As I've mentioned before, you need to obtain a building permit if you are finishing your basement, even if you are finishing it yourself.  Doing so triggers inspections by Harrisonburg or Rockingham County that will help to ensure that your newly finished basement is safe.  It will also keep you out of trouble when you're selling your home:


So, if you find yourself in this situation, you'll probably make a phone call something like this....

Guilt-Ridden Permit-less Basement Finisher: 
Honey, how do you block Caller ID?  Oh yeah, *67, ok, here goes -- wish me luck. 

Rockingham County Community Development Office: 
Good Afternoon, Community Development...

Guilt-Ridden Permit-less Basement Finisher: 
Uh, yes, I had a question about building permits.

Rockingham County Community Development Office: 
O.K., what is your question?

Guilt-Ridden Permit-less Basement Finisher: 
Well, uh, I heard that I have to get a permit to finish the basement on my house, is that right?

Rockingham County Community Development Office: 
Yes it is, would you like me to send you the necessary paperwork?  What is your name and your property address?

Guilt-Ridden Permit-less Basement Finisher: 
Oh, uh, well, so, how much does that cost? 

Rockingham County Community Development Office: 
<Insert cost here>

Guilt-Ridden Permit-less Basement Finisher: 
Yeah, ok, and so if someone finishes their basement but didn't get a permit, what do they need to do then?  Is there sort of fine or penalty?

Rockingham County Community Development Office: 
(Smiling)  When did you finish your basement?

Guilt-Ridden Permit-less Basement Finisher: 
Oh, no, it wasn't (whispers: necessarily) me, but I was just curious about how all of that would work.

Rockingham County Community Development Office:  Oh, I see.  (Still smiling)  Conversation continues....

Good news, folks, they won't lock you up if you confess to having finished your basement without a permit.  Instead, they'll help you through the permit process, perform the necessary inspections, and will likely give you the thumbs up, indicating that everything has been completed according to code.

Here are some comments from some of my clients who had their permit-less basement inspected a few weeks ago in preparation for marketing and selling their home.

I just finished up with the building inspector and he signed off on everything--it was a very painless process (not counting my anxiety about what would happen). From what I understand, someone from the county real estate office will follow up to add the additional livable space to our property assessment. So we are in good shape.

The permit for our basement was $171--that was for framing, electric, and hvac. If we installed a toilet and/or shower I believe we would have had to pay for a plumbing permit too (they told us we didn't need one just to install the utility sink) but I'm guessing that would have brought the total up to around $200.

So, as you can see, it's not an irreversible decision.  If you finished your basement without a permit, consider contacting Harrisonburg or Rockingham County today to have your basement inspected!

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Investing in real estate isn't for everyone --- and it isn't without its risks.  But if you have some money to put into an investment as a down payment, and if you have financial reserves with which to cover maintenance costs and months without rental income, you might be interested in learning more.

The easiest case study of real estate investing in Harrisonburg is to consider the purchase of a two-story townhome built in the last ten years.  There are quite a few neighborhoods where these townhomes can be purchased, somewhere between $130k and $160k:

• Avalon Woods
• Beacon Hill
• Blakely Park
  
• Harmony Heights
• Liberty Square
• Wellington Park

These two-story townhouses in these neighborhoods will likely rent for between $850 to $950 depending on the age and condition.  View them on a map here.

Next, let's assume a great deal on the purchase (we'll shop until we find that deal) with a purchase price of $129,900.  However, we'll make lots of conservative assumptions as we continue.  For the time being, assume:

• $850 / month rental income
• Half a month's rent lost each year between tenants
• 20% down payment, the balance financed at 5%

This results in an estimated $927 of positive cash flow in the first year...



This might not seem like much, but when combined with a few other investment benefits, it starts to add up, even in the first year.

Year 1 Investment Benefits

• $926 positive cash flow
• $1,533 principal reduction via rental income
• $638 tax benefit for loss based on depreciation
• Total "Gain" = $3,097

It gets even better when considering the property over five years:

• $6,990 positive cash flow
  
• $8,492 principal reduction via rental income
  
• $2,394 tax benefit for loss based on depreciation
• Total "Gain" = $17,876

And if we assume a meager 2% of appreciation per year, then, over five years we'll see:

• $6,990 positive cash flow
  
• $8,492 principal reduction via rental income
  
• $2,394 tax benefit for loss based on depreciation
• $13,520 appreciation
  
• Total "Gain" = $31,396

Do recall, that you put 20% down ($26k) and paid some closing costs ($4k), so after five years you have more than doubled your money.

There are plenty of variables to consider when buying an investment property, but the basics of the cash flow are the first to thoroughly understand.  For a head start on everything else you need to learn, review this detailed investment analysis.

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 An early rendering of an estate home to be built at Preston Lake.


 An early rendering of the Charleston Rowhouses to be built at Preston Lake.

In the Beginning

The news of Preston Lake first broke in October 2005.  Here's an excerpt from the Oct 26, 2005 article from the Daily News Record:


Sales by the Numbers

Now, nearly five years later, progress is still being made at Preston Lake, but not at the pace that was originally anticipated.  Certainly, the enormous changes in the financial markets and the housing market over the past five years have played a large role in the change of pace at Preston Lake.  Let's take a look at residential sales at Preston Lake per the MLS...



Per the data in the MLS (reflected above) there have only been seven single family home sales, but I believe the count is actually closer to twelve when including custom contract builds that may not have shown up in the MLS .  It would seem that detached homes can be built at Preston Lake for anywhere between $350k and $900k.



Rowhouse sales have certainly slowed down in 2010, but over the past three years have been selling between $300k and $550k.

What's Available Now?

There are currently 14 active (or under contract) listings in the HRAR MLS, priced between $299k and $814k.  Five of these homes are under contract.

The Big Picture

Many developments of this scale (as close as Charlottesville) have failed over the past few years as housing markets faltered across the country.  It is remarkable, and notable, that Preston Lake (slowly) marches onward. 

Construction on the commercial parcels has not yet begun at Preston Lake, partly due to a sluggish retail market across the country, and partly because the layout of the commercial area at Preston Lake still may be in flux as a result of the yet-to-be-fully-funded South East Connector Road.

The developer of Preston Lake and its lender (Wachovia) are in the midst of legal proceedings, as described in the Mar 2, 2010 article from the Daily News Record:


Moving Forward

So, what's next for Preston Lake?  My best guess is that residential development will continue (slowly) and that commercial development will eventually take place.  The retail development, however, will likely not take place until the economy improves such that retail businesses (independent and franchises) are looking to expand once again.

If you have questions about Preston Lake, feel free to call (540-578-0102) or e-mail (scott@HarrisonburgHousingToday.com) me.  My parents live at Preston Lake -- they built a cottage home when they relocated to the Shenandoah Valley -- thus I'm in the neighborhood quite a bit.

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In my opinion, there is already more than enough college student in Harrisonburg.  That said, a developer will soon be starting a new student housing complex on South Main Street near Valley Lanes.

So....maybe Harrisonburg needs a student housing moratorium?

Joe Fitzgerald states (at the link above) "We can't flat out ban student housing, but we can stop rezoning more land for it."

I never considered that a moratorium on rezoning could be enacted.  Several questions then come to my mind....

Is local government overstepping its bounds to create such a moratorium (via *not* rezoning)? 

Perhaps not --- local government wouldn't be prohibiting development, just the rezoning for development.

So, local government is now making rezoning decisions based on market conditions?  Isn't a landowner entitled to make that part of the decision?

If a surplus of student housing creates a burden on the locality in some way (based on the new use or non-use of the old student housing??) then perhaps local government ought to factor in market conditions?

What does this sort of a moratorium look like?

Is this an unspoken stance of local government?  Or a drafted and approved policy?  Could this be challenged legally?

So, perhaps this all comes back to property owner rights?

Certainly, a property owner has the right to use or develop their property as the zoning ordinances allows them to do so.  But does a property owner have any rights when it comes to rezoning?  Are there reasonable, and unreasonable factors that can and cannot be used in a zoning decision?

Weight in if you have an opinion -- this raises more questions than answers for me.

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It's always good to get a different take on the data and situation in our market.  Feel free to share your own comments on the state of our market in the comment section below.



[From the Daily News Record, July 16, 2010]

Housing Market Enjoys Boomlet
But Area's Sales Surge Likely To Be Short-Lived

By Doug Manners

HARRISONBURG  - Buoyed by the expected expiration of federal tax credits, home sales in Harrisonburg and Rockingham County climbed in June to the highest monthly total in nearly three years. However, sales are likely to drop during the second half of the year, due in part to the expiration of the tax credit program.

According to a report released by Scott Rogers, associate broker at Coldwell Banker Funkhouser Realtors, 116 homes were sold last month, the most since August 2007, when 138 homes sold. It also marks a 35 percent increase over sales from June 2009.

To be eligible for the credits - up to $8,000 for first-time homebuyers and $6,500 for existing homeowners - buyers originally had until June 30 to close sales, but Congress extended the deadline to Sept. 30. Buyers still must have entered into a binding contract by April 30 to qualify.

‘Buffer' Needed

Local sales in 2010 are 16 percent higher than those from the first six months of last year, and Rogers said he believes that the area will reverse a four-year downturn in annual home sales.

"I think the 16 percent is enough of a buffer" to beat last year's numbers, Rogers said.

That buffer is key because sales are now expected to fall, with most tax-credit seekers having already made their home purchases (Congress didn't approve the extension until late June).

Furthermore, Rogers wrote in his report, "for most of the past four years, there is a steady decline in sales between June and December, so we will likewise probably see a decline month after month."

Contracts Plummet

In April, 121 properties went under contract, the most since March 2007. After the April 30 deadline expired, that number dropped to 84 in May and plummeted to 54 in June.

"This June's buyer commitment rate is notably lower than any of the past three Junes," Rogers wrote, "which is not a good indicator for July and August sales figures."

Rogers said it's too soon to say conclusively whether the tax credits provided a real boost to the housing market or simply shifted sales toward the first half of the year.

"Perhaps it's a wash other than the timing," Rogers said, "except that timing might have helped create some momentum in getting people feeling more positive and hopeful about the economy."

Values Continue To Drop

Despite the increased market activity, home values continue to decline, according to Rogers' report. The average median sales price is $186,450, down 8 percent from a year earlier. Rogers said median prices are not likely to start increasing until the year-over-year sales pace rises.

The average time a home stays on the market is holding steady at about six months.

Contact Doug Manners at 574-6293 or dmanners@dnronline.com

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There is a slowly growing area just north of Harrisonburg that you may not have heard of or visited, but there are a variety of factors that may make it a growth area over the next several to many years.



A strategic plan has been created for this North Valley Pike corridor, that suggests turning an existing section of Route 11 into a main street area, with most through traffic diverted to a new road.  For an overview with lots of helpful links, read the post on hburgnews.



A research and technology park has been established amidst this corridor on 365 acres, owned and operated by Rockingham County. 



SRI International has established a 25-acre campus in the above-referenced research and technology park, and opened the Center for Advanced Drug Research, which is a "state-of-the-art research facility for conducting systems biology research in the areas of biodefense and neglected diseases."



An attractive subdivision of single family homes is being developed in this corridor area (I am marketing this subdivision) with prices starting in the low $200,000's. 



A new elementary school was recently built on Smithland Road, not too far from this North Valley Pike corridor.  This has created new traffic flow patterns, bringing greater awareness to the north side of Harrisonburg.

While most development has taken place just southeast of Harrisonburg in the recent past, the area just north of Harrisonburg will be a key area to watch over the next 3 to 20 years.

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Can you spare 5 minutes?  Press play below, and I'll walk you through most of the graphs in my monthly report to provide some commentary on what we're seeing this month.

Have further questions?  Leave them in the comments below, or e-mail me at scott@HarrisonburgHousingToday.com.

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Click here for the full July 2010 Harrisonburg & Rockingham County Real Estate Market Report.

We're not out of the woods yet, but several indicators are quite positive in the Harrisonburg and Rockingham County housing market. 



As can be seen above, June 2010 home sales soared up to 116 transactions -- the highest number of monthly sales we have seen in almost three years.  Many of these home sales were likely a result of the home buyer tax credit deadline, so we may see a decline in July home sales.



Above, you will note that long term indicators continue to trend very positively.  This graph shows a rolling 12-month sum of home sales to remove the seasonal variation in sales.  After several years of a declining market (in number of home sales), we have now seen a stabilization and increase for over six months.



Despite good signs as far as closed home sales go, the number of buyers committing to buy during June 2010 (contracts signed) declined, both compared to the last several months, as well as compared to the past three months of June (2007, 2008, 2009).  This will likely result in lower levels of home sales in July and August.



In addition to home sales, inventory levels also soared in June 2010 -- cresting above 1,000 homes for sale for the first time in recent past (and maybe the first time ever).  We should see a decline in inventory over the next six months based on historical seasonal trends.

Learn even more about our local housing market: click here for the full July 2010 Harrisonburg & Rockingham County Real Estate Market Report.



Do you have questions about this report, or about the Harrisonburg and Rockingham County real estate market?  Or about your house?  Or about a house you might buy?  Be in touch . . .

Scott Rogers  |  540-578-0102  |  scott@HarrisonburgHousingToday.com

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Many people have asked me how much of an affect on our market the first time buyer tax credit has had over the past year.  It's a challenging question to answer --- some first time buyers who bought this year may have bought because of the tax credit, but some (or most?) may have bought even if the tax credit didn't exist.

One way that we should be able to tell if the tax credit had a big impact is to see if there are more first time buyers in the market now as compared to last year.  Thus, I decided to examine the breakdown of sales prices during May and June 2010 (it should be a lot of first time buyers) as compared to all of last year (2009).



As you can see, above, I assumed that I would probably find a pretty big increase in the proportional number of lower priced homes selling this May and June as compared to last year. 



Above, however, you'll note that there wasn't actually much of a change at all.  About 60% of the homes sold in the last two months were priced below $200k and the same percentage of the sales from last year were below $200k.

I welcome your suggestions for other ways to slice and dice the data to get at whether the tax credit had an impact on the market.  For now, we'll say the jury is still out...

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