Before you jump to conclusions about the “Bursting Real Estate Bubble,” check with your local real estate expert. As I’m out in the playing fields on a daily basis selling real estate, one major question continues to overwhelm me. It’s a consistent, “Alex, when is the bubble going to pop...these prices are too high!” To better educate the non-resident, here is some quick background information for the City of Virginia Beach, Virginia. Virginia Beach, the most populous city in Virginia, is located in the southeast part of the state on the Atlantic coastline. It is independent and is not part of any county. Tourism is a mainstay of the economy; more than 3 million people visit Virginia Beach each year. Virginia Beach's economy is also supported by four military bases and diverse industries, including agriculture, computer software, engineering, and technical services. In 2003, Virginia Beach ranked #1 for the safest city according to the total number of reported violent crimes and violent crimes per 100,000 citizens.
A real estate bubble or property bubble (or housing bubble for residential markets) is a type of economic bubble that occurs periodicly in local or global real estate markets. It is charactorized by a rapid speculative increase in the valuations (appriasals) or real property such as housing until they reach unsustainable levels relative to income and other economical elements.
Did the real estate bubble pop? Virginia Beach has been a major player in this “real estate bubble” spot light for some time now. We have recently seen a dramatic decrease in home buyers, as well as more homes for sale and a longer market time. We have gone from 10 buyers per property to 10 properties per buyer over the past 6 months. However, Historically the Virginia Beach area has never really seen a dramatic reduction in home value just a leveling of prices over time. This past real estate spike has been overwhelming though. From 2002 to present, home values have risen by more than double their previous value. As we near the beginning of the second quarter in 2006 and the rapidly approaching summer, a lot of analysts are predicting that the Virginia Beach market will gain another solid 20% in home appreciations (this is just a prediction based on the heavy military relocation, warmer weather, and tourism). US Federal Reserve Chairman Alan Greenspan said in mid-2005 that "at a minimum, there's a little 'froth' (in the US housing market) … it's hard not to see that there are a lot of local bubbles." Is Virginia Beach, Virginia a “local bubble?” Take a look at some of these rough statistics that I have been putting together latly:
