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Pittsburgh’s real estate moment?
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3:32 pm
December 30, 2010

Christopher Briem


posts 59

In order to post something positive and to stick to the knitting, several positive economic notes out there. We’ll start with real estate.

I already mentioned the latest real estate data from realstats.  The PG headline was quite negative: Region home sales drop sharply.  Unless you are in the real estate biz itself, I am not sure sales is a metric that can be universally interpreted as a negative for a region.  That is a topic unto itself.

The bigger issue I also pointed out was that the other numbers mentioned in that story don’t quite add up.  It said: “Average home prices rose 3.7 percent, from $138,907 last year to $151,556 last month, according to RealSTATs.”  OK. Problem is that by my math a gain from  139 to 145  = +9.1%, not 3.7%.   So over on my echo that I mentioned in the last post, the principal at realstats that came up with the numbers actually commented and confirmed the PG’s math was off.  Real estate values by that measure did in fact go up by over 9% year over year, and the headline didn’t even notice.

Real estate price appreciation of +9.1% over the year is a huge number by most any benchmark.   For Pittsburgh it is quite unprecedented.  Should note that those numbers are the ‘average’ prices and it may be more common to compare median prices, but that is interesting in itself.  Note that how low inflation is, that is a real real estate price increase.  Even if 30 years ago there were some nominal increases that were comparable to that, in real terms those gains were minimal in the face of double digit inflation at the time. Latest inflation data is still virtually nonexistant in the US so that rate of appreciation is significant… for Pittsburgh historic.

Then here is the context that makes it an even bigger story.  Not only is Pgh real estate appreciating better than other markets.. almost all other markets are heading downward.   So Pittsburgh is appreciating in the face of strong national downtrend.  If there is an economic story of note around here, in the real estate data is something worth a lot lot more notice than it is getting.

Trib also covered the data with a headline that also skipped the price story: Region’s home sales fall 36 percent over year.  It also noted the other story of note that: “The median price of new homes sold (in the region) rose 13 percent to $275,000″.  That’s a pretty remarkable factoid for Pittsburgh in itself.  New homes basically appreciated in one year by an amount that far exceeds the median value of homes in many city neighborhoods and more than a few municipalities.   So something is up.

For a counterfactual angle to it all.  The ongoing, if stealth-like, county real estate mass reassessment is ongoing and starting to make noise.  If we are about to enter a phase of unprecedented real estate appreciation around here, it might be good for homeowners to get new values set sooner rather than later.  Might be painful for some (and only some) folks to see new higher assessments, but like a lot of things… some pain now will avoid bigger pain later.

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11:28 pm
December 30, 2010

Daniel Murrer


I would not read too much into the year-over-year 9.1 percent increase in average home price for November 2010.  In November 2009, first-time home buyers benefited from an $8,000 tax credit to which home buyers in November 2010 did not have access.  The tax credit drove the region's average home price down in November 2009 by overstimulating lower end home sales (i.e. first-time home buyers).  Until we reach July 2011 we will not have a fair year-over-year comparison as each ensuing month between now and then will be at a competitive disadvantage as the comparison will be between a non-stimulated month and a stimulated one.  The extended tax credit affected home sales through June 2010.  Any discussion about changes in price must be tempered by this fact.

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