I received a call at the office two weeks ago that left me scratching my head.  The gentleman was calling to inquire about a property priced around $80,000 --- which was a manufactured home being sold without the lot --- thus the low, low price.  Since the land underneath the manufactured home was not to convey, the loans available for this product had very high interest rates, and loan terms that this gentleman wasn't too excited about.  I don't blame him!

He then asked about properties in Harrisonburg around $100,000.  I explained that there weren't any properties selling in that price range unless they were uninhabitable, which didn't seem to be a satisfactory answer for him.  He then said "just wait . . . you'll see . . ."  Puzzled, I asked him if he was trying to tell me that he thought a year from now that we would see properties in Harrisonburg selling for $100,000.  He assured me that he was positive that properties would be selling at or below $100,000 within 12 months.  I asked for his name and phone number, and explained that I would love to talk to him a year from now to see if he was correct.  He didn't care to share his contact information --- so we continued chatting and I told him that I would be shocked beyond belief if we saw properties selling at those prices a year from now.  Admittedly, over the past four years, starter townhomes have increased in price from $95,000 to $155,000 --- but to predict that in the next 12 months that these properties (for example) would plummet back down to $100,000 or even $120,000 --- that seems highly improbable.

As we concluded our conversation, I realized that since perception is reality --- this caller would likely not buy any real estate in the coming year.  Since he truly believes real estate values are going to fall that significantly, he would certainly not invest in any way.

My predictions for twelve months from now are a bit different --- I think we will see modest increases in real estate values in most price ranges, with some possible flat-line or decreases in the $350k+ price range.  I come to these conclusions (in part) by looking at how many months of supply exist in different price ranges.  With such an oversupplied $350k+ price range, it is possible (or quite likely?) that some such sellers will lower their asking prices to the point at which they become the best buy in the price range --- thus affecting average real estate values.

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Have any questions? Contact Scott Rogers at 540-578-0102 or scott@funkhousergroup.com