Here’s why: While house prices over the last decade have gone through the roof, the annual cost of owning a house has not.This is an excellent editorial that takes to time to explain some of the basic fundamentals of the “bubble.” I believe that there is certainly room for a decrease in the local market’s rapid rate of appreciation. From Rismedia – In a study covering 46 single-family housing markets from 1980 to 2004, Charles Himmelberg, Christopher Mayer (Columbia Business School), and Todd Sinai (Wharton School of the University of Pennsylvania) confront misperceptions about the underlying drivers behind the decade-old real estate boom. The researchers find that recent growth rates of house prices do not reflect a bubble — and, in fact, are largely explained by basic economic fundamentals such as low interest rates, strong income growth among high- income Americans, and unusually low housing prices in the mid-1990s.I think that the market’s future remains in the middle.
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Charlottesville area Market update/bubble?
Prevailing wisdom says that one of the major indicators of a bursting real estate bubble is an increase in the number of homes on the market. Using the local MLS, I pulled together the number of homes that were Active, Contingent or Pending in 2004 versus 2005. There are two snapshots – one for January through September and one for April through August…. In short, there were significantly more properties on the market in Albemarle, Charlottesville, Fluvanna and Greene in the “Spring Market” of 2005 versus 2004.
C’Ville’s bubble
My short answer is “maybe.”There has been an awful lot of discussion here and elsewhere about the possibility of a real estate bubble locally and nationwide…. What happens in California (they have 17 of the top 20 “extremely overvalued” markets) does not have a direct, nor a necessarily indirect effect on the Charlottesville/Central VA market. What their data can do is give us guidance of sorts.When California Association of Realtors starts issuing an Amendment titled “Market Conditions Advisory,” which states, “In light of the real estate market’s cyclical nature it is important that buyers understand the potential for little or no appreciation in value, or the actual loss in value, of the property they purchase.”… One would expect our market to be more valuable than many markets, especially in light of the recent news that we are the Number One Best Place to Live (again, ranked by USA Today).
Bubble prediction
is the nation’s largest mortgage lender, handling nearly one out of every six new mortgages in the country. So it’s worth taking note when the company’s in-house economist predicts a big change in home values. “The most likely secnario for housing prices over the next year or so is a significant slowdown in the overall rate of appreciation, down close to zero,” Jeffrey K…. Home prices have risen too far, too fast, exceeding income gains for the past five years.
What Housing Bubble?
Our strong housing market is a function of myriad factors with real economic underpinnings: low interest rates, local job growth, the emotional attachment one has for one’s home, one’s view of one’s future earning- power, and parental contributions, all have done their part to contribute to rising home prices. Over the past quarter-century, there has been an explosion of second-home purchases, a continued influx of immigrants, and a significant reduction in existing housing inventory through tear-downs…. Speculators are Driving Home Prices: The media today is chock-full of stories of day-trading dot-com refugees who have found their calling buying homes and condos “on spec,” with the hope of flipping the property for a higher price…. The Charlottesville/Central VA market has a lot of speculative buyers who are taking out second mortgages on their primary residences, home equity lines, etc. Should rates rise and they stop buying, our market very likely will see a decrease in the rapid appreciation in home values – not an altogether bad thing.
How did real estate prices get so high?
We all know that real estate prices are higher in urban than in rural areas, and highest of all in the affluent residential enclaves of our largest cities. But, how did these high prices get to where they are?
CNN/Money: Top housing markets
CNN/Money: Top housing markets:U.S. residential real estate markets lost no steam in the first quarter of 2005, according to statistics released Thursday by the National Association of Realtors (NAR)It is a bit refreshing that Charlottesville is not listed here. Not because we have not experienced appreciation similar to Richmond or the VA Beach region (16.2% and 22.2%, respectively) but because we aren’t big enough – yet.