Friday, August 1, 2008

Real C'ville - The Bubble Blog

New Here? This post is about Real C'ville - The Bubble Blog.

It will be periodically updated to reflect new information, the changing economy, and the addition of links others might find interesting and/or useful. A link to this post will remain in our sidebar.

What Is This Blog?

We say what a lot of people are thinking: "You want what for that?"

We are the local aggregator of C'ville/Albemarle and national housing and economy issues and financial woes, and keep things in perspective relative to this. We offer links to local and national news and interpretive sites and professionals.

This blog began in May 2008, which was a couple years late to come into existence in the grand scheme of Bubble Blogs. But in looking around at what was for sale, we realized that while a national credit crisis was going on, and prices almost everywhere were declining, many houses coming on the market here had asking prices that were higher than the equivalent from last year. And this, despite the fact that there was a huge supply of houses for sale—and that sales were significantly down from last year (by July, 2008, they were down about 36% in the County, about 12% in the City).

We're in the midst of the bursting of a national bubble, and prices are declining everywhere. There was a persistent idea that Charlottesville was a “protected market.” This means that due to the presence of UVa and, to a lesser degree, NGIC, house values would continue to increase into the future.

Is this true? Is Charlottesville a protected market? Many of the loudest voices in local real estate—agents, bankers, brokers, etc.,--with advertisements in print and on the internet, web sites, and so forth—even in feature articles in The Daily Progress (Sunday, June 22, 2008)—still have recently said “It’s a Great Time to Buy.”

How much is the Charlottesville/Albemarle Market overvalued? How much have home prices appreciated, on average, over the past five years? These are two different questions. But we have the answer to the second: According to the Office of Federal Housing Enterprise Oversight, (OFHEO), the average increase in prices over the past five years, as of Q1 2008, was 64+%. With some houses, it has been much more.

There's confusion in this market on how to price houses. See this example, 708 Park Street, whose original Asking was $852,000.00, and which sold in May, 2008 for $470,000.00.

You can also look at these graphs, where Charlottesville values increase over 70% over a five-year period.

This type of increase in "value," whether in C'ville/Albemarle or anywhere else in the United States, is unheard of except in a bubble. Owners used to be grateful when there houses appreciated the expected 3% per year. Then again, the model for what a house "should" cost and what an individual could afford used to be the income-to-price ratio of one to four. So for Charlottesville, where the median income is $30K, the median price of a house "should" be $120K. Unheard of here, for years. There are many fine people who work extremely hard here, but owning a house is out of reach.

On this blog, we look at houses and neighborhoods. We point out the fact that all properties are not equivalent and the greatest thing ever built, just because they happen to be in C’ville/Albemarle. It’s a lovely place to live, sure, but some houses and neighborhoods are nicer than others. It makes no sense that an old place needing lots of work in Fifeville can have an asking prices higher than a nice Cape in the Rugby Road area, except that some seller (often just an investor, not a resident) heard that Fifeville was the new Belmont, and slapped on a price to reflect this.

The most recent Market Report, with numbers of sales/median prices available through August 1, 2008, is available here, courtesy of the blog REALCentralVA.

For more information, look at these sources:

Watch a NYTimes narrated slide show about the national credit crisis.

Read this NYTimes article about global economist Nouriel Roubini, who has been accurate in his predictions since 2006: "Dr. Doom."

Visit Real Estate VooDoo News for a compendium of stories, daily.

What Can This Blog "Do" For You?

This Blog can give information about the local real estate market, local financial issues impacting the City and County, and news about the national housing bubble, economy, foreclosures, and recession.

On our sidebar we have a number of links and tools. These include:

"Featured Stories or Posts" - these are typically clickable links under an image.

"In the News" - national news stories we find compelling.

"Live Blog Updates" - from national finance and economics blogs, including CalculatedRISK, the NYTimes Freakonomics, WSJ Marketbeat, and the Mortgage-Lender-Implode-O-Meter.

"Accidental Landlords" - A series about unsold houses that are now available for rent.

"Recent Posts That Generated Talk" - Some, but not all, recent posts. All posts are available under "Blog Archive."

"Finance Calculators" - "Is it better to buy or rent" calculator, mortgage calculators, personal income calculators, family expenses, debt to income ratio, and so forth.

"Bubble Blogs" - national and local blogs about the housing bubble. Not to be missed: HousingPANIC, the "#1 national bubble blog," which is leaving the blogosphere the day after the election, Nov. 5.

"Local Blogs, Sites, and Resources" - everything from local news sources to personal blogs to City and County sites and resources, including City and County Tax Assesors.

"Local Real Estate Blogs" - sites run by agents.

"Vital Reading" - includes national finance, economics, and real estate sites.

Is Now A Good Time To Buy Or Sell A House?

Only you can answer that for yourself.

One blog that will tell you not to buy is Housing Crash. Be sure to read carefully. A recent article in US News and World Report tells you that there are 5 Considerations Before You Buy a House, and not to buy a house if you don't meet these particular criteria.

People have other reasons besides money/profit to buy houses, and we respect this.

If you are going to buy a house, be sure use the City and County Tax assessors, which are links are on our sidebar, to see what previous owners have paid for particular properties. And buyers/sellers can look up comparable properties as well, or neighboring properties, to get an idea. This is a starting point. The tax assessment info is less important than the selling price; the tax info is what the gov’t wants to make, not what the house is actually “worth.”

Be sure to read Charlottesville Tomorrow for development news.

And IOHO, REALCentralVA has the best professional real estate info in the region.

Who Are We?

We're essentially nobody--just a collection of opinions, posts, information, facts, and links.

We are owners and renters interested in what the housing collapse has done to the national, regional, and local economy. We're also interested in those seeking the American Dream of owning a home here in Charlottesville/Albemarle.

You can read more about us in an interview with cVillain here or here at REALCentralVA. For more on who we are, please see an earlier post.

We're anonymous, but we have strong opinions, in addition to offering “tools” and “facts.” But what we do for a living, how much money we have, how much property we own, where we live, etc., would make a difference to some readers. Instead, they have to try to evaluate the words and information in a context that’s more pertinent to their view of the real estate market, economy, and what’s important to them.

Instead of just believing what we have to say, readers can click over to the links we provide, or start doing the math, or even (we hope) becoming more activist in the community or blogosphere about things that are important to them.

We're essentially nobody--just a collection of opinions, posts, information, facts, and links.

Post Updated Aug. 5, 18, 31.

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