Pittsburgh Appraisal Blog

Feel Comfortable With Our Expert & Dependable Real Estate Appraisers...

Pittsburgh Appraisal Blog - 412.831.1500

If you would like a source for interesting real estate related information, YOU have come to the right place! Timely and incisive Pittsburgh Appraisal Blog.

Pittsburgh Values: Single Family vs. Multi-Family Pittsburgh Values: Single Family vs. Multi-Family Pittsburgh Values: Single Family vs. Multi-Family Pittsburgh Values: Single Family vs. Multi-Family Pittsburgh Values: Single Family vs. Multi-Family Pittsburgh Values: Single Family vs. Multi-Family Pittsburgh Values: Single Family vs. Multi-Family

Pittsburgh Values: Single Family vs. Multi-Family

4

Pittsburgh Values: Single Family vs. Multi-Family

5

Pittsburgh Values: Single Family vs. Multi-Family

6

Pittsburgh Values: Single Family vs. Multi-Family

7

Pittsburgh Values: Single Family vs. Multi-Family

8

Pittsburgh Values: Single Family vs. Multi-Family

9

Pittsburgh Values: Single Family vs. Multi-Family

10

themed_object
Use The BEST, Forget The REST!! Non-Lender Specialist
follow me on facebook tweet me

Pittsburgh Values: Single Family vs. Multi-Family

September 1, 2015 by Bostedo Appraisal Services - the Pittsburgh Appraisers

Over the past number of years, I had the opportunity to appraise many 2-4 family properties in the Pittsburgh and surrounding areas for pre-listing, divorce, estate and other reasons. The reasons behind the appraisals are not the story; the story is why, and how, there was such a reversal of fortunes so to speak in the overall value of both single family residential, and multi-family (2-4 unit) properties. At this spot in the blog, I must point out that this is not only an issue in Pittsburgh, but the entire southwestern Pennsylvania region.

At a particular period of time, 2-4 family rental properties were much more valuable than single family homes. In fact, during this period, many larger single family homes were split up into units, rented out, and then, were worth more than their single family counterparts. However, due to some legal manipulation the complete opposite, (in most cases), is now true. If you would be so kind, I would like to tell you a little story, it begins with starting a new career in real estate back in 1983.

In 1983 Ronald Regan was president and home interest rates were dropping from 18%+ down to 16%. As part of a brilliant plan, Congress over the next few years tried to, ‘fix the economy’, and came up with a plan to change the tax code. Prior to 1986, business professionals were able to write off any losses in real estate such as 2-4 units, 5 units & more along with commercial real estate against their business income. During this period of time and because of this ‘tax incentive’, properties of 2 or more units were worth a significant amount of money. In fact, during this time and before, income producing properties were worth much more than single family residences’.

Congress in their wisdom enacted the 1986 tax act that put a stop to this real estate tax deduction. This new tax law pretty much single handedly not only crashed the stock market in October of 1987, but led to what was called, ‘The S&L Debacle’. What happened was since this tax deduction was no longer allowed; it became a fire sale, because those who had properties that were losing money were selling to cut their losses and then most went into foreclosure as a similar scenario played out 20 years later that we all just witnessed, although from different reasons. Because of this calamity, the overall effect was to not only put the S&L’s out of business, but it also readjusted the values of income producing properties, and not in a good way.

Over the course of the next few decades, there was what appeared to be a shift in sentiment from many individuals who wanted to be real estate investors to those who do not. While this shift was happening, this became another negative factor for income producing properties which also helped in their loss of value.
This leads us to today. Due to the switch away from multi-unit properties, in most markets locally in the Pittsburgh area, these income producing properties are now worth less than their single family counterparts. In fact, in many Pittsburgh area markets today, you find investors purchasing these larger homes that were turned into units due to their lower values, and turning them back into single family homes and selling them at an increased profit.

So what is the takeaway form all of this? In today’s market, many are surprised that their multi-family property is not worth what they may think, and in fact, worth less than single family homes in the same area. This is due to primarily multi-family properties now needing to make sense financially and can no longer lose money in most cases. The 1986 tax act single handedly crushed appreciation in this market and for the near future it will be status quo. As far as the long term outlook goes, only time will tell.

back to top