Track the tax

Don’t let higher transfer levy hurt housing market

As some real estate agents and city Controller Michael Lamb feared, a slip in Pittsburgh housing sales has followed implementation of a higher real estate transfer tax.

Opponents of the tax hike, such as Mr. Lamb, see cause and effect.as Mayor Bill Pe du to, do not.

It’s important that officials continue tracking the numbers so a pattern becomes clear. If the longer-term data point to an adverse impact on the housing market, Mr. Peduto and other supporters must be honest enough to admit they erred and take steps to reversethe slide.

When compared to the same period last year, housing sales were down 7.7 percent from Feb. 1 through July 16, according to data on listed properties gathered by the Realtors Association of Metropolitan Pittsburgh.The increase in the real estate transfer tax, to 4.5 percent from the previous 4 percent, took effect Feb. 1 for all sales of residential and commercial properties.

The city receives 2.5 percent of the tax, up from 2 percent before the increase took effect, while the Pittsburgh Public Schools and the state split the balance. The increase is intended to help fund affordable housing initiatives for people who might be forced out of the city, or denied the opportunity to live here, because the healthy economyis driving up property values.

But the danger is that the city’s tax rate will turn buyers off and cool the market. Families — especially the middle-class families needed to support the city’s ailing public schools — could just as easily buy in suburbs with much lower realty transfer taxes. There’s also the potential for the higher tax to alienate developers, who could build in the suburbs or take their projects to other cities.

Mayoralspokesman Tim McNulty said the numbers so far shouldn’t cause alarm. He cited strong demand for city houses, which are spending less time on the market, on average, than last year. Another reason for fewer sales, according to Mr. McNulty, is that fewer homes have been offered for sale this year.

Perhaps some owners are sitting on properties because of a potential bump in value from Amazon. If the online retailer chooses Pittsburghas the site of its second headquarters — it’s one of 20 cities in the running — values could surge in short order.

The housing sales numbers aren’t the first inkling that the higher real estate transfer tax was a bad idea.

Last month, Mr. Lamb said the city’s revenue from the transfer tax totaled about $9 million for the first half of the year, down from about $12 million during the same period last year. At the time, Mr. Peduto’s budget office said a lack of high-dollar real- estate deals explained the lower figure.

The dueling interpretations underscore the need to monitor the data for a longer period.

But there’s real reason to worry. While housing sales fell off here between Feb. 1 and July 16, they rose 2 percent overall countywide. A tax meant to provide affordable housing to some shouldn’t be allowed to make city properties unaffordable, or unattractive, to others.