Two and a half years ago (June 2010) there were an astonishing 1,015 homes on the market in Harrisonburg and Rockingham County – including single family homes, townhomes, duplexes and condominiums.  As of yesterday, there were just 551 homes for sale in our local marketplace.  This startling 46% decline in local housing inventory has far reaching implications for many of us in our local community.

Homeowners are losing less sleep.  The median price of homes in our area has declined 10% in the past six years – but what is telling is the trend in median prices over the past 18 months as inventory levels have declined.  For the past year and half, median prices have hovered between $173,000 and $177,000 with very little variation.  After 18 months without further declines in median sales prices, homeowners in our local area can relax a bit, knowing that their home's value is not continuing to decline.  

Would-Be Sellers are still waiting.  As is evident from the continued declines in the number of homes for sale, we are not seeing a flood of would-be home sellers putting their houses on the market after having seen that home values have stabilized.  If anything, it seems fair to say that the high inventory levels of 2006 were would-be sellers hoping to catch the tail end of the housing boom.  Today, those would-be sellers that were not successful seem to be waiting to put their homes on the market until there are signs of increasing sales prices.  That is certainly a very reasonable approach unless there is some specific impetus for selling – moving out of the area, a growing family, etc.

Would-Be Buyers are simultaneously frustrated and elated.   Many of today's home buyers are not finding very many homes that match what they are looking for in a new home.  They often feel they are scraping the bottom of the barrel with the current low inventory levels.  Yet at the same time, buyers realize that since we seem to be at the bottom of the market that their opportunities to buy a home at a greater price have been never been better.  The added bonus for would-be buyers is the historically low interest rates – as low as 3.25% on a 30-year fixed rate mortgage.

Home builders are dusting off their hammers.  As home values declined over the past six years it became increasingly difficult for home builders to compete on price with homeowners who were selling their homes.  As inventory levels have declined, however, buyers have had fewer options and prices have stopped declining.  As a result, some home builders are starting to see renewed interest in their homes or subdivisions. 

While we are likely to see inventory levels start to increase again in the Spring, it is quite likely that we will continue to see historically low inventory levels over the next 12-24 months as our local housing market continues to recover.  As always, not only do you need to understand the general market trends in our area, you also must dig deep to explore the specifics of the market that pertain to your particular home.  For a thorough understanding of the overall local housing market, please refer to HarrisonburgHousingMarket.com.
  

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Today (this morning) is likely the low-water mark for the number of houses on the market in Harrisonburg and Rockingham County.  But even as some houses start to come back on the market over the coming weeks and months it seems that inventory levels may stay significantly below where they have been for the past several years.

These low inventory levels should help our local housing market continue to recover, especially given the low mortgage interest rates currently available to buyers.  Just a reminder, those are currently hovering around 3.35%.
  

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Last year at this time I predicted we'd see a 5% to 10% increase in single family home sales in 2012.

"So, now for predictions for 2012.  It's actually a bit more difficult this year.  After an 11% increase in single family home sales during 2011 --- it's hard to be conservative in my estimates.  Before seeing these figures, I would have estimated we'd see a 2% to 5% increase in single family home sales in 2012.   But given that 2011 showed a whopping 11% increase in sales pace, I think I'll have to predict that we'll see a 5% to 10% increase in 2012.  That would put us somewhere between 649 and 680 sales in 2012 -- which is on pace with 2008."

It turns out my first instincts (2% - 5%) were more accurate.  Here's how the market performed in 2012 based on data through 1/1/2013 (a few more sales could trickle in)....



So, now for predictions for 2013....

After a 2% increase in single family homes between 2011 and 2013, I am going to predict somewhere between a 2% and 5% increase in single family home sales in 2013.  This would result in somewhere between 647 and 666 home sales during 2013.

Despite only a 2% increase in single family homes during 2012, overall it was a great year for our local housing market!


  

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