Investor Ownership of Properties in Hazelwood

Background

Hazelwood is a neighborhood approximately 1.5 miles south of CMU, in an area that was home to the Hazelwood Coke Works, the last operating steel mill in the City of Pittsburgh. Since its closing in 1998, the neighborhood has struggled with abandoned buildings, crime, and the loss of commercial businesses.

Yet the site that the Coke Works once sat on, a 178 acre site adjacent to Hazelwood and along the river, represents the last large vacant parcel of land in the city of Pittsburgh. The Almono site (named from the three rivers that converge in Pittsburgh) has attracted interest and has development plans for roughly 2 million square feet of office space and 1,300 housing units. In February 2016, Uber Technologies announced it will be building an autonomous vehicle test track on the southern end of the ALMONO site.

Almono Site

With this renewed interest in the neighborhood, Hazelwood sits at a crossroads of promise. With almost $1 billion in planned investment at the Almono site, the neighborhood as a whole will benefit from the economic impact of new infrastructure, businesses, and jobs that will be created. However, ensuring that current, long-term residents of Hazelwood are protected from rising rents, increased cost of living, and higher property taxes, are a real concern. Additionally, history has shown that this type of concentrated development, combined with extremely low housing costs, attracts real-estate speculators and investors who will buy property and hold until the land appreciates.

Analysis

First, I took a look at the raw count of properties sold using the Western PA Regional Data Center's Property Sales Database, which tracks all sales in Allegheny County from 2012 to date. As you can see, the number of properties sold in Hazelwood has steadily increased since 2012, as well as the number of investor-owned properties. Interesting to note is that of the 25 properties sold in the first quarter of 2016, 18 (72%) of them were purchased by investors.

A property was identified as investor-owned according to the methodology outlined in the WPRDC’s Property Assessment User Guide. I also removed any government-sold properties that were sold through the tax foreclosure process.

Where

After establishing that the sales volume has increased, I then turned to a spatial analysis of where the most properties have been bought and sold, including both investor-owned and owner-occupied. Using CartoDB’s animated heat maps, I was able to show a timelapse of property sales during the same 4-year time period as the chart above and I annotated the map with various points of interest in Hazelwood.

The most interesting findings from this map is the buzz of activity that has been concentrated in the southwestern part of the neighborhood, which is directly adjacent to the site where Uber announced it will be building its future test track.

Additionally, there has been a steady sales volume in the blocks surrounding the site of the former Gladstone Middle School. The school, vacant since 2001, was sold in November 2015 to a realty company representing a series of nonprofits who will be turning it into a center for low-income residents.

Finally, there’s a flurry of activity in the southeastern part of the map, around where the Propel Hazelwood elementary school opened its doors in 2014.

Investor Behavior in Hazelwood

After establishing where properties are being bought and sold in Hazelwood, I then proceeded to look at the investor-owned properties only, using the WPRDC’s Property Assessment database, which provides information about every parcel of land in Allegheny County. While recent sales volume helps to identify areas that are attracting recent interest, an analysis of the parcels of land that are investor-owned can help to identify “holding” investors and especially the behavior of individual investors.

The upper righthand side of the graph has a list of the top 12 individual investors in Hazelwood. Common ownership was determined according to the methodology outlined in the WPRDC’s Property Assessment User Guide. When an individual investor is selected, the list of all properties will be filtered to just see the properties owned by that investor. The background coloring in the main map shows the income level by Census block group and the color of the points indicate the condition of that property, according to the Property Assessment database. Additionally, the lower righthand corner’s map allows the users to see a timelapse of when properties were purchased. This helps to distinguish long-term investors from those who have purchased many in a short period of time.

Additionally, I analyzed the Bureau of Permits, Licenses, and Inspections (PLI) Violations Database. By selecting the name of the investor and then the “View data” button, the user can see the number of violations that have been found at the addresses owned by that investor. A few things to note is that the PLI Violations database only has data from October 2015 to date. Additionally, the violation is associated with the parcel, therefore there is a small chance that the investor was not in possession of the property when a violation was found.

By selecting the “Out of State” investors, the user can also see where out-of-state investors are located (Pennsylvania is excluded from this map). The top state is Florida, followed by New York and South Carolina.

Initial Impacts to Hazelwood

The indicators that are typically used to evaluate the impacts of investor-owned properties on a neighborhood are the number of violations found, the number of building permits opened (to identify potential “flipping”), and the number of 311 requests made reporting unsafe conditions. Unfortunately, at this point it’s challenging to measure any of those indicators in Hazelwood due to the paucity of data (or in the case of building permits, not yet on the WPRDC) that exist at the neighborhood level on account of the fact that the WPRDC was only recently launched in October 2015.

However, I used Zillow’s rental and homeownership price index for Hazelwood as a whole, and found that there was a steady increase in housing prices in Hazelwood from 1996 to 2014, at which point sales prices plummeted 24% in less than a year, to $49,400 where they approximately remain today.

A similar story exists for rental prices, which have remained relatively flat in Hazelwood since 2011.

Conclusions

It’s too early to be able to say with certainty what the impact of investor-owned properties on Hazelwood has been or will be. However, there are a number of findings that came out of this analysis:

  1. Property sales volume has been increasing year-over-year in Hazelwood since 2012.
  2. Investor activity in Hazelwood is concentrated around areas of recent activity (Uber test track, Gladstone Middle School, Propel Elementary School).
  3. Most large investors in Hazelwood have increased their purchasing of parcels within the last two years.
  4. While rental prices and home sale prices have remained stagnant across the neighborhood as a whole (according to Zillow) in the past few years, the increase in the sales volume and the Almono site’s development, combined with the fact that 72% of all properties sold in the first quarter of 2016 were purchased by investors, suggest that investors may play a larger role in Hazelwood going forward.