Monday, December 01, 2008

Speaking of real estate - Braddock

Lest anyone think that my observations on the state of the regional real estate market means there are no problems here, I was just getting around to looking at not yesterday's but the previous Sunday's real estate section with its monthly focus on trends in selected neighborhoods. That week they get to the perennial poster child for failed urban development. I hate to pick on Braddock which may not be the only place we have failed, but it remains such an outlier. The PG's Realstats data has the year-to-date trend comparisons for 2007 and 2008 for real estate transactions in selected neighborhoods/municipalities. Let's just skip all the others and look at:

Braddock

2007: # of sales = 46, median price = $15K
2008: # of sales = 39, median price = $8K

Again, there is no zero missing there. That is $8,000. So five properties you could have if you were willing to trade in your Hummer. If it were just a few properties I would write it off as a small number anomaly, but 39 sales is not an exception. Half sold for less than that. That you can get price depreciation despite starting from $15K/property is beyond comprehension in most of the western world. I once calculated that property vacancy in Braddock was 2nd highest in the state other than for Centralia which is the municipality the state evacuated due to a mine fire decades ago.

I do hate focusing on Braddock which at this point is not responsible for its own situation any longer. Braddock depopulated for a whole lot of reasons and basically we let it happen and continue to leave it as it is. The whole topic of redevelopment in the Mon Valley has been talked about for decades, yet some of the core problems are as intractable now as they were ever in the past.

So here is a story. About a decade ago I was in Germany for a conference. There was a tour looking at redevelopment efforts in the Ruhr Valley which like us once had a concentration of steel plants that have closed. We were tooling around as part of this tour in a town that was essentially Braddock in that it was in the shadows of a former steel plant that had shuttered. The thing is, it was a very nice place it seemed to me. Good housing stock and looked like a very livable place. I made a comment to the effect that the Germans don't let things like Braddock happen. I wasn't making a statement about any person or policy at all. A certain former politician in town was with us heard the comment and sort of teed off on me a bit over how much progress had been made and that the public and in particular the media didn't appreciate that Braddock had turned the corner. If I was less kind you could say it was kind of delusion not only back then, but to this day. I was just in Braddock last week and I would make the same statement today. In some ways it's a lot worse than a decade ago. Something the real estate price trend would support.

Why is it so hard to fix Braddock? Even being someone who has looked at the issue for a long time, just the other day I learned something new about how intractable the situation is there. I was talking with someone who lived in Braddock for over 50 years until very recently. Born and raised in Braddock and probably would have lived there longer if they could.. but it just became impossible for them to stay. Why did they have to leave? First their immediate neighbors moved out. They could live with that. Then the plumbing from the neighbors house was stolen, copper being pretty valuable until lately. Still, that wasn't a problem itself, but it turns out that the water was supplied collectively to a group of houses. The water meter being in the house which had it's plumbing mined. No plumbing there meant no water for the group of houses. Still, even that didn't force them to leave, they really were going to stay and pay to have some plastic plumbing put back into the vacant neighboring house. But since the house with the meter was unoccupied, the water company would not restart service to what was essentially a vacant and abandoned house. Makes sense sort of... but it meant that the occupied houses next door couldn't get water. The water company's cost of putting in a new water line and meter was far too exorbitant an investment, probably several orders of magnitude more than the house was worth to begin with so that wasn't an option. No water, you pretty much have to move out. If you can't keep folks like that who very much want to stay, what hope is there of rebuilding population there. In the end the house was sold for a dollar to a 'redeveloper' who mostly stripped out the remaining plumbing and other semi-valuable pieces of the property. Probably had a decent return on the $1. Just unbelievable, and seriously not something that is allowed to happen elsewhere in the developed world.

12 Comments:

Blogger Bram Reichbaum said...

I know the uncertainty of the MFX project is blamed for a lot of Braddock's more recent ills -- who would want to invest in a place that may or may not but most likely will eventually have a freeway plowing through it somewhere? The uncertainty itself is said to be killing potentialities.

Also, I'm curious that if they don't "let" things like that happen in Germany, what do they do exactly in the way of prevention? And are those functions carried out by the equivalent of county, state, or federal governments? Or is it too much like expecting cavemen to start exploiting dilithium crystals and travel the galaxy like the cast of Star Trek?

Monday, December 01, 2008 10:43:00 AM  
Anonymous Anonymous said...

Say Bram, what leads you to believe that Braddock "most likely" will have a freeway plowing through it? All my reading tells me that completion of the MFX is nowhere in sight and likely won't happen.

Monday, December 01, 2008 11:52:00 AM  
Anonymous Anonymous said...

Braddock, like most crap areas like Elliott or the west end just need to be bulldozed over for an industrial park or strip club.

Monday, December 01, 2008 12:03:00 PM  
Blogger Bram Reichbaum said...

I dunno, I may be buying in to the hype generated by the project's boosters. Something just came out recently about that, can't remember where.

Monday, December 01, 2008 12:53:00 PM  
Anonymous Anonymous said...

Highway projects have a way of getting built. Look at the East Street Valley Expressway (Parkway North). Property values plummeted in the Northside.

As for bulldozing and building new - look at Allegheny Center -- they bulldozed almost 600 properties and now we have a half-empty office park / Mall.

Monday, December 01, 2008 4:35:00 PM  
Anonymous Anonymous said...

I am a big proponent of preserving historic areas and revitalizing existing urban environments... and Pittsburgh is blessed with many areas rich in historic architectural and walkable streetscapes that have proven a catalyst for urban revitalization in recent decades... but even I think that Braddock's best hope may be to somehow wipe the slate clean and build anew (of course, that would be something beyond the powers of tiny, crippled Braddock Boro)

Tuesday, December 02, 2008 1:20:00 AM  
Anonymous Anonymous said...

Perhaps, but as with other big 'urban renewal' projects, I would not bet the farm on it.

What would have happened if there was a commitment of funds for a community development corporation to build/rehab 10 for-sale houses per year since 1990? I would argue that Braddock would look completely different with 180 new/rehabbed units. Also, while the subsidy on the new houses would have been high in the beginning, my guess is that by the end of 18 years, there would have been a market in the boro that would have reduced the subsidy to zero.

In addition, you would have had the 'butterfly effect', where private individuals putting sweat equity into other houses. A progressive strategy and some patience and perseverance would have made it a very different community.

That is how you rebuild neighborhoods. One house at a time, one block at a time, and it works.

My question is, when will this work get started?

Tuesday, December 02, 2008 9:23:00 AM  
Anonymous MH said...

I doubt that any such work will be started. When you've got a declining population, you are going to have surplus houses somewhere. Even if you could successfully subsidize Braddock, there will be another town or neighborhood with empty houses.

As for private individuals putting sweat equity into houses, I don't see that happening in Braddock. You get people trying to rebuild declining areas when they can't afford better areas. This is not a problem in Allegheny County. Why fight against the tide in Braddock when you can find nice, affordable houses in Swissvale, Munhall, Forest Hills, etc?

Braddock and many others areas are going to go fallow until the regional economy improves.

Tuesday, December 02, 2008 10:02:00 AM  
Blogger Jim Russell said...

Why fight against the tide in Braddock when you can find nice, affordable houses in Swissvale, Munhall, Forest Hills, etc?

I think you've hit on the crux of the problem. In fact, most Rust Belt cities face the same issues plaguing Braddock. Why fight against the tide in Buffalo, Cleveland or Detroit when you can find nice, affordable houses in Pittsburgh?

Tuesday, December 02, 2008 12:02:00 PM  
Anonymous Jerry said...

Make a new county park. Buy all the occupied houses for a fair price (i.e., a price that gives the seller enough money to buy a new house), condemn the rest of them, knock them all down. The Pittsburgh area probably has enough spare housing to accommodate all 3000 residents in new houses or apartments.

I'm sure it would be heartbreaking to force out all those long-time residents, but it seems analogous to choosing to cut off a limb to save a patient's life. Either you take drastic action now, or you do nothing and wait for something worse to happen.

It'd be very expensive, but probably less expensive than the North Shore Connector. Which is to say, crazier projects have been proposed.

Tuesday, December 02, 2008 12:02:00 PM  
Anonymous Anonymous said...

I am a realtor in the East End and here is my take on why Braddock hasn't stabilized or taken off:

1. We have a declining population. We can only have so many "up and coming areas." Most of them seem to be closer to the golden triangle or oakland at this point.

2. The housing stock isn't too glamorous. There are a few gems, but over all the houses are frame built with antiquated wiring along with other mechanical defects. If you were to purchase a below average condition house there for 5k, you'd probably have to put at least 25k into it. That's a 30k investment. The average person isn't going to want to invest 30k (cash or rehab loan) in Braddock, unless they have a special connection to the area or they see it as a great investment. Instead they are going to get a regular mortgage for more money on a house that they could move right into in a more stable area. Meanwhile, a landlord is going to buy that house for 5k and do a mickey mouse rehab for 10k instead of the 25k that a homeowner would put into it.


3. Location location location. Sure, it isn't too far from the parkway and it isn't too far from the waterfront, but...

Homestead real estate isn't selling like hotcakes and it is closer to Downtown and the Waterfront. The housing stock there is generally nicer than those in Braddock.

Swissvale houses are selling, but there is a business district, an express bus to downtown and it is closer to Regent Square, the Parkway and Frick Park.

What somebody said above, you can get a nicer house in Forest Hills, Swissvale or N. Braddock with less of a risk.


4. Construction costs are enormously expensive and with the economic meltdown, we won't be seeing too many huge developments in 2009 and probably not in 2010...especially risky developments.

Thursday, December 25, 2008 9:39:00 AM  
Anonymous Luxury Real Estate in Arizona said...

Nobody knows how long we need to ensure our investment in real estate. What is important to do is to monitor how the market runs to ensure that we can do whatever is necessary to keep our business successful.

Friday, December 13, 2013 5:01:00 AM  

Post a Comment

Links to this post:

Create a Link

<< Home