Reports Laura Rowley.
Charlottesville is #14 but Lynchburg is #1??!!
… according to Moody’s Economy.com.
The company determines an “equilibrium price†for the market based on its analysis of long-term supply and demand trends. The ranking “highly overpriced†indicates that the current market house price is more than two standard deviations above its historical relationship with the equilibrium price.
I tried to leave a comment asking what is considered “Charlottesville” – (the City or the MSA) – but had to login to the blog to do so. Sadly, the report looks to cost a couple hundred dollars.
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702 Belmont, asking $519K. Ghetto Garrett Square 1 block away, 1 house from Avon St. w/50+ cars pass per minute, lot the size of a postage stamp. Charlottesville overpriced?! LOL.
It’s overpriced everywhere as far as I can tell. Things are nuts at the moment.
When we moved to Charlottesville roughly 2-1/2 to 3 years ago we thought it was overpriced. As a result we ended up in Greene County. Now that we left the area we can’t sell our home in Greene to save lifes. Charlottesville may be overpriced, but, from a capital preservation perspective, it would have been a smarter buy.
Lynchburg has enjoyed a nice run in prices and the average and median prices have been heavily impacted by a large amount of new construction in the $400,000 and up price range. I subscribe to Economy.com and have read the latest Lynchburg analysis (3/08) which covers much more than just home prices. That report shows home prices continuing to increase in 2009 after a slight 2% drop in 2008. They are projecting nearly 15% growth in prices from 2008-2012 which is higher than many markets (they project C’ville to grow 10.5%).
Economy.com is good but far from perfect. I actually had to tell them that Liberty U is now one of the larger employers in the area! It went from unlistedto the #2 employer after I corrected them. Another thing that income ratio analysis fails to capture is the buying done by out of area retirees. Lynchburg is still cheap compared to about 90% of the decent towns in the US. The word is getting out and their own report notes that L is becoming a retirement heaven. That means people like me with cash buying the cheap homes for future retirement use while we continue to earn our big city incomes that are not counted in the L numbers.
C’ville’s prices = ridiculous for a variety of reasons, one of which is non-local $. This isn’t an issue in L’burg.
L’burg has some *very* nice houses for sale now, for under 200k. In C’ville at that price point you get a ‘condominium’ or a shack. In L’burg you get a solid 3-4 bdrm house in 24503 (the desirable zip) w/a lawn and/or mature landscaping, and good schools.
And if you’re interested in buying property to rent out? Plenty available, and the rents are such that you could more than cover your mortgage and even have a rental mgt co. take care of tenants.
I just don’t see how anyone can responsibly project that any market has bottomed out at this point. We have a perfect storm of record oil prices, record erosion in home equity and rising consumer defaults. And supply of homes on the market is still too high.
I think there will always be strong demand for well-built homes with big yards in quiet neighborhoods in the city. Belmont to me just looks like one of the last-to-burst remnants of the bubble.
Hi Short Seller
You are absolutely correct; no one knows if this market has bottomed. You will notice it is the people and pundits who can gain financially from a turn around in the market that are preaching we’re at a bottom.
I have heard numerous realtors in town advertising that there is no better time to buy in C-ville….it all depends on the situation.
We’re nowhere near bottom of mkt in C’ville: too many sellers still in denial about the elements Short Sale points out out. But C’ville *is* part of the US Economy, and eventually it all trickles down here to the Hook. And the NAR just disclosed it’s monthly numbers: sales down, again, 1%. C’ville hasn’t seen its share of ARMs and interest-only loans collapse yet–but it will. Jim had a post about this earlier–how many “creative” mortgages there are in this area….maybe he’ll re-link to the data?
Word on the street has it that there is a potential out-of-state buyer looking at homes up in Greene. Story has it he is making offers to sellers at up to $90K below their asking price.
If true, I’m wondering if bottom feeders like this individual are a good sign. My rationale is that their emergence beens pricing has fallen to a level that buying makes sense. Also, as their actions start to absorb the excess inventory of homes, they get the buy-sell cycle going again. Any thoughts?
Hello John (and Jim). Respecting your comment about the Greene County bottom feeder, there has been a flurry of articles in the press about this kind of thing (i.e., investors re-entering the market). A couple of notes: First, an outside investor bidding 90K below asking price for houses in Greene County doesn’t suggest that prices have fallen far enough — quite the opposite. It suggests that prices have to fall, but that the investor thinks that seller psychology is changing and now is the time to bludgeon sellers into finally admitting what the true market price of their property is. Second, to me this has the feel of a “dead cat bounce” — i.e., a false bottom. Given that the debt and foreclosure crisis hasn’t nearly run its course yet, given that inflation is perking up, given the price of fuel ($5 gal. soon?), given the persistence of job losses, given the ongoing shrinkage in personal income, given (especially) the still-out-of-whack ratio of housing prices to rents, I can’t see any positive case for housing price gains, or even stability. Once we get through this election, we’ll see. But I’m guessing we’ve got another 2-3 years to go before we get back to macro conditions conducive to even modestly rising real estate prices. Just one person’s opinion . . . AC
AC –
Makes sense. What’s interesting to me is the ripple effect. The most common comment we have heard from prospective buyers is that they would love to buy but they have to sell their home first. Here in Charlotte real estate activity is off by 40% or more depending on the county. In talking with builders they share the same observation that there are people who want to buy but can’t because they have a house to sell first. What’s really interesting is that it is getting tricker to find apartments in our area (particularly those in good school districts) because so many folks are having to wait it out.
What seems to make Charlottesville a tough nut is that there are so few employers in general, and few new employers in particular, that the normal churn of activity caused by people coming and going seems so low.
– John
Hi John. I think you’ve put your finger on an important effect of the current housing situation — the inability of people to sell their current house makes moving for a new job much trickier, and this in turn gums up our labor market and makes our already-struggling economy less efficient. I haven’t seen any work yet to estimate the size of this effect, but I think it’s got to be significant. One major advantage the U.S. has enjoyed historically on our economic rivals is the willingness of Americans to move house when they move jobs — this makes our labor market more fluid (people flow where the jobs are). Let’s see what happens but I’m waiting to see whether there are more serious regional employment problems magnified by the phenom of folks stuck in their current houses.
Finally, a word re: C’ville. You’re right — there are very few major employers in C’ville. The economy here is not diverse — we lean very heavily on UVA — which obviously presents a risk. If state tax receipts fall substantially and UVA has its state money cut, we could get a hiring freeze. That would not be pretty for us. So far, however, VA state tax revenues are holding up very well. I’m hoping that continues. AC