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Originally Posted by Don't Be That Guy
I think the absence of Fox Chapel, Sewickley, and USC from that list has more to do with those places already being at the top of the market for this region, and from what I'm hearing anecdotally, the demand for 5,000sf million dollar suburban homes has really dropped. There are more baby boomers in Fox Chapel looking to downsize than millennials that can afford that kind of house, especially since it's probably still rocking 90's mauve wallpaper and pickled wood cabinets.
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I'm sure it is a demand-side effect, but I am not so sure it is driven by lack of means among potential buyers.
Generally speaking, average household incomes have been trending up in the region, and at lot of that is being driven by the fact various professional-class job categories have been experiencing relatively strong growth. These are the households that potentially could be looking at the Fox Chapels and Sewickleys of the region, so why is demand for housing in those areas not keeping pace with this underlying increase in professional-class households?
I think part of it is just what you said--depreciation is a real thing, and there is a well-known effect where there tends to be a large period of time between when a house is contemporary and when it becomes historic, such that in that period it is merely old/dated.
But I also think this is in part an outgrowth of changing lifestyles and preferences. The core area is getting both more fun and more safe with every passing year. People are valuing shorter commutes, particularly ones which don't require them to put down their smartphone. And so on.
For a bit of evidence to support this hypothesis, I would note that both Squirrel Hill and Mt Lebanon are still on the hot list. I'd suggest there is still demand for expensive homes in these areas in part because they have the right sorts of walkable amenities, and decent public transit, and otherwise short commutes. Of course they have also slipped out of the merely old category and into the historic category, but I don't think that is the whole explanation.
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What struck me about the Mon Valley was the one year increase in Duquesne and the other Mon towns. There is very little happening down there, so even one real estate transaction that's significantly larger than the already extremely low norm could easily throw the statistics.
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That could contribute, but if you look at the turnover rates for those zipcodes, they tend to be pretty substantial, in like the 3.5-5% range. Duquesne, for example, was 3.8%. Braddock was actually all the way up at 6.3%.
Now to be sure, probably hidden in all these statistics is homes not being resold but instead being abandoned, or otherwise depreciating while sitting vacant. Still, I'd say there is enough of a pattern here to keep an eye on.
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As for the usual suspects in the City, there is still enough housing in need of renovation to keep fueling these increases. North Point Breeze, southern Highland Park/East Liberty and sections of Morningside will continue to see these year over year increases until the existing stock of updated homes becomes constrained. There is definitely a price ceiling for move-in ready houses in each of those neighborhoods.
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I do think increasing incomes will likely provide some underlying support for home prices increases in the established East End neighborhoods, but otherwise I agree a lot of these apparent price increases in these neighborhoods is being driven by renovation.