Pittsburgh Homes Daily

Photo by thenicole through a Creative Commons license.

Pittsburgh tops the list of the most courteous drivers in the nation. It also had the lowest percentage of drivers reporting cell phone use by other drivers. Read more in the Pittsburgh Business Times.

Drawing by Mike Kline via a creative commons license.

Reuters had an article on Monday about the increasing number of squatters living in vacant foreclosed homes. It is written from the perspective of the mortgage companies and their real estate agents detailing the squatting problem. But I’m not feeling too sorry for the new owners of the foreclosed homes. They aren’t particularly good neighbors.

Cities across the nation are now, or are considering, suing lenders and banks for there role in the foreclosure problem and the consequences of the vacant foreclosed homes, according to the USA Today. A recent statement indicated that Cleveland would have to spend $65 million a year over 5 years to handle abandoned homes. And that doesn’t count the economic effect on the neighbors because of decreasing property values. Or probably the problem that mosquitos from swimming pools at foreclosed homes could pose (see the wsj article).

The problem of vacant homes is one that Pittsburgh has known all to well. At various points in recent history, Pittsburgh has tried to make an effort to deal with the problem - through legislative or other means. Noteably, it attempted to board up vacant buildings to secure them a few years ago at taxpayers expense.

Ideally, foreclosed homes would be put up for sale on the market and quickly sold by the bank - since they aren’t in the real estate business. But now that they have so many foreclosed homes - and there’s no indication that they’ll be out of the real estate business quickly, it’s time a real solution to the problems of vacant homes and squatting are worked out. I don’t think anyone is happy with the current situation.

Read other articles on squatting and foreclosures here and here.

Photo by LukeGordon1 through a Creative Commons license.

Brighton Heights on the north side of Pittsburgh is holding a chocolate house tour on Sunday, May 18, 2008 from 1 pm to 5 pm. Enjoy a self-guided walking tour of ten homes and the tasty chocolate treats provided inside. Photos of the ten homes are currently available on Flickr. For more information, or to purchase tickets at the reduced rate, visit the Brighton Heights Citizens’ Federation.

UPMC must be pretty excited that their new facility (the Children’s Hospital of Pittsburgh of UPMC) in Lawrenceville will be opening one year from now - in May 2009 - as they’ve already released a press release here about the opening.

Want to see what all the fuss is about? Take a virtual tour of the new hospital (other tours found here) or check out the construction photo gallery.

Photo by KitAy through a Creative Commons license.

Money Magazine’s Real Estate Survival Guide has published Fiserv Lending Solutions’ 1 year price change predictions for the top 100 U.S. Cities. Real estate values are expected to decline, on average, 9.7 percent in the United States over the next year. Pittsburgh’s prediction? A relatively modest loss of 1.3%.

Prices are expected to increase in some areas of Texas and Upstate New York, while areas of Florida, California, Las Vegas, Arizona, Washington D.C., New York City and New Jersey are all set for an expected decline of more than 10%.

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?