CHARLOTTESVILLE, VA (CVILLE RIGHT NOW) – While Charlottesville is enthralled in an ongoing lawsuit over their new zoning ordinance, which is their effort to implement policies to make housing more affordable; equally Albemarle County has similar challenges of rising assessments and housing prices.  In some data metrics, Charlottesville-Albemarle is ranked as either the fourth or second most expensive real estate market in the state.  In addition, the recently released Charlottesville Area Association of Realtors ( CAAR) second quarter report indicated that median home prices had risen once again, despite a marginal increase in inventory, which usually should help to keep housing prices steady.  However, the demand for affordable housing far outpaces the supply in both municipalities, and the national interests rates simply exacerbate the problem.  While many, including the President believe that the Federal Reserve reducing interest rates could ultimately bring mortgage rates down, (which currently are around 6.7% for a 30 year fixed rate mortgage).  However, UVA Economist Dr. Edwin T. Burton says there is one reason, and one reason only that consumers in Albemarle and Charlottesville are experiencing high interest rates in an extremely expensive and competitive real estate market, the debt and the spending of the federal government.  “The bad news on the deficit side is that the deficit was expected to be $180 Billion, for the month of July, the number actually came in at $180 Billion, which is the estimate, and that’s an estimate provided by the U.S. government” Burton told WINA Morning News.  ” The government was looking for $180 Billion for the deficit, it’s 295, $295 Billion, in other words it was $115 Billion higher and that’s a sign of things to come.  The debt is exploding and that could be a big problem.”

Burton says the lack of awareness of the impacts on reckless spending by both parties is causing the challenges Americans are feeling in the real estate market as well as other areas.  He contends that the overnight lending rate, which the central bank examines during their meetings can effectively be reduced by reducing federal spending.  ” There’s no politician that I’m aware of that even talks about the national debt anymore, the President doesn’t, none of the congressional leaders do.  Nobody running for office talks about it, if you follow any of the congressional campaigns in Virginia, no one discusses the debt or worries about it there off on other things.  So the debt is the single biggest issue that the economy faces and that’s what’s driving [mortgage] interest rates, not the Central Bank [Federal Reserve]. ”  Burton went on to describe that in order for the overnight lending rate to come down, without a reduction in spending, the government would have to increase the national money supply, basically printing money which would drive inflation for the average consumer.  Burton appeared on the WINA Morning News and the interview can be heard below: