If you haven’t heard of the Bubble Blog, it’s the antithesis of the Charlottesville Real Estate Media machine. The people who run it are anonymous from what I can tell. As fellow Villains, we were immediately attracted to their mission “for bemusement purposes only, it’s a small contribution to the zeitgeist.” We discovered many things which are well worth the read. Between real estate agent denial, BULLMONT, it NOT being a great time to buy for 99.9999% of the population, I am very excited to share this amazing interview with you.
We put on the masks and met in a secret lair. I cannot tell you details about the Bubble people behind the mask, but I can share with you the responses which may outsnark some of our very own Villains. The questions are below:
- When the Charlottesville housing bubble bursts, will we be wet, slimy or greasy?
- Why do realtors lie about housing in Charlottesville being HOT right now? In my neighborhood, prices have come down over 15%. How is that hot?
- When our homes fall into the giant hole in the economy, what are your survival tips? How many guns do you own?
- Are you smarter than Jim Duncan? Are you Jim Duncan’s Nemesis
- What’s the most ridiculously priced house and/or neighborhood in Charlottesville right now? What’s the best deal?
- Anything else you want to say to our readers?
Get ready for the responses, this one is a doozy.
1. When the Charlottesville housing bubble bursts, will we be wet, slimy or greasy?
We currently have a “Mid-Year Market Retort” up on our blog, which details some issues in the local housing market. The C’ville Bubble has burst. About a year ago. It’s just that the loudest voices in Real Estate, the Agents, not only didn’t realize it until this July (around the day that mortgage giants Fannie Mae and Freddie Mac were bailed out, the 14th) AND they had to be in denial about the existence of the Bubble and its Bust. Baseless optimism is part of their jobs.
But the Bubble’s over everywhere, prices are declining, there’s too much inventory on the market, it’s harder than ever to get a mortgage and when you do it’s expensive. And this whole mess is impacting people who don’t even own houses.
And it’s not just “subprime” mortgages that are the problem. In the Monday Aug 4 NYTimes, there’s an article about Alt-A (no documentation of income required) and Prime borrowers (great credit histories) starting to default—and how these mortgage holders will have a string of defaults over the next couple of years, just as the Sub-Prime defaulting is starting to stay at a steady level, instead of rising every month. C’ville/Albemarle is the kind of place that may have a significant # of Alt-A and Prime loans. Good luck to us.
And anybody who’s trying to sell a home knows the Bubble is over. Sales of existing homes in Albemarle over last year are down nearly 30%. With the bubble bursting, some people will be wet with salt water: tears and sweat. Some of the “flippers” out there will be greasy, along with their salty sweat and tears. And some of the mortgage brokers, who guided folks into crazy mortgages, will have the slime of shame on their face. And mortgage lenders or brokers who encouraged folks to use the “lowest monthly payment” option, meaning their principal just keeps piling on, are pretty slimy.
You can still find “Low” or “no downpayment” loan info on the websites of local banks: for instance, BBT’s says, “if you have limited employment history, you have limited or alternative credit history, you’re concerned about qualifying income or earn less than the median income—we can help you find a mortgage.” And by “alternative” credit history, they don’t mean one that’s covered with tattoos or piercings.
But that’s a quandary in this City, where the “haves” and the “have nots” are so far apart financially. And the “Haves” have been tromping into the neighborhoods of the “have nots” and making the “value” of the houses rise beyond the means of the long-term residents…in addition to disrupting a sense of community (we’re thinking of Fifeville, in particular, Belmont, plus the 10th & Page and old Rose Hill areas).
The median income in C’ville is 30K. In times past, the income to price ratio of a house, nationwide, was one to four. This means that someone who makes 30K a year could afford a house of about $120K. What’s available for $120K in C’ville Albemarle? NOTHING. Not even a crappy condo that just a couple years ago was an apartment; and not even an asbestos-shingled shack in Belmont.
We’re on a rant here. Lack of affordable housing in C’ville impacts not just “the working poor,” but also just-graduated students who stay, and musicians, artists, or anybody who’s not in a corporate job, and many people under the age of 35 w/out family $. It’s an issue of community and the future.
2. Why do realtors lie about housing in Charlottesville being HOT right now? In my neighborhood, prices have come down over 15%. How is that hot?
“HOT” is a ridiculous term—idiotic when Paris Hilton uses it, and completely inane when used in conjunction with any piece of real estate that isn’t actually on fire. And the line “It’s a Great Time to Buy” is beyond stupid. It’s a great time to buy for about three people. Or for John Grisham, if he suddenly wanted to snap up a bunch of mid-century ranchers, which for some reason are often priced at $350k.
Not all agents lie, though. Some actually believe it’s a great time to buy because they’re not educated about the US economy, or they’ve failed to surf the net or open a newspaper lately. Or they have low IQ’s. OR they think Charlottesville/Albemarle is a “protected market”—due to UVa and NGIC. It may have been once, but this is no longer true.
Unfortunately, UVa is suffering budget cuts, and the Commonwealth will continue to do so as well. And our local economy is affected by the National economy, which is in serious disarray. But after the events of this past July, with banks failing every Friday—meaning the FDIC (Federal Deposit Insurance Corporation) closed them because they’d lost assets—and mortgage guarantors Fannie Mae and Freddie Mac needing Billions of dollars in Bailouts, plus “write-downs” (admissions of losses) at giant Wall Street firms and banks, not to mention Wachovia Bank ceasing its mortgage lending through brokers—it’s indisputable that the Bubble has impacted our local market. And that the pain will be around here for several more years.
Have you ever noticed, though, that often we’re a little behind trends here in the Hook? Clothing, music, food—we’re our own planet. So our admission of the Bubble was a little late. But there’s no denying it now, after July (if readers want more info on the financial chaos of July, our posts last month detailed these daily, and there are lots of external links).
3. When our homes fall into the giant hole in the economy, what are your survival tips? How many guns do you own?
Great question. We actually ARE survivalists. We’re positively MORMON in our belief that everybody should be prepared for disaster. But then, the Federal Government, which we don’t trust for pretty much ANYTHING, believes this too. Here’s a Mormon link on how to gather food and provisions for a year, and here’s a Fed Gov link.
The thing about the Gov’t link is that they’re admitting that in the event of a crisis—Terrorism, Bioterrorism, Natural Disaster, Pandemic Flu Epidemic, etc.—they are not to be relied upon. It will be every man for himself. Reason #87 to grow your own food. Between us, we own five guns. Several . 410s, a .22, and a 9mm pistol.
Other tips for surviving a bad economy and/or a disaster? Lots of alcohol and cigarettes and condoms. For recreation AND for trading. AND a stash of cash. We’re compleeeeetly serious.
4. Are you smarter than Jim Duncan? Are you Jim Duncan’s Nemesis?
We are NOT smarter than Jim. And we don’t think we’re his nemesis. He’s a frequent contributor in the comments section of The Bubble Blog. We link to REALCentralVa fairly often. We admire his blog—as you must, since it’s linked on cVillain—and if we were going to buy a house, he’d be our agent.
Conversely, lots of the local RE blogs (we link to a number on our blog) have blather, or are misleading (“great time to buy!”) or are a collection of ads, or are written by agents who have their proverbial heads stuck in the sand (or a darker place), with a disconnect to the National Recession that is going on right now.
5. What’s your most favorite place to eat in town?
Lunch: Revolutionary Soup. Coffee: am Mudhouse , afternoon Java Java, Dinner: Bizou and Zocalo. But if we were feeling fancy or special or wanted to get plastered, we’d be Old School and go to the C&O.
6. What’s the most ridiculously priced house and/or neighborhood in Charlottesville right now? What’s the best deal?
BULLMONT—er, Belmont—is the most ridiculously overpriced area of the city. For instance, have you seen the collection of “cottages” for sale on the corner of Meridian/Bolling? Eight in all, with a “shared” yard…going for $190-220K EACH. Give us a break! That’s $250-$300 per sq ft, which is what a nice spread over in the Rugby area could reasonably command. These shacks were built post WWII to house poor laborers. We cover these in a post entitled “Fire Sale in Belmont!”
“Downtown” Hellmont—er, Belmont– is cute, sure. And the 700-800 block of Belmont Ave has some stunners. But most of Belmont is old houses that were made with construction material that 50-100 years ago was not top-of-the-line. It’s been waaaay overhyped with “young architects live there.” (And you know what? All those architects can blow us. If they were real architects they’d go off to a big city that has an actual need for new buildings and new designs—not one that just keeps recycling the ideas of Mr. Jefferson.) These people, and their yup counterparts from SNL have ruined Belmont for the modest-incomed folk who’ve lived there decades AND the artistic types who weren’t upsetting the status quo and needed the affordable housing.
Best value?
We’ve seen some good deals up 29 in the Carrsbrook subdivision. You know, across from Chick-Fil-A and Lowe’s? Not a “walking” neighborhood, certainly, and not “hip,” but if you and your family (or you and your band) need a nice sized house for about $260K, there are several available. But house prices everywhere will be declining. And for some time. We’re nowhere near the bottom.
7. Anything else you want to say to our readers?
Some tips about $ in general: It’s a baaaad economy. Try to use cash only—it helps keep track of what you spend, AND you don’t get interest charged on your purchase. Try to save 5% of your income if you’re under 30—more if you’re over. Work to have 3-6 months savings in the bank in case you get laid off work. We’re thoroughly serious about emergency preparedness.
RANDOM IMPROVE-YOUR-LIFE TIP: If you aren’t familiar with singer/songwriter Andrew Bird, start by listening to “The Mysterious Production of Eggs.” Learn to love the band Deerhoof. And read the stories of local literary legends John Casey (“Testimony and Demeanor”) and Ann Beattie (“Secrets and Surprises”).
And some tips for potential buyers: Asking prices on houses are just “suggestions.” And the tax assessment has nothing to do with what a house will sell for—it’s the amount that the city/county thinks the house is worth and the percentage of which they want from the owner. Similarly, the amount that the current owner paid for the house has nothing to do with its value. If they paid $347k a year ago, it may be “worth” 10-20% less now—even here in “Protected” Charlottesville.
The best deals will come from someone who has owned the house a long time, that is, has paid for it, but doesn’t have a 2nd mortgage or home equity line of credit to pay off….their selling profit will be larger this way, and they don’t face losing $. You can find out how long a house has been owned and what the owner paid for it by going here for the City, and here for the County.
We also have a lot of tools and tips on our blog for those interested in buying a house. We look forward to seeing any comments that are generated by this post, and love lurking on cVillain. Thanks for talking to us.
Now, visit the Bubble Blog. They love the input and send house tips or gossip to real.cville@gmail.com.
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Related posts:
- Charlottesville Real Estate Ready to Hurt?
- Real Estate Assessments Up. Charlottesville laughs and spits in your face and then throws you in the gutter
- Holy Shhhh… Bubble Blog Is Back
I like BULLMONT.
this is completely awesome. the end.
Just read the whole thing. Agree with most, except the whole gun stockpile thing. I think that’s a little extremist and discredits the rest of the interview. Too bad.
The only thing that wasn’t mentioned (and I brought this up on WNRN a few weeks ago when Duncan was on), is that there will be a HUGE fallout of Realtors that got into the business here in town because of the huge boom. Lots of folks quit their day jobs, got into real estate as an “easy” financial fix, and have been reaping the benefits since I moved here (summer of 2000). It couldn’t keep up, it got bad, and it’s bursting, but a lot of folks that changed careers are now focked. And of course, as the blog interview mentioned, also are the “flippers.”
I feel bad for them, but not too bad, as they knew the inherent risk involved and did it anyway. The fallout will be ugly indeed.
The fall out is very ugly for those who decided to rebuild old homes for resale to turn a quick profit. I know of several cases where houses have been in the market for over a year.
/Even with six month savings, you’re screwed in this situation.
Most useful cVillain post I have seen yet.
@5. I agree. It’s reinforced the idea of savings.
i’d like to know what geniuses in the building/construction industry think it’s a good idea to keep building (ahem, pantops condo developers) when there is a gigantic surplus of homes already up for sale?
ATTN: building company execs – you’re fucking homeowners and burning through your company’s equity to build stuff that will sit on the market for >6 months.
All new construction should have been seriously curbed last october, and all those resources should go toward refurbing existing homes for stuff like energy efficiency. not like i want construction people out of their jobs. upgrading old homes is much more sensible when there’s a surplus of supply. it’s the new market, bitches. [realizes i should go into business refurbing old houses for energy efficiency, like this]
@7, not sure when the Pantops development was begun, but usually with the big real estate projects the financing is secured early on in the project…so it could be they got in before the bubble when everyone was “Chilling out, maxing, relaxing all cool”.
I do agree with you though on new projects you see in this economy…it makes no sense. We are definitely not as bad off as other markets like Miami, FL. If you have some cash and always wanted a beach front condo, now is the time to pillage!
I don’t konw exactly what it is, but there’s supposed to be some sort of military/government branch opening in the area in the next year or so that’s expected to bring nearly 10,000 people with jobs here. If that’s true, they are all gonna need places to live.
Is there anyway to find out about recent housing transactions? Say I wanted to get an idea about how much a similar house to mine sold for recently. Where can I look?
i tend to believe that just as the market will predict a downturn, it also predicts a recovery. that’s why, in the midst of all this “sky is falling” nonsense that you hear squawking out of one ridiculous media outlet after another, i see the two major building construction projects in downtown charlottesville as soothing visual reminders that we’re on a pendulum. always.
First of all, great topic, great blog to be aware of. Thank you.
Just looked up Rancho Notso Grande (which is in Hellmont) on the link provided, which is pretty trippy. It lists none of the improvements I have made whilst living there (8 years). How do they keep up with that? Is an improvement only structural, or would a new heating system or new electrical system count?
that were made with construction material that 50-100 years ago was not top-of-the-line
This I can attest to (ahem, porch, ahem). The guy that built my joint apparently stole the materials bit by bit from his boss (as legend has it, that was 1920) so no two pieces of anything match. Every time something needs to be done, the quote I hear is “Now why would anyone build it this way?” Its insane the things I have discovered once walls are opened and whatnot.
Then again, the whole thing only cost $96k so I really cant complain. I haven’t looked into real estate in a good long while, some of the asking prices in the hood listed on the bubble blog are truly nuts. Shit has changed. Guess I have to stay put for a while.
/rambling
except the whole gun stockpile thing. I think that’s a little extremist and discredits the rest of the interview.
Yeah – a .410, .22 and a nine? That’s great, if what you want to survive are birds.
/9mm, .45ACP, .44 Magnum
They mean real guns oy. Video game guns don’t count.
oh man, bird survival. those were dark nights.
hell, you were there.
whoah, you’re usually nice to me on VeeOwnYay night – does this mean you’re not coming out?
/if you do, I’ll show you my REAL gun knowwhatImean,nudgenudge?
@11. The county, at least, tracks improvements that you need a permit for so they can come out, inspect the quality of the work, and reassess as “needed.” The previous owner of my shack down 5th Street put a full bathroom in the basement, but left the concrete subfloor. The inspection happened before I bought, but the assessor wanted to come by and look at the improvements to jack up my assessment.
/”Needed” means how much additional revenue the gub’mint thinks they “need” from you now that you can poop without having to go upstairs.
OMG it’s tuesday and y’all didn’t mention SS until 4:30? WOW
I brought it up twice mind you.
@ 16 Ahh.. that makes sense. Thanks.
And damn for a while those assessments were a killer. Is it possible for an appraisal to drop below an assessment? Perhaps I should head over to the bubble blog look around…
@18: Well have fun. I will be in my BUBBLE bath. Oh see how I took it back to topic? Kinda sorta?
Great information and questions!
I’ll be in a bubble bath of sorts as well. The bubbles in the beer will be bathing my taste buds. It’ll be an odd night, no Odie and no Tuesday.
@19
I’m no Jim Duncan, but yeah, it’s easy for appraisals to drop below assessments, especially in this market. Both are just people’s educated guesses as to what a house is “worth.” I think assessments trail appraisals both when the market is increasing and decreasing.
/Not a real estate professional, but play one on CVillain.com.
Wow, they really blew the roof off the vast realtor-wing conspiracy.
Silly.
Wow! Nice article. Congrats to Thor and the gun-toting bubblemen
The only thing missing is the definition of a “bubble.” That is the one thing I have yet to determine anywhere with any real certainty. On top of that, what constitutes a “burst?”
Agreed, total sales are down 37% YTD from last year in Albemarle, and 11% YTD in Charlottesville. Median price, however has actually gone up (4% YTD) in Albemarle, and is essentially flat in Charlottesville. Of course, those stats are strictly from the MLS, so they might not be comprehensive, and the numbers have issues (closing costs, seller credits, etc.).
I’ll also agree that the folks who bought in the last 12-36 months and are now selling are making little to nothing, or even losing money when they sell. In an area that has seen yearly appreciation rates in the double digits for much of recent memory, a flat market is going to feel like the end of the world. I just don’t know that you can put it on the same level with markets like Las Vegas, Detroit, and South Florida.
Where groups like the National Association of REALTORS have gotten their members in hot water is that they are forced to make big, blanket statements like, “now is a great time to buy.” That is truly absurd. It is simply impossible to put such labels on such a diverse market. Not to mention, it doesn’t take into account personal situations (not that it could). But, I could go on and on about NAR. . .
There are most certainly homes out there that are insanely priced. There were similar homes two years ago, too. The difference back then was that there were equally insane people willing to lend money on them and buy them. Now. . . not so much.
Perhaps the best piece of advice in the entire article are the buyer tips. That is good information, and any REALTOR worth his/her salt should be telling you the exact same thing.
Great interview, and thanks for the kind words. I admire what the bubble bloggers are doing and appreciate their candid analysis (even if I don’t agree with them all the time).
@ icenine – I’m going to address the fallout with an “agent update” in my market update early next week.
@ t(h)om – an awful lot of local builders have shifted to renovations, restoration, general fix-up in attempts to withstand the market.
@3stix – The NGIC move is going to bring about 1200 jobs to the area. If you want to find out about recent transactions, check out either the City’s or County’s respective pages. Or, you could ask a Realtor to check out the data in the MLS.
@bullmont yo – you don’t want the assessor to know what improvements you made; if they know about them you’ll pay more in taxes. Assessments are not an accurate measurement of market value. As far as I know, you don’t have to let the assessor in the door. Appraisals (done by the bank) are different from assessments, and both are different from a market analysis that attempts to determine the current market value.
PS – I have my own interview with them slated to run next week – different questions and answers and perspective.
Speaking of interviews, wasn’t there supposed to be an interview with Thor in the E-VILLE?
@9 – That would be the NGIC… it has been around a while. At the news they were expanding their facilities people immediately started raising prices around here… but no one seemed to note that the construction was set to go for the next several years (at the time) and is still years away from completion. Meaning: those 10,000 jobs are coming in a trickle over the next 3-6 years, not 2 years ago and all at once.
People are morons.
@9 – Oh, and not add 10k jobs, but support, meaning the current 3-4k jobs currently supplied by NGIC will be apart of that number. But that is also a government facility, so expect things to be delayed for years and changes in administration can move all that elsewhere.
There have been real estate bubbles in the past, and there are currently bubbles occurring elsewhere in the world. Here’s a good definition of a real estate bubble and how to tell when it has burst. The short article also has lots of great links.
http://en.wikipedia.org/wiki/Housing_bubble
In completely unrelated news, except visually, Mr. Bubble has gone bankrupt: http://tinyurl.com/5dp38g
Great interview!
Following up on one of the earlier comments, I think it’s tragic that ANY new construction is going on with commercial vacancy rates in C’ville and throughout Albemarle County well above 20% right now. And, as the economy worsens, the city and county will be desperate to ease the tax payer’s burden. Our officials succumb to business interests and developers by lessening and loosening zoning standards.
You can already see it, as often is the case, in outlying areas where they literally sell their town to the devil (Wal-mart, Lowe’s, McDonald’s, etc.) to reap tax dollars. They satisfy their immediate income needs at the expense of sustainability and good site development.
Look at Ruckersville in Greene County. This area on Rte 29 is disgusting. Generic buildings put up with little concern for aesthetics. Entire developments of construction grade boxes on sterile, arid, side-by-side lots. A blight of new traffic lights heralding the entrances to Wal-Mart, Lowe’s, and ugly strip malls. Large tracts of land cleared of every living thing in anticipation of more buildings.
And every where, more land for sale as the “Old” Virginians sell their holdings while the money’s here.
Master Plan? I’m sure they think they’ve got a great one. But the visual evidence is anything but positive.
They built a gorgeous 4 lane highway from Rte 29 to the Blue Ridge and patrol it with scores of police. What a great use of tax dollars! In fact, next time you travel thru Ruckersville or Rte 33 to the mountains, count the number of cop cars you see–you’ll be amazed and alarmed–is this a police state, or what? I guess part of the Greene County Master Plan is to augment incoming tax revenue with driver “donations”.
You’ve been warned! Stay away from Ruckersville! Their current “plan” will ultimately cause real estate values to drop further, their infrastructure to suffer, and the natural beauty of the area to degrade with more and more sloppy, second rate construction.
Towns can’t stop growth, they can only control it. But control is often parlayed in the interest of money–something that isn’t flowing as readily into the town coffers, these days.
Why does the City Assessor live in the *County*? Doesn’t the county have lower tax rates? Ahem.