My recap of our local housing market, and some predictions, as published this week in the Shenandoah Valley Business Journal....

It was certainly an exciting time for homeowners as home sales doubled (829 to 1,669) during a five year period (2000-2005) in Harrisonburg and Rockingham County.  But after that amazing increase in home sales (and prices!) the market here and just about everywhere cooled off significantly.  Over the subsequent five years (2005-2010) home sales fell more than 50% (1,669 to 758).  After such turbulent times, even modest growth in home sales activity is a welcome sight to homeowners.  Thus, the past two years of increased home sales (+4%, +9%) have been encouraging to see, and have been accompanied by stabilization in prices (+1%) over the past year.  The question, then, for many people is what we should expect over the next few years in our local housing market.

Home sales will continue to increase.  Despite an increase in home sales over the past two years, there were roughly the same number of home sales in 2012 (864 sales) as took place 12 years earlier in 2000 (829 sales).  During the same timeframe, however, the population of Harrisonburg and Rockingham County has increased from 108,322 to 127,354 according to the Weldon Cooper Center.  This 17.5% increase in population suggests that current home sales (if the same percentage of the population purchased a home each year) should be closer to 1,015 home sales per year.  As such, it seems safe to say that the current level of buyer activity is still lower than historically normal levels and we should see continued growth in home sales over the next several years.

Median prices to slowly start to increase.  Many other areas of Virginia and our nation experienced significant declines in home values over the last 5 to 7 years.  Thankfully, the Harrisonburg and Rockingham County housing market has not seen significant declines in this area.  After topping out at a median price of $195,500 in 2008, our local market's median price has only declined by 10% over the past four years to $175,000.  Of note, this still marks an overall 51% increase in home values over the past 12 years.  As we head into 2013 and 2014 we should expect to see further moderate increases in home values in our area, likely an increase of between 1% and 4% per year.

Inventory levels to stay relatively low.   There are fewer homes on the market now (572) than we have seen in several years.  Overall inventory levels have dropped 15% over the past year, and 27% over the past two years.  These lower inventory levels mean that many would-be sellers have decided to stay in their homes, perhaps after not being able to sell in a reasonable timeframe.  These lower inventory levels do mean buyers will have fewer choices, but they also are helping to stabilize the local market.

After five years of unsustainable increases in home sales and home values, and then five years of dizzying declines in both of those areas, we are finally seeing stability and moderate, sustainable growth in our local housing market.  Given the diverse, and stable local economy, we should expect to see further improvement in our market over the next year years.

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