By Christopher Briem, on November 24th, 2010
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.
By Eldon Mast, on April 28th, 2010
U.S. housing prices are showing more signs of recovery. On Tuesday Case-Shiller released their index of home prices in 20 cities and it rose 0.6 percent in February from last year. The National Association of Realtors reported last week that existing-home prices advanced 0.4 percent in March as sales climbed for the first time in four months.
An abundance of inexpensive homes and a stabilizing job market are helping support housing demand, according to Dean Maki, chief U.S. economist for Barclays Capital:
Affordable home prices and the improving economy are doing more to lift sales than the tax credit. Consumers are becoming more confident about a major purchase such as a house. We’ll see a surge as buyers rush to close before the deadline, followed by a subsequent falloff. After that dip, we expect home sales to increase for the rest of the year.
“We’ve turned a corner with housing,” said economist Karl Case, who with Robert Shiller created the index. “As long as mortgage rates don’t jump and employment continues to improve, we should see housing play a key role in preventing a double-dip recession.”
The Case-Shiller Home Price Index is based on repeat transactions and measures the appreciation or depreciation for same the houses as they are resold over time. Many agree that this index is probably one of the best measures of changes in home prices.
The performance of home prices obviously continues to vary widely around the country. During February, the 12-month gain in prices was strongest in the West while prices in Washington D.C. and Dallas rose moderately.
The data continues to point to an extended price recovery, a trend that the index first highlighted back in February.
By B.P.T., on April 27th, 2010
The weekly ICSC-Goldman Store Sales report will be released at 7:45 AM EDT, and another strong week of sales is expected.
At 8:55 AM EDT, the weekly Redbook report will be released, giving us more information about consumer spending.
The monthly S&P/Case-Shiller home price index report will be released at 9:00 AM EDT. Given that most economists don’t expect the overall U.S. economy to improve until housing prices end their decline, the market will be watching this number closely.
The monthly report on Consumer Confidence for April will be released at 10:00 AM EDT. The consensus index level is 53.5, which would be a slight increase over March, and this report will be watched closely by the market because of the drop in consumer sentiment reported earlier this month.
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By Eldon Mast, on February 12th, 2010
Home prices rose in 67 of 151 U.S. metropolitan areas in Q4, said the National Association of Realtors (NAR) on Thursday. Furthermore the association pointed to a “broad stabilization” of values across the country.
The median price for single-family home resales was up from a year earlier in over 44% of the areas included in the trade group’s quarterly survey.
Some of the metro areas showing the biggest gains from a year earlier were Cleveland (25%), Akron, Ohio, (23%) and San Francisco (13%).
The seasonally adjusted annual rate of previously occupied homes sold jumped 13.9% from the third quarter. The national median price rose 2.9%.
Existing-home sales in the West jumped 16.2% in the fourth quarter to an annual rate of 1.38 million and are 18.2% above a year ago. The median existing single-family home price in the West was $227,200 in the fourth quarter, which is 8.9% below the fourth quarter of 2008, but with many areas showing notable gains.
“Markets in the West such as San Francisco, San Jose and Denver are showing double-digit price increases, and other markets like San Diego and Anaheim have begun to firm up,” Lawrence Yun, chief economist for NAR.
“The surge in home sales was driven by buyers responding strongly to the tax credit combined with record-low mortgage interest rates,” said Yun, “With inventory levels trending down over the past 18 months, we expect broadly balanced housing market conditions in much of the country by late spring with more areas showing higher prices.”
By Eldon Mast, on November 11th, 2009
Sales of previously owned homes rose across the country during the third quarter, according to a report released Tuesday by the National Association of Realtors.
Nationally, sales were up 5.9 percent from the third quarter of last year. Previously owned homes changed hands at a seasonally adjusted annual rate of 5.3 million, according to the report. NAR attributed much of the jump to continued affordable prices and a federal income tax credit. Congress and President Obama legislated an extension and expansion of the tax credit program last week.
Home sales rose in 32 states and Washington, D.C., from the third quarter of 2008 to the third quarter this year. Sales jumped in 45 states, and in Washington, D.C., from the second to the third quarter.
There was no lack of media enthusiasm for the news on Tuesday as local media outlets across the country finally picked up on the good news…
1. Home sales up nearly 79.6% in October in Orlando
2. Pittsburgh home prices rise in third quarter
3. US Home Sales Rise to Two-Year High
4. Home prices seen stabilizing in North Jersey
5. NJ homes sales jump 11 percent in quarter
6. DC Area housing sales jump
7. Las Vegas Home Sales On The Rise
8. Florida home sales up for fifth straight quarter
9. Houston-area home prices rise in third quarter
10. Ohio home sales rose during the third quarter
11. Nashville home sales climb first time in three years
12. Lehigh Valley home sales rise 30 percent in October
13. Illinois Third Quarter Home Sales a Bright Spot in 2009
14. Home Prices Are Suddenly Hot in Some Areas…
Back in June we pointed out a dozen housing markets that were showing pricing improvement. August revealed a dozen more.
While some year over year comparisons continue to show price erosion recent jumps in the national S&P/Case-Shiller Home Price Index further clarifies that the price drops of the past few years are now over. The 20-city index is now consistently rising quarter-over-quarter.
Three independent sources, the National Association of Realtors, the Federal Housing Finance Agency and Case Shiller are now all showing housing price improvement.
Repeatedly we’ve said that the strength of this recovery will be measured in part by how well the housing industry fares. Tuesday was further strong evidence that this recovery continues unabated.
By Eldon Mast, on July 28th, 2009
New home sales added to our run of good news in the housing market on Monday. Sales jumped 11.0 percent in June to an annual rate of 384,000 and the highest rate this year — well above any economists’ estimates. In fact the month-to-month percentage change was the highest in nearly 9 years. But the best news in the data was that the strong sales sucked down new home market supply. Supply fell precipitously from 10.2 months in May to 8.8 months in June for the lowest supply reading in 23 months. With the significant supply shrinkage, the total number of new homes now on the market is the lowest in 11 years.
Fishing for something negative, doomsayers continued to point to year over year home price declines. However, when closely examining data for the more recent 4-5 months, it should be no surprise that home prices have bottomed and that in many markets the prices are rebounding.
By Eldon Mast, on June 25th, 2009
Tuesday we reviewed a dozen areas where home prices are rising. Wednesday yielded the release of home sales data with three more significant pieces of great news.
1. Sales of previously owned homes rose for the second month in a row in May. The improvement was 2.4% better than the sales rate in April.
2. Inventories of existing homes continue to decline rapidly. Inventory levels are now below the 10 month mark for all existing homes for sale. That level is down over 15% from a year earlier. There is now only a 9 month supply of existing single family homes on the market.
3. What may be the best news in Tuesday’s home sale data is the fact that the number of distressed sales has drop precipitously. Earlier in the year close to 50% of sales were distressed. May’s data shows that level down to 33%
It is no wonder then that home prices in many cities are beginning to recover.
By David Barr, on April 28th, 2009
Can anyone think of a more value destroying transaction than foreclosing a home in a dead real estate market. There are more than 700 houses in Detroit listed for less than $3000. And there not selling. In this climate banks can’t possibly expect to recover much of anything from a foreclosed. Considering legal costs, taxes and maintenance the banks would surely be better off just letting the borrower stay in the house. And of course all of these foreclosed homes are killing property values, which leads to more foreclosures. And I haven’t even talked about the impact on evicted individuals.
Governments should offer reduced taxes on foreclosed properties if the former owner is allowed to remain in the house. This is a win win win solution. The borrower gets extra time in the home to figure out there next move. The city can stabilize property values by keeping a glut of foreclosed homes off the market. But the big winner is the bank who can hold on to the house at little cost until the market improves.
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