The wonderful folks at the Cville Bubble Blog have returned to answer a few questions for us, and like Rosanne Barr singing the national anthem, a gaggle of sorority girls trying to hit the high note in “Living on a Prayer”, or Nickelback anywhere, things don’t sound very good.  You may remember the last interview cVillain did with them over a year ago.   A lot has happened in the real estate world since then, so I thought we could all stand for some updates.

Going through a roller coaster of answers, on topics such as BLOWmont, shrinkwrapping buildings, and getting out of town while you can, the Bubblers take us on a trip that doesn’t sound like too much fun.  Like a road trip to Minnesota with that flatulent uncle… a few high points, but generally unpleasant with no end in sight.  We asked:

1. Last time, you wrote, “The C’ville Bubble has burst.” Are we still bursting (in free fall) or are we anywhere close to being done (leveling off and stabilizing)?

2. Are realtors still saying that housing in Charlottesville is HOT right now? Have they awakened to reality?

3. Have any of the underlying Fannie/Freddie issues been solved/ignored/suppressed/shifted? Is the government taking any steps to help the situation?

4. What’s all this talk about a commercial real estate bubble? Your site recently linked to this piece in the Atlanta Journal Constitution. Sounds pretty scary. Any thoughts?

5. Any comments on The Landmark Hotel: The True-Life Story of a Boy With a Dream and a Blight on a Skyline, a Halsey Minor Joint?

6. Is BULLmont still the most ridiculously priced neighborhood/area in Charlottesville? Where are the best deals/values?

7. Anything else you want to say to our readers?

Take a deep breath (and maybe a shot), and read the answers below.

1.    Last time you wrote, “The C’ville Bubble has burst.”  Are we still bursting (in free fall) or are we anywhere close to being done (leveling off and stabilizing)?

The blog just did a long long post, “To Buy or Not to Buy, That Is The Question,” which includes local info about pricing, appreciation, wages, foreclosures, and sales, and lots of charts and graphs and numbers from folks far more knowledgeable than us.

Prices, according to the Virginia Housing Development Authority, are still high in comparison to earned wages.  Despite sales being at a 10 year low, prices have only adjusted 10-20%, depending upon area.  That is, prices for things that have sold.  There’s a lot of inventory sitting there, and prices are definitely coming down. 

But  the area is still out of whack in terms of affordability and earned wages.  If you look around at people you know, in their 20’s or 30’s, can they afford to buy a “decent” house here?  Without significant help from their parents or a trust fund?  And will it break them?  The Cville City’s median price for a single family home is still more than $100K above the national median of $177,900, and Albemarle County’s is nearly $200K more (using prices from 2009). 

So…still bursting in terms of prices coming down.  The VHDA thinks prices will continue falling through 2010.  We think it will be longer…because the run-up was so extreme (135% on average; in some neighborhoods, much more).

And foreclosures: who can say how many there will be?  For the first three quarters of this year, there were 676, according to RealtyTrac via the Virginia Assoc. of Realtors.  Total sales for the same time period: 1559.  So 43% of the properties sold will eventually be replaced by foreclosures going back on the market…at a lower price.  This doesn’t do much for the glut of inventory in this area, does it. 

And despite the fact that the word “recovery” has been tossed around a lot in the media, nationally, WTF does that mean?  There are 2.4 million houses expected to be foreclosed upon in 2010.  There’s an estimated 7 million houses already owned by banks that aren’t on the market—YET.  The “Making Home Affordable” program of the Obama administration was supposed to help 3-4 Million homeowners with mortgage modifications.  They’re not releasing hard numbers, but speculation is that only a few hundred thousand have been helped.  Nobody’s in housing recovery yet.  We’re still in the beginning stages of Armageddon, not recovery.

2.    Are Realtors still saying that housing in Charlottesville is HOT right now?  Have they awakened to reality? 

You still see ads and signs that say NOW IS THE TIME TO BUY or exhort folks to take advantage of the up-to $8k tax credit.  But there are a lot less Realtors than there used to be, so there’s a lot less noise.  The Daily Progress seems be a cheerleading section for the local Realtor’s Association.  But then again, who can blame them?  Both industries are suffering massive cuts and changes.  As for that up-to $8k tax cred (it’s $4k if you’re single), if the house is overpriced by $50k, who gives a s— about a few thou?  Also, in terms of “bargains”?  Condo prices have plummeted due to oversupply and foreclosures.

3.    Have any of the underlying Fannie/Freddie issues been solved/ignored/suppressed/shifted?  Is the Government taking any steps to help the situation?

FandF are worse.  Government is taking steps to throw $$$$$ at them.  Fannie and Freddie were put into “Conservatorship” in September 2008.  They own or back a huge number of  mortgages.  They are literally eating billions of dollars of taxpayer money as “owners” default on their mortgages and go into foreclosure.  There are links to articles explaining the problems, and the problems at the FHA (Federal Housing Administration) in the post we just did, link above.  This is an unconscionable drain on our children’s’ future… and our unborn children’s children’s future. 

4.    What’s all this talk about a commercial real estate bubble.  Your blog linked to this piece in the AJC.  Sounds pretty scary.  Any thoughts? 

Anybody who walks or bikes or drives around town or the County knows we have our own problem here.  Some of the vacant buildings and storefronts will have owners who rely upon tenants to make their mortgage payments.  Without the tenants, they’ll eventually go into foreclosure.  They’ll lose the building, the bank will lose money, and then the building will be resold for less…which will bring down the value of other buildings.  Commercial RE here, and everywhere else, had its own special bubble going…and is due for its own debacle.  Read this for more info.

And this: the blogger CalculatedRisk has some links on the coming wave of commercial RE issues, bad especially for local and regional banks.

5.    Any comments on The Landmark Hotel: The True-Life Story of a Boy With a Dream and a Blight on a Skyline, A Halsey Minor Joint?

Yeah, speaking of commercial real estate, right?  Great title.  Two comments.  First, the thing should be shrinkwrapped.  Seriously: to protect the structure in case it can be put to good use as the hotel or as…whatever.  There’s a company that actually does this: http://www.businessinsider.com/genius-company-will-shrinkwrap-vacant-condos-2009-7

Second, if there’s a grand opening fete that Halsey Minor throws for the Landmark, whether it is 2010, 2011, or 2015, we’re going to send him a bottle of Cristal Rose vintage 2000 

In addition, we’re going to make a donation equivalent to the price of the bubbly in his honor at the First Street Church Project.

6.    Is BULLmont still the most ridiculously priced neighborhood/area in Charlottesville? 

Actually, BLOWmont  :0)  has significantly slowed in sales and come down in pricing, comparatively speaking. While the “penthouse” at the Belmont Lofts sold this summer for $850K, it’s something of an outlier.  

 In fact, if you look at property sales  (realestate.charlottesville.org) the houses that are actually selling are doing so at 2002-3 prices.  This is the 3 bedroom “farmhouse” type, selling in the low-to-mid 300’s (even when the asking price is much higher).  The “charming Belmont cottage” at the $210K and under price point has done well.  But as far as we know, the last time a house sold for over $400K was in May 2008.  If something is listed at $400, $500, or even $600K, it either doesn’t sell, or goes for much less (of existing homes).

One of the cheapest listings in the City is 602 Hinton Avenue – $132K.  Needs work.  Foreclosure.  But hey, with the up-to $8k tax credit…. 

The most “bubbly” area of the City right now is North Downtown.  400 West High Street for $1.8 Million, price reduced from $2.2M.  With a view of the County Courthouse and one of the busiest intersections in the City.  Then there’s 615 Kelly Avenue, which looks like a Quonset hut painted in primary colors for  $1M.  512 N. 1st Street for $1.3M; when it sold just a few years ago for $700K, it wasn’t referred to as an “estate.” 517 2nd Street NE, a two bedroom “Modernist” house for $1M, has recently been delisted.  Can’t wait to see who the buyers are for these babies!

 7. Anything else to say to readers?

Yes, a  few moments of preaching, thanks for the op:

1.  How to save $: You can grow a lot of your own food on a tiny plot of lawn or, if you don’t have even a patch of dirt, in containers (google ‘container garden’).  Plus, if you use organic seeds, it’s better than anything you can get at WFM.

2.  It’s never too early to start saving for retirement.

3.  Audit then Abolish the Federal Reserve.  Write to Tom Perriello advocating for this.  The Fed is an entity that is for the profit of a handful of incredibly wealthy families; it does not have the interests of America, or its taxpayers, foremost on its proverbial mind.  Read about it here: http://www.petitiononline.com/fedres/petition.html

4.  If you feel like you don’t know much about how f’ed up the economy is right now and want to learn about it from a blog that has as much ‘tude as cVillain, read The Market Ticker.

Frightening and entertaining all rolled into one.

5.  Don’t stretch to buy the first (or any) house.  Read www.patrick.net for housing info.

6.  If you’re thinking of moving out of Charlottesville and don’t do it before you’re 30, there’s a good chance you might never do it.

7.  Great band: Kings of Leon. 

Thanks so much for talking to the bubble blog… and thanks so much to cVillain for coming back to life. C’ville needs you!

Aaaaand that’s how I feel after reading their responses.  In their own inimitable style, they lay out the cold, hard facts.  If their answers are too long for your liking, at least go read the post they’ve linked in the first question above. Here, I’ll link it down here too, so you don’t have to even scroll.  Stunning.

[Photo credits: Mike Licht; Paul Keleher]

Related posts:

1. Interview with the Villains of Charlottesville’s Real Estate Bubble Blog
2. Charlottesville Blogs You Gotta Read
3. Charlottesville Real Estate Ready to Hurt?

Tagged as: Belmont, bubble blog, Charlottesville, housing bubble, landmark hotel, shrinkwrap, teotwawki