Monday, June 13, 2016

Pittsburgh real estate

Lots of real estate data to parse in Zillow's recent Negative Equity Report for the 1st quarter of 2016. Negative equity being defined as mortgage holders with homes worth less than the outstanding debt on their mortgage, something that can happen when the value of your home drops after you buy it..

Using Zillow's data, first take a look at this benchmarking of how metro areas compared 4 years ago.

Pittsburgh was that extreme stable case. We just didn't see the real estate price collapse that happened elsewhere. It really was a remarkable observation. There just was little notice of just how extreme we were for a whole bunch of years.  All the stories of real estate miasma elsewhere just was not a systematic issue here at all.  In part it reflects how little the prior real estate bust hit here, a fact all the more remarkable by how deep the real estate bust was just on the other end of Cleveburgh.

So today.. still true?  No, but...   National real estate prices are on a tear if you have not seen the news or the numbers lately.  But across metro areas some reversion to the mean was inevitable. So indeed Pittsburgh no longer has the lowest % of homes with negative equity, but we remain far closer to the low end than the high. Still, note how dramatically the negative equity rate has dropped in some of the formerly worst-off areas.

It's not that Pittsburgh, the metro area, has not seen similar declines, but when you start out so low you just can't drop anywhere near as much. Still a positive trend for Pittsburgh, with the negative equity rate dropping from 16.7% to 9.2% over 4 years.  Also note these are metro numbers.. If you look at Zillow's county level data, Allegheny County is coming in with the lowest negative equity rate across the metro region at just 7.5%, well below their national average of 12.5%.

In the end as every knows for real estate it is location, location, location, and by that it means micro-location.  Averages are usually not really that helpful at saying what your house is worth.  Still if you want to tell the whole Pittsburgh story in a nutshell... ponder just one data point. For those of us born in Lawrenceville, real estate prices like this are pure cognitive dissonance.  Didn't click the link? The price history for that typical Lawrenceville 2x2 was sold for $25K in 1983 (somebody probably paid way too much), $60K late in in 2013 and now on the market for $395K. The current asking price is a bit incongruous with the current assessed value for that property, literally less than 1/6th the current asking price. That has to be some sort of record. No comment at all on the prices of places like this.