Condo Crazy in Pittsburgh

The Pittsburgh Post-Gazette is reporting developers have gone condo-crazy in Pittsburgh.

OK, is there anyone not already constructing or planning to build condominiums Downtown? I think we see hands of a few Candy-Rama employees and some squatters from beneath the Fort Pitt Bridge, but other than that, there's the PNC developers, the new arena developers, the Lazarus developers, the First Avenue developers, the Union National Bank developers, and probably lofts more -- whoops, lots more -- we're forgetting. They've all gone condo-crazy! All those people from the suburbs who for years viewed Downtown as a bleak, scary place they wanted to be nowhere near?

Developers are planning to build condos at a rate of about 2.3 units for every man, woman and child now living between Aleppo and Zelienople. People must really hate their longtime homes, which is kind of odd considering Pittsburghers are known to stay in the same dwelling longer than residents of any other metropolitan area.

The condo-mania sounds kind of surprising until you realize that, yes, this is just one more party to which Pittsburgh is late in arriving. Scan headlines around the country, and there are plenty of other cities large and small already on the developers' dance card.

From the Providence, R.I., newspaper on Oct. 21: "Condos, condos everywhere."

From Boulder, Colo., on Sept. 13: "Condo boom continues."

From Starkville, Miss., on Aug. 29: "Mississippi State alums, fans fueling condo boom."

Liz Pulliam Weston, a personal finance columnist for MSN Money, thinks the condo market is a bit out of control. She wrote of it being like "the tech-stock bubble," with too many speculators involved attempting to make quick profits. She's talking about "hot" markets like Las Vegas and Miami, rather than dowdy Downtown Pittsburgh, but notes that the rise in condo values nationally has begun slowing down after shooting past that of single-family homes in 2004. Yes, she agrees that some upscale baby boomers becoming empty nesters are willing to pay to avoid shoveling the sidewalk, to have a building fix-it man at their beck and call, and to be within walking distance of a city's cultural center. "But anyone who expects vast numbers of boomers to shift to condos is delusional," Ms. Weston wrote this fall. "Like their parents, 80 percent of whom age in place, most boomers will stay in the houses where they retire. Familiarity, and family ties, will, for most, trump Arizona golf courses and Florida early-bird specials."

Three Questions

1. Who in their right mind thinks Pittsburgh is going to be a hot spot mecca for retiring baby boomers?
2. If not boomers, just who is supposed to be buying these units?
3. What are the lenders backing these projects thinking anyway?

In the end, there will be towers of half-built condos standing in Pittsburgh, Miami, Las-Vegas, Chicago, Denver, Milwaukee, and dozens of other places, as a testament to just how ridiculous this all was.

Mike Shedlock / Mish
http://globaleconomicanalysis.blogspot.com/