Pittsburgh; Llivable or Leavable? (York, California: foreclosure, condos, credit)

[subdivisions]

Originally Posted by Humanoid

You can't take that data and conclude this. For a good explanation about men/women pay differences (and why they don't necessary mean something is wrong) read "Economic Myths and Fallacies".
The basic problem is that women and men have rather different lifestyles and it is this lifestyle that causes the difference in pay not the fact that you have different sexual organs. Most women leave the work force while they have kids, this puts them well behind men who stay in the work force. If you look at single women (who's never been married and doesn't have kids) and compare them to single men (likewise never married, no kids), the women actually make more. This would imply that the causal picture is much different than what people like to imply from the data. It is not being a women that causes the pay differences, rather it is the lifestyle that women pick that causes it. If you do not have such a lifestyle there is no reason to believe you'll get paid less.

Also, the data may be a bit worse in Pittsburgh as women (at least from my experience) tend to be stay at home moms more than else where.

Although I hate to admit it, I have to actually agree with Humanoid on this one. He's right - pay differences between men and women are typically caused by lifestyle differences.

I don't know about the part where Pittsburghers tend to be stay-at-home-moms, though. I think that might depend on the area of Pittsburgh you live in.

[Goodjules]

Originally Posted by Humanoid

If you ignore the current bubble in prices (they are declining fast), then you can get a decent house for that price in a major area. But housing in Pittsburgh isn't really cheaper than CA, because people make less on average in Pittsburgh. Although some may get lucky and find jobs in their field pay roughly the same in Pittsburgh vs other more high priced areas. But that is not the norm. Despite the prices being higher in California, people still pay dramatically less property tax. Not only that future tax is very predictable (1% increase on your current total tax).

I know of no major CA cities where you can get a home for $210,000. You can find those prices for condos in the outlying burbs, or in some of the mid-sized cities, or in rural areas. I live in a lower-end neighborhood in an older suburb of Silicon Valley and my house has had a huge decrease in value since 2005 when it appraised for $650,000. I am going through a divorce and I had to have my house appraised. It is valued (optimistically according to the appraiser) at $481,000. It is a 2 br, 1 ba home less than 1,000 sq ft in need of many major repairs. But the trend is downward and I hope to sell my home soon before it is worth less than what we owe on it! Plus, gas is hovering at $3.90 a gallon for regular unleaded at the cheap stations in my town. And, to top it off, today's paper said that my area has been designated as a flood zone by FEMA due to deteriorating levees. They say we will be forced to buy flood insurance to the tune of $1500 to $3000+ a year. I hope the article I read is wrong!

Even though pay is lower in Pittsburgh compared to the Bay Area (which was recently rated as having one of the highest pay scales in the nation), it still doesn't make up for the huge difference in housing costs, even when you factor in higher property taxes. I know that there are variances when you look at individual situations, but overall Pittsburgh does seem to have a lower cost of living.

[Humanoid]

I know of no major CA cities where you can get a home for $210,000.

My claim wasn't that such homes exist at the moment but rather they will in 1-2 years, just as they did 5 years ago before the housing bubble got started. Currently you can find a decent house in the suburb's of LA in the 300 range, just a year ago that wasn't possible. Another , 1-2 years and you'll be able to pick them up in the 200k range. I'm not too familiar with real estate values in the bay area, other than that they are ridiculous.

t still doesn't make up for the huge difference in housing costs

Historically it does, people just have a habit of forgetting how housing use to be in California before every idiot and his mom was out buying a house with a no-doc option-ARM loan. Historically the median house = 3x median income in California. Where as in Pittsburgh its more like median house = 2.3x median income. So its possible houses in Pittsburgh area are cheaper, but it could just be that the distributions are different. At least from my point of view the median in Pittsburgh is worse than the major cities of CA, but I have no real way to measure this.

Although its unlikely that prices in Pittsburgh are going to hold steady. As other (more desirable) parts of the country become cheaper, places like Pittsburgh will be less attractive. Add, increased foreclosure activity to that and you'll most likely see declines in the order of 10~20%. I don't know of any reliable index (e.g., case-shiller) that tracks housing in the Pittsburgh area.

[Humanoid]

I don't know about the part where Pittsburghers tend to be stay-at-home-moms

I believe the high (traditional) Jewish population may change some city wide statistics on labor etc. But its just a guess.

[BrianTH]

Housing prices have not fallen nearly as much in the inner parts (city proper and close-in suburbs) of coastal cities like Boston, New York, Philly, DC, SF, or so on, as they have in the farther out suburbs and "exurbs". Unless that trend changes, and in a dramatic fashion, post-industrial cities in the interior of the country will continue to have housing in their inner areas available for a much lower price, at least until an exodus starts from those coastal cities into the interior (which could happen as younger middle and professional class people find they are priced out of the lifestyle they were expecting).

And there are decent reasons to believe the prices in the inner parts of coastal cities are high for fundamental reasons, not speculative reasons. Among those reasons are a weak dollar (making real estate cheaper for foreign investors, e.g. Londoners buying in New York), higher energy costs and congested highways (making shorter commutes and public transit commutes more attractive), various regulations that have artificially reduced the supply of "walkable" neighborhoods (e.g., minimum lot size requirements and large residential-only zones), and so on.

But we shall see.

[Humanoid]

post-industrial cities in the interior of the country will continue to have housing in their inner areas available for a much lower price,

For working individual what is important is the income to price ratio not the price by itself.

And there are decent reasons to believe the prices in the inner parts of coastal cities are high for fundamental reasons, not speculative reasons.

I wish I could get what you're smoking. What fundamental justifies an increase of over 100% in 5 years? Ironically some of the reasons you state were not the case when the prices were increasing the most, yet now they are true prices are doing down? Like most financial manias the current real estate bubble was a credit bubble, the credit bubble busted in August 2007. Another Ponzi scheme bits the dust.

But we shall see.

See what exactly? All the cities in the Case-Shiller 20 are down, the Case-Shiller 20 is down about 12% from last year. There is no sign that the situation is improving. This is going to have an effect on Pittsburgh, unfortunately its hard to measure what effect its having on Pittsburgh as there is no good index for the area. Tracking the median sell price is largely useless due to changes in the distribution of sales. Its hard to imagine prices not going down 20% or so in the Pittsburgh area over the next 4-5 years (Note: in real terms not nominal).

[BrianTH]

Originally Posted by Humanoid

For working individual what is important is the income to price ratio not the price by itself.

Correct, and I believe my proposition will remain true normalized for incomes.

What fundamental justifies an increase of over 100% in 5 years?

I already named some of them. The short answer is that increasing demand plus scarce supply is likely to lead to appreciation in real terms.

Ironically some of the reasons you state were not the case when the prices were increasing the most, yet now they are true prices are doing down? Like most financial manias the current real estate bubble was a credit bubble, the credit bubble busted in August 2007. Another Ponzi scheme bits the dust.

You need to distinguish different housing markets. I agree that artificially cheap lending and people overestimating their likely returns led to a "bubble" in many housing markets. But not all housing markets were dominated by these forces, and indeed the current depreciation as these effects unwind is not affecting all markets equally.

All the cities in the Case-Shiller 20 are down, the Case-Shiller 20 is down about 12% from last year.

The Case-Shiller index is not sufficiently granular for this purpose, since it only goes down to the level of MSAs.

Its hard to imagine prices not going down 20% or so in the Pittsburgh area over the next 4-5 years (Note: in real terms not nominal).

Pittsburgh did not participate in much of the "bubble": real appreciation in the area as measured by the OFHEO's HPI (which uses the same sort of price-matching methodology as Case-Shiller) was barely over the long term historic average. Rents were also never much out of line with house prices, as happened in the markets currently experiencing the most depreciation. So, I don't see much reason to believe the unwinding of the "bubble" will have more than a moderate effect on Pittsburgh prices.

[Goodjules]

Originally Posted by Humanoid

Historically it does, people just have a habit of forgetting how housing use to be in California before every idiot and his mom was out buying a house with a no-doc option-ARM loan. Historically the median house = 3x median income in California. Where as in Pittsburgh its more like median house = 2.3x median income. So its possible houses in Pittsburgh area are cheaper, but it could just be that the distributions are different. At least from my point of view the median in Pittsburgh is worse than the major cities of CA, but I have no real way to measure this.

A few months ago I read that the median home price in the SF Bay Area at the height of the bubble was 11x higher than the median income. But that with the downturn it was getting closer to a 7x spread. It may be lower now. This was only for homes in SF and the closest highest priced suburbs (Marin County & lots of Silicon Valley). The outlying suburbs and parts of the East Bay are a completely different story. That's where you see lots of foreclosures and prices falling way more dramatically.

For me personally, I still can't afford the kind of home in the kind of neighborhood I want in the SF Bay Area; but I can afford something roughly equivalent in Pgh. If I lived in another part of CA that might not be the case.

[guylocke]

Humanoid I'm glad you aren't an economist because your economy would be very unsound. I wonder why Tallysmom hasn't chimed in. She is an expert on California home appreciation and depreciation!

She is probably afraid to get involved.

Wuv you Tally!

[BrianTH]

Originally Posted by juliegt

For me personally, I still can't afford the kind of home in the kind of neighborhood I want in the SF Bay Area; but I can afford something roughly equivalent in Pgh. If I lived in another part of CA that might not be the case.

That is often the problem--not just finding a nice house at a good price, but a nice house at a good price in the right sort of neighborhood in a convenient location. In fact, we were flirting with moving to Washington, DC, over the last couple years, and we were hoping the housing market would improve considerably down there. But in the neighborhoods where we would have wanted to live (considering them comparable to our neighborhood in Pittsburgh), prices only moderated slightly, and remained WAY higher than prices in Pittsburgh. Now if we had wanted a house in a cheap new master-planned subdivision way outside the city, well then prices did indeed come way down in some of those places. But given our preferences, at least, that would have been a downward move.