It can be terrifying to watch the business news these days…

• Bear Stearns hedge fund collapses.  
• Countrywide is acquired by Bank of America just prior to collapse.
• The U.S. Treasury takes over Fannie Mae and Freddie Mac.  
• Lehman Brothers, a large U.S. investment bank files for bankruptcy.
• Merrill Lynch is acquired by Bank of America just prior to collapse.
• Washington Mutual bank is on the brink of collapse.  
• The Federal Reserve agrees to an $85 billion bailout of AIG.
• $700 billion mortgage security bailout.
• $250 billion bank bailout.

The unstable economic conditions we continue to hear about on the national level can cause one to question a local real estate purchase.  Here are a few things to keep in mind as you consider a home purchase:

Low interest rates are now lower
In large part because of the government takeover of Fannie Mae and Freddie Mac, mortgage interest rates have dropped considerably.  Recent rates from local lenders are as low as 6.0% for a 30-year fixed rate mortgage, which is a great opportunity for buyers.

Don't forget the first-time home buyer credit
If you haven't owned a home in the last three years, you are likely eligible for up to a $7,500 tax credit if you buy a home before July 1, 2009.  This is a great opportunity to get a boost up in the first year of homeownership by helping offset closing costs or moving expenses.

High inventory empowers buyers
As a result of the basic rules of supply and demand, the current elevated levels of inventory (in almost all price ranges) provide buyers with a great opportunity to buy a home at a competitive price.  That isn't to say that home sellers are universally negotiating large chunks off of their asking prices, but simply that buyers often have the upper hand in negotiations.

A strong and growing local economy
While local economic conditions vary to some degree in different parts of the Shenandoah Valley, the economic climate in Harrisonburg and Rockingham County continues to be very favorable.  Unemployment is still very low, and many companies are expanding or opening their businesses in this market.  

Buy smart
As you consider, with excitement, a home purchase – remember that buying a home should be viewed as a long-term investment.  Run the numbers with your Realtor or lender to understand your financial position 3 years, 5 years and 7 years after purchasing a home.  Have reasonable expectations about how long you will stay in a home, and how that will affect the financial perspective of a home purchase.

Despite the economic storm we are in the midst of nationally, it can still make good sense to buy a home in the Shenandoah Valley.  Get to know your segment of the real estate market so that you are comfortable with the price you are paying, and the value of the home you are purchasing.

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In the last three months, 250 properties have sold in Harrisonburg and Rockingham County.  On average, it took 177 days from the time they hit the market to the time they closed.

There have, however, been some record-breakers....

• The five homes that sold most quickly sold in 18, 19, 25, 28, and 28 days.
• The five homes that sold most slowly sold in 539, 541, 558, 704, and 752 days.  (That's a range of 1.5-2 years.)

As you can see, there is an enormous variation in the time that it takes for a property to sell.  It is interesting, in contrast, to look at the "days on market" for active listings.  This group of 886 properties has an average current days on market of 194 days, with the low being 3 days, and the high being 1,151 days (3.15 years!).

What does this mean for you?

1. We should analyze average days on market for your neighborhood or part of the city/county before putting your house on the market, and while it is on the market.
2. Even with the analysis referenced, we must bear in mind that it is hard (in our current market) to predict how long any given property may take to sell.
   

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Experience life in downtown Harrisonburg --- 194 condos on four floors in two towers. 
Update --- the first floor of the East Tower is almost completely framed! 
Click here for more construction photos.

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That's not to imply that any settlement agents in Harrisonburg have wood-destroying insects in their conference rooms, but rather...

The standard Virginia purchase contract places some minimum termite treatment and repair requirements on the Seller, but does not mandate disclosing the infestation or damage at the time of discovery.

Here's what you need to know:

1. Sellers are required by state law to perform a termite inspection (at their expense) within 30 days of the settlement on the sale of their house.
2. If the inspection reveals the presence of or damage from termites or other wood-destroying insects or organisms, the seller is required to treat the infestation or repair the damages up to a cost of $1,000.
3. If the cost is greater than $1,000, and if the buyer and seller cannot agree as to how the excess will be paid, the buyer may select to accept the $1,000 of seller-paid treatment/repairs, receive a $1,000 seller-credit at closing, or terminate the contract and receive a refund of their deposit.
4. But......if the treatment or repairs cost less than $1,000 --- the seller may very well treat/repair the home and the buyer wouldn't know until closing when they saw the inspection report indicating infestation/damage and invoices showing the treatment/repair.

So...as a buyer, be aware that there is a (slight) chance that you could get to closing and find out that there were termites, or was damage in the home.  It can be disconcerting (termites in our new home!?!?!?) but rest assured that the treatment or repairs have already been taken care of by the seller.

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Two exciting milestones this week...

1. I turned 30 yesterday.
2. After 294 posts, and 292 comments, on Saturday, this blog will be a year old. 

Thanks to all who read, provide feedback and ask questions!

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While houses are certainly selling, and some are selling quickly, there are many homes that are languishing on the market because of a collective increase in hopeful sellers, and decrease in able buyers over the past two years.



For the owners of those homes, the selling process can be an emotional roller coaster of an experience.  I have witnessed that first hand several times lately in conversations with some of my seller clients, and in watching the Facebook status of some of my Facebook friends who are selling their homes right now.

What a high when someone actually wants to come see your house --- what an anxious feeling when you're waiting to hear how they liked your home --- and what a low when you discover they may not be making an offer on your home.

My advice for sellers in today's market:

1. Familiarize yourself with market conditions and price/market your home accordingly.
2. Seek to understand how supply/demand in your price range may affect the timing of your sale.
3. Be reasonably optimistic as you see buyer activity --- do everything possible to make a sale possible, but don't expect that every buyer that sees your home will want to buy it.

Does anyone else have advice based on their current experience selling their home?

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If you're buying a home as well as selling a home, many people select the Realtor that they will work with based on how each Realtor will market their home for sale.

If you're a first-time buyer, and you don't already have a relationship with a Realtor, this leaves you with the following main options:

1. Visit open houses, call the listing agent on houses you wish to view, and eventually work with the listing agent on the house you purchase.  This is not a great idea, but I'll touch on that in another post.
2. Select a Realtor based on the recommendations of friends, colleagues or family members.
3. Meet with several Realtors (who may or may not have been recommended to you) to determine the Realtor you are most comfortable with and confident in.

My suggestion?  Option Three!

Set up a brief meeting with a few Realtors and talk to them generally about what is important to you in a house, and in a Realtor.  Select the Realtor you will work with through the buying process based on having had real, in-person conversations with several Realtors so that you understand the service that they will provide to you, and so that you can sense whether your personality and communication styles will work well together.

I would certainly love to be one of those Realtors you talk to as you decide who to work with through the buying process.  Call (540-578-0102) or e-mail (scott@cbfunkhouser.com) if you'd like to set up a time to get together, perhaps for some coffee.

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Comparing 3rd Quarter 2008 sales stats with 3rd Quarter 2007 sales stats results in some interesting market variations across Virginia...

Number of Home Sales

• Harrisonburg / Rockingham Coujnty = 21% decrease
• Prince William County = 145% increase
• Dan River Region = 81% decrease
• Entire state of Virginia = 4% decrease

Median Sales Price

• Harrisonburg / Rockingham County = no change (0.3% increase)
• Chesapeake Bay area = 19% increase
• Prince William County = 42% decrease
• Entire state of Virginia = 1% increase

Source: Virginia Association of Realtors

What becomes interesting is when a buyer from a different part of the state is contemplating buying in Harrisonburg or Rockingham County.  As you can imagine, some such buyers bring along assumptions about our market based on the current state of the market where they currently live.

Real estate is indeed local, and even within Harrisonburg and Rockingham County market conditions vary by area and price range.  As a buyer, or as a seller, take the time to understand the market conditions that affect your purchase or sale!

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OK --- so the typical smoke alarm isn't all that visually obtrusive --- but it is when compared to Kidde's Silhouette smoke alarm! 

This low-profile smoke alarm protrudes less than half an inch from the ceiling, blending in much more nicely than a traditionally shaped smoke alarm.  Furthermore, it uses a rechargeable battery that will last the life of the alarm!  No more changing the batteries when the alarm starts beeping!

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Yes --- sometimes we are still seeing multiple offers!

A house that shows well, is priced well, and is marketed well can still generate strong buyer interest --- even in a market where we are seeing 22% fewer sales than last year.

We received three offers in the first week on this delightful home on the northern end of Harrisonburg.


1143 Waterman Drive, Harrisonburg, VA

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Are you considering buying at Preston Lake?  Some of my clients are exploring the possibility of building a single family home at Preston Lake, and it's been an interesting process . . .



Access to the developer
We have been pleasantly surprised to have the opportunity to work directly with the developer, Richard Hine.  Rich is very invested in the Preston Lake project, is very knowledgeable about the building process, and has been immensely helpful as my clients have explored the possibility of building at Preston Lake.

A flexible design process
While Preston Lake offers a variety of standard floor plans (for rowhouses and single family homes), they are also willing to make almost any modifications you might desire.  We have now been through several different renditions of the floor plans for the "Cape Cod" style home, each time bringing the design a bit closer to what my clients' desires.

Organized communication
The building team at Preston Lake uses an online project management system to organize the design/build process, and to streamline communication.  Even only in these early stages of the process, the use of this tool has been extremely helpful.

Final Pricing, Building Process, Final Product
Still yet to discover --- will the pricing work for my clients, will the building process be as pleasant as the design process, and will the finished home be exactly what my clients envisioned.

Overall, the building process at Preston Lake (or the complemplation thereof) has been a relatively enjoyable and efficient process.  If you are considering buying at Preston Lake, and if you have any questions, please call (540-578-0102) or e-mail (scott@cbfunkhouser.com) me.  Otherwise, stay tuned, and I'll keep you informed on the continuation of this process.

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Roughly a month ago, the International Code Council approved hundreds of changes to be included in the 2009 version of the International Codes.  Several of these changes mean we will be seeing more fire sprinklers in new construction homes:

• Fire sprinklers are required in all new one- and two-family residences beginning Jan. 1, 2011.
• Fire sprinklers are required in all new townhomes.

Several other interesting code changes include:

• Carbon monoxide detectors are required in homes with attached garages or fuel-fired equipment such as gas furnaces, gas stoves and gas water heaters.
  
• A requirement to install programmable thermostats in new homes and buildings with forced air furnaces.
  
• High-efficiency light bulbs required in at least 50% of permanent lighting fixtures in new homes.

Here is a slightly longer list of significant changes, and an overview of the 2008 annual conference.

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Are you trying to avoid the potential danger of a space heater?  Are you trying to heat a room or garage more efficiently than with a space heater?  Have you considered a ceiling fan?

The fan pictured above, the Reiker Room Condition, may be what you are looking for.  A heater is housed just above the fan blades, and the heat being generated is evenly distributed throughout a room. 

These sophisticated fans will cost between $270 and $400 depending on options and finishes, and can be ordered through the Reiker web site, or found at some Home Depot stores.

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If you have been following the development of Urban Exchange in downtown Harrisonburg, you may want to check out the floor plans for the condos that have just been released. 



The project will include 192 studio, 1-BR, 2-BR and 3-BR condos in two towers.  The apartments in the East Tower are available for rent.  The condos in the West Tower are available for sale.

Find out more at LIVEUE.com.

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I have now heard from several lenders that they cannot lend more than 80% on investment properties.  The main issue seems to be that mortgage insurance companies are not willing to issue policies on investment properties any longer.  (Most loans with less than a 20% down payment require mortgage insurance.)

Let me know if you have heard of any lenders who will still loan more than 80% on investment property...

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In talking to people in Harrisonburg and around the state lately, I have heard several people comment about how it is now near impossible to obtain a mortgage to buy a home.  This has not been my experience --- I am still seeing most (reasonably qualified) buyers having no problem obtaining a mortgage.

A few caveats:

• It may be difficult to borrow 100% of the purchase price (unless you are a qualified veterman)
• It may be difficult if you need to borrow based on "stated income" or "stated assets"
• Somewhat of a restatement, but It may be difficult if you have no money in the bank for a downpayment and closing costs

Here are a few excerpts from a memo I received last week from Coldwell Banker Mortgage:

• "Over the last few days, we have received many questions in regards to the availability of mortgage funds in the credit markets. Now that the Federal Government controls Fannie Mae and Freddie Mac in addition to FHA and VA, these traditional sources of mortgage funding are still readily available."
• "In markets characterized as "stable", conventional financing is available to a 95% LTV while a first time home buyer can potentially obtain conventional financing to a 97% LTV."

Read the full memo here.

If you are considering buying, don't be scared off by a concern that mortgages are not available.  In fact --- in addition to mortgages being available, 30-year fixed rates are very low right now!

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The September 2008 Harrisonburg & Rockingham County Real Estate Market Report is now available. Click here for a printable PDF of this report.



When comparing September 2008 to September 2007, both median and average sales prices show declines, of 3.85%, and 4.96% respectively.  However, when comparing Jan-Sept 2008 to Jan-Sept 2008, the median sales price still shows an increase of 1.03%.



Each year for the past six years, September sales have been slower than in August, and 2008 was no different.  However, September 2008 sales were stronger than September 2007, which, combined with the typical increase in October sales, make this a good trend to watch.



This graph shows a normalized trend of home sales by charting the ongoing sum of the preceding 12 months' sales.  Pay close attention this trend next month, as the September 2008 sales trend figure (Oct 1 ‘07 - Sept 30 ‘08) shows an increase in sales.



For quite some time, we have seen an elevated level of inventory -- thus, it is healthy to see  a decrease in inventory levels.  Yet, we may also be observing a seasonal trend in inventory that we will see continue through the winter.



Inventory has declined since August, and likewise, the number of months of housing that is on the market has also declined.  The sub-$200k supply has remained stable for several months, but the price range with the most extreme over-supply ($400k+) has declined.

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