For me the most intersting thing about the latest news on the real estate front is that there just isn’t anyway anyone could find to spin this as less than positive news. As news on the real estate front nationally continues to be described as anemic at best, locally real estate prices have gone up over 6% in the last year. 6.6% exactly which is quite a remarkable annual price increase for Pittsburgh. I wish I had a long term time series to compare, but net of inflation that must be a record of some kind. Granted the Trib version lead with the downer: Sales of new, existing homes fall 26 percent in W.Pa.. Sales being a volume metric and reflective of the big tax credit last year. The nugget buried in that version however is that in the region ”New houses sold for an average of $304,841 last month”. I am not sure folks in town will believe that… Over $300K!? Tell your grandmother and see what she says about that.
It occurs to me that if there really was this mythical link between mortgage risk and Marcellus Shale it would only be the opposite as the news accounts described it the other day. If Marcellus pushed UP real estate values, that would make the risk of future depreciation increase as well… our low risk of price drops in the future is really a reflection of anemic price apprciation in local markets. Anything that is pushing up prices is pushing us down on that ranking of safest markets looking at potential future price drops. So the last thing some would want to do is to take credit for our mortgage risk ’safety’. OK, enough counterintuition for the day.
But I liked the phrase “Pittsburgh Paradox” as used in that story. Here is my contribution to the world of equations. This is going to be really deep:
People + Income = Real Estate Prices
So there isn’t that much paradox in a sense. Regional migration has turned positive, incomes are trending up… not included in the equation, but our housing stock is old and not exactly oversupplied across many markets. The prices follow.
Ignore that for now. I was curious how far back the “Pittsburgh Paradox” term has been thrown around here. I came across this article on local public transit from 1976 that is curious in lots of ways, but really worth a read these days: Transit Scene here replete with paradox. Of course that paradox may soon be gone as transit itself here may soon be gone. Looks like the Port Authority has failed to get public sentiment raised enough to save its funding. Not all that surprising. In fact they succeeded…. all too well. They spent so long, and spent so much money on PR consultants, convincing the public that public transit had to be cut back in recent years that it really is no surprise that the public is not responding when they want to send out the opposite message now.