Pittsburgh Real Estate Blog | Pittsburgh Homes R Us

Zillow has just released its latest quarterly report for the national housing market.

While I’ve questioned Zillow in the past, and while I do still question their market value assessments ("Zestimates"), they appear to be getting their "sold" numbers from a variety of reliable sources.

However, since part of their report is based on their "Zestimates," some caution is required when taking their numbers at face value.

Overall, the nation’s home values have decreased by an average of about 10% from last year. The hardest hit areas are not big news - California and Florida are still experiencing the bursting of their housing bubbles, with some areas of California seeing price drops of as much as 40%. Some observers believe these markets will continue to drop over the next few years.

The Pittsburgh metropolitan area, on average and as a whole, hasn’t changed much since last quarter and has seen a slight increase in home values of 0.6%. Pittsburgh ranks in the top 10% in market stability according to the Zillow report.

The Philadelphia metro area has seen prices fall by about 3.5% from last year.

Of course, there are areas that vary within our region, as I reported in my last housing update where I compared July of this year with July 2007.

In the latest Zillow report, there are home value increases averaging around 6% in parts of Westmoreland County. In Allegheny County, home values have risen in areas such as the City of Pittsburgh, Monroeville, Allison Park, Gibsonia, and Bethel Park, where the average is around 3%.

So, we’re holding our own for now - which is not very surprising. The Pittsburgh area has had a conservative housing market for a long time and we’re continuing to see the wisdom and benefits of that economic conservatism.

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In a previous blog, I mentioned the Homebuyer Tax Credit for first-time buyers which is included in the housing bill recently passed by Congress - the Housing and Economic Recovery Act of 2008.

To recap - the bill provides a credit of up to 10% or $7500 (whichever is less) for first-time home buyers. The "credit" is actually a loan which is paid back over 15 years in equal payments. If you sell your home before the credit is paid back in full, the balance is due at time of sale.

The credit applies to the purchase of a home made between April 9, 2008 and July 1, 2009.

Here are a few more details on this credit:

Residency - The home you buy must be your primary residence until you pay back the credit. So, if you’re thinking of buying and then renting out the property, you’ll have to pay the balance of the credit in the year that you first rent it out.

Repayment - Starts two years after the year in which the residence is purchased.

First-time homebuyer - According to the CCH Group (a tax advisory company), "a person is considered a ‘first-time homebuyer’ if he or she (or spouse) had no ownership interest in a principal residence during the three-year period before the new home is purchased."

Income Eligibility (based on adjusted gross income) - For married couples, you can receive the full tax credit if your income is less than $150,000/year. The credit is then phased out up to an income limit of $170,000. If you’re single, you can receive the full credit if your income is less than $75,000/year; the credit is then phased out up to a limit of $95,000/year.

Claiming the credit - The credit is claimed after you purchase the home, so it cannot be applied to your closing costs.

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Looks like the downturn in the housing market is finally starting to hit home.

We’re seeing a lot of negative numbers for July 2008 compared to the same month last year.

Once again, I took a look at residential, single-family home sales, based on statistics from the WestPenn Multi List. Numbers reflect the percent change between July 2008 and July 2007.
 

East Allegheny County
Sales Volume -22%
Average Sale Price -3%

Westmoreland County
Sales Volume -25%
Average Sale price -8%

North Allegheny County
Sales Volume -24%
Average Sale price +1.6%

Butler County
Sales Volume 0%
Average Sale price +6%

Washington County
Sales Volume -32%
Average Sale price +7%

Murrysville
Sales Volume -48%
Average Sale Price +5%

Plum Boro
Sales Volume -42%
Average Sale Price -11%

Monroeville
Sales Volume -11%
Average Sale Price +3%

Penn Hills
Sales Volume -36%
Average Sale Price -16%

Squirrell Hill
Sales Volume -42%
Average Sale Price -1%

While the market in Butler County continues to remain strong, the rest of  the statistics speak for themselves.

The question now is: what effect, if any, will the housing stimulus package have on the Pittsburgh market?

I think it will take, at the very least, a few months  to see what happens.

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In case you missed it, part of the Fannie Mae/Freddie Mac bailout included some measures that will affect buyers and homeowners.

• A $7,500 tax credit for first-time homebuyers - note that this is based on 10% of the sale price, up to a maximum credit of $7,500.  However, don’t get too excited - this money is more of a loan, in that it will have to be paid back over the course of 15 years. But at least it’s interest-free. This will apply to home purchases made between April 9, 2008 and July 1, 2009.
• A tax deduction for homeowners who don’t itemize deductions on their income tax returns - estimated deductions will be between $500 and $1,000.
• Higher limits on mortgages insured through Fannie Mae and Freddie Mac - up to $625,000 beginning January 1, 2009. The current temporary limit of $729,750 will stay in effect until the end of this year.
• Mortgage refinancing for distressed homeowners - allows homeowners facing foreclosure to apply for lower fixed-rate mortgages backed by the FHA. However, the original lenders would have to agree to potentially take a loss on their loans.

On the darker side of all this are provisions in the 600+ page bill that will require the fingerprinting of mortgage loan originators (broadly interpreted to include anyone who takes a mortgage loan application) and the requirement for payment systems nation-wide to report online transactions to the IRS. This includes eBay’s PayPal, Amazon.com, and Google Checkout, as well as the major credit card companies.

Some bloggers (you can Google the topics) are questioning these provisions, especially wondering what that last one is doing in a housing bill.

Based on some research I did, it does not appear that either of these provisions will be removed from the bill when it is finally signed by President Bush.

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With the Pittsburgh housing market remaining competitive for sellers (at least for now), it would be a good idea to take a quick look at some relatively simple and cost-effective approaches to increasing the value and desirability of your home.

Here are some areas you should keep in mind:

1. Curb Appeal - obviously, it’s the first thing buyers see when they take that walk up to the front door. And since it doesn’t take much time for a first impression to register, this is an important area to focus on.

The condition of the landscaping, paint, soffit and fascia, siding, window frames, even the house number, can point to either neglect  or a home that has been well-maintained. Repair, paint or replace any broken screen doors.

2. Interior Colors - some say paint everything white. But that can be a turn-off as well. Soft colors, such as pale greens, can be attractive to a buyer’s eyes. Avoid dark colors - lighter colors can make a home look larger. Needless to say, stay away from the pink, orange and purple rooms. Bold colors are risky.

Wallpaper is not very popular either - although if it’s high quality and the pattern is tasteful, it could pass.

3. Upgrade the kitchen and bath - probably the two most important rooms in the home. If something looks dated, consider replacing it. Make sure both rooms are pristine for showings.

4. Hardwood floors - because it’s costly and time-consuming to refinish floors, try "screening." The process involves scraping off the old finish to prepare it for applying a new finish. Do a Google search or click here to download a pdf file for an explanation of the procedure.

5. Closets - cluttered closets give the appearance of messiness and neglect. They can also give the impression that a decent size closet is smaller than it is.

6. Window treatments - plenty of light and the view are most important when it comes to windows. For example, dark drapes will darken a room and should be replaced.

7. Pre-inspection - as a seller, a home pre-inspection will give you a head start on finding out what needs repair before the buyer finds it. If you can get most, if not all, of the problems repaired (at least the major ones) you’ll be better off.

Make sure you provide a list of recent repairs, along with receipts, to prospective buyers. Chances are you’ll get a higher price for your home or it will sell faster, or both. You’ll also avoid much of the sticky home inpsection negotiations - which can result in buyers walking away from the sale.

As a final suggestion: The web site for HGTV is a good place to start for getting ideas on how you can improve the image of your home.

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There’s a movement afoot to lower or even abolish the Pittsburgh drink and car rental tax. Chief Allegheny County Executive Dan Onorato has stepped up to say that if the drink tax goes, county property taxes could increase by up to 20%.

But a 20% increase in property taxes would collect around $40 million, which is $8 milion more than what is earmarked for the Port Authority through matching funds by the state.

According to the Allegheny Institute for Public Policy (the region’s government watchdog group), the $40 million is what the tax levies have brought in so far.

In addition to all this, the county money collected from the drink tax has not yet been released to the Port Authority. It’s release is pending, based on agreement to concessions by the Port Authority union.

However, Act 44 which authorized the levying of these taxes does not authorize the money to be withheld based on agreement to concessions by the union.

Meanwhile, the state has already sent its share of the money.

Something obviously smells fishy.

But quite often that seems to be the way it goes when government gets it’s hands on large sums of money.

The plot thickens …

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Every now and then I need a diversion from … well, you know, all the stuff that requires some diversion every now and then.

So, I came across this video and I thought I’d share it.

Certainly, this is not all there is to Pittsburgh’s legacy. But just as certainly, it bears some recognition. Even if you’re not a rabid sports fan, it’s still pretty cool.

Some of you have probably already seen it, but if so I think it’s worth watching again. For those of you who haven’t seen it … enjoy.

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I hear hurricanes ablowing.
I know the end is coming soon.
I fear rivers over flowing.
I hear the voice of rage and ruin."

                        - Creedence Clearwater Revival

Most people don’t want to hear bad news. I surely don’t.

Most people like to believe that when the ride gets bumpy, things will soon smooth out - and not get bumpier. Many people have faith that our elected leaders will not let the ship go down.

However, if we’re going to be realistic, then we need to face reality.

This country is in some economic trouble. And it’s not looking good.

Many of you have probably heard the news by now - Fannie Mae and Freddie Mac in distress. IndyMac, one of the largest mortgage banks in the country going belly-up. The Bear-Stearns bailout.

And that’s just the recent news.

The US government has pretty much stepped in to say that they will not allow these large financial institutions to go under - that the government, i.e. US taxpayers, will be the lender of last resort.

While this may sound like a reasonable, necessary and immediate solution, it will only make things worse in the long run.

Consider that the federal government is now approximately $9.5 trillion in debt - and that’s only the debt that we know about, the debt that’s "on the books."

To get some perspective on this $9.5 trillion national debt - if you took one dollar bills and stacked them in a single pile, this pile would be approximately 568 miles high. Picture driving from Pittsburgh to Nashville.

Hmmmmm.

We have an economic system in this country that is built on debt. Even the so-called money we carry around in our wallets and pockets represents nothing more than a debt instrument.

While I’ve mentioned that the housing market in Pittsburgh has not seen the wild swings of other markets, we need to keep in mind that our fair city does not exist in a vacuum. Buyers in this area access the same lenders that people all over the country use. And as these lenders tighten the screws, we’ll feel it over here as well. Even local lenders will be forced to become far more conservative when it comes to handing out money.

In fact, this is already coming to pass.

I’m not an economist nor a politician. I have trouble understanding most of the mumbo jumbo we hear from people who are economists and politicians.

But the mumbo jumbo is there for a reason - to confuse people; to lead us to believe that it takes economic wizards and esoteric incantations to figure out what’s going on.

I believe that economics does not reside in a supernatural realm where only the initiated may partake of ancient wisdom.

I believe the solution to all this is fairly simple: This country needs to get on sound economic footing by reducing the size, and therefore the expense, of government. We need to do away with fractional reserve banking. We need to return to a constitutionally-based dollar, which is gold and silver coinage.

This may sound quaint (even conspiratorial!) to some, but this is the only way to get the economy on solid ground.

Making these changes would be painful for a while. But not nearly as painful or long-term as allowing this present system to run its course.

Some folks might call me an alarmist. My take is that if you smell smoke, you sound the alarm. Waiting for the building to first go up in flames seems fairly useless.

It could take many more years before everything implodes, but in the meantime the writing is clearly on the wall.

If we don’t heed these warning signs soon, there will be much weeping and gnashing of teeth.

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Okay - so we have a lousy baseball team (at least for now). But there are reasons why Pittsburgh was voted America’s most livable city.

And when New Yorkers sit up and take notice - well, that sort of ices it.

A friend alerted me to an excellent travel article on Pittsburgh, written by Jeff Schlegel of the New York Times, and I thought I’d pass it along.

The article also contains some links to other pieces about life in The Burgh.

Great photo of the  Duquesne Incline on Mount Washington, too.

Enjoy.

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The numbers are in for the 2nd quarter of 2008 so we can compare what’s happening now with a year ago for residential, single-family homes.

These numbers are culled from the West Penn Multilist.

I took a look at some specific areas in East Allegheny and Westmoreland County - Churchill Boro, Forest Hills, Monroeville, Murrysville and Plum Boro. Generally speaking, the market in these areas is holding steady along the lines of the trends we’ve been seeing, keeping Pittsburgh in the class of one of the more stable metropolitan areas in the US. There are slight increases in sales volume for most areas and some price increases.

Murrysville has seen a price drop of around 1.5% compared to the second quarter of 2007. In general, average sale price in Westmoreland County is down by about 3% compared to last year.

Plum Boro appears to be experiencing the most drastic market decline compared with the trends seen in Allegheny County as a whole. Sales volume in Plum is down 23% and average sale price is down by 10%.

Regionally, we continue to experience a decrease in sales volume, and some ups and downs in average sale price compared to last year’s second quarter:

North Allegheny County:    Sales volume down 16%;
                                               3% decrease in average sale price
East Allegheny County:     Sales volume down 15%;
                                               8% increase in average sale price
South Allegheny County:   Sales volume down 12%;
                                               6% increase in average sale price
Westmoreland County:     Sales volume down 12%;
                                               3% decrease in average sale price

So, nothing too earth-shaking to report here.

It’s still a good market for buyers as interest rates remain low by historical standards. And if your credit is good, you should have no problem securing a loan.

For sellers, the absorption rates, which reflect the amount of inventory currently available, are very good, with an average of a little over 4 months worth of inventory on the market for the regions cited above. Which means, if you price your home competitively, it should sell in a reasonable amount of time.

Economic predictions for the country in general remain a bit pessimistic at this point, as fuel prices continue to climb and take the price of most goods and services along with it. There’s a chance that interest rates will continue to rise during the year as the Federal Reserve continues to battle the inflation that it created.

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