This is not a Bubble Blog. Or is it?

September 1, 2006

The very first article in the Guide that mentioned the Bubble was on the second full day of our Blog experiment, March 26, 2005. Since then, the Bubble is mentioned no less than 37 times, about twice a month on average. My approach has always been to dig out data and present it in an objective way. I started commenting on the market downturn in Loudoun County a little over a year ago. I also commented that the attention the media gives the Bubble just might be a self fulling prophecy. I still do to some extent.

I am not an economist. Even those that are, cannot agree. Some say "normal adjustment," some say an inevitable "cooling from an overheated market" and "soft landing" is yet another phrase used. Others predict "crash, burst and significant decline."

What I do know is that demand has dwindled and we now are over supplied in Northern Virginia. New home builders are slowing production, offering huge incentives and abondoning building lots already approved. Buyers are like vultures waiting for sellers to capitulate. Lets look at Loudoun County for example: The average rate of homes being sold is about the level last seen in 2001. Average monthly home sales are off 33% from the 2005 average. Home prices are off at least 6% from last year. As I sit here and look at all my charts, I see significant breaking...not a crash. Even if prices roll back 20-25% we will still be at the same level as early 2005. Still not a crash in my mind. And, unsold inventory is now slowly declining. That's good.

There are many factors that influence the market, emotion has to rank very high. Even though housing is considered somewhat of a commodity, it is still an emotional purchase (and sell for that matter). What value do we place on lifestyle, security, personal space, privacy, community and similar intangibles?

If economists can't agree (those that don't have some interest in the industry) then I am at a loss as to what this practioner can tell my clients. We just do the best we can helping them meet their objectives.

So. Is it a Bubble Blog? It is if you want it to be.

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