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Old 09-25-2011, 05:56 PM
gg
 
Location: Pittsburgh
26,137 posts, read 25,783,846 times
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user_id, you do know that brian is going to argue with you no matter what facts or stats or really anything you present, don't you? He tries to cheerlead to the point of silliness.

You are correct IMHO. If you want to live in a middle or nicer area, your tax burden is huge. Most places are around $3,100-3,700 per $100K of value. Sure you can live in Wilkinsburg for cheap. Sharpsburg is cheap. Millvale is cheap. That is great. So is Camden, NJ. Who cares? What if you want something nicer? You taxes eat you alive. Many have no problem buying the home for $300K. It is the reoccurring costs of ownership that kills the investment on a nicer home. $300K = $10K in tax a year. Do you think the home you purchase will appreciate that much each year in Pittsburgh? Doubtful.

You will not get through to brian. He will defend all local, state and federal governments to the end. You are wasting your time. He doesn't want to hear about sustainability of all this. I don't think he can understand it. He lives in a very inexpensive suburb that has a school district that wouldn't be a consideration for any child, if you care about education at all. I don't think he knows what it is like if you want to live in a nicer area. Not great, just nicer! Heck I just saw a home sell in Morningside for $200K. What will the taxes be when the reassessment comes through? Ouch! Morningside is okay, but is it worth $500 a month tax bill, plus mortgage, plus the countless other bills of home ownership?
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Old 09-25-2011, 06:53 PM
 
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Quote:
Originally Posted by user_id View Post
Of course they are explanations in Pittsburgh, the relationship between median income and median housing costs is similar to national averages. Housing in Pittsburgh isn't really cheap when compared to local incomes, its just cheap compared to the nation but Pittsburgh's median household income is noticeably lower than the nation as a whole.
Per the 2010 American Community Survey (conducted by the Census), U.S. median household income is $50,046, Pittsburgh Metro is $46,700. Median value U.S. is $179,900, a ratio of 3.59. Pittsburgh Metro is $122,200, a ratio of 2.62.

And I think it is misleading to compare all of the U.S., including rural areas, to a larger metro. If you look at just U.S. metropolitan areas (so including many smaller metros too), median value is $198,900, median household income is $51,998, which is a ratio of 3.83. I suspect that ratio would be bigger still if you could zero in on, say, the top 40 metros.

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In terms of declining population, this really creates a lack of upward pressure than serious downward pressure.
After 30 years, I am not sure I understand the distinction. Homes in most other major metros have appreciated more than homes in Pittsburgh, which is why you get that big difference in ratios I just demonstrated.

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Most of the excess housing units are in rundown communities, indeed, much of it isn't even in a livable condition today.
I do think it is true that excess capacity in a variety of neighborhoods serves as a constraint on local housing prices in general, but remember we are looking at the median for occupied units, not the mean over all units, occupied and vacant, and the median occupied home in Pittsburgh is a decent home in a decent neighborhood.

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Sure, some people can benefit from this sort of arbitrage, but these are usually not lastly opportunities (sooner or later, the cost benefit attracts sufficient people to lower the wages, etc) and most can't benefit from them in the first place.
I think most people actually can benefit, given the great disparities at the median I just documented. I also assume it is true that in the long run this will go away, but that doesn't remove the opportunity today, and in fact implies it is even a better idea to take advantage today (assuming you think some convergence could happen during the term in which you live in Pittsburgh).

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Show me one area that is like Pittsburgh, yet has dramatically different prices. Obviously, NYC, Washington DC, etc are nothing like Pittsburgh.
I just showed the overall metropolitan price to income was dramatically different, but if you have a specific list of peer cities you would like to look at, we could do that too. I can tell you that having looked around, there are in fact a few larger metros which are comparable, and they mostly fall into two categories: the Texas cities (which have their own reasons for low appreciation rates) and just recently, severely distressed metros like Detroit (which was actually considerably higher pre-recession). Other than that, most larger metros have higher ratios, sometimes way higher ratios (although I suspect you would consider most of the latter not truly comparable).

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Those metro area with norms in the 4~5 tend to have a lot of wealth and a lot of immigrants both of which distort the numbers.
As I noted, the overall metropolitan average is pushing close to 4 as it is, and so I don't think you can say that ratio is a wealth effect per se. I agree immigration likely plays a role--that is part of the same overall population story I was noting (among other things, post steel-bust Pittsburgh has had very low immigration rates).

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But income/price ratios are only reliable for "normal housing", that is communities composed of households in the 90% percentile or so. It is this group that is essentially bound to its income, once you get into the top 10% you start to see more significant wealth which is not picked up by income/price ratios.
I don't have a handy way to prove that higher-end homes track similarly to median homes, but I can report that when we were looking at higher-end homes, the multiples seemed pretty consistent with the ratios of the medians in question. So, for example, if the median ratio was 3 times as much, it would seem to us that higher-end homes also cost about 3 times as much as we would expect in Pittsburgh, give or take.

Quote:
So as I was saying, the fact that the numbers may work out for the "average" Pittsburgh household provides me with no solace at all. My situation is far removed from the average Pittsburgh household.
So I suggested above that if you want to take advantage of Pittsburgh's relstively low housing prices, you should be looking to pay around 2-3 times your household income, maybe a little more. If following that rule means you think living somewhere else would be a better deal in light of what you could afford here, then so be it. I really do believe you are right to look at this as an individual, and I am not trying to persuade you otherwise.

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When comparing Pittsburgh costs to other areas the price differential shrinks as you move up the housing market and the cost differences are entirely correlated with real differences in local economies, amenities, etc.
Obviously we disagree on this issue, but unlike with the median price to income ratio, as noted I don't have handy data to address the high end specifically. So I guess that is as far as we can take that.

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Its not that Pittsburgh makes it hard to thwart tax avoidance on any sort of technical front, its that the thwarting has no desirable consequence for both me and the region.
I think we are talking about the same thing--I also mean "thwart" in the practical sense. In any event, regardless of why you believe it is a good thing for you personally to be avoiding typical taxation rates, meaning whether your motives are self-interested or otherwise, I am agreeing that living in Pittsburgh may well make that harder to achieve.

Quote:
Also, it should go without saying, one can thwart Pittsburgh's tax system by simply not living there. That doesn't benefit Pittsburgh either.....
But again, poor government services are also a deterrent, and government services cost money. I'm not saying the tax system in Pittsburgh is perfect--far from it. But the issues I would identify have very little to do with the overall level of taxation, which is really quite middling. And given that property taxation as a percentage of income is itself middling, I don't see it as a particular issue (again, in an overall level sense--there are other property tax related issues I agree are problematic).

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A number? Great...so name some. Remember, I'm asking about major cities that have never experienced a property boom. The fact that a city, today, is slow growing is irrelevant to this idea.
Sorry, I thought you meant real growth booms, not housing price booms. It is true very few other major cities missed the housing bubble--the aforementioned Texas cities being the most notable examples.

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Actually booms are great in the long run, its the short run (the bust) that is painful. Indeed, I'd imagine many of the amenities that kept you in Pittsburgh were created during Pittsburgh's boom days.
Are we talking real booms here, or property price booms?

In any event, it is true that moving into a city after a huge bust has happened and as that city is starting to recover may be good for that individual. But boy did a lot of other people have to suffer to create that opportunity, and a lot of value tends to be destroyed.

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What I'm talking about are booms in local economies/property markets, these types of booms created every major city in the US.
I think if you strip out the housing bubble--which is still unwinding most places--you would in fact find that many prosperous cities have been on a slow growth path for the last few decades. I agree that most cities tend to go through some boom periods in their history, but I don't think that means they are necessary, and particularly not when they are older and well-established.

Quote:
Turned around? Sorry, I don't follow. The population of Pittsburgh is still declining.
The Census Bureau thinks it has leveled out in the last couple years, and pretty much every forecaster thinks it will grow in the coming decade.
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Old 09-25-2011, 07:30 PM
 
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Being in the top 5th percentile of the entire country of counties with the highest property taxes paid as a % of home value (and by far first in PA), can in no way be argued to be a postitive thing.
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Old 09-25-2011, 08:35 PM
 
Location: Conejo Valley, CA
12,460 posts, read 19,999,178 times
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Quote:
Originally Posted by squarian View Post
I think most people would understand Pittsburgh's boom days as being the quarter-century from the Lend Lease treaty, c. 1940-75. Speaking for myself, most of the amenities I value in Pittsburgh were created much earlier, in the Age of Carnegie, c. 1880-1910, but perhaps that's what you mean?
I'm thinking about the period starting with Carnegie and ending around the start of the great depression. In what sense would 1940~1970 be a boom? Population and economic output declined during that period, aggressively starting in the early 1960's.
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Old 09-25-2011, 09:01 PM
gg
 
Location: Pittsburgh
26,137 posts, read 25,783,846 times
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Quote:
Originally Posted by UKyank View Post
Being in the top 5th percentile of the entire country of counties with the highest property taxes paid as a % of home value (and by far first in PA), can in no way be argued to be a postitive thing.
Well, it seems to be being argued by brian. Kind of an amazing thing isn't it?
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Old 09-25-2011, 09:38 PM
 
Location: Conejo Valley, CA
12,460 posts, read 19,999,178 times
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Quote:
Originally Posted by BrianTH View Post
Per the 2010 American Community Survey (conducted by the Census), U.S. median household income is $50,046, Pittsburgh Metro is $46,700.
My comments were about Pittsburgh not the "Pittsburgh metro" area. Furthermore, you want to exclude rural areas yet the "Pittsburgh metro" includes many areas that are rural. Indeed, the Pittsburgh metro is far more rural than most metro areas. The Pittsburgh metro around is around 2 million, yet the city is only 300,000 and even the city has parts that are semi-rural. Let me remind you just how big the "Pittsburgh Metro" area is:

Pittsburgh metropolitan area - Wikipedia, the free encyclopedia

Switching to "Pittsburgh metro" area instead of discussing Pittsburgh and its immediate suburbs while also trying to exclude rural areas from the picture is.......fundamentally dishonest. I seriously wonder about your intentions...or perhaps you're just not able to take the "lawyer hat" off. I don't know....

Quote:
Originally Posted by BrianTH View Post
and the median occupied home in Pittsburgh is a decent home in a decent neighborhood.
I don't agree with this, the housing stock in Pittsburgh is of a pretty poor quality. When I first moved to Pittsburgh (12 years ago or so) that was one thing that definitely stood out.

Quote:
Originally Posted by BrianTH View Post
So I suggested above that if you want to take advantage of Pittsburgh's relstively low housing prices, you should be looking to pay around 2-3 times your household income, maybe a little more.
Why should I look at paying around 2~3 times my income? That ratio has no relevance for me, that metric is only relevant to someone that is bound by their annual income.

For me, the critical issue are the maintenance costs and here property taxes are central.


Quote:
Originally Posted by BrianTH View Post
But again, poor government services are also a deterrent, and government services cost money. I'm not saying the tax system in Pittsburgh is perfect--far from it.
Yes, poor government services are a deterrent and Pittsburgh from my point of view has poor government services. I don't benefit much from a city that overpays its (heavily unionized) city work-force at the expense of important city services (public transit, infrastructure, etc).

I don't mind higher taxes if I'm getting valuable things in return, I don't see that in Pittsburgh. I don't see that here either. Sadly this is a trend throughout the nation.....


Quote:
Originally Posted by BrianTH View Post
Sorry, I thought you meant real growth booms, not housing price booms.

In any event, it is true that moving into a city after a huge bust has happened and as that city is starting to recover may be good for that individual. But boy did a lot of other people have to suffer to create that opportunity, and a lot of value tends to be destroyed.
I'm not really sure how you understand "booms", but I'm talking about development/business booms and not financial booms or booms in just house prices. What occurred during the last decade was a financial, that is credit, boom which found a home in real estate. In contrast, the dot-com bubble was a boom in development/business.

I contend that development/business booms are positive long-term (painful short-term) and have been involved in the formation of every major US city. On the other hand financial booms are generally negative across the board.

Now some of the credit creation during the last boom did find its way into development and I think the areas that did see large booms in development will ultimately benefit from it.

Not really sure how slow-growth is suppose to work in market economies, boom/bust cycles have been an part of market economies since they formed. Still wondering about an example of a city that became a major city or was revived without a boom.
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Old 09-25-2011, 10:26 PM
 
20,273 posts, read 32,877,652 times
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Quote:
Originally Posted by UKyank View Post
Being in the top 5th percentile of the entire country of counties with the highest property taxes paid as a % of home value (and by far first in PA), can in no way be argued to be a postitive thing.
I don't think anyone is arguing it is a positive per se.

But when you factor in lower property prices, it is closer to neutral:



And when you then look at the other implications of relatively inexpensive housing, THAT is a positive.
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Old 09-25-2011, 10:41 PM
 
5,894 posts, read 6,842,546 times
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But the higher the home value the more absurd the tax becomes.... someone could buy a million dollar home here and have a higher yearly property tax bill then yearly mortgage payments....and taxes only go up, whereas mortgages stay the same.

Last edited by UKyank; 09-25-2011 at 10:54 PM..
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Old 09-25-2011, 10:52 PM
 
20,273 posts, read 32,877,652 times
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Quote:
Originally Posted by user_id View Post
My comments were about Pittsburgh not the "Pittsburgh metro" area.
Good lord, why? We've been talking about places like Sewickley Heights, which are in the Pittsburgh Metro but not Pittsburgh. So why would we suddenly start talking about just Pittsburgh?

Quote:
Switching to "Pittsburgh metro" area instead of discussing Pittsburgh and its immediate suburbs while also trying to exclude rural areas from the picture is.......fundamentally dishonest.
Wow. First of all, metropolitan areas are THE standard unit for reporting comparative housing data. Calling me "fundamentally dishonest" for using the same unit that everyone else uses is kinda crazy.

Second, I also used other metropolitan areas as my basis for comparison, so used common units.

Third, Pittsburgh "and its immediate suburbs" isn't just Pittsburgh. You might be able to use the Pittsburgh Urbanized Area for that concept, and in fact urbanized areas are one of my favorite units, but they are not commonly used.

Now I am willing to try to find numbers for Pittsburgh's urbanized area versus other urbanized areas. But are you willing to agree that is the right unit in advance? I'm quite confident that no matter what unit I use, the comparison will show the same thing, but I don't want to have to keep redoing it.

Edit: Well, I couldn't resist looking anyway.

If there is a way of filtering the relevant category for just all urbanized areas, I couldn't find it. So the best I can do is compare the Pittsburgh Urbanized Area to the United States as a whole, which is likely understating the difference. Also, it appears 2010 data isn't available yet, so here is 2009

U.S.: median home $185,200, median household income $50,221, ratio 3.69
Pittsburgh Urbanized Area: median home $122,100, median household income $46,429, ratio 2.63.

The fact is that this statement just isn't true: "the relationship between median income and median housing costs is similar to national averages." No matter what unit you use to define "Pittsburgh".

Last edited by BrianTH; 09-25-2011 at 11:26 PM..
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Old 09-25-2011, 11:03 PM
 
20,273 posts, read 32,877,652 times
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Quote:
Originally Posted by UKyank View Post
But the higher the home value the more absurd the tax becomes....
I don't understand your logic. Higher home values means higher taxes, but it also means higher income buyers. What makes you think the result for taxes as a percentage of income is going to change?

Quote:
and taxes only go up, whereas mortgages stay the same.
Let's think that through. A person in City A pays half as much as a person in City B for an equivalent house. But tax rates in City A are twice as much as City A as in City B, so they pay the same property taxes.

I, and other people, would point out the person in City A comes out ahead, because they also pay less in mortgage costs, tie up less capital, pay less insurance, and so on.

Aha, you say, but taxes will go up, whereas mortgages stay the same. The problem is that exact same logic applies to both the person in City A and the person in City B. Of course with anti-windfall laws and such, it is hard to predict what that means. But if you take a simple model in which the tax rate stays the same and the appreciation rates are the same, then it turns out that the people in each city just continue to pay the same taxes.

Seriously, housing being less expensive is a good thing. Tax rates being high as a result of housing being inexpensive makes it slightly less of a good thing, but it is still a good thing.
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