Archive for January 2018
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When Will Home Buying Activity Start in Earnest? |
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 It is no surprise that buying activity (signing contracts, not closings) slows down over the Winter. As shown above -- an average of 72 buyers sign contracts in January, which then jumps up to 90 in February, and then an even larger jump in March to an average of 130/month. So, we're going to say the March is when we first seem a big jump in buyer activity. For that reason, many sellers wait until March (or even April) to put their homes on the market -- though the Spring market brings more competition from other sellers in addition to meaning that we'll start to see more buyers. Of note -- staying relatively true to form, there have been 75 contracts signed thus far in January 2018. Who knows, maybe we'll come out slightly ahead? | |
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City vs County Home Sales Trends |
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 Now, for the annual showdown between the City of Harrisonburg and Rockingham County, though first noting that:
There are any number of factors that affect whether buyers end up buying in the City or County, including what type of property they are seeking, how much land they desires, school systems, employer locations, and much more. | |
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30 Year Mortgage Interest Rates Starting To Rise |
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 While we ended the year just below 4%, the average 30-year fixed mortgage interest rate has now risen to 4.15%. This is a good bit above the 12-month average of 3.98%, though still historically low in any longer term context. It seems possible that we'll see some further increases in coming months, though I don't think rates will get up to 4.5% in 2018. And....it's possible they will drop back down closer to 4% within the next few weeks or months. | |
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Which price range of homes have been hit the hardest with reduced inventory levels? |
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 Clearly, the under $200K market is extremely tight right now -- with a sharp (65%) decline over the past two years. Some of this is the lack of availability of this housing because more people want to buy these homes than sellers want to sell them -- and some is a result of increases in property values over the past two years, resulting in some "just under $200K" homes becoming "just over $200K" homes and falling into the next price bracket. As shown above, there has also been a significant (45%, 43%) drop in housing inventory levels between $200K-$300K and $300K-$400K. The only stable price range has been the "over $400K" price range where there are just about the same number of homes for sale now (58) as there were two years ago (55). I expect that inventory levels under $200K will drop even lower over the next 12 months You can find out more about the Harrisonburg and Rockingham County real estate market by visiting....  | |
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January Inventory vs. Past Year of Home Sales |
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 In 2014, 2015 and 2016 we started off the year with enough homes actively listed for sale to last us for right around six months -- or a bit longer. This balance (a six month supply of housing inventory) is considered by many analysts to be an indicator of a balanced housing market. Last year (2017) was quite different. Inventory dropped 26% from 2016 to 2017 and sales rose 17%. As you would, thus, expect - we started off last year (Jan 2017) in a slightly different spot, as shown above. Which is, arguably, why we ended up seeing slightly FEWER home sales last year -- sales declined 4% in 2017 from 1309 to 1254. So, now, starting of 2018 -- are things any better? No. There are even FEWER homes for sale now than there were a year ago. Inventory levels dropped another 32% between January 2017 and January 2018 -- and the current inventory of active listings (280 homes) will / would only last us 2.7 months -- as compared to that balance point of six months. So, what then will this lead to in 2018? I am predicting slightly fewer sales than last year -- and likely faster sales -- and at slightly higher prices. Stay tuned! | |
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Conjecture vs Analysis in Home Pricing |
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 Sometimes, determining the market value of a home is quite straightforward, such as in this recent example....
When you then are considering the value of a 3 BR, 2 BA, 1800 SF, circa 2000 home -- it would seem reasonable to think that you'd likely pay between $245K and $255K. Multiple comparable sales point very specifically to that value based on a high degree of similarity between the comparable sales and the subject property. Sometimes, however, it's not as straightforward. Conjecture - an opinion or conclusion formed on the basis of incomplete information. Sometimes, we're going to identify a few sales of homes that are not so similar to your home, but which we understand a buyer would see as inferior to your home. And then we might point to a few other sales of homes that are, again, no so similar to your home, but which we understand a buyer would see as being superior to your home. At the end of the day, pricing a home is a conversation, based on data, to come to our best, clearest and most complete understanding (guess) as to what a buyer is going to be willing to pay for your home. Sometimes this conversation is a reassuringly precise exercise -- sometimes, not so much. | |
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How does a Kickout Clause work in real estate? |
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 Buying and selling at the same time can be tricky -- and a common question is whether you should go ahead and make an offer on a house if you do not yet have your house under contract. If you do so, you'll likely then be dealing with a kickout clause. What is a Kickout Clause? If a buyer who needs to sell their home in order to a buy a new home finds a home that they want to purchase – they can make an offer that is contingent upon the sale of their current home. If a seller is willing to entertain such an offer they will typically counter back with a "kickout clause" which allows them to continue to market the property to other buyers who do not have to sell a home in order to buy. If a second buyer comes along and makes an offer, that is not contingent upon the sale of a house, the seller then provides notice to the primary buyer that they are being "kicked out" – and that primary buyer has a set period of time (typically 48 or 72 hours) to either get their house under contract (to satisfy the home sale contingency) or remove the home sale contingency by showing proof that they can proceed with the purchase without selling their current home. If the primary buyer cannot do this, and the timeframe passes, then the first contract will be null and void and the seller can then proceed with the second buyer. OK -- and no -- a kickout clause does not have anything to do with soccer. :) | |
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The Two Phases of Looking For a Home |
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 Looking and waiting. Exciting and frustrating. Fun and boring. Whatever we call them, there are usually two phases of looking for a home to purchase once you have (decisively or tentatively) made a decision that you are going to buy a new home. First -- we'll take a look at all of the homes currently on the market that might fit your ends. Second -- we'll wait for new listings to hit the market that might fit your needs. These days -- with very low inventory levels in many price ranges and market segments -- the first part of the process (looking at current listings) is often a brief exercise. Most of the homes of interest that have been listed in the past 90 days may very well have already been snatched up with another buyer. As such, don't be surprised if it doesn't take long to go see the houses currently on the market that are a good potential match for you. We're then stuck in that second phase -- waiting. How exciting. There will (likely) be new listings hitting the market in coming weeks or months that will be a potential match for what you're seeking in a new home, but we'll have to wait around for a homeowner to be ready to list their home for sale. When a local housing market experiences low levels of housing inventory, more of our "looking for a home" time is typically spent waiting rather than looking. What an exciting opportunity to practice patience! ;-) | |
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Last Call for City Homes Under $200K |
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 There are fewer and fewer homes for sale under $200K in Harrisonburg and Rockingham County. Here's what the inventory numbers have looked like over the past few years....
That has now fallen a bit further, to 93 homes for sale under $200K in the City and County -- but even more interesting is where those homes are located....
And it probably woulnd't surprise you that only 5 of the 21 City homes under $200K are actually single family detached homes -- the other 16 are townhouses, duplexes or condos. Prices are rising -- which makes homes under $200K harder and harder to come by, especially in the City. | |
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In 2017, Median Sales Price Finally Surpasses 2007 Peak |
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 It should be noted, perhaps with some fanfare, that in 2017, the median sales price in Harrisonburg and Rockingham County finally surpassed the prior peak seen in 2007. Yes, that 2007, the one after a rapid run up of sales prices as a result of a largely nationwide real estate BOOM, followed thereafter by a decline in sales prices, at different speeds in different areas. But now, in 2017 -- ten years later (!!!!) -- we finally hit a median sales price of $198,500 -- slightly edging out that previous high of $195,100 seen in 2007. Thank goodness. Now, folks who bought in 2006, 2007 or 2008 might finally not be underwater based on their original purchase price. It's been a long time coming.... | |
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Determining An Offering Price on a Property in a Neighborhood |
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 How does one determine an offering price in a neighborhood? Start 5% below asking price? Start at the tax assessed value? Start at the price the seller paid, adjusted per market changes since that time? Start $1K lower than the list price for every day it's been on the market? Start at full price if it's a new listing and you think it will sell quickly? Many or all of these strategies are likely to lead you astray. In theory -- you should be willing to pay approximately the same price as other buyers have paid for approximately similar homes in the recent past. For example....
When you then are considering a new listing of a 3 BR, 2 BA, 1800 SF, circa 2000 home -- it would seem reasonable to think that you'd likely pay between $245K and $255K. Of course, there are a variety of other extenuating factors that can affect this pricing:
So -- how does one best research what homes are selling, and at what prices? I'll remind you of -- HarrisonburgNeighborhoods.com.  On this handy new website, among other things, you can find a three year history of the sales prices in each of 34 neighborhoods in and around Harrisonburg. I hope that HarrisonburgNeighborhoods.com continues to serve as a helpful resource to you as you research home values, monitor for new listings, and more. Don't forget -- you can sign up to receive email alerts of all new listings and recent sales in any of the 34 neighborhoods! | |
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Updated City GIS Mapping System |
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 The City of Harrisonburg just launched an updated GIS system, and it's worth checking out the next time you are trying to explore a property in the City of Harrisonburg. One of my favorite parts of the new GIS system is that it is mobile-friendly and you can explore property data much more easily from your phone or tablet. Here is the GIS system: http://www.HarrisonburgVA.gov/GIS Here is the update from the City.... The City of Harrisonburg's Geographic Information System (GIS) recently improved its mapping system and GIS viewer online to allow for more capabilities. The City's GIS technology combines layers of information to give the public a better understanding of a specific area. Different layers of information can be combined to tell a story about that piece of property. Some layers include streets, public facilities, parks, property lines, and city limits. Information about specific parcels of property is also available through the GIS system. The improvements to the City's GIS system have enabled it to be more user friendly and responsive, which allows it to work on a desktop computer or smartphone. When the data and maps are updated, it will be reflected online almost immediately. "The GIS system is a resource that holds a wealth of information, which is free and accessible to the public," explained Nate Rexrode, GIS Administrator. "We encourage members of the public to take a look at the site and utilize the information that is available to them." Property owners are encouraged to visit the GIS site for zoning information, acreage, voting and school districts, and data specifically involving their property. This site is also beneficial for realtors, surveyors, engineers, planners, and those who often research property-related information. | |
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Local Home Values Rise in 2017 |
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 Find out more about this stellar home just outside Bridgewater at 1215MtCrawfordAvenue.com. I just published my most recent monthly market report, and as usual, you can read on for an overview, download the full report as a PDF, read the entire report with commentary online, or tune in to my monthly video overview of our local housing market...  OK - now, let's dive into the market data behind this month's report....  As shown above....
 Two observations here (above)....
Perhaps the truest analysis of the trends in housing values -- single family homes on their own. The waters can be muddied, a bit, on townhouses, duplexes and condos -- with investors buying the properties as rentals. Most single family homes are bought as residences, and thus there are fewer external factors that affect these home sales. As noted above, there were 10% fewer single family home sales in 2017 -- but the median price rose for the third year in a row, to $224,950. This is a good indicator that home values are rising in our area. And finally, the disturbing statistic I was hesitant to even go look for this month....
Indeed -- after free falling for most of 2017, the number of homes for sale in Harrisonburg and Rockingham County has now plunged below 300 -- to only 280 homes for sale as of this morning!?! Two crazy further notes -- there are only 46 townhouses/duplexes/condos listed for sale in the entire City/County -- and there are only 64 homes for sale in the City of Harrisonburg!?! OK -- I'll stop there for now. There is plenty more in my full market report, so feel free to download it as a PDF, read the entire report online, or watch/listen to a video overview of this month's report. And, my reminders for buyers and sellers last month still apply.... SELLERS -- even though it is a seller's market in many price ranges right now, you must still focus on price, condition and marketing. For further reading on buying or selling in this area, check out.... | |
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Septic Tanks Can Crack |
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 If you are buying a home in the County, I strongly suggest that you have the septic system (tank, distribution box, etc.) inspected by a qualified company. Just because everything is neatly tucked away underground, and seems to be working fine, that does not mean that, in fact, all is well. Septic tanks can crack. Connections to/from the distribution box can crack. Distribution lines can be crushed or crack. Regardless of whether the buyer or the seller is paying for it, as a buyer, it is worth having the septic system thoroughly evaluated when purchasing a home on a septic system. | |
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My Predictions for the 2018 Real Estate Market |
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 As is my annual tradition, I am making some predictions about what we'll see in the Harrisonburg and Rockingham County real estate market in 2018. As you'll note below, I am optimistic about the coming year as it pertains to home values -- but as shown above, not so much when it comes to sales volume. Just as we saw a 5% drop in sales in 2017 -- I believe we will see a further decline in the number of home sales in 2018. I am predicting a 2% year-over-year decline in the number of homes being sold. This will largely be a result of a lack of supply -- not a lack of demand. I believe we will still see high levels of buyer interest in many or most price ranges, but a lack of housing supply (listing inventory) will keep us from seeing as many home sales as we did in 2016 and 2017.  As shown above, I am predicting another 3% increase in the median sales price during 2018. Over the past several years we have seen steady increases in the median sales price, and I believe that trend will continue, partially as a result of continued high demand for housing and low supply of housing. My hope is that we do not see a significant increase (greater than 6%) in the median sales price, as these types of increases are typically short-term, cannot be sustained, and can lead to future downward corrections. Those are my predictions, what about for you? Email me (scott@HarrisonburgHousingToday.com) and let me know where you think our local market will go in 2018. And keep up with all the market data between now and December 31 by signing up to receive my monthly housing market report by email if you are not already receiving it. | |
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Comparing My 2017 Housing Market Predictions To Reality |
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 As shown above, I was horribly inaccurate with my prediction of how many home sales we would see in 2017. After a 16% increase in the pace of sales between 2015 and 2016 I thought I was being sufficiently conservative to only point to a potential 4% increase in the pace of sales between 2016 and 2017. Perhaps what I did not fully account for was the limiting impact of low inventory levels -- which I believe are a key reason why we did not see more home sales in 2017. So -- not only did we not see 1350 home sales in 2017 (as I predicted) we also did not see 1301 home sales (the 2016 total). We ended up with right around 1,254 home sales for 2017. Now, let's see how I did in predicting market values in 2017....  Woah! I think I'm going to say his prediction mattered much more than the first. :) As you can see -- I predicted that we would see the median sales price climb from $192,900 up to $198,500 in 2017. And --- it did! The median sales price for the 1,254 sales reported thus far in the Harrisonburg-Rockingham MLS show a median sales price of.... $198,500! That means (as conveniently shown in this one year old graph above) we ended up seeing a 3% increase in median sales prices -- only slightly below the 4% increases seen in 205 and 2016. Stay tuned for some predictions for 2018 in the coming days! | |
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Home Sales Slow By (perhaps as much as) 5% in 2017 |
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 All home sales have not yet been reported but it is now clear that we did not clear the 1300 sales/year mark in Harrisonburg and Rockingham County last year. With 1,249 home sales recorded in the MLS thus far, we are likely to see that figure rise a bit more over the next few days, but not by much. This is a slight drop off compared to last year after several years of increases over previous years....
Stay tuned for my full market report in the next week or so, as well as predictions for the 2018 housing market. Oh, and HAPPY NEW YEAR! | |
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Introducing HarrisonburgNeighborhoods.com |
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 Happy New Year! On this absurdly chilly morning, I'm excited to announce a brand new website that I hope you will find to be a helpful resource for you as you buy real estate, sell real estate, or study the real estate market.... HarrisonburgNeighborhoods.com On this new website, you can explore 34 neighborhoods in and surrounding Harrisonburg.....  Here is an overview of the type of information you will find about each of these 34 neighborhoods.... First, an aerial view of each neighborhood....  Next, a statistical overview and analysis of the neighborhood....  Next, all active (and pending) listings in the neighborhood....  Next, all home sales from the past year, plus an option to look back even further....  And finally -- one of the most exciting features of this new website....  Indeed -- as shown above -- for any of the neighborhoods featured on this new website, you can sign up to receive email alerts of all new listings and home sales in the neighborhood. I recommend that you sign up to receive email alerts for the neighborhood in which you currently live -- as well as the neighborhood where you are considering a home purchase, if there is such a neighborhood. Oh, and yes, the new website is mobile friendly and will give you helpful info on the go as well....  So -- what are you waiting for -- go check it out at HarrisonburgNeighborhoods.com and let me know what questions you have or recommendations for further improvements. Here's to an exciting 2018! | |
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
Licensed in the
Commonwealth of Virginia
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