As featured in the December Shenandoah Valley Business Journal...

Absent hard data on the local real estate market, we could make erroneous assumptions by listening to national news stories.  Here is a quick overview of how things stand in the Harrisonburg and Rockingham County real estate market:

Are property values falling?  No. The median sales price of all residential properties shows a 1% increase when comparing 2008 (Jan-Nov) to 2007 (Jan-Nov).

Are buyers buying?  Yes.  However, it is at a significantly slower pace than last year.  In 2007 we saw 1,182 residential sales (Jan-Nov) and this year we have only seen 861 sales (Jan-Nov).  This indicates a 27% decline in market activity.

Are sellers selling?  Yes.  Homes are selling at approximately the same pace as last year with an average "Days on Market" of 166 this year (Jan-Nov 2008) as compared to 171 last year (Jan-Nov 2008).

Hopefully this draws out the realization that while the national housing market is not doing so well, our local housing market is a different story entirely.  But yet, the state of our housing market isn't good news for everyone:

A Buyer's Delight

Buyers currently enjoy many housing choices, as the slow pace of sales provides for high inventory levels.  Inventory levels have declined since September, and will likely continue to do so through the winter, yet current levels still provide buyers with many options for their next home purchase.

The current slow rate of sales can allow for significant price negotiations in some instances.  Even as median home sales prices stay steady, some sellers are ready to negotiate to provide for a faster sale instead of waiting for months amidst the masses of homes for sale.

Buyers are also enjoying tremendously low interest rates, now below 5% again with many lenders for a 30-year fixed rate mortgage.  The most recent time we have seen interest rates this low was in 2003.

A Seller's Despair

Despite no significant change in the time it has taken for homes to sell, high inventory levels equates to a long wait for many sellers.  This can mean month after month of keeping a home ready to be shown, or it can equate to weeks or months of discouragement from a lack of showing activity.

Buyers want to negotiate on price like never before, which means that not only do sellers need to price their homes competitively to attract market attention, they also need to still have room to adjust once negotiations begin.  Many sellers of late find themselves balancing money and time as they consider a buyer's offer.

Where We Go Next?

As 2008 comes to a close, we still find ourselves in a buyers market, and we will likely see a similar market into the first and second quarter of 2009.  We could start to see an across-the-board downward shift in home values, but if we were going to see a tremendous shift, I believe we already would have seen the start of it.

One of my colleagues in the financial sector recently shared a great cliche about the housing market: "Most people get in too late, and they get out too late."  As he pointed out, the second mistake has already been made by most.  Don't let the first happen, too.

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