The Charlottesville Area housing market is having a bounce on the way to a boom. This, the final data post of C'ville Bubble, explains how the boom will persist--but likely won't turn into a bubble.
The Charlottesville Area housing market, like many others across the nation, has, through a combination of circumstances chronicled in this post, pulled out of its slump. Sure, there are still some wobbles and worries...but most of the news is good.
After years of declining sales, 2012 showed the largest increase in nearly a decade (see the Wahoo-colored chart, above). As the 2013 Spring selling season kicks off, optimism runs high that the market will equal then exceed 2012's sales.
2013 could easily see Charlottesville return to the status of Protected Market -- one that is "different, insulated, and steady." As the intellectual and cultural center of Virginia and home to several large employers -- UVA, the UVA Health System, State Farm, Centra, NGIC/DIA -- this area is a highly desirable place to live.
Will the Protected Market persist into the future? Of course, that's the multi-million dollar question. Chances are likely that it will last at least a few years...and 2012's bounce will lead to a boom.
But why a boom instead of a bubble? Why will this time be different?
1. There are current and former homeowners who cannot participate in the market.
2. Lending standards are tight.
3. Millenials have different ideas about home owning than previous generations.
4. The college debt bubble will impact all housing markets going forward.
5. The lessons of the Great Recession have been internalized. We all hope.
Specifically, a buying boom will persist in the Charlottesville / Albemarle area for these important reasons:
1. This is a highly transient population area, due to UVA and in part to the other large employers that fuel the economy.
2. Therefore, folks who want control over their environment--folks who want to know their neighbors for years (whether in a condo, townhouse, etc) or have a single-family home with a yard for the kids--have few options except to buy. (Sure, there are long-term renters. But.)
3. The newer the neighborhood--and newer means more walkable, better energy efficiency, and often better pricing--the fewer the rentals (subdivisions such as Belvedere and Old Trail are exceptions, since their master plans eventually included apartments).
4. The higher the price point of the neighborhood, and the more established a neighborhood is, the fewer rentals there are.
5. Jobs - No place other than CharlAlbemarle has the well paying jobs in Central Va.
The Capstone Post
And so it is that after chronicling the local and national housing downturns for years, this last data post caps the blog with optimism for the housing market, the local economy, and everything creative, entrepreneurial, and forward-thinking that is Charlottesville.
Through the years the C'ville Bubble bloggers have had lively conversations with many buyers, sellers, agents, media reps, and Twitter friends, in the blog's comments section, via emails, and on Twitter. And to all those folks, and to all the readers, huge gratitude and Thank-Yous. A blog is nothing without its relationships.
Speaking of: an ongoing interaction came about between C'ville Bubble and Realtor Jim Duncan and his blog. RealCentralVA offers not only the most comprehensive RE data for the area, but is also a cultural touchstone. Jim read C'ville Bubble and told his many readers and eventually Twitter followers to read it, and then participated in a series of posts and interviews.
And so it seems logical, and an honor, that simultaneous with this last post, we answered a series of questions that Jim is putting up today. RealCentralVA's post has the back-story and the meta-data for C'ville Bubble's final post.
More Local Data
Vis-a-Vis the chart at the top of this post, 2010's sales were fueled by the Homebuyer Tax Credit, while 2011's were fueled by low prices, short sales, and foreclosure deals. 2012 saw stunning low mortgage rates--under 4% for 18 months as of this post--an influx of buyers who had waited out the market for years, and a return to optimism and a feeling of prosperity as the Great Recession faded further into the past.
Prices are rising:
Low inventory is helping to drive prices up. It's a national issue. There are several negative reasons that inventory is low, including underwater sellers who can't get what they paid by selling, and those who can't "move up" or "downsize" because their stock or retirement savings took such a hit during the Great Recession. But the rise in prices is seen as a positive for private sellers as well builders.
Foreclosures and Short Sales
These are now are a smaller part of the market. Banks are more willing to modify mortgages, cut principal, forgive second liens--but they're also likely to hold foreclosed properties off the market. The upshot is that bargains may be gone--except for investors buying in bulk. The following pies are for the Charlottesville market:
Images are copyright the CAAR. Here's the PDF: The CAAR 2012 Year-End Market Report.
Caveat Emptor with Carpe Diem.
A Reading List, with Positives and Headwinds
Yes, We're Confident, But Who Knows Why? (Robert Shiller)
"We're in Housing 'Nirvana'" (CNBC)
Monthly Market Activity: Listings, Solds, Prices (via Roy Wheeler Realty)
Charlottesville / Albemarle Population Will Continue to Grow (NBC29)
Actually, Some Lenders Are Easing Their Rules (CNBC)
Pending Home Sales Soar (CNBC)
The #Bubblecovery (TheBubbleBubble)
Why Sequestration Will Hit Housing on Several Fronts (CNBC)
Virginia, and the Charlottesville area, Feast on Federal Funds (NYTimes)
Other Housing Bubbles (OfTwoMinds)
Americans, $$$, and the Future (ZeroHedge)