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I did know the broad strokes of that, but I don't want to imply I know much if anything about Pittsburgh real estate.
One thing I do know is a simple comparison of median price/median wage yields this for my town Ashland, Oregon and Pittsburgh from the city data 2007 figures (It is probably a bit more affordable in Ashland now):
Ashland, OR
Median home $420k/Median Household Income $39.9 = 10.6 x Income
Unemployment (May 2009) 13.8%
Pittsburgh,PA
Median home $84.5 k/Median Household Income $32.4 = 2.6 x Income
Unemployment (May 2009) 6.8%
Not capping on either place, but this is a simply shocking difference, and I think folks, particularly those starting out, will move in eventually. Or they should!
As for Ashland, another buddy with a PhD thinks since things have declined enough now (probably to 8.5 x income) and foreclosures are dwindling they will begin rising again soon! And with 14% unemployment! It is amazing when people drink their own "koolaid."
It would be interesting to compare thos stats with the median household income of home owners.
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Originally Posted by BrianTH
Another useful piece of data to consider is rents. According to Zilpy, the average price per square foot for 1BRs in the Pittsburgh Metro is $0.66. In Allegheny County that rises to $0.81, and in the City it rises further to $0.84. In Bloomfield (what I am using as an average neighborhood closer to the center) it is $0.88, and in the Golden Triangle it is $1.10.
So actually, the rental story supports the view that you have growing demand as you get closer to a central location.
I think this shed some light on the housing price variation, though. An apartment in the city and an apartment in the suburbs are going to cost about the same and be of similar quality. With housing I think there is a bigger disparity in quality.
I did know the broad strokes of that, but I don't want to imply I know much if anything about Pittsburgh real estate.
One thing I do know is a simple comparison of median price/median wage yields this for my town Ashland, Oregon and Pittsburgh from the city data 2007 figures (It is probably a bit more affordable in Ashland now):
Ashland, OR
Median home $420k/Median Household Income $39.9 = 10.6 x Income
Unemployment (May 2009) 13.8%
Pittsburgh,PA
Median home $84.5 k/Median Household Income $32.4 = 2.6 x Income
Unemployment (May 2009) 6.8%
Interesting, something is odd about the numbers though. I just looked at a few other markets - like Vegas, where the average house is now around 160K, but the city-data has values around 360K.
Pittsburgh is insanely low, which is strange because the state of Pennsylvania is much higher. While it's possible Philadelphia alone skews the entire state in a significant upward direction, it is hard to believe.
Nontheless, no doubt the housing market is great for Pittsburgh though! Also, no doubt that states like Oregon/Washington, even in small towns, is certainly not!
My "killer commute" was about half an hour each way in the worst rush hour traffic. That exceeds the average commute in Allegheny County by roughly 40%; my colleagues thought I was nuts for putting up with that kind of commute. ....
Drover- Yes, that is one of the things that is interesting about comparing places. Right out of high school I lived two years in S. California (Orange County). I thought it was living hell. Nothing against the people or place. It was just all that time in traffic. My brother was totally down with it though and would take three freeways to buy an oil filter for his car. I think your colleagues were still in touch with their sanity enough to know even a one hour round trip commute is no way to spend your life IMO. Of course, many folks have no choice, so no use bashing..glad to hear that travel around the burgh is comparatively easier.
The funny thing is that if folks in Pittsburgh argue for better transport, there are tens if millions of people around the country who have been acculturated to such a wretched daily lifestyle, they will not support transport investment (just shut up and drive, whiners!). I personally don't want anyone to have to put up with that S. Cal model, or what you are describing for DC. Terrible for the individual and environment.
Brian-Nice rent data. Do you suppose that many of the folks closer to downtown rent? It would only make sense, and owner-occupied would be harder to find in the center. And average home/ apartment sizes must decrease in that direction too?
Perhaps with the lower per foot costs in Pittsburgh, your average Joe or Jane wants a relatively grand house in the suburbs. If Drover is right, the housing gain vs. commuting pain is a decent trade for most folks.
Interesting, something is odd about the numbers though. I just looked at a few other markets - like Vegas, where the average house is now around 160K, but the city-data has values around 360K.
Nontheless, no doubt the housing market is great for Pittsburgh though! Also, no doubt that states like Oregon/Washington, even in small towns, is certainly not!
I did try to point out that the 2007 data are a bit extreme for the West. Obviously with the meltdown things are now lower. But I wanted to use City Data, which folks could verify. Bear in mind, some areas, like vegas and phoenix were so overbuilt in the bubble and a huge number of homes were bought by investors that they crashed spectacularly. Not all areas have fallen nearly so far. Still I will grant that Ashland has certainly fallen, whereas Pittsburgh has not.
Yes, my ongoing theme is that I HATE housing hype. All you have to do is look at those numbers and see how out of whack things became out here. Yet the realtors are still saying it is just a hiccup until we resume 10% appreciation. I challenge anyone to propose a reason why west coast prices can restart their exponential rise with numbers like that. Obviously, for people and families starting out, the advice (to make Horace Greeley roll in his grave) is "GO EAST YOUNG MAN!" To do otherwise does not make financial sense. Now, I think the west is great, but not THAT great.
Perhaps with the lower per foot costs in Pittsburgh, your average Joe or Jane wants a relatively grand house in the suburbs. If Drover is right, the housing gain vs. commuting pain is a decent trade for most folks.
The main reason is commuting is NOT a pain in Pittsburgh. In other cities, people might spend over an hour commuting one way from the suburbs; however, a Pittsburgher can live in the suburbs with a 15 minute commute. A 45 minute commute one way in Pittsburgh could be 1-1/2 hours somewhere else.
I think this shed some light on the housing price variation, though. An apartment in the city and an apartment in the suburbs are going to cost about the same and be of similar quality. With housing I think there is a bigger disparity in quality.
I'm not sure I agree there is a big difference in quality in the City. A lot of the apartments in the City are in converted houses, and so often you are talking about the same fundamental building stock. I'd suggest it is more a matter of the underutilized housing stock providing a more direct check on prices to buy versus prices to rent, basically on the theory that homeownership results in more capital being available for renovation.
Brian-Nice rent data. Do you suppose that many of the folks closer to downtown rent?
Right in or near Downtown, yes, because that market is more skewed to relatively transient people. The same also applies to the student-heavy neighborhoods in the East End, most notably Oakland and some parts of Squirrel Hill and Shadyside. On the other hand, there are large chunks of the City that are mostly owner-occupied, and some neighborhoods actually making a transition back that way (like Friendship, which is in the process of converting back from student ghetto to owner-occupied).
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And average home/ apartment sizes must decrease in that direction too?
So the average 1BR in the Pittsburgh Metro was 827 sqft, Allegheny County 761, City of Pittsburgh 772, Bloomfield 738, Triangle 845. That isn't the nice linear relationship you might have expected, and it is attributable to the fact a lot of City apartments are conversions that can end up with a decent amount of space, particularly in the lofts in the Triangle and other commercial neighborhoods, but less so in former blue-collar residential neighborhoods like Bloomfield.
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Perhaps with the lower per foot costs in Pittsburgh, your average Joe or Jane wants a relatively grand house in the suburbs.
So there are actually quite a few big houses available in the City, and lots of houses of more or less standard size even by modern standards. The more typical differences are going to be the date of original construction and yard size.
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If Drover is right, the housing gain vs. commuting pain is a decent trade for most folks.
Ultimately I don't think the housing mix really explains why there is a different pricing pattern in Pittsburgh versus other cities with a roughly similar housing mix. On the other hand, I think the commuting point is probably the strongest on the demand side of the equation, but I still think the largest part of the explanation is actually on the supply side. Again, I don't think it is surprising we have relatively low prices exactly where we have relatively high underutilized housing stock. And in fact the notably higher prices for modern builds in places like Squirrel Hill helps to confirm that view: if it was just a commuting story it shouldn't really matter that much, but it makes sense when you realize that we are undersupplied, not oversupplied, with that specific sort of housing in the City.
Obviously, for people and families starting out, the advice (to make Horace Greeley roll in his grave) is "GO EAST YOUNG MAN!" To do otherwise does not make financial sense. Now, I think the west is great, but not THAT great.
So true.
Incidentally, I found this very current great website to compare cities the last few years month-by-month.
Pittsburgh is pretty steadily low, where everywhese else is all over the map. I'm surprised though that cities like Sacramento skyrocketed downward, whereas cities like Seattle seem to stay sky upward.
I'm not sure I agree there is a big difference in quality in the City. A lot of the apartments in the City are in converted houses, and so often you are talking about the same fundamental building stock. I'd suggest it is more a matter of the underutilized housing stock providing a more direct check on prices to buy versus prices to rent, basically on the theory that homeownership results in more capital being available for renovation.
I think the housing stock is underutilized (and therefore cheaper) due to the suburbs having larger houses/yards and being more modern.
I'm not sure I entirely understood your post where you say you disagree, are you saying you don't think city and suburban apartments are of similar quality? Even the converted house apartments are still of similar quality in my experience.
I think the housing stock is underutilized (and therefore cheaper) due to the suburbs having larger houses/yards and being more modern.
Well, certainly there was a post-WWII suburbanization effect in Pittsburgh, but again that doesn't distinguish Pittsburgh from any other American city. The more unique thing about Pittsburgh is the relatively huge population losses associated with the contraction of local industrial employment, which are still echoing in the population figures today.
So now across the country you have people with money starting to move back into cities, and it has caused rapid appreciation in a lot of central neighborhoods in many cities. And this is happening a bit in Pittsburgh too on an isolated basis, but we have so much more excess capacity than most cities, and again are still dealing with the last echoes of the population loss, such that we just haven't reached that same point of rapid appreciation yet due to the supply overhang. At least that is what I think is happening.
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I'm not sure I entirely understood your post where you say you disagree, are you saying you don't think city and suburban apartments are of similar quality? Even the converted house apartments are still of similar quality in my experience.
My point was that I think a renovated city house is going to be similar in quality to a modern suburban house in the same way that a renovated city apartment is going to be similar in quality to a modern suburban apartment.
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