Another list: Pittsburgh among 10 Cities Primed for a Real Estate Recovery (Lebanon: real estate market, 2010)

[BrianTH]

10 Cities Primed for a Real Estate Recovery - Rick Newman (usnews.com)

The paragraph on Pittsburgh:

This once industrial city wriggled out of the Rust Belt years ago, and the economy now revolves around medicine, technology, and higher ed. At 7.7 percent, the unemployment rate is nearly 2 percentage points lower than the national average. Few people got rich in Pittsburgh during the real estate boom, which seemed to pass the city by. But the bust has spared Pittsburgh as well, with home prices remaining more stable than in most other markets. That leaves the Steel City primed for a recovery.

I hope this is correct, in part because there are a lot of development projects at various stages that I would like to see completed, and financing will be easier if the local real estate market is in fact recovering soon.

[ditchdigger]

In my little corner of the "new construction" housing market, I do not recall ever having seen a time so slow.

That having been said, I spoke to a friend of the family recently, who happens to be a real estate agent, and she said that she has been just as busy as always.

[Drover]

Recover from what? How can a market recover from a recession it didn't experience? Pittsburgh's real estate market plodded along ever so slowly before the recession and during the recession, and will probably do the same after the recession.

[BrianTH]

Originally Posted by Drover

Recover from what?

My understanding is that although real estate projects with financing that had broken ground are continuing along to completion (not something that can be said for all places), some projects in earlier stages have been put on hold and there aren't as many new projects entering the pipeline right now.

Meanwhile, although we haven't been hit by mass devaluation in residential housing like some places, more people are choosing to rent for a while instead of buying, particularly in the mid-high part of the market.

[Drover]

I still don't understand. You cite an article that contains all of 3 sentences on the Pittsburgh real estate market -- the upshot of which is that it has not suffered a recession -- and cite it as evidence that the Pittsburgh real estate market is primed for a recovery. I ask again: recovery from what?

[BrianTH]

Originally Posted by Drover

I still don't understand. You cite an article that contains all of 3 sentences on the Pittsburgh real estate market -- the upshot of which is that it has not suffered a recession -- and cite it as evidence that the Pittsburgh real estate market is primed for a recovery. I ask again: recovery from what?

And now I don't understand. I know this isn't in the article, but I laid out in my prior post my understanding of how the recession has affected the real estate industry in Pittsburgh. My hope is that these conditions will turn back around, meaning new development projects will start entering the pipeline, development projects in early stages will start moving forward again, and that we will return to a normal amount of turnover throughout the residential market.

Edit: By the way, I think some of the confusion may come from the fact that some people think of a "recovery" in real estate as applying strictly to prices. But I am using "recovery" in the broader sense, to include investment in real estate, healthy markets, and so on.

[BrianTH]

As a follow up, here is part of an article listing Pittsburgh at #6 among "The 30 Strongest Housing Markets in the U.S.":

The 30 Strongest Housing Markets in the U.S: Rank: 6 - BusinessWeek

Nonetheless, here are the stats:

Share of homes with increasing values: 48.80%
Median value: $108,700
Annual change: -2.89%
Quarterly change: 0.12%

That is indeed relatively good, but it also isn't what I would call healthy: over 50% of homes dont have increasing values, the annual change is negative, and the quarterly change is positive but barely so. So I would suggest we do in fact have room for, and need, a recovery.

[user_id]

I would not put too much money on Pittsburgh. The city is still a rather unattractive place to do business. A lot of the more recent developments seem to have been rather speculative and fueled by easy money, remove the speculation and what fundamentals justify investment in the area?

In terms of home prices I find the mid/high end stuff pretty over-priced. Its odd too, because the inventory is huge and the homes seem to stay on the market for ages.

Anyhow, Pittsburgh needs population growth for residential investment and business growth for commercial. It seems to lack both. Also, I think Pittsburgh has the wrong sort of infrastructure, they've built things to support a FIRE economy while have next to nothing to support other types of businesses. Basic things like an industrial park are a rarity in the area. I believe while trying to be part of the "new economy" it totally missed the mark.

[BrianTH]

Originally Posted by user_id

In terms of home prices I find the mid/high end stuff pretty over-priced.

Compared to where? In my reviews of real estate markets in cities of a comparable size or larger, comparable homes in central upscale neighborhoods like Shadyside or Squirrel Hill or close-in upscale suburbs like Sewickley and Fox Chapel would still be much more expensive in most cases (Texas cities being the one notable counterexample).

Anyhow, Pittsburgh needs population growth for residential investment and business growth for commercial. It seems to lack both.

Pittsburgh's urbanized area was already growing again in population as of the 2000 Census (it was the rural areas and satellite towns that caused the metro area as a whole to lose population), and I expect the 2010 Census to confirm further growth in the urbanized area. Meanwhile, both total real GDP and real GDP per capita grew in the Pittsburgh Metro Area between 2001 and 2006 (latest statistics available from the BEA).

Also, I think Pittsburgh has the wrong sort of infrastructure, they've built things to support a FIRE economy while have next to nothing to support other types of businesses.

Looking at the real GDP statistics from 2001 to 2006, FIRE as a total was actually down (finance was up, but insurance and real estate were down). The major growth sectors were trade, transportation and utilities, professional and business services, education and health services (which was all health: education was flat), a little bit from leisure and hospitality, and information/communications/technology (ICT). Manufacturing was barely up, but there was growth in what you might call the high-tech manufacturing subsectors that was helping to offset contraction in other manufacturing subsectors.

[user_id]

Originally Posted by BrianTH

Compared to where? In my reviews of real estate markets in cities of a comparable size or larger, comparable homes in central upscale neighborhoods like Shadyside or Squirrel Hill or close-in upscale suburbs like Sewickley and Fox Chapel would still be much more expensive in most cases (Texas cities being the one notable counterexample).

Its not "compared to where", but "compared to what". The homes are overvalued in historic and fundamental terms. I'm talking about the nicer neighborhoods, like Shadyside, Mt Lebanon, etc. In many cases these homes have gone up a lot in value this decade, yet the homes on the market sell like molasses.

But even in terms of "compared to where" I don't Pittsburgh is any cheaper than other areas that are actually comparable. Why would it be? Do the free markets not operate in Pittsburgh? If they were truly similar they'd be similar in price. Of course, I have a feeling you are comparing "central upscale neighborhoods" in places like DC, NYC, LA, SF, etc to ones in Pittsburgh, which if true is rather silly.

Originally Posted by BrianTH

Pittsburgh's urbanized area was already growing again in population as of the 2000 Census

What is the "urbanized area"? Between the 1990 and 2000 census Pittsburgh declined in population so I'm not sure what you mean.

Originally Posted by BrianTH

Meanwhile, both total real GDP and real GDP per capita grew in the Pittsburgh Metro Area between 2001 and 2006 (latest statistics available from the BEA).

This means little...in terms of business and population growth. You can have a real increase in GDP with no additionally businesses or population.

Originally Posted by BrianTH

Looking at the real GDP statistics from 2001 to 2006, FIRE as a total was actually down (finance was up, but insurance and real estate were down).

I should have incluced health too, my point that is that Pittsburgh built infrastructure for the "service economy" many pieces which I consider a bubble. In Pittsburgh desire to "join the party" seen in other cities, it ignored the future. I really do find it amazing to what degree it lacks infrastructure for small non-service based businesses. But the city is probably small enough to survive on health, education, finance, etc going forward I just don't expect to see a a lot of growth from it. Growth, I believe is going to come from businesses that actually produce something.