February 14th, 2009 · 7 Comments
Pittsburgh was lucky enough to avoid Forbes’ list of the 10 most miserable cities. If you check the comments from Pittsburgh residents on some of the articles that have painted Pittsburgh as an up and coming city that has rejuvenated itself following the collapse of the steel industry, you might be surprised that some cities managed to beat its misery level. But Chicago, Cleveland, Detroit, and Buffalo all managed to be among the most miserable, while Pittsburgh escaped unscathed.
That wasn’t the case in the real estate market, despite its designation as one of the best real estate markets in the country. The number of real estate projects around the Pittsburgh area canceled or placed on hold in January was pretty depressing. I did a brief search for news articles about Pittsburgh condominium projects and the results weren’t pretty at all. It will be interesting to see whether it simply reflects the decreased demand for housing and tough lending environment, or if it signals the beginning of the decline of the Pittsburgh real estate market.
Both Pittsburgh’s residential real estate market and commercial real estate market have received praise for their strength in recent days.
Moody’s ranked the Pittsburgh commercial real estate market the best in the nation in its latest survey of the market in 60 metropolitan regions. Back in 2005, it was ranked among the worst for owners of commercial real estate. The honor was covered in both the Post-Gazette and Tribune-Review if you are interested in reading more.
Residential homeowners in Pittsburgh received similar news. ABC News and Forbes, in a joint survey, declared Pittsburgh one of the nation’s 25 strongest housing markets. They expect the market for Pittsburgh homes to bottom in the second half of 2009, and the prices to fall a mere .3% more before reaching that bottom.
Of course, today’s strong real estate markets don’t resemble the price appreciation and frenzy of the boom times. It may be that Pittsburgh has received the praise only because prices haven’t fallen as much as they have in other cities. But even that may be sufficient cause to celebrate given the condition of some of the nation’s housing markets.
Tags: Commercial Real Estate · Housing Market · Personal · Real Estate · Why Pittsburgh
The New York Times earlier this month did a news story on Pittsburgh titled, For Pittsburgh, There’s Life After Steel. It spins a story of a relatively recession-proof city that has turned the corner in its economic transformation. Although it faced tough times when others prospered, it now finds itself in the sweet spot with a 5.5 percent unemployment rate, a real estate market that saw prices up for the year ending in September 2008, and strength in sectors such as education, health care, and commercial construction. It followed similar themes to the article in October 2008 in Time Magazine about Pittsburgh titled, Finding One Economic Bright Spot on Main Street.
Yet, the reaction to the articles that I have seen has been deeply divided. Many of the comments to the New York Times article seem to imply that the author was smoking something when he wrote the article, or was simply intoxicated by the Pittsburgh PR machine. News stories and editorials commenting on the story featured headlines such as Power to the ‘poopers’, Progress through delusion?, and Ignoring Pittsburgh’s decline.
I’m going to withhold my own personal thoughts on Pittsburgh from the debate, since I’ve been witness to some of the best and worst of Pittsburgh and don’t want to lay it all out in this post. I’m encouraged, though, by the fact that the debate over the benefits and drawbacks of living in Pittsburgh has progressed to the national stage. Both sides can make a pretty compelling case that Pittsburgh is declining / advancing, and the truth likely lies somewhere in the middle. While the grass may be greener on the other side, I’m sure that there are plenty of places right now where it is much browner. As far as I know, Pennsylvania isn’t considering handing out IOUs in place of tax refunds. And that, at the very least, is something to be celebrated.
Tags: Why Pittsburgh
As the Pittsburgh Steelers host the Baltimore Ravens in the AFC Championship Game at Heinz Field today, I decided to check on the progress of the North Shore Connector, which will likely be used by many fans for transportation to the Steelers games when it is completed in 2011.
This past week, the tunnel boring machine completed its digging of the second of two tunnels that the light rail transportation system will use between the North Shore and downtown Pittsburgh. As reported by WPXI, the project is on time and on budget according to the Port Authority of Allegheny County.
That was a bit intriguing to read, because the Pittsburgh Post-Gazette reported just two days later that the project is in jeopardy because it is $117.8 million over budget. Without additional funding (from the federal stimulus package or another source), a Port Authority spokeswoman said, it won’t be completed.
The last I had heard, the budget for the project was $435 million. A cost overrun of 25% sounds like a pretty significant amount in today’s economic environment. I had heard that there were concerns about cost overruns for the project back in the summer because of escalating commodity prices, but I expected that declining prices on commodities would alleviate some of those issues. Can anyone explain the discrepancy between the two news articles?
Allegheny County (the county surrounding and including Pittsburgh for those not familiar with the area) has joined the growing list of communities that are struggling with a solution to the foreclosure problem. Pittsburgh adds a bit of a different perspective to the nation’s housing problems, as many areas of Pittsburgh did not undergo the rapid price appreciation that took place in other cities. In many areas, declining prices have produced incentives for homeowners who are underwater in their mortgage to essentially return the keys to the lender through the foreclosure process. Foreclosures grew in other cities as adjustable rate mortgages reset to unsustainable levels for families. While there are no doubt foreclosures in Allegheny County based on these problems, I suspect that much of Pittsburgh’s foreclosure problems resulted from lax underwriting standards and the dismal economic conditions for those most susceptible to the economic downturn.
In order to attempt to stem the tide of foreclosures before it reaches record proportions, the court system is implementing a new residential mortgage foreclosure program. Starting Monday, January 12, homeowners who contact the “Save Your Home Hotline” at (800) 298-8020 in the first 20 days after their first official notice of a foreclosure judgment will receive a 90 day delay in the foreclosure proceedings so that the homeowner may work with a free housing counselor to create a payment plan, renegotiate their mortgage, file bankruptcy, or otherwise avoid foreclosure.
While the effort to keep people in their homes is worthwhile, and the program could be considered a success if it helps even one family keep their home, the numbers that I have seen so far from other cities adopting moratoriums on foreclosures have not been encouraging. And the default rate on renegotiated mortgages does not give me cause to be optimistic.
Instead, the ultimate resolution to the foreclosure problem may have to wait for the national housing debate to take form. Nationwide, the problem is staggering: At one point last year, one in 10 American homeowners with a mortgage were at least a month behind on payments or in foreclosure. And it has been predicted that more than 8 million foreclosures will occur over the next four years.
President-elect Barack Obama told CNBC that he expects to announce a plan to prevent foreclosures within two months, but while that type of decisive action is needed, the number of different players and proposals might derail those plans. Hopefully, the Allegheny County foreclosure delay will give the federal government the time it needs to implement a solution to the foreclosure crisis before homeowner’s availing themselves of the delay are placed back into the lineup for a sheriff’s sale.
Tags: Allegheny County · Real Estate · foreclosure
Apparently, community leaders around the Baum-Centre Corridor are attempting to get Giant Eagle to put a new shine on a GetGo gas station (discussed in the Tribune-Review). But Giant Eagle’s efforts to create an inviting and innovative gas station convenience store mix aren’t nearly as interesting (since we’ve heard them before) as this comment on the Corridor:
“The Baum-Centre corridor has the potential to be one of the prime real estate areas in the city …,” said Rob Pfaffmann, a local architect.
One of the prime real estate locations in the city? That’s speaking pretty highly of it, since to call it that would have to put it in competition with established and developed Pittsburgh areas Squirrel Hill and Shadyside, popular and hip East Carson St. on the South Side, and up and coming Lawrenceville and the North Side.
Wedged between Oakland, Shadyside, Bloomfield, Friendship and East Liberty, and often visited by nearby Highland Park and Lawrenceville residents passing through, the Baum-Centre corridor certainly has a lot of potential. It’s highly visible and a major thoroughfare in the area. It has access to public transportation. It’s also a logical area to take advantage of the popularity of living in the Shadyside neighborhood.
But at the same time, the area has a lot of work to do to define itself as separate and distinct from the nearby neighborhoods and to establish its value as more than a means of getting from one area of Pittsburgh to the other. I’ve looked at the Baum/Center Corridor Strategy and I don’t yet see the unifying/defining theme that is going to turn the area into prime real estate in the next 5-10 years. Will the area need to seek a major developer to come in and unify development in the corridor similar to what is expected in the Federal North redevelopment or Fifth-Forbes corridor? Or is pursuing a one developer corridor project impossible (politically, financially) to pull off successfully these days such that the only way to go is to hope that individual property owner development can produce more than a bunch of gas stations and fast food restaurants (who doesn’t love Wendy’s?) on every corner. Will nearby residents ever truly consider the Corridor its own neighborhood - or will it always be overshadowed by Shadyside (and hopefully soon East Liberty)?
Of course, planning the development of a neighborhood is a difficult and long term game, and while I’m skeptical of the area’s ability to create its own identity and name as a destination in Pittsburgh, I’m hopeful that it can achieve it.
What are you thoughts on the area? Potential prime real estate in Pittsburgh or just another Pittsburgh redevelopment plan?
Tags: Commercial Real Estate · East Liberty · Lawrenceville · Pittsburgh · Real Estate · Shadyside
The obvious, and perhaps more relevant for most Pittsburgh Homes Daily readers, question that follows from yesterday’s discussion of commercial real estate in Pittsburgh is, “How is the residential real estate market in Pittsburgh fairing?” So I sifted through recent news reports for information about the Pittsburgh housing market and here’s what I found:
Realstats reported the average price of a home sold in the Pittsburgh area was up 1.8 percent from July 2007. Washington County was the exception - the average price of a home in Washington County fell significantly, though it was thought to be the result of declining new construction sales rather than a collapse in home valuation.
Online home valuation website Zillow recently released its Zillow Real Estate Market Report for the second quarter April - June 2008. Only one of out ten homes sellers in Pittsburgh sold their home for a loss compared to one in four home sellers nationwide and three out of five sellers in California.
The bad news for individuals who need to sell their house in the Pittsburgh market is that fewer homes are selling in the Pittsburgh area. Realstats reported that real estate sales were down 12 percent in July compared to July 2007 - the 17th consecutive month of declining sales. Butler County proved to be the exception - sales in Butler County increased in July.
Pittsburgh ranked 79th out of America’s 100 largest metropolitan areas for the rate of foreclosures in the second quarter - 1 out of every 383 homes in the region were in foreclosure - with foreclosures in greater Pittsburgh up only slightly for the first six months of 2008 compared to 2007. The one troubling signal among the data was that foreclosures in June 2008 in Allegheny County doubled compared to foreclosures in June 2007.
Tags: Housing Market · Pittsburgh · Real Estate
After writing yesterday’s post about Pittsburgh’s economy, I did a quick search of the local newspapers to see how the commercial real estate market was doing in the Pittsburgh region.
Despite concerns around the nation that commercial real estate will follow the downtrend in the nation’s residential housing market, and the postponement of the downtown housing project in Pittsburgh’s Theater District, Riverparc, Pittsburgh’s commercial real estate market has had some pretty good news lately.
Over the past year, the vacancy rate is down from 20 percent to 18 percent, UPMC located itself at the U.S. Steel Tower, Siemens Engineering signed at the Union Trust Building, BNY Mellon plans to add about 2,000 employees to its downtown locations, and there is now a report of a tentative agreement for the sale of law firm Reed Smith’s building. Reed Smith is moving to Three PNC Plaza in 2009.
With the construction of the new Penguins arena in the Hill District, developers are now looking at the Uptown corridor between downtown Pittsburgh and Oakland.
And the Pittsburgh area has been successful in attracting alternative energy companies to the region as well. EverPower, involved with harnessing wind power, is opening an office in Lawrenceville and Flabeg will open a manufacturing plant near the Pittsburgh airport to produce solar power components.
Tags: Commercial Real Estate · Downtown · Hill District · Lawrenceville · Pittsburgh · Real Estate
Pittsburgh seems to be moving to the beat of a different drummer recently. I’ve frequently seen the comment that Pittsburgh’s real estate market didn’t have the excesses of other markets and so wasn’t experiencing the same downturn in the housing market. If that’s true, then the current housing created nationwide economic slowdown might not have the same effect in Pittsburgh as it would in other harder hit locations. While there’s no doubt that the economic effects of the nationwide banking crisis and employment slowdown have had their effects on the Pittsburgh region, a few recent articles have told a much different story about the economy in Pittsburgh compared to that of the nation:
Longtime readers of Pittsburgh Homes Daily will remember this series of articles by the Pittsburgh Post-Gazette about how Charlotte is booming because of its development as a center for banking. If Charlotte was dependent on banks for its boom, then it’s worth looking at the charts of their banking giants to see how the city is doing. Since that 2006 article, the stock of Wachovia Bank has declined from ~ $55 to ~ $15 and Bank of America has declined from ~ $52 to ~ $28.
Of course, Harold Miller pointed out in an above article that Pittsburgh generally takes longer to feel the effects of a nationwide downturn than other cities - so it is possible that the worst is yet to come in Pittsburgh. But as of right now, Pittsburgh isn’t acting like a region with a declining population and image problem.
Tags: Pittsburgh · Why Pittsburgh · employment · hotels
Construction workers should be back to work on the North Shore of Pittsburgh casino by the time you are reading this post. Holdings Acquisition, headed by billionaire Chicago businessman Neil Bluhm, closed on the financing for the purchase of 75% of the Majestic Star Casino in Pittsburgh after construction stopped on the project in June due to default on a bridge loan by Don Barden’s group. It secured approval from the Pennsylvania Gaming Control Board last week for transfer of the gaming license to Holdings Acquisition.
The purchase of the casino by Bluhm and his family add to their casino holdings - they own about 60 percent of the proposed SugarHouse Casino in Philadelphia.
Holdings Acquisition reaffirmed Barden’s commitments to fund the new hockey arena, as well as development in the Hill District and on the North Side. The financing approval and reaffirmation bailed out Pittsburgh taxpayers, who would have been on the hook for Barden’s $225 million commitment.
Multiple newspapers reported that a spokesperson for the company expected construction workers to be back on site on Pittsburgh’s North Shore almost immediately, with construction full speed ahead by next weekend. Pittsburgh’s Majestic Star Casino is expected to open in August of 2009.
The construction webcam can be viewed here: http://www.majesticstar.com/pittsburgh/construction.html
Tags: Commercial Real Estate · Hill District · North Shore · Penguins · Pittsburgh · Real Estate · casino