station. Creating a TOD zoning overlay would permit, and encourage, the creation of high-density, walkable, pedestrian-oriented mixed-use development, including multi-unit residential, around transit stations.

EXECUTIVE SUMMARY

Multifamily Zoning Districts, 2021

Source: City of Pittsburgh, Port Authority of Allegheny County

Pittsburgh Housing Needs Assessment

The City’s Zoning Ordinance requires one off-street parking space per dwelling unit for all residential developments, which increases development costs. Many households don’t have access to a car and don’t need the parking space.

Minimum Parking Requirements

Currently, about a quarter of all households in Pittsburgh, and over 35% of all renter households in Pittsburgh, do not own a car. As such, there are a large number of households who do not need a parking spot despite the requirement of one off-street parking space per dwelling unit. While the City’s Zoning Ordinance does allow for reduced parking requirements for residential uses within certain districts (SP, PUD, Downtown, and Riverfront), it does not make allowances for reduced parking near mass transit stations.

Requiring a one-to-one ratio of parking per dwelling unit can significantly increase development costs which in turn puts upward pressures on housing costs as developers need to ensure these additional costs are covered by revenues. In areas well-served by existing transit, a one-to-one ratio of parking to dwelling unit may be unnecessary. Eliminating or reducing parking requirements near transit stations may lead to developers reducing the number of parking spaces built, thus lowering the cost of building this new housing. For example, the City of Seattle found that reducing and eliminating minimum parking requirements around transit saved $537 million in direct construction costs (more than $20,000 per unit), allowing for lower cost housing to be developed. However, the market will likely dictate the number of parking spaces constructed, so removing minimum alone may not significantly reduce parking and development costs.

EXECUTIVE SUMMARY

Multifamily Residential Near Transit Stations, 2021

Source: American Community Survey, City of Pittsburgh, Port Authority of Allegheny County, Transfers Magazine

Pittsburgh Housing Needs Assessment

The Residential Multi-Unit zoning districts have a minimum lot size per dwelling unit, which in many cases, severely restricts the ability to develop parcels.

Minimum Lot Sizes for Multifamily Residential

Minimum lot sizes can be a hindrance to developing residential, particularly multifamily, in many neighborhoods. While there are no minimum lot size requirements for multifamily in the riverfront and mixed-use districts, there is a minimum lot size per unit for the following residential districts:

• RM-VH Residential Multi-Unit, Very High Density: 400 SF/unit; 81% of existing parcels are too small to accommodate four units

• RM-H Residential Multi-Unit, High Density: 750 SF/unit; 72% of existing parcels are too small to accommodate four units

• RM-M Residential Multi-Unit, Moderate Density: 1,800 SF/unit; 89% of existing parcels are too small to accommodate four units

• RM-VL Residential Multi-Unit, Very Low Density: 8,000 SF/unit; 11% of existing parcels are too small to accommodate four units (note: there is only one small district, comprised of nine parcels, in Westwood)

EXECUTIVE SUMMARY

Multi-Unit Residential Zoning Districts, 2021

Source: City of Pittsburgh, Port Authority of Allegheny County

EMI (Administrator Exception) No Minimum Lot Size GT, LNC, NDI, NDO, RIV, UNC, No Minimum Lot Size RM-H – Residential Multi-Unit High Density RM-M – Residential Multi-Unit Moderate Density RM-VH – Residential Multi-Unit Very High Density RM-VL – Residential Multi-Unit Very Low Density UI (Special Exception), No Minimum Lot Size

Pittsburgh Housing Needs Assessment

Similarly, single-family residential zoning districts also have a minimum lot size per dwelling unit, which in many cases, severely restricts infill development opportunities.

Minimum Lot Sizes for Single Family Residential

Similar to multifamily development, minimum lot sizes can be a hindrance to infill development in single-family residential neighborhoods. The table below shows the required minimum lot size for single family homes in residential districts. As shown, the required minimum lot sizes are often times smaller than the majority of existing parcels within each district. This can be cumbersome for homeowners and developers as variances would be required for infill development.

EXECUTIVE SUMMARY

Share of Parcels Smaller than Required Lot Size, Single Family Residential Districts, 2021

Source: City of Pittsburgh, Port Authority of Allegheny County

Residential Zones R1D, R1A, R2, & R3

Minimum Lot Size Required

Total Parcels Below Minimum

Percentage of Parcels Below Minimum

Very Low Density 8,000 sf 10 of 15 67%

Low Density 3,000 sf 68/216 31%

Moderate Density 3,200 sf 958/1499 64%

High Density 1,800 sf 595/944 62%

Very-High Density 1,200 sf 885/1069 80%

LEGEND

Share of Parcels Smaller than Lot Size Requirements

Very High Density, 80%

Very Low Density, 67%

Moderate Density, 64%

High Density, 62%

Low Density, 31%

Major Rivers

Pittsburgh Neighborhoods

Pittsburgh Housing Needs Assessment

The effects of redlining are still apparent today, with many of the “definitely declining” and “hazardous” neighborhoods from 1937, reflecting today’s predominantly Black neighborhoods, where multi-unit residential development is permitted, and areas with concentrations of housing in poor condition.

History of Redlining

The practice of redlining, which made it difficult or impossible for people in certain neighborhoods (red/yellow areas on the map) to obtain mortgages and/or sell their homes, continues to heavily influence demographic and housing patterns today. Although the practice of redlining ended in 1968, many of these neighborhoods once designated as “hazardous” are today home to the city’s largest concentrations of Black and African American residents and are also the areas where multi-family…