By Christopher Briem, on August 18th, 2011
The title was going to be for a baseball post, but then I saw the latest stories on Pittsburgh region real estate prices. Baseball geeks can probably deduce what the baseball comment was going to be unfortunately. For real estate we have something really odd continuing. The Trib’s headline is not the first, but may be an escalation in some peculiar cognitive dissonance. The title of the article is: Housing Sales in Pittsburgh Region Continue to Decline.
That headline is true enough, but if you read the story you see it is reporting local real estate values increased by over 8% and 5% in terms of median and average prices year over year.
+8.3% and +5.6% to be precise….. when comparing to national real estate prices which are continuing to plummet, why is the headline about a very marginal decline in the number of sales. I still am not so sure the number of sales is inherently a good or bad metric for a region, important as it may be to the livelihood of individual real estate brokers or sales agents.
I’ve said this before, but when you factor in the relatively low inflation level of late, the ‘real’ real estate appreciation going on in Pittsburgh must be maintaining a near record pace.
By Christopher Briem, on July 21st, 2011
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.
By Christopher Briem, on December 30th, 2010
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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By Christopher Briem, on December 17th, 2010
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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By Eldon Mast, on June 8th, 2010
Recent distractions with economic uncertainty in Europe have turned many heads, but the strong U.S. economic recovery rolls on. Just about all new U.S. economic reports are now posting positive results. This past week was no exception.
A very strong month-to-month surge in new manufacturing orders and additional employment boosts highlighted another robust ISM manufacturing report. New orders have been rolling in steadily now for well over a quarter and employment is now accelerating a level not seen for almost 6 years. Other ISM readings included strength for production, backlogs, and export orders. Additionally all the activity in production is drawing-down inventories – a sign that points to additional necessity for inventory restocking and even further production and employment.
The recent surge in home sales has also carried over to unexpected strength in construction activity. Construction outlays in April have jumped 2.7%, following a 0.4% rebound in March. Even though economists knew about expiring tax credits for home buyers, the consensus had expected no change for the April reading. The recent jump in home sales has now cut home inventories enough to give contractors renewed confidence to pick up their pace of additional construction.
Car and truck sales are also proving very solid. In the latest report, sales are now ramping to an annualized adjusted rate of 11.6 million — surpassing April’s 11.2 million. The best news for the auto sector is that even now that those government incentives have been curtailed, sales continue to ramp steadily.
The Challenger’s job-cut report held its count at a pre-recessionary 38,810 in May. The level is little changed month to month, but compared to last year’s 111,182 in May the rate is now at “normal” levels. The report supports continued expectations for sizable payroll gains and lowering unemployment rates in the months to come.
The ISM’s non-manufacturing composite also continues to report solid gains. Its readings continue to indicate steady month-to-month acceleration in activity. The employment component of the report now shows a net gain in hiring with rising backlogs pointing to accelerated hiring ahead.
So while short term market fluctuations many times have folks asking if the recovery is over, the reality is all indications are that this recovery cycle (even though it is now about a year old) is likely just getting started. Fundamentally, most indicators now point to steady economic growth and an increase in hiring for the foreseeable future.
By Eldon Mast, on May 26th, 2010
Existing home sales soared in April as existing home buyers rushed to take advantage of the tax credit that expired at the end of the month.
On Monday, the National Association of Realtors reported that existing home sales jumped 7.6% last month to a seasonally adjusted annual rate of 5.77 million units, up from a rate of 5.36 million in March. Sales year-over-year were up 22.8%.
Even though the jump was widely anticipated, it still beat forecasts. The consensus among economists was that resales in April would only rise at an annual rate of 5.65 million units.
The median price of all existing homes also rose in April. Existing home sales tally the number of previously constructed homes, condominium and co-ops in which a sale closed during the month.
Details of the report show comparable gains for both single-family homes, up 7.4%, and condos, up 9.1%. The Northeast led the regional breakdown of gains.
By Eldon Mast, on April 26th, 2010
New home sales jumped up in March at the fastest single-month rate since March 1963. The government report released on Friday said buyers gobbled up new houses ahead of the federal tax credit that is just about to expire.
New-home sales rose 26.9% to a seasonally adjusted annual rate of 411,000 in March, compared to a revised annual rate of 324,000 in February.
The surprise jump was significantly better than even the most optimistic professional forecasters had thought. The average economist surveyed said that March sales gains would only amount to an annual rate of 330,000.
The rate gain was the biggest in a month-over-month measure since a 31% gain 47 years ago in March 1963.
Gains in the South were especially pronounced. New home sales there were up 43.5%. The Northeast region also saw a massive 35.7% spike.
“It’s obvious that homebuyers are rushing in to take advantage of the tax credit that’s set to expire,” said Robert Dye, an economist for PNC Financial Services.
In a national housing market that still is concerned about oversupply, the March results also produced significantly declining market inventory. The report showed that at the current rate inventory is now at 6.7 months. That is down sharply from over 9 months of inventory in February.
“It’s a very good sign to see [the inventory] number down,” said Dye. “Firming house prices and an improving jobs market will make recovery felt on Main Street as well as Wall Street,” said Dye. “We’re headed in the right direction.“
By B.P.T., on April 23rd, 2010
At 8:30 AM EDT, the Durable Goods Orders report for March will be released. The consensus is that there was a gain of 0.4% from February, which would be the fourth consecutive month of gains.
At 10:00 AM EDT, the new home sales report for March will be released. The consensus is that 330,000 new homes were sold last month, which would be an increase over February, which was a very weak month for new home sales.
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By B.P.T., on April 22nd, 2010
At 8:30 AM EDT, the U.S. government will release its weekly Jobless Claims report. The consensus is that there were 440,000 new jobless claims last week, which would be slightly less than the higher than expected number reported last week.
Also at 8:30 AM EDT, the Producer Price Index for March will be released. The consensus is that the index increased 0.4% over last month, and 0.1% when food and energy are excluded.
At 10:00 AM EDT, the Existing Home Sales report for March will be released. The consensus is that 5.25 million existing homes were sold last month, which would be a small increase over February.
At 4:30 PM EDT, the Federal Reserve will release its Money Supply report, showing the amount of liquidity available in the U.S. economy.
Also at 4:30 PM EDT, the Federal Reserve will release its Balance Sheet report, showing the amount of liquidity the Fed has injected into the economy by adding or removing reserves.
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By B.P.T., on April 5th, 2010
At 10:00 AM EDT,the value of the pending home sales index for February will be announced. This index fell 7.6% in January despite attempts by the federal government to prop up the housing market, and February will probably be another weak month for existing home sales because the poor weather in that month.
Also at 10:00 AM EDT, the ISM non-manufacturing index for March will be released. It rose 2.5 points in February, and the consensus estimate is that it increased 1 point last month, pointing to continued economic growth in the United States.
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