Pittsburgh Real Estate Blog | Pittsburgh Homes R Us

To say that October was a quite a month for the economy would be … well … quite an understatement.

Be that as it may, once again the numbers are in for the Pittsburgh residential real estate market.

The biggest overall trend we see for October 2008 is that  homes for sale are staying on the market longer, compared to October 2007.

Not much of a surprise here as credit for the preceeding months tightened up and we saw fewer buyers in the market. This is also reflected in a drop in sales volume for the 3 counties in this survey.

It’s interesting to note that East Allegheny County experienced the smallest drop in sales while experiencing an increase in average sale price. With the economy continuing to sputter, it’s possible that buyers are now opting for the lower prices in East Allegheny, compared to North Allegheny and Westmoreland Counties. However, it’s still too early to draw any definitive conclusions.

Here are the stats for single-family homes, courtesy of the West Penn Multi List:

The year-end numbers, which I will be posting in January 2009, should be interesting. So far, for the first 10 months of the year overall sales volume is down compared to last year but average sale price is holding pretty steady.

Bookmark It

Hide Sites

The statistics are in for the Pittsburgh housing market for the month of September. Once again, these stats were taken from the West Penn MultiList and reflect sales for single-family homes only.

As you will see from the numbers, nothing too earth shaking occurred during the month of September, compared to last year.

Sales volumes remain down for most areas but the changes are not significant. Average sale price in general is holding steady, with some areas slightly down and a few slightly up.

For this month I added a new stat - average days on market for sales closing during the month of September. This number has risen slightly in most areas but not significantly so.

So, the magic question once again - what is the housing market outlook for the Pittsburgh area for the next 12 months?

Honestly, I have no idea.

What seems to be clear is that (as I’ve mentioned before) Pittsburgh didn’t have a "housing bubble" like many other areas in the country. Thus, no wild numbers to report.

On the other hand, we do not live in a vacuum.

Apparently, we’re going to get some relief from the government in the form of the controversial "bailout," which the President signed just a few hours ago.

There are also other relief programs that are already in place - one of which, the Hope for Homeowner’s Act of 2008, I will be discussing in an upcoming blog.

All this may help in the short term. However, the area of continuing concern is the fact that the federal government is now more than $10 trillion in debt. And the government continues to monetize that debt by printing more money to pay for more things. As more money is injected into the system, the value of the dollar will continue to fall.

That is, and should rightly be, our real long-term economic concern.

It’s a shame that almost no one is talking about it - certainly not the Presidential or Vice Presidential candidates.

Bookmark It

Hide Sites

Ah, September. The kids are back in school, baseball is winding down (mercifully, for the Pirates) and  football is winding up (Go Steelers!), and fall colors are about a month away.

For the Pittsburgh housing market, the changes seem to be a bit more of the same - the area is continuing to experience a downturn in the housing market.

Sales volume is continuing to take a hit. August 2008 sales volume compared to August 2007 is showing drops in most areas.

Here are the numbers:
 

August 2008 Sales Volume vs August 2007
East Allegheny County  -25%
North Allegheny County  -22%
Plum Boro  -30%
Monroeville  -54%
Penn Hills  -48%
Squirrel Hill  +8%
Westmoreland County  -12%
Murrysville  -43%
 

I can certainly attest to the fact that there are fewer buyers out there now than there were a year ago.

However, average sale price for homes are showing some interesting changes in some areas:
 

August 2008 Average Sale Price vs August 2007
East Allegheny County  +11%
North Allegheny County  +12%
Plum Boro  +6%
Monroeville  -26%
Penn Hills  -20%
Squirrel Hill  -18%
Westmoreland County  -10%
Murrysville  -7%
 

(Note: Stats are taken from the West Penn MultiList)
 

It’s difficult and tricky to identify any of these numbers as a trend for the near future.

It’s quite possible that we could see an overall improvement in the market leading up to the Presidential election. That would not be unusual.

Also, with interest rates falling again slightly, we could see things picking up - for a while.

But there are some disturbing reports lurking in the shadows.

The Federal Deposit Insurance Corporation (FDIC), the entity that insures bank deposits, will supposedly be raising the insurance premiums they charge memeber banks. So, it wouldn’t be much of a surprise to see this rise in costs of doing business for banks passed on to consumers in the form of higher rates and/or higher loan fees.

The FDIC is scheduled to implement this change in October - but again, we may not see the effects of this until after the election.

And with Freddie Mac and Fannie Mae still on the ropes, and more banks in the same precarious position …

Personally, I do not see the policies of either the Democrats or Republicans being a cause for much optimism in the long term.

Then again, I’m still waiting for my crystal ball to arrive in the mail.

Pittsburgh remains one of the better housing markets in the country. That may not be saying much right now, but at least it’s saying something positive.

Bookmark It

Hide Sites

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.

Bookmark It

Hide Sites

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.

Bookmark It

Hide Sites

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.

Bookmark It

Hide Sites

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.

Bookmark It

Hide Sites

For all of you who love looking at statistics, here’s a summary of Sales Volume and Sales Price for some areas of East Allegheny County. The numbers compare the stats for May 2008 vs May 2007 for single family residences that sold for more than $50,000.
 

In Allegheny County as a whole, sales volume is down by about 18% compared to May of last year but average home price has increased by about 4.5%.  In Westmoreland County, sales volume is down by about 3% and average home price is up 3%.

So, what we’re seeing so far in this area is fewer homes sold but, generally speaking, at higher prices.

Summer is the most active part of the year for buying and selling real estate, so we should have a better indication of how the region is doing from looking at this time period which is yet to hit full swing.

Needless to say, the country is in the midst of an economic crisis - prices continue to rise (due mainly to inflation) and the housing market in many areas continues to suffer the consequences of loose credit and high speculation.  Some people who are in the real estate industry are thinking that what we’ve seen so far is only the tip of the iceberg.

One thing that would help the Pittsburgh area right now would be to cut business taxes - Pennsylvania has the second highest business tax rate in the nation and taxes in Allegheny County are also high.

Offering some incentive for businesses to set up shop here would create jobs and an overall healthier economy.

But as long as politicians can get citizens to believe that we can tax our way to prosperity, the chances of getting out of this quagmire any time soon are pretty slim.

Bookmark It

Hide Sites

I suppose that anyone who doesn’t yet know we’re living in the Information Age must be living in a cave.

Not that there’s anything wrong with that.

In any case, in the area of real estate, the impact of this information overload over the last few years has been significant.

For example, buyers and sellers can go on line and within a short amount of time can find out what’s for sale, what’s been sold, and where it’s all happening. This information is offered, no doubt, to help people crunch numbers when it comes to making an offer on a property or determining a selling price for a property they’re thinking of putting on the market.  All, presumably, without the assistance of a real estate agent.

Will the wonders of technology ever cease?

While some people see this as a boon for the consumer, there are certain things that one needs to be aware of. One of those things is the accuracy of the data that is available.

Zillow has become one of the popular web sites for property listings and valuations.  As I’ve mentioned elsewhere, the accuracy of their "Zestimates" can be a bit dicey.

Now Realtor.com, the number one web site for property listings, has thrown their hat into the ring with their "Find Home Values" feature.

For the edification of the readers of this blog, I decided to do a comparison of the two sites to see how close they come to reality.

Using one of my current listings, this is what I found:

First, some background.  My listing (MLS # 713690, for anyone who may be interested) is a 9 year-old, 3800 square-foot, 4/5-bedroom home in Plum Boro.  It’s in excellent condition and loaded with extra features and upgrades, such as an eat-in kitchen with an $8,000 Sub-Zero fridge, 1st floor laundry, a custom-designed lower level with an in-law suite, an elevator (!), outdoor sauna, pool, and 3-car garage, just to name a few of its many attributes.  The listing price is $235,000 - a major bargain, even if I do say so myself as the listing agent.

I began with Realtor.com. I typed in the address and - Voila!  Their estimated value of this home came up as $38,547.

Hmmm. Perhaps they left out a digit.

I also wonder if that’s the reason they haven’t been heavily advertising this new feature.

I should mention that the home next to my listing is valued at $245,000 - so there’s obviously a glitch somewhere. However, for a consumer who is not looking carefully they could miss this.

On to Zillow.  Their estimate is $411,500.

For comparison and fairness, I checked another 10-year old, 4-bedroom in the same area, which is listed for $243,000 - a fair price in my opinion.  This home is identified on both web sites as a 3-bedroom home with a value of around $208,500 on Zillow and $203,000 on Realtor.

I don’t believe that either of these sites has provided information to allow a consumer to make an accurate and informed decision about the value of these properties.

Zillow does have a disclaimer about their estimates, stating that they can be affected by the amount of information that is available about a property. They also state that in Pittsburgh their valuations average about 80% of the actual sale price of homes that have Zestimates (not all properties have this).

Based on that average, my listing in Plum Boro should have a market value of about $329,000.  While that might be the case in a much stronger market than what we have today, that would still be stretching it. And an accuracy rating of 80% is not very good.

All of this is to say: Caveat Emptor - Let the Buyer (and Seller) beware.

While real estate information on the Web can be of value to consumers, there’s just so much of it out there that there’s really no substitute for a real estate agent who can accurately interpret it.

Bookmark It

Hide Sites

The Foreclosure Prevention Act of 2008 (H.R. 3221, S.2636) was passed April 10, 2008.  The bill provides for a $7,000 tax credit for buyers who purchase a foreclosed property.  The credit is divided equally during the first two years the buyer owns the property and it must be the buyer’s principal place of residence during that time.

So, if you’re purchasing a foreclosure as an investment property, you’ll have to wait two years before flipping it or renting it out.

There is some concern that making foreclosures more attractive to buyers could hurt private sellers by adding more competition to the market and lowering home prices.

This could have an impact on the Pittsburgh housing market.  The area in general has a lower foreclosure rate than many other metropolitan statistical areas. However, some local areas have higher rates than others. For example, the North Hills has a relatively low foreclosure rate while the eastern suburbs has a higher rate.

As with all economic predictions, how this would actually play out in this area remains to be seen.

The bill has passed both the House and Senate in slightly different versions. Once those differences are worked out, the bill will proceed to the White House. President Bush’s advisors are recommending he veto the bill, based on two provisions - one which would allocate $4 billion to state and local governments for redevelopment of abandoned and foreclosed homes, and another provision which would modify bankruptcy codes.

You can click here to read the details of the bill.

Bookmark It

Hide Sites