Pittsburgh Homes Daily

Photo by KitAy through a Creative Commons license.

Money Magazine’s Real Estate Survival Guide has plenty of fodder for good blogging. I’m pretty sure that I’ll be talking about it again later in the week.

Today’s Post is about the article - Real Estate Agents on the Cheap. The article appears to be long on speculation and short on facts and figures. The thesis of the article is that online real estate websites are unlocking the real estate information once tightly guarded by Realtors, and thus real estate agents will not be able to “command their traditional price” without that information monopoly. I think there are a couple problems with the analysis.

The only evidence provided is an example of a couple that successfully sold their home for sale by owner. Not only is it an insufficient sample size to demonstrate that people will be better off selling their home on their own, but it doesn’t even begin to demonstrate that commissions will drop. The Realtor involved in the transaction was able to command their traditional price - 3 % to represent the buyer.

It’s also unclear that commissions will decrease. First, the increase in commodity prices increases the cost for a Realtor to do business. Why would they drop their prices while costs are increasing? Second, the article makes the rather large implicit assumption that getting a home on the MLS will mean that it will be seen in the databases of all real estate websites and agents in the future. I don’t think that’s a safe assumption - and even if it is, the sheer amount of homes listed in the database could preclude it from having the same impact that it once had. Moreover, if consumers are shunning real estate agents on both sides of the transaction, it is unclear that the buyers will be engaged in a comprehensive and effective search of the entire market. Moreover, I don’t know that a home seller has enough information available to assess the traffic their selected fsbo website will provide - or whether they have to spend thousands listing on every website to make sure that their home gets in front of as many eyeballs as possible. The other problem is that listing on the MLS and an FSBO website won’t do you any good if all potential buyers are searching on Craigslist. The more real estate websites that there are, it may be that more sellers will just be tilting at windmills.

Will Realtors “hold the line’ on the 6% commission? I don’t know - but the article doesn’t even get to first base on the question of whether real estate commissions are, or will, or should, drop.

I’ve been hearing increasing speculation in the media that the nation’s housing market is at or near the bottom. Upon reading this interview, I (along with many other people) am wondering how long it will take for the real estate market to return to housing prices of Fall 2005 / Spring 2006 once it hits the bottom.

Susan Wachter, a professor at the Wharton School of Business, said:

WACHTER: Well, it is not going to be a bounce to the upside. This is going to be a sharp decline still to come, how sharp depends on the overall economy, and then the rise unfortunately will be slow. We could be two years out, three years out before we are back to the previous highs.

Something seems to be wrong with that statement. I can’t believe that a slow rise in prices would only take two or three years to get back to the housing market top. If real estate prices are down an average of 10-15% from the market high, and her statement that another 5-10% decrease is likely is true, then that would be a pretty significant recovery bounce to the upside.

What do you think? Will massive real estate speculation plus pent up buyer demand cause a significant bounce at the bottom or will the credit crunch, market pessimism, and a poor economy leave prices stagnant?

DiCicco Development announced Friday that two additional Pittsburgh airport hotels, a 128 hotel room Hilton Garden Suites and a 101 hotel room Homewood Suites, will be built adjacent to each other in its 22 acre Scott Station real estate development in Moon Twp. The developer is still looking for interest in 100,000 sq. ft. of possible additional office space. More information about Scott Station can be found here.

News Coverage:
Pittsburgh Post-Gazette
Pittsburgh Tribune-Review
Pittsburgh Business Times

Photo by SoundandFury through a Creative Commons License.

As I was reading about approval of the design for the new Pittsburgh Penguins arena, I decided to try to hunt down the actual design renderings online - which can be found here, complete with people and all.

In my search, I also found a webcam covering the construction zone, so you can watch the progress of the new stadium here. I do have to warn that “webcam” is a bit of an overstatement though given today’s technology - from what I can see it is just a still shot photo that updates every minute.

Looking at the pictures, they’ll be busy in the next two years.

Worldwide ERC named Pittsburgh #1 on its 2008 list of Best Cities for Relocating Families in the Large Metro

The rest of the list can be found here. It’s interesting that six of the top ten could essentially be considered Midwest Cities (Pittsburgh, Indianapolis, Columbus, Kansas City, Minneapolis, and Cincinnati. With three of the other four top ten cities in Texas, three of the top five cities in the mid-sized cities category coming from upstate New York, I am a bit curious of the criteria for the award - though there is much more diversity among the top of the small cities list.

The Pittsburgh Business Times coverage is here.

I am alive.

Not just alive in the physical sense that I am breathing - I figure most of you probably guessed that - but ALIVE - that I am enjoying the twists and turns of life and excited about the future.

It has been almost a year since I’ve written an article for Pittsburgh Homes Daily - and I have to say that there wasn’t a point in time during the last year where I stopped and thought, “Gee, I wish I were blogging right now.” That’s not to say that I wasn’t ever tempted to check my feed reader or my email, but for the most part I resisted. Only on very rare occasions did I wade through the monstrosity of spam that had accumulated (in both the feed and the email) - to pop my head out of the hole for a little while and take a look around before scurrying back underground.

Why did I stop? The best answer is personal and professional reasons. I’m now employed in Philadelphia - and to some extent - it was just necessary to put my brief time in Pittsburgh behind me. And with “the plan” changing, it wasn’t as clear why I was blogging. Oh yeah - and the 70+ hours a week I was working required some changes in my outside activities.

Why not let Pittsburgh Homes Daily go - to another blogger, or shut it down? I’ve thought alot about that recently. I received an email in March that *almost* had me respond and offer to let the individual run Pittsburgh Homes Daily. I’ve been thinking about my plans for Pittsburgh Homes Daily even more now that PHD is coming up on its second birthday - May 10th, 2006 was the first post.

Back in October 2006, I responded to a question from Zillow about why I am blogging - and after 9 months of reflection I have to provide the same answer as to why I am going to start blogging on Pittsburgh Homes Daily again. I miss the intellectual exercise of reading the news and other posts, and coming up with something valuable to say that will be semi-permanently recorded. I miss seeing positive change in Pittsburgh, even though a source that will remain unnamed here seem to think that the air quality is lacking. I miss involvement in the real estate community - and watching the online real estate space flourish. And I miss messing around online.

To some extent, this is my online diary, and for 9 months it’s been locked in a drawer. I think it’s time to find the key.

Housekeeping:

You’ll notice that I’ve changed the theme. I adopted Cutline a little over a year ago and it just seems like a good time for some new clothes. I’m not totally happy with it - so you’ll probably see a few changes over the next couple months as I settle in to a new theme. One that attempts to compensate me for the time involved but doesn’t interfere with the user experience.

At one time or another, I swapped links with a few of the people on my blogroll. I’ll be going through it, and unfortunately, some of you may get dropped. Hopefully, by now, you are established and don’t really need the link. And I’m sure that I’ll find a way to link back to you in other ways. I think I have always been a generous linker.

I’ll be wading through the comments soon and approving old ones. Also fixing the feed so that it points to the right location. And I’ll think about updating the list of blogs - after I’ve put some effort into building this thing back up.

As I said - I’m alive. For those who have stuck through the dry spell, who have helped along the way, and have influenced who I am today, THANK YOU! I hope you are all well - and I look forward to catching up soon.

I was wondering the other day whether it would be better for buyers and sellers if the real estate market were more like the stock market.

Real estate agents could act like brokers do on the stock exchange - they take a request for a purchase or sale and facilitate the transaction. If no one is willing to complete the transaction at the price sought, then they shop the deal to other brokers who may have a client interested in the house.

Marketmakers could provide liquidity to the market. Currently, bridge loans, contractors, flippers, We Buy Houses, and even some real estate brokerages offer assistance to some homeowners who face a lack of liquidity in what is probably their biggest asset. But these seem to me imperfect solutions to the problems of the real estate market. On the stock exchange, it would be the job of the specialist/marketmaker to step up to the plate and buy the stock even though there is not a buyer waiting in the wings.

One problem would be in the method of valuation of the home. That’s a serious problem. But at the same time, I can imagine a day in the not too distant future when an online home valuation company could put forth a reasonably accurate price that could be traded on subject to a “home inspection.”

Another problem that would require city/state cooperation is the problem of transfer and property taxes. There would at least need to be a waiver of transfer taxes for licensed real estate marketmakers for some portion of the transaction.

Don’t think that a stock market for residential homes would attract any investors willing to play the game? You may be right. But if they were able to buy a home at fair value minus 10% (which for the homeowner is probably a 6% realtor commission plus a couple of months of mortgage payments), and then sell the home at fair value in 1 to 4 months, on average, you might get enough investment companies to play the game.

And with a central exchange for buyers, sellers, and their agents to hang out, there may be a bit more transparency in the state of the market.

This past week, I half-heartedly advocated that real estate agents should use Twitter as a means to communicate with clients. Today, I had the probably behind the times realization that a web-savvy client doesn’t need Twitter to check up on their Realtor.

As Realtors increase their online presence through blogging, Active Rain, and other tools, potential clients need to take the time to search for prospective agents online both to (a) ensure that they have a web presence; and (b) ensure that they like what they see.

Employers have searched Google for more information about job applicants for some time. Now, I hear that employers are even using Zillow to find out more about job applicants.

Home buyers and sellers need to adopt a similar practice. You can find out what your potential agent is doing in their free time. So go do it!

The Paris Hilton of the real estate industry is out there somewhere, shouting loudly for attention online. Embrace her (him) or avoid her (him). It’s your call.