Sunday, June 23, 2013

Reassessment Reexamined

Two news stories that are far more interesting when reading together:

Last year: Pittsburgh's commercial tenants may flee from higher values, landlords warn

Today: Outside investors purchasing more Downtown Pittsburgh sites (As an aside note the rehash of past stereotypes/demographics.)

No mention at all of reassessment impacts in the story today about expanding investment precisely in the Downtown commercial real estate market that was said to be, actually was, hit hardest by the reassessment? Maybe it didn't happen?  Read the old story. 'Panic' was used in a quote to describe the investment climate Downtown.  Really funny thing is that I bet a lot of the real estate deals in today's story were well in progress when the earlier story was written. 

Could it be that investors were waiting for the reassessment to be completed? Business abhors political uncertainty.  Just a hypothesis I have had for a long time, but the decade long delay in completing the reassessment just could not have been a good thing for real estate values.  The market knew full well the reassessment was going to be completed (rational expectations anyone?), it just wanted the assessment completed so investors could plan for future tax rates. 

Think I am just making that up? Here is just one past perspective from the real estate community when the political angst over reassessments was near its peak: Pittsburgh Exemplifies Pennsylvania’s Property Tax Discord.  The professionals were not complaining that reassessments needed to be completed, as they are routinely in virtually every other major city/county in the nation. It was the uncertainty of it all that was the worst. 

Pols tried to kill off the entire assessment process all the way to the end, by most any means possible. Imagine if they had succeeded?  Would all this new investment be happening?  The timing is striking if nothing else, stories on new investment coming right as the new assessement values are kicking in.

For sure, correlation does not imply causality, but folks continually repeated that the new reassessment was going to choke off all investment in the local real estate market for years to come. I think we have proven at the very least that the market can deal with it all, probably a lot better than the politics can.

and let's not even get into how the new assessments have slowed down investment/appreciation in the neighborhoods which had the biggest assessment increases.  Funny that


Anonymous BrianTH said...

The idea that regular, reasonably accurate assessments would somehow make Allegheny County LESS competitive than other counties always struck me as bizarre, but I think it just indicates the degree to which various folks have gotten away with promoting the false notion that reassessments mean higher taxes for all.

Monday, June 24, 2013 12:00:00 PM  
Anonymous MH said...

Investors may have also been waiting to see that the bus wasn't going to go completely to the dogs.

Tuesday, June 25, 2013 7:49:00 AM  

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