Well, things don't seem to be slowing down yet in our local residential real estate market!  Looking at the first 25 days of this month, 109 buyers (and sellers) signed contracts to by (and sell) homes in Harrisonburg and Rockingham County.  Comparatively, only 104 buyers (and sellers) did so in the same timeframe last year.

So -- the pace of contracts is somewhat slower this month than last month (as is typical), but this June is more active than last June.

More sales -- fewer listings -- it is somewhat surprising that we haven't seen more of a upward shift in sales price!
 

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Here are the three sequences I see buyers follow most frequently....

As Late As Possible

• Guess at what you can buy using online mortgage calculators.
• Start viewing houses.
• Make an offer.
• Ratify a contract to purchase a home.
• Start talking to several lenders.
• Select a lender.
• Become pre-qualified.
• Make loan application.
  
• Provide income and tax documents (etc.) to lender.
• Obtain loan approval.
  

Incredibly Proactive

• Start talking to several lenders.
• Select a lender.
• Become pre-qualified.
• Make loan application.
  
• Provide income and tax documents (etc.) to lender.
• Obtain loan pre-approval.
• Start viewing houses.
• Make an offer.
• Ratify a contract to purchase a home.

A Reasonable Middle Ground

• Start talking to several lenders.
• Select a lender.
• Become pre-qualified.
• Start viewing houses.
• Make an offer.
• Ratify a contract to purchase a home.
• Make loan application.
• Provide income and tax documents (etc.) to lender.
• Obtain loan approval.

I try to encourage all of my clients to at least be in the "reasonable middle ground" sequence as outlined above.  This gives them a firm idea of what they can afford and how a home price will compare to a loan payment.  This also allows them to make a stronger offer, already having a pre-qualification letter in hand.

I strongly discourage my clients from following the "as late as possible" sequence as outlined above.  This doesn't help them make the best decisions about which houses to pursue, how far to negotiate, etc.  This also doesn't allow us to make as strong of an offer on a house.

Occasionally, one of my clients will fall into the "incredible proactive" sequence as outlined above, and wow, this makes the financing process a joy to work through!  These buyers have already done so much of their work with the lender before even thinking about which house to buy -- which then allows them to focus on buying, negotiating, inspecting, etc., rather than be bogged down in the process of securing their mortgage.

Let me know if you have questions about how I have described these sequences -- and let me know if you would like a few recommendations for lenders in the Harrisonburg area.
 

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This low-inventory market we're in is certainly providing some new perspectives....

If you are having a LOT of showings of your house -- it MIGHT mean that your house is priced well, prepared well and marketed well (our three main areas of focus) and that it will be under contract before you know it!

OR -- it could simply be an indicator of extremely low inventory levels in your segment of the market, such that lots of prospective buyers are trying to convince themselves that your home will work for them, even if it is not exactly what they are looking for.

The general rule of thumb is that if you are LOTS of showings, but are NOT receiving an offer -- you will likely (at some point) need to adjust the price downward.  This will then likely generate even more showings, but will also hopefully make the house seem like a better value proposition for a buyer, enticing them to make an offer.

Again, as a seller, don't get lulled into a false sense of complacency, thinking that you'll certainly have an offer soon if you have lots of showings.  It is certainly possible (and perhaps even likely) but if inventory levels are low, then that offer might not be forthcoming after all!
 

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One of the reasons why the under $200K market is inventory-challenged right now is because there is very little new construction happening in this price range.  Over the past 10-15 years we saw many new townhouse developments that (at the time) fell into that price range, including:

• Avalon Woods
• Beacon Hill
• Harmony Heights
• Liberty Square
• Parkcrest
• Taylor Spring
• The Gables
• The Townes at Bluestone
• The Townes at Wellington Park
• Twin Gables

Now, however, there are significantly fewer options available when it comes to newly built townhouses in or near Harrisonburg, under $200K....

• The Townes at Bluestone (barely under $200K)
• Cedar Point (none currently listed)
  

I think a considerable opportunity exists for a townhouse developer to build new, $170K - $190K townhouses in the City of Harrisonburg -- if it can be done!

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Per a reader's request, I have updated this super-long historical context of real estate tax rates in the City of Harrisonburg. 

This graph can be a bit deceiving in its attempts towards being legible -- the y-axis does not start at zero.  As such, it makes some of the historical tax rates (around $0.60) seem closer to zero than they really are. 

That said, the trajectory of the real estate tax rate over the past five-ish years is quite striking in a historical context.

OF NOTE -- the 2017 value ($1.025 per $100 of assessed value) is a proposed, not approved, tax rate.
 

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Short answer -- yes, but no.  :)

Longer answer....

In a recent conversation with a home seller, they wondered if they had missed out on the best time to sell their home since they wouldn't be ready to get their house on the market until July 1.  Let's take a look at what last year looked like from the perspective of when buyers signed contracts to purchase homes.  Based on the graph above....

1. Only slightly more than half (54%) of contracts signed in 2016 were signed before July 1. 
    
2. The most active months of contract signing were April (158), May (141) and March (133).  August was just after that, however, with 130 contracts and July was also quite strong with 119 contracts.  Thus, there are several more (at least two) months of strong buyer activity to come.
    
3. Contracts were signed at an average pace of 135/month between March and August.  The average pace of August (99) and September (109) was 104/month.  This is not a significant decline -- we're not talking about having only half as many buyers signing contracts per month once you get into September and October.  Even November had 93 contracts signed.
    
4. Certainly, if you were hoping to sell (close on) your house this summer (by Aug 31) then you would have been better off to list your home for sale earlier in the year -- but there are still plenty (!) of buyers who are likely to be signing contracts for the next several months.

As usual -- every segment of the market (based on price, location, property type) is a bit different -- so let me know if you want to chat more specifically about your home, and what it would look like to list your home for sale in the coming month to be aiming for one of these late-summer / early-fall buyers.

 

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One of the most striking changes in inventory levels has been the "under $200K' market, where we have seen a 58% decline in the number of homes for sale.

A small part of this is the slow and steady increase in the median sales price -- causing some homes to no longer fall within this price bracket. 

Another significant reason for this decline is a slow and steady increase in the number of people trying to purchase homes in this price range.

The final component is the lack of new construction in this price range.  Increasing demand and decreasing supply is usually addressed via builders jumping in and starting to build new homes (or perhaps townhomes, in this case) to help bridge this gap between low supply and high demand.

If we continue to see increasing demand, decreasing supply, and no new construction, we may start to see faster than normal increases in the sales prices of these properties as buyers compete for a slim number of listings.
 
Read more about our local housing market via my most recent monthly market report....


 

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Just the BEST month of May EVER!  :)

Indeed, as shown above, it seems that the 148 home sales seen in May 2017 was the most home sales we have EVER seen during a month of May.

Now -- to see how things turn out in June!

Read more about our local housing market via my most recent monthly market report.
 

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  Check out this immaculate rowhouse at Preston Lake with a rooftop terrace!

Wow!  Both the temperatures and our local real estate market are certainly heating up!  I just published my most recent monthly market report, so apply your sunscreen, read on for an overview of the blistering sales pace of 2017, download the full report as a PDF, or read it online.

But first -- for those that would rather listen/watch than read -- tune in to my monthly video overview of our local housing market...



OK -- now, back to a high level overview of where things are with the local real estate market....



MORE HOMES ARE SELLING -- As shown above, we have seen a 5.51% improvement in the number of home sales in this area in the first five months of 2017 as compared to the same timeframe last year.  Furthermore, looking at the past 12 months (1,338 sales) as compared to the prior 12 months (1,187 sales) we see a 12.72% improvement in the pace of sales.

PRICES ARE SORTA-KINDA INCREASING -- Technically, the 2017 median sales price (January - May) of $189,000 is identical to where it was last year during the same time, however, over the past year the "rolling 12 month" median sales price has increased 4.16% from $185,000 to $192,700.  So, we'll say that prices are sort-kinda-mostly increasing.

HOMES ARE SELLING FASTER -- The median sales price of homes selling thus far in 2017 has been 49 days.  This is 23% lower than last year when it took a median of 64 days for homes to sell.  This calculation is based on how many days it takes for a property to be under contract after it has been listed for sale.



Inventory levels are LOW right now (more on that later) so when April concluded, I had some serious doubts about whether we would be able to match the 133 home sales in May 2016.  But -- buyers (and sellers, I suppose) didn't disappoint -- there were an astonishing 148 home sales in May 2017!  I'll delve into this history a bit more in coming days on my real estate blog, but take my word for it for now -- there have NEVER been 148 home sales in the month of May in Harrisonburg and Rockingham County!



What is to come, you might ask?  I'd say more sales -- maybe not quite 148 of them -- but hopefully 135 to 145 of them next month.  After all, as shown above, there were 133 more contracts signed in May 2017 -- just a slight decline from the 140 and 137 seen in March and April.



As mentioned previously, inventory levels are DROPPING!  There are now only 394 homes for sale in Harrisonburg and Rockingham County -- which is 32% fewer than one year ago!  Of note -- we only seem to have had sub-400 inventory levels once anytime in the past MANY years -- in January 2017.  That wasn't too surprising -- inventory levels have been declining, and who wants their house on the market in January, anyhow?  But now, in the month of May (June, actually)?  Inventory levels below 400 are quite surprising at this time of year.



Oh -- but it gets worse -- for buyers, that is.  Looking at homes under $200K, in ALL of Harrisonburg and Rockingham County, there are only 107 homes for sale!?  This includes single family homes, townhouses, duplexes and condominiums.  This marks a shocking 57% decline in this price range of homes in our area.

OK -- there is a pile of additional information bout our local housing market in my monthly market report.  If you are interested in more, feel free to  download the entire thing as a PDF, or read it online. 

And, my reminders for buyers and sellers last month still apply....

SELLERS -- even though it is somewhat of a seller's market in many price ranges right now, you must still focus on price, condition and marketing.

BUYERS -- it can be difficult and frustrating to buy right now -- make it a bit easier for yourself by knowing the market, knowing the process, knowing your buying power, and monitoring new listings closely!

For further reading on buying or selling in this area, check out....

• BuyingAHomeInHarrisonburg.com


• SellingAHomeInHarrisonburg.com

And if you are ready to get the process started, simply contact me at 540-578-0102 or scott@HarrisonburgHousingToday.com.

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Who bought what, when, for how much, you might ask?  If you're looking for information about recent property transfers in Harrisonburg and Rockingham County, be sure to check out HarrisonburgPropertyTransfers.com.

You can even (see the red arrow above) sign up to receive updates by email on recent property transfers!

 

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The odds are, you'll have to compromise on SOMETHING when you are buying your next home. The question becomes -- what are you you willing to compromise on?  The easiest (at first) sometimes seems to be price -- you still get everything you want, you just have to pay more for it.  But if you're drawing a firm line on price, then likely some other need or want will have to be imagined differently.

Here is what buyers tend to compromise on based on the the 2016 Profile of Home Buyers and Sellers from the National Association of Realtors....

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Take a few minutes to fill out this 19-question survey about the Harrisonburg area that will ask you about yourself, your internet use and our shopping habits.  This survey is being used to determine what gaps exist in what is being provided by local retailers, with the hopes of using the data to attract further retailers to our area and to enhance existing businesses.

Read on from the Daily News Record....

Survey Seeks Data To Lure Retailers

Olive Garden is here. Whaddaya want next?

That is one of the questions Harrisonburg and Rockingham County economic development officials want area residents to answer over the next 13 days to help provide data for a regional retail market analysis.

Community Land Use + Economics Group, an Arlington firm with experience in economic analysis, strategy and implementation, and business development, is compiling data local leaders hope can help them lure new retailers to the area and enhance existing businesses.

As part of that effort, city and county residents are being asked to complete a 19-question survey themselves, including internet use and shopping habits. Those completing the survey, available at surveymonkey.com/r/CVCRW6Y, are eligible to win tickets to Massanutten Water Park or $50 in downtown dollars.

The survey is being conducted to find out what local retailers are and aren't providing that residents want.

"What we really want to know is, ‘Are you going elsewhere right now for retail services? Who are we losing to other markets? Why are they filling a need Harrisonburg is not filling?'" said Peirce Macgill, Harrisonburg's assistant director of economic development. "We want to find out what businesses residents are going elsewhere for, because they should be a target for the commercial brokerage community."

Michele Bridges, Rockingham County's economic development and tourism manager, said the information gathered can be used to let certain businesses know they have a market here or encourage existing retailers to carry specific items people buy elsewhere.

"It's really just to strengthen our retail experience here in the Harrisonburg-Rockingham County area," she said.

The analysis is a public-private effort that leveraged a state grant.

The Virginia Department of Housing and Community Development awarded the city a $15,000 Building Entrepreneurial Economies planning grant for the study. The city, county, James Madison University and Harrisonburg Downtown Renaissance combined to provide a $7,000 match, and the Shenandoah Valley Small Business Development Center has provided technical support.

In addition to finding out what local residents are buying elsewhere, Bridges said Rockingham is focused on information that can be used in the development of three major shopping areas: Stone Port Retail Plaza, the commercial space at Preston Lake, and the retail frontage at Rockingham Park at The Crossroads.

Those three commercial developments in the county's urban growth area represent significant, immediate opportunities to land retailers and grow Rockingham's tax base.

The Harrisonburg market's demographics are skewed, Macgill noted, by the high concentration of college students.

The city's median income, a key data point many retailers use in determining where to set up shop, is lower than the state average. That's deceiving, though, because many college students have cash to spend, so the market's strength is hidden somewhat by the top-line number.

"It's a matter of how can we better tell the Harrisonburg story beyond household income and what the traffic counts are," he said. "A lot of times, we're not on radar [of some retailers] to get a serious look."

Capturing information on what local residents are buying out-of-town, Macgill and Bridges noted, can be shared with city and county retailers that might be able to add the items to their shops. If area business already have the items, they can be alerted that they're losing part of the market.

The survey is the final stage of the analysis data-gathering process.

Already, Macgill said, about 800 JMU students have completed a similar survey. The consultant also spent two days here last month meeting with stakeholders and checking out the community.

The CLUE Group officials, Macgill said, left Harrisonburg with a potential marketing and development angle for Duke's Plaza.

"They were pleasantly surprised by the number of what appears to be immigrant-owned businesses in Duke's Plaza," he said. "They were intrigued at how we could take advantage of that, the immigrant niche businesses."

The final report from CLUE Group is due in late July. Macgill said an implementation grant has been applied for that would allow efforts to begin immediately to leverage the study's information into growth opportunities for local businesses.

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As a home seller, you will face rejection left and right -- many prospective buyers will come view your house and most of them will decide not to buy it.  But how, as a seller, do you make sense of that feedback? 

I often hear the following types of feedback after a showing:

• the house just wasn't quite big enough for us
  
  
• we like the house, but have decided we want to live closer to _______
  
  
• the house was very nice, but the layout of the bedrooms wasn't ideal

This type of feedback (size, location, floor plan) is difficult to do much with as a seller.  You likely aren't going to build an addition to your house, nor will you physically move the house, nor will you reconfigure the floor plan.  Sometimes the feedback is just a mild objection to be overcome -- did you realize that the unfinished bonus room could be finished quite inexpensively (size) and that the new South East connector will make your commute quite short (location)?  Oftentimes, however, if you receive feedback about size, location or floor plan there isn't much you can do about it as a seller.

I also, however, will hear the following types of feedback after a showing:

• we love the house but we're holding off because it seems overpriced
   
  
• the house would probably work for us, but would need so much work
   
  
• we like the house, but we're hesitant because it has been on the market for so long

This type of feedback (price, condition, marketing) is completely in your control as a seller.  Many buyers will not make an offer if they think your list price is too far from reality -- adjusting your pricing may be just what you need to either generate more showings, or have a chance of the showings turning into offers.  I almost included AGE as a factor outside of a seller's control, but it's much more about condition -- how well has a property been maintained, and is it in top showing shape so that buyers don't feel overwhelmed by short-term cosmetic updates and long-term maintenance needs?  Finally, if a house has not been marketed thoroughly and effectively, it will likely have a much longer "days on market" than other properties, worrying buyers that perhaps they shouldn't buy the home because nobody else has in the last ten months. 

It is imperative to gain feedback after showings of your house -- but when processing it, try to quickly categorize it as either something you can control, or something you cannot.  Of course, if the feedback is consistently something you cannot control (size, location, floor plan) the answer might be to further adjust what you can control (price, condition, marketing) to compensate for those weaknesses.
  
Read more about, think more about, and learn more about selling your house at SellingAHomeInHarrisonburg.com.
 

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OK, OK, I am sure you are a very smart person, and certainly excellent at counting.  So, why might I be giving you tips on how to count the bedrooms in your house?  Well, primarily because counting bedrooms is a bit different in real estate than you might otherwise assume.

Now, the basic rule of thumb for what makes a bedroom is that it needs a window and a closet. So -- if you have a room with a bed, where someone sleeps (regularly, or on occasion) but it does not have a window or does not have a closet, it might not be considered by Realtors, buyers or appraisers as being an actual bedroom.

Now -- the National Appraiser Roster has all sorts of nuances surrounding this topic....

1. Fannie Mae does not specifically require that a bedroom have a closet.
    
2. The Dictionary of Real Estate Appraisal does not have a standard definition of a bedroom and points out that local codes define bedrooms.
    
3. The HUD Handbook requires that bedrooms provide a means of egress to the exterior of the home -- and require that a basement bedroom's window be no more than 44" above the floor and should be at least 24" x 36" in size.
    
4. Homes built long ago (pre-1900) are not likely to have closets -- and appraisers sometimes must consider the intent of a room regardless of whether a closet exists.
    
5. Bedrooms should be accessible via  hallway or living space -- so bedrooms that are only accessible through other bedrooms are not really bedrooms. 
   

Wow.  OK.  Lots to consider there.  So -- the short answer is that you can count your bedrooms based on whether they have windows and closets -- but it may require a bit more thought and analysis before we decide how many bedrooms we'll say that your home has when we put it on the market.

Oh, and two final notes....

1. If you live in the County, in a home with a three bedroom conventional septic system, and with five bedrooms with closets and windows -- we might still need to call it a three bedroom home!?!
    
2. Appraisers actually look at above grade (non-basement) and below-grade (basement) bedrooms differently.  So, if your home has 2 bedrooms on the first floor and 3 more in the basement -- it won't necessarily be able to be compared to a home with 5 bedrooms on the first floor.
   

 

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So -- are you trying to figure out the square footage of your home?  Here are a few methods that are not certain to give you the correct answer....

• Check the tax records to see how much square footage the City / County believes you have in your home.
   
• Measure the square footage of each room and hallway and add it all up.

So, how do you really measure square footage?  It starts outside the home!  You'll need to measure the exterior dimensions of each level of your home -- and then subtract any open areas, such as the open space above a foyer.

This measurement method, as odd as it may be, is what is used by nearly every appraiser, as it is how "gross living area" is defined by Fannie Mae, HUD, FHA, ERC and ANSI.  As such, it is important that you're measuring the square footage of your home in the same way that nearly every appraiser and Realtor would be measuring it, so that you're comparing apples to apples when comparing the size (SF) of your home to another home that has sold or that is on the market for sale.

And here's why I consider it to be an odd way to measure square footage....

• WALLS:  I don't know anyone that lives inside of the their walls -- but by measuring the exterior dimensions of your home, you are including the square footage that is inside the interior and exterior walls of your home.  As a side note -- this makes a home with an open floor plan slightly more spacious than a home with lots of separate rooms -- because the home with the open floor plan has less 'lost" square footage inside of interior walls of the home.
   
• STAIRS:  I don't know anyone who spends meaningful parts of their day on the stairs between levels of their home -- but by measuring the exterior dimensions of your home, you are including the square footage that is in the stairwell of your home.  As a side note -- this makes a 2000 SF ranch style home slightly more spacious than a 2000 SF colonial home -- because the ranch style home does not have any "lost" square footage in a stairwell.

While the City and County measurements for tax assessment purposes are often very accurate, it is often a good idea to double check the square footage of your home when we're putting it on the market for sale.

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Have you heard?  There are more high school students to be taught in Harrisonburg than can readily fit inside of the high school!

There are three options being considered:

• Built an Annex (+800 students, $48M)
• Build an Addition (+800 students, $45M)
• Build a School (+1300 students, $88M - $100M)
  

A rendering of the potential ANNEX from Mosely Architects....



A rendering of the potential ADDITION from Mosely Architects....



There are pros and cons of each option, but the High School Space Study Committee has recommended building a new high school.

But YOUR OPINION is wanted, needed, welcomed!

Click here to read up on the options, pros and cons.

Click here to voice your opinion.

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