Monday, April 25, 2011

The Unemployment Chart That Helps Explain Why Charlottesville Area Home Sales Are Slow and Prices Keep Falling

In February 2008, regional unemployment was at 2.5%.  Sunday's Daily Progress has an article on the long, slow, painful employment "recovery" in this area. 

The chart below, from the researchers at the St. Louis Federal Reserve, tells the unemployment story. 

Click for larger image in new window.  Gray areas are Recessions.

In the housing market, it has technically been a "buyer's market" (high inventory) in this area since 2007, but there have been slower sales and accelerating price declines  since the expiration of the Federal Homebuyer Tax Credit April 30, 2010.  

Of course, other elements besides unemployment contributed to this area's housing bubble bust: the rapid and unsustainable rise in prices, the debunked myth of the "protected market" (the idea there would always be buyers with UVA, defense, and medical as steady employers), no more easy credit, the exploded national belief that 'housing always goes up,' and this area's large and rapid rise in foreclosures at all price points.

Unemployment by City/County: 

Image copyright The Daily Progress.

Past coverage of area unemployment:
September 2010: Local Jobs Vanish
Map of Layoffs in VA
Sept. 2009 Recession Unemployment

3 comments:

craigger said...

Bubbles,

You guys are crazy. If having almost half the unemployment rate of the national number isn't a sign of a somewhat "protected market" what is? I would also wager that most of the Cville unemployment is from those that were not home-buyers to begin with, which is why foreclosures are so low relative to almost anywhere else in the country.

Just trying to keep the data flow unbiased.

C'ville Bubble Blog said...

Craigger, in our little ole crazy world, "Protected Market" refers to the housing market, *not* to unemployment.

This post and chart *isn't* comparing the area to national unemployment numbers: it's comparing the present to the past, as per the DP article.

There are plenty of people in Cville, and who *move to* Cville w/money...but clearly, this area is also suffering:

http://realcville.blogspot.com/2011/02/uva-study-14-of-virginia-residents-on.html

The myth of the housing market as "protected" has, as we said, been debunked. Even the CAAR said in its most recent report that this market is now in line w/the national market. Down.

And...how's your house hunt? For those who don't know, Craigger is looking in the $800k range and has been taking his time; he also expects prices to further decline 10-15%.

craigger said...

I will gladly buy you a beer or three if nominal median home prices decline in Albemarle by 30% here from the peak (30% would about match the national decline. Consider it a bet, if median prices go from 259k at the top to 181k, I will buy the Bubblers the 6 pack of their choice. I just don't see how its going to happen given the inflation that's been building for three years and the relatively benign economic environment of Charlottesville relative to the nation.

I am still happily renting, although I would have been happier if I kept my down payment in GLD instead of CD's during the fed's money printing this whole time.

There is some very good value in this market below 500k, but the more expensive stuff is just sitting with ridiculous asks. We'll probably start bidding for some things at the end of May.