Tuesday, November 18, 2008

real estate again and again

Headline story nationally is a record drop in home prices. But again, how to translate that national headline to what is happening here?

Ever more Internet forum/discussion sites popping up every day. I'll let you decide whether this one is any better than the rest. But the Trulia Real Estate site (which I have mentioned in the past for some amazing info-graphics they put together on real estate history here) has some forums and I noticed their Pittsburgh Real Estate discussion which has this post recently: 10 Homes Sold in One Community in One Day! What Slump?

With all the national media talking down the economy, it is easy to forget that here in Pittsburgh things are different. Every time someone from Pittsburgh tells me about an article they read about how housing is in trouble, I ask them to read the heading of the article again and notice that 95% of the time it doesn't say the story was written locally.

What happened on 10/18/2008 was that 10 homes were sold, and three more home sites were reserved – in a single day at Franklin Run! To me, this certainly proves that Pittsburgh is in much better shape than the other areas of the country. The average sale price of these homes was in the high $300's to low $400's - and another 5 homes were sold by 11/07/08! It is so nice to be able to say that we sold out 30% of the entire community in the first weekend.

Granted it sounds like the author was involved with the deal and this sounds like marketing spin to a degree, but if one wanted it ought to be easy enough to verify if that story is true. If it is, not many areas of the country where relatively high priced (for the region) housing is moving much at all. Who is buying anything in suburban developments. Who is financing the downtown condo's for that matter which according to news sources are continuing to move... the only exception which we have not heard from in some time were the lagging sales in the Granite Building Downtown. About time for another media story on that I bet.

It also would get to a point made in the news over the weekend. I have resisted dissecting the real estate story in the PG that again tried to paint only a negative spin on the local real estate market. It had a point that the lower number of real estate transactions is an indicator of an imbalance in supply of homes vs. demand which would then push prices down eventually. The money quote from Florida (just like Pittsburgh?) where things really are bad is:
Fewer sales mean the number of transactions aren't there, and it's only a matter of time before prices decline," said Michael Sichenzia, Chief Executive Officer of Dynamic Consulting Enterprises, a Deerfield Beach, Fla.-based firm that renegotiates mortgage debt for distressed owners. "Supply will eventually outstrip demand.

There are reasons to think the transactions are at least in part due to decreased supply of homes on the market which would mean something else altogether. Like a lot of people who would normally be selling their house because they have moved or are looking for a new home... those folks are also unable to finance their new homes I figure, which then means their current home may not go on the market. Now, if you are a real estate professional whose income is dependent on the volume of transactions, the recession is here big time like everywhere else. So you are probably in a sour mood if your business is real estate in any form, but that does not necessarily mean everyone else's home value is plummeting.

But that story also warned "Some housing data also could be deceiving." which was really odd if you just turned to the PG's own real estate section where they looked at the most recent data on real estate prices for a dozen neighborhoods. What did they come up with in terms of real estate prices in the following areas... a couple declines, but some health increases in most other municipalities listed. And that was data through September which is the same timeframe as the really dire national news out today which is all year over year 3rd quarter data. Think about that.

So it was just odd to read both sections of the paper and try to figure out how they fit together. Is the PG casting aspersions on itself? The 'deceptive' part of the real estate stats is supposedly the disparity in real estate micro-markets in the region and specifically the difference between what is happening in Shadyside vs. Homewood. That is absolutely true, but what does it have to do with the housing slump nationally or any regional impacts. The situation in Homewood real estate is dire, has been dire, and will be dire for reasons that are probably not impacted by the national real estate situation only because you can't get much worse. So again, the deceptive part is the implication that our regional real estate data is misleading because of a situation that existed long before any housing price collapse. I hope that does not mean that once the real estate crisis abates folks will think things are solved in Homewood. and the quote about Homewood is that prices have not appreciated since 1997 in the neighborhood. Anyone think it is just a coincidence that that date is awfully close to when the city sold the tax liens to a third party. Again, the issue is not the real estate market nationally.


Anonymous Anonymous said...

I thought it ridiculous that the P/G would interview a real estate guy from FLORIDA on Pittsburgh's market! Talk about a market that couldn't possibly be any more different!

Tuesday, November 18, 2008 1:24:00 PM  
Anonymous Anonymous said...

Enjoy a tour around the lake by car or bicycle or an off-road adventure to see the historical Gold Mining sites of Holcomb Valley.

Spend a few nights in one of the many fine hotels or places of accommodation. Dine at any of the fine restaurants the Valley has to offer.

Tuesday, November 18, 2008 3:44:00 PM  

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