Anyway we are getting there..  albeit slowly.  Read the PG piece today carefully please: Allegheny County reassessment favors properties with higher prices, review finds…. and the penultimate comment. :-0 Seriously though, I would concur with and beyond what the PG is observing . . . → Read More: Digging into the numbers]]> So I lied. I did. But don’t expect much more this week.

Anyway we are getting there..  albeit slowly.  Read the PG piece today carefully please: Allegheny County reassessment favors properties with higher prices, review finds…. and the penultimate comment. :-0 Seriously though, I would concur with and beyond what the PG is observing in their ward by ward level analysis. In fact the regressivity of property assessments is a bit starker than you can see when looking ward by ward as they do. Ward by ward tend to even out what is clearly true that the new assessment values are progressively more under assessed (or is the semantics better described as regressively more) for higher valued properties. By the time you get to $300K properties it becomes undeniable yet those are some of the angriest people out there.. at least from whom I hear from directly.

BTW.. note also relevant PG letter to the editor today on topic.

This is entirely an artifact of self-selection, but it is remarkable how many home owners in Shadyside and Squirrel Hill or environs have talked to me about how their own properties were overassessed. Look at the Post Gazette numbers and you begin to see what is incontrovertible that pretty much everything valued over 150K (I would put the point lower actually) is under assessed. As you get into higher valuations the level of underassessment can be quite large. You can go back and look at my own graphing of sales value to new assessment numbers and for properties valued over 100K or so there just are very very few sales in 2010 that came in at values below new assessment values.  Virtually all sales transactions are coming in above the new assessment values and far above the old assessment values.

Just a point in passing, but note the clear PG point: “properties that recently sold for between $100,000 and $150,000 were, on average, accurate.”

What the PG analysis does not get into at all is how under assessed the higher valuations are in the current assessments. I think equally incontrovertible is the observation that the base-year assessments currently in use higher valued properties are far more under assessed than in the new numbers. I wish they dug into the comparison of old assessment values to current market values which they mostly skipped in the piece today. But I suspect they will be at this for some time. I do with they did this separately for residential and commercial parcels, but that is more judgment call than anything else. Just lots of different things going on in commercial markets than residential markets in the region.

A point in there is what we should all be focusing on. There is no doubt that the county’s preferred method of ‘fixing’ assessment values though the appeals process is just not a fair way to fix more than extreme cases. If there are systematic problems you want to do it uniformly because the access to quality appeals is going to be highly self-selected with income. I hope someone tracks the appeals process to see if any value changes make the inequity issues being observed better.. or if things wind up worse in the end.

Also with appeals there is a bigger deal. One of the big problems with the political rhetoric of late is that I am speculating most school districts and municipalities are being spooked out of doing their own fiduciary responsibility and appealing the obviously low valued assessments. Just as individuals will appeal their own valuations to get a fair assessment.. if no taxing body appeals the obvious underassessments there are significant tax revenues being left on the table. But I bet the political climate prevents that routine administrative action from taking place. How big a deal could it be? Well.. just looking at the Post Gazette’s own data.. just looking at the 14th ward alone it says the average underassessment to market is 9% on an average market value of 287K. I’ll add a number that there are 10,718 parcels in the 14thWard… so you can do the multiplication of what the total value lost to tax revenues is notionally if you want. That is just one ward mind you. Someone should do the calculation of what the tax revenue lost in the current base year assessments is for the same set of properties which is going to be a much bigger number.   Maybe the county should be assisting local school districts in identifying potentially over assessed parcels and assisting with those appeals. Probably not.

Which gets to my comment in that. Property per property the underassessment of the higher valued homes has a far bigger impact on tax revenues at the end of the day. So even fixing half of that underassessment will result in millage adjustments that will in the end benefit lower valued homes that I bet are proportionally higher to lower valued parcels.

and at the end of the day we just miss the forest for the trees.  Set aside the level of accuracy in the assessments, new or old, take a look at that table and the average sales value of property in Knoxville!   Isn’t that the story here in the big picture.

For the folks really parsing this.  I like the fact the PG looked at the most recent sales, though I wold prefer folks parse commerical and residential parcels separately. There just are some very different things going on in commercial markets here than in a lot of our residential neighborhoods.  Also from what I read in the court filings the cutoff of sales data for this assessment happened early in 2011 and more reflects valuations from 2010 or before.  Given there is little dispute some neighborhoods are seeing appreciation in the most recent years, it begs a situation where some folks might really want this assessment to conclude quickly.  If we do this next year again those in appreciating neighborhoods may see even bigger changes than they are seeing now.  At least that is what the PG’s version of this all is saying to me.

and for thos really wondering..  it’s Newark airport.. what else am I supposed to do? Those who have been here understand. Though I have to say it is a far nicer terminal than when I first flew through 30 years ago flying Peoples Express and buying the ticket on the plane.  Can you imagine what TSA would say if someone tried to restart that business model?!

Which just makes me wonder… how many residential townhomes could you fit within the footprint of the Shakespeare St. Giant Eagle? . . . → Read More: Real estate stream of consciousness]]> So we statrt with the Trib: East Liberty Target counts on food shoppers.  Points for mentioning Mansmann’s department store.  How come nobody ever mentions any of the Autenreith’s that were all around town?

Which just makes me wonder… how many residential townhomes could you fit within the footprint of the Shakespeare St. Giant Eagle? or I suppose of the entire Shady Hill Plaza where it sits is the better question. Just idle, and hypothetical mind you, questions is all.

Speaking of real estate.  Nationally the news of late has been almost universally bad with mostly accelerating declines went it comes to the state of real estate markets. See just a few headlines:

MSNBC: The housing slump is far worse than you think-Key housing market statistics point to years of stagnation

BloombergBusinessWeek: The Housing Horror Show Is Worse Than You Think

WashPo: Shiller Says U.S. Housing Market `Stuck in the Doldrums’

Yet our news today is sublimely understated. PG: Home Values Rise in Region.  Do the division and the annual % increase is really quite remarkable in absolute terms, but in light of what is happening everywhere else is another thing altogether.  Given low inflation, the ‘real’ real estate appreciation here continues to be unprecedented in the region’s history.   Some headlines still emphasize slow transaction flow: PBT:Pittsburgh region home sales down in June (and I am not sure what the ‘average median home price’ is quoted in that piece means), but again I am not sure transaction flow as a metric means as much as some think.  What if transaction flows are down because the demand out there can’t find a local supply of real estate it is looking for? What would you expect to see?   Rising values maybe?  Then there is this big national issue that so many folks elsewhere are trapped in underwater mortgages that they can’t sell and move on which is probably a big part of what is going on.

To complete the trifecta the Trib headline is conflicted: Home sales dip, but average prices rise, but buried in it may be the true headline of it all in a quote from a local real estate professional saying “prices continue to appreciate despite fewer sales because there are fewer, low-priced foreclosed properties on the market”. If true, that is the story.  I have not seen enough data to either concur or not, but in many ways I am the last to find out these things.

Read the story carefully.  Lots of financial institutions want it both ways.  They essentially want to foreclose on you, but don’t want to file the paperwork to actually make the transaction and then incur the liabilities of . . . → Read More: Cincinnati to Banks: Drop Dead]]> From my Cincinnati peeps…..   Has anyone thought of something similar here: Cincinnati suing banks over empty eyesores

Read the story carefully.  Lots of financial institutions want it both ways.  They essentially want to foreclose on you, but don’t want to file the paperwork to actually make the transaction and then incur the liabilities of actual ownership.  Can’t have your cake and eat it as well.  I bet we could come up with a list of properties comparable to what is being litigated over in Cincinnati in half a heartbeat.  The legal netherworld lots of institutions are operating in when it comes to foreclosure is about as close to market failure as we come.  Where’s Coase when you need him?

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In Allegheny County, the median price for an existing home rose 23.7 percent, and the average price was up 23.9 percent

Ummm…   I take that is over two years, but……  I’m telling you the headlines are completely missing the real story in . . . → Read More: Speaking of Property Values]]> The very last line in an article… barely surviving the editor’s scissors:

In Allegheny County, the median price for an existing home rose 23.7 percent, and the average price was up 23.9 percent

Ummm…   I take that is over two years, but……  I’m telling you the headlines are completely missing the real story in all of this.

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 . . . → Read More: Pittsburgh’s real estate moment?]]> 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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Yet this is the cut and paste quote from that article right now as I type:

“Average home prices rose 3.7 percent, from $138,907 last year to $151,556 last month, according to RealSTATs.”

I’m missing something in the math on that?  Later another quote is . . . → Read More: What is the Real Estate Story?]]> Headline screams bad news:  Region home sales drop sharply

Yet this is the cut and paste quote from that article right now as I type:

“Average home prices rose 3.7 percent, from $138,907 last year to $151,556 last month, according to RealSTATs.”

I’m missing something in the math on that?  Later another quote is that regional prices for new home construction experienced “a 13.3 percent increase in the median price of a new home to $275,000.”

Given that national real estate markets are extremely anemic most everywhere… I would say this is one of the bigger economic stories for the region.  Not sure most readers will realize that, but those numbers are quite a story.

and I saw this yesterday, but for some reason thought it was really from something that came out previously.. I guess it is new.  See:  Region Economy Gets High Rating

and just to follow those stories… quite a coincidence, but:   Google delays site selection for project.  Who knows what that means for the handicapping.

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