As Pittsburgh home sales dip, no agreement on why (Penn: comparable sales, real estate)

[tyovan4]

Pittsburgh homebuyers closed a growing number of deals over the past few years, driving up annual sales of listed properties around 15 percent from 2015 to 2017.

A real estate group warns that 2018 may be different.

Purchases dipped 7.7 percent from Feb. 1 through July 16 compared with the same weeks in 2017, according to an analysis of publicly listed homes by the Realtors Association of Metropolitan Pittsburgh. Comparable sales for the rest of Allegheny County climbed about 2 percent overall for the same period.

To the real estate group and city Controller Michael Lamb, the discrepancy signals that a realty transfer tax increase in Pittsburgh is dinging sales and nudging buyers away. City council approved the higher levy, which rose to 4.5 percent — up from 4 percent — in early February. It’s among the highest transfer rates in Pennsylvania and more than double the expense in many Pittsburgh suburbs.
...
Councilwoman Darlene Harris, who voted against the tax increase, said she may reintroduce the subject when council holds budget talks late this year.

“These are the repercussions from trying to tax people more,” Mrs. Harris said. “They’ll just leave.”

As Pittsburgh home sales dip, no agreement on why | Pittsburgh Post-Gazette

It's always ironic when Darlene Harris is a voice of reason and common-sense...

[eschaton]

Originally Posted by tyovan4

It's always ironic when Darlene Harris is a voice of reason and common-sense...

It was a dumb idea, based upon some cockamamie thought that "sticking it to the newcomers" was better than having everyone pay an equal small increase in the mil rate.

Also, in some cases where one company buys out a controlling interest in another real estate holding company, they may be exempt from the tax entirely. Which are exactly the sort of real estate transfers that I would expect people would like to see taxed at higher rates.

[UKyank]

I love that one side of the tax increase is presenting facts & figures whereas the city is refuting that it has had any effect on sales by basically just saying, ‘nah, that can’t be it’ as it continues to bring in millions for an ill defined s̶l̶u̶s̶h̶ fund operated by the ever so shady URA

[PghYinzer]

I thought we had an issue with low inventory in the city? A lack of inventory means that people are not leaving. Are they afraid of paying the transfer tax so they have decided not to move? I would assume that if someone was bound and determined to move out of the city, that a transfer tax would not stop them.


Also, it was up 15% from 2015-17, and is up 7.3% for the same period from last year. I am not the best at math, esp when we start diving into percentages, but for two years it was up 15% and for one year it was up 7.3%. So overall they are up 22.3% for three years, or on average 7.4% a year. Seems like a pretty consistent growth. I am not sure why they bundled two years into the first number and then only one for the second. Math is fun, esp when you twist it around to suit an agenda.

[eschaton]

One thing to keep in mind is Pittsburgh's property tax system (or more accurately, PPS's) is set up to benefit businesses, not homeowner occupants.

I can't remember the numbers off the top of my head, but somewhere between a quarter and a fifth of the city's total taxable real estate value is in the Downtown area. The decision of PPS to rely upon a higher income tax rate and a lower property tax rate is effectively a huge tax break to downtown commercial property holders, who pay the lower property tax rate but don't have to worry about the income tax.

[jea6321]

the inventory is a huge part of the reason for a dip in sales. Myself and every agent I know has multiple buyers ready to purchase if a home that meets their criteria comes up. As much as I dislike the extra .5% tax, its not even remotely going to stop someone from buying or selling if thats what they plan to do. I would venture to say it has had basically no affect on sales.

being the transfer tax is most often split 50/50 by the buyer and seller, does anyone really think that $250 additional cost per 100k purchase is going to make someone not buy or sell?

[PghYinzer]

Originally Posted by jea6321

the inventory is a huge part of the reason for a dip in sales. Myself and every agent I know has multiple buyers ready to purchase if a home that meets their criteria comes up. As much as I dislike the extra .5% tax, its not even remotely going to stop someone from buying or selling if thats what they plan to do. I would venture to say it has had basically no affect on sales.

being the transfer tax is most often split 50/50 by the buyer and seller, does anyone really think that $250 additional cost per 100k purchase is going to make someone not buy or sell?

If $250 breaks your bank when you are buying a house, you are probably cutting it too close to truly afford to buy the house to begin with.

[xdv8]

Originally Posted by jea6321

the inventory is a huge part of the reason for a dip in sales. Myself and every agent I know has multiple buyers ready to purchase if a home that meets their criteria comes up. As much as I dislike the extra .5% tax, its not even remotely going to stop someone from buying or selling if thats what they plan to do. I would venture to say it has had basically no affect on sales.

being the transfer tax is most often split 50/50 by the buyer and seller, does anyone really think that $250 additional cost per 100k purchase is going to make someone not buy or sell?

The $250 extra in your example is on top of an already extra $1k or so. The City already had the highest RTT. At some point people compare numbers and it does impact decisions.

[PghYinzer]

Originally Posted by xdv8

The $250 extra in your example is on top of an already extra $1k or so. The City already had the highest RTT. At some point people compare numbers and it does impact decisions.

I would guess that most people don't crunch the numbers that much. Very few people are going to find a house that they really like, in an area that they want to live in, and then say screw it, lets start again over that amount of money. If they are rolling closing costs into the loan (can you still do that?), the difference in payment would be less than a trip or two to Starbucks. Most buyers, for better or worse, look at the final payment amount and know if they can afford it, and don't dive deeply into the finer points of closing costs.

[jea6321]

Originally Posted by PghYinzer

I would guess that most people don't crunch the numbers that much. Very few people are going to find a house that they really like, in an area that they want to live in, and then say screw it, lets start again over that amount of money. If they are rolling closing costs into the loan (can you still do that?), the difference in payment would be less than a trip or two to Starbucks. Most buyers, for better or worse, look at the final payment amount and know if they can afford it, and don't dive deeply into the finer points of closing costs.

90+% of people do exactly like you say. It usually all comes down to the monthly payment. and yes rolling closing costs into the loan is still very much common in our market.