Daily Progress: What Housing Bubble?

Brian McNeill over at the Charlottesville Daily Progress does a quick survey of the Charlottesville market, and all indicators seem to be pointing towards a slowdown, but not a bust:

Over the previous two years, the number of new residential homes in the region fell by a whopping 42 percent, as the number of permits fell from 3,452 in 2005 to 2,423 in 2007. Building permits are the last hurdle of the approval process before homebuilders can begin construction on a residential unit.

“There’s energy in the marketplace right now,” said Dave Phillips, chief executive officer of the Charlottesville Area Association of Realtors. “The market is oversupplied. We’re in a buyer’s market. We’d like to see some balance restored.”

For the time being, the housing oversupply is good news for homebuyers, particularly because mortgage interest rates are currently below 6 percent.

“There’s some incredibly good deals out there right now,” Willer said.

2,423 permits is nothing to sneeze at. In fact, that’s still pretty damned hot.

The good news for buyers is there’s a bit of a glut on the market. Whether the market has bottomed out is yet to be seen, but whether or not the deals will remain on the market forever is not.

In short, can anyone really argue that housing prices are going to dramatically fall? I doubt it seriously, as housing prices (1) seem to have remained quite stable, and (2) builders continue to build at a rather furious pace.

The only real “crisis” seems to be with the lending industry itself… at least amongst the more unscrupulous ones. Still, as banks have shored up their reserves and books come clean, I wonder what precisely has changed from the old formula that drove housing prices skyward in the early part of the decade?

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One Response to Daily Progress: What Housing Bubble?

  1. Anne says:

    That’s the nature of markets, they go up, they go down, they try to settle to equilibrium.

    Irrational consumer behavior helped to run the market up – including taking loans that looked too good to be true (because they were).

    Buyers’ markets become sellers’ markets and vice versa.

    I never liked the word “bubble” though. It’s dramatic, but not descriptive, in my own opinion. What we are seeing now, I really do believe, is a very necessary market correction. Clearly, it is going against sellers and developers in that some prices have slinked back down and we are seeing some condo projects converting to apartments and such. Buyers are regaining control and are able to be a little pushier now.

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