Wednesday, October 22, 2008

What is the story here?

I was going to ignore this... I am pretty sure most don't want to hear my 'few foreclosures here' mantra again, but I have talked to more than a few of my neighbors who had thoughts similar to mine on this.

On Sunday the PG had one of those "woe is us" type of real estate/foreclosure stories. Now I have to believe they looked far and wide for the best apocryphal example of the state of the real estate market here. What did they come up with? Some poor fellow who is having a difficult time selling a house in Friendship for $393K? I mean, really? This happens to be a couple blocks from where I live as disclosure. Most I talked to on this from the neighborhood thought it was just plain ridiculous.

Now I am sure there has been a real significant $ amount put into improving that particular house, but you have to wonder what anyone was thinking trying to sell it at that price. Or even if that was the goal, do you really get to be upset if that proves unrealistic. Don't get me wrong, I am sure the value of the improvements are 'worth' that price, but you have to know your market. These days home improvements are costly and there are few city of Pittsburgh neighborhoods where you can expect to get an investment of that scale back. Is this a real estate market story, or a bad investment decision story?

Put another way, would it not have been a much bigger story about the state of Pittsburgh if that house actually could sell for nearly $400K. Honestly, I even doubt myself these days on what the relatively benign data in the real estate market really means. But if this is the best example the media can come up with for how the real estate market has turned sour then it really comes across as more proof that things are pretty stable here.

For some more concrete positive news... across the nation employment went down in September in 41 of 50 states yet in Pittsburgh employment for the same period went up by more than 10K.... at least in the raw numbers. The seasonally adjusted employment change will likely be positive, but maybe a third or half of that unadjusted change. We will get that data next week. Still, positive in the face of all that is happening elsewhere is something.


Anonymous MH said...

I had pretty much the same reaction to the price as you. I also noticed that he wants to show it himself because, he says "I want to share the story of why it's so special." After having been on the receiving end of that type of sales pitch, I am no longer convinced that realtors are completely worthless.

Wednesday, October 22, 2008 10:36:00 AM  
Anonymous jason said...

The real story is that, Brian's house aside, that there have been some houses sold in Friendship within the last six months in the 300K to 400k range.

Wednesday, October 22, 2008 10:57:00 AM  
Anonymous MH said...

Maybe, but can you buy a cupcake in Friendship?

Wednesday, October 22, 2008 11:33:00 AM  
Anonymous Anonymous said...

There is a map in the Washington Post that seems to suggest that the rate of foreclosures in W Pa is probably closer to the Ohio experience (high) than that of WV (low). They show Allegheny County coded as having the second highest category on the chart. Is this misleading?

Friday, October 24, 2008 10:23:00 AM  
Blogger C. Briem said...

is that map online? I can't find it so I cant answer explicitly. But one thing to note is that foreclosures in Ohio have dropped a lot. Because things are better I won't say. Could just be sheer exhaustion of the market and that a lot of the worst predatory lenders there were shut down a few years ago and we may just now be moving past the peak of the impact of the ARMS there adjusted through earlier this year. At least that is what my ohio colleagues tell me is happening there. That is also consistnet with the data out today that Ohio actually has no new notices of default which is an early indicator of the foreclosure process.

But the data I see just out today still has PA still well (still a fraction) below Ohio by all foreclosure metrics even with the big drop in Ohio numbers. PA has a small increase in year over year numbers but yet another big decrease in month over month numbers. -14% between August and September. Not as a big a decrease as some other places, but that is a positive artifact of not having the spike in previous years. So just mathematically speaking, there will have to be convergence of US,OH rates going into the future.

I was talking to a few real estate professional friends in town here recently on this. Their big issue is just getting the process to move fast enough on some foreclosued homes to allow them to buy those properties. It's just a different issue here than Cleveland where there are whole neighborhoods of forecloses properties with no propsects for new buyers. Some folks they say are refusing offers to sell prior to foreclosure thinking they will get some governmenthelp but then wind up being foreclosed on completely.

But I will have to see the detail data to say much about SW PA in particular.

Friday, October 24, 2008 10:44:00 AM  
Blogger C. Briem said...

Just a quick data based answer.. but data out today still shows Pittsburgh ranked 73rd amount 100 regions in terms of housing impacted by the foreclosure process. That is for Septmber. Cleveland looks to be moving off from the peaks and is down to being ranked 30. I suspect this is the data the WashPo is mapping but cant say for certain.

So my quick answer to your question is that Western PA is not moving toward the Ohio experience but Ohio is moving over the hump. Our 0.30% incidence is not really that much difference than any of the 26 or so regions that show up as lower than us even. If anything metricst like this do not give credit to regions on the low end in terms or regional impact. Its not just the number of homes in foreclosure but how long they remain vacant/unsold. I bet the average lenght of time houses in Cleveland remain in that state far exceeds the same number here which multipled out the impact of the differetial in actual incidence per household.

Friday, October 24, 2008 11:02:00 AM  

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