In any market, it's important for both buyers and sellers to understand the market dynamics specific to his or her location. With declining sales, but better performance in the Valley than the state as a whole, there is a lot of information to consume. Here's where to start:

Sales Trends

Each month the Virginia Association of Realtors releases home sales data about each locality around the state of Virginia. The most recent release compares January through November of 2006 and 2007. This information is visually reflected in the graph to show the difference between the two years.



Despite a decrease in sales in all four counties – Rockingham, Augusta, Shenandoah, and Page – all of the counties except Augusta outperformed the state as a whole. Overall, Virginia showed a 14.64% decrease in sales during this same time frame.

Supply & Demand

In Harrisonburg and Rockingham County, the relationship between supply and demand differs significantly based on the price range. Generally, as the price goes up, the market is increasingly over-supplied.

Of homes priced under $200,000, there is a six month supply available. This is to say that in all of Harrisonburg and Rockingham County, approximately 46 residences are selling each month (10/07 = 51, 11/07 = 58, 12/07 = 30). Thus, with 282 homes currently for sale, there are 6 months (282 / 46) of supply available.

In the $350,000 and up price range, however, there are 18 months of homes available. In all of Harrisonburg and Rockingham County, approximately 10 residences are selling each month (10/07 = 11, 11/07 = 13, 12/07 = 6). Thus, with 171 homes currently for sale, there are 17 months (171 / 10) of supply available.

Six months of supply is considered by many to be an indicator of a healthy balance between buyers and sellers.

The Implications

As has always been the case, all real estate is local. Sales trends, supply and demand all affect every buyer and every seller – but these market factors are different in almost every situation, based on location, property type, price range, and much more.

As a seller, before pricing your home, take a careful look at similar recent sales. How long did it take for these homes to sell? Did they sell close to asking price, or did the sellers concede on purchase price? Were any additional buyer incentives offered, such as closing cost assistance? In addition to looking at recently sold comparable properties, sellers must examine their competition – similar properties in their neighborhood, or of a similar property type and price range. Today more than ever, having a firm grasp on your segment of the real estate market is essential for making wise real estate decisions as a seller.

Buyers are having a bit more fun than sellers these days. In almost all cases, they have lots of homes to choose from, in many price ranges they have the upper hand in negotiations, and they can finance their purchase with a historically low fixed interest rate. Yet despite all of these exciting factors for a buyer, it is still important to analyze the market in which a home is being purchased. Buyers should look at recently sold properties to better understand the value of the property being considered, as well as to understand the seller's context.

Looking Forward

As 2007 progressed, sales increased, and inventory levels decreased. In most price ranges, there is still somewhat of an oversupply of housing – but this will likely continue to correct itself in 2008. As we move through the first quarter of 2008, expect to see a continued gradual increase in the number of sales, and a continued gradual decrease in the inventory of available homes. The continuation of both of these trends will restore a healthy balance between buyers and sellers in our market.

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