Archive for August 2018
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What To Do When A Home Buyer Behaves Irrationally |
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 The purpose of a home inspection contingency is to allow a buyer to learn more about the property they have contracted to purchase -- and then to request repairs to the property if they discover new issues of which they were unaware when they contracted to purchase the property. For example -- a buyer contracts to buy a home for $250K and believes the electrical wiring and plumbing are all in good condition. The home inspection takes place and the inspector discovers that there are four plumbing connections that are leaking in the unfinished basement. It is then reasonable for the buyer to ask the seller to repair these plumbing leaks prior to closing. They agreed to pay $250K for a house that they did not believe had plumbing leaks -- and thus they request the seller restore the house to being a leak-free house. This is certainly an oversimplification of the matter, as there are often many discoveries during a home inspection -- of varying levels of seriousness or complexity -- but stick with me for now. Back up at our prior example -- rarely would a seller be disappointed, surprised, or unhappy if a buyer asked for plumbing leaks to be repaired. But what is a seller to do when a buyer starts to behave irrationally -- in a way that the seller believes no other buyer would certainly ever respond? For example --
I could go on and on. The point is -- sometimes buyers behave irrationally -- for whatever reason they have decided that they cannot / will not buy the house, and they are going to dig in their feet and make irrational repair requests until the seller finally caves and releases them from the contract. Or, rather, given the standard Virginia home inspection contingency, the buyer just terminates the contract on the basis of the home inspection even though their decision to do so was based on a view of the property condition (and of needed repairs) that is unlikely to be shared by any other buyer, ever. So, what in the world is a home seller to do in such a situation?
Of course, I hope this advice is absolutely never pertinent to you. May you never be in the midst of a home sale -- under contract -- just working your way through contingencies and excitedly anticipating a closing in the near future -- and then have the rug pulled out from under you by a home buyer with unreasonable expectations or demands. But if you do find yourself in this situation, try to move on quickly and be transparent with future buyers -- after getting angry, frustrated and discouraged, of course! | |
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30 Year Fixed Rate Mortgage Interest Rates Seeming Stable Around (Just Above) 4.5% |
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 Despite the fact that interest rates have climbed almost three quarters of a percentage in the past year -- they are now seeming relatively stable, around 4.5%. Over the past three months we have seen interest rates mostly between 4.5% and 4.6%. These interest rates, being higher than the sub-4% rates seen last year, do not seem to be hindering buyer interest and activity -- as we have seen a record year of home sales (thus far) in 2018. If you will be buying a home soon, I would recommend talking to a lender early in the process to get a sense of your buying power and to understand your potential monthly mortgage payments. | |
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Twice As Many Home Buyers In County than City |
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 Each year, right around twice as many home buyers purchase homes in Rockingham County as compared to in the City of Harrisonburg. Clearly, the home buyers in the City are much more densely situated -- since the City is comprised of only 17.42 square miles -- while the County spans 849.09 square miles! As a random aside, Rockingham County is the third largest county in Virginia! So -- twice as many buyers in the County -- do sellers in the County have it easier than in the City? Not necessarily, as there are slightly MORE than twice as many homes for sale in the County as compared to the City.  Where will you purchase your next home? In the City or the County? Why? Based on the lot size, privacy, school district, age, property type? | |
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Who Bought (Or Sold) What For What? |
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 Looking for information about recent property transfers in Harrisonburg and Rockingham County? Be sure to check out HarrisonburgPropertyTransfers.com. Of note...
You can also subscribe to receive these updates by email. Just complete the form at the top of HarrisonburgPropertyTransfers.com. | |
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Fall Is Not The Worst (Nor The Best) Season For Selling Your Home |
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 As is likely no surprise -- the busiest time for home sales (contracts) is SPRING -- followed by SUMMER. Fall, though, is the third best -- ok, also the second worst -- season for home sales. Of note, the data above reflects the timeframe during which properties went UNDER CONTRACT -- not when they closed. Plenty of the Summer contracts turned into Fall closings -- but the 279 figure is a reflection of how many buyers made buying decisions (signed contracts) between September and November of last year. So....if you want to sell your home (and close on it) in 2018, you should be thinking about getting it on the market sooner rather than later. Fall is definitely a better time to sell than Winter! | |
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Fewer and Fewer Homes For Sale in the City of Harrisonburg |
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 Home buyers looking to purchase in the City of Harrisonburg are finding fewer, and fewer, and fewer options at any given time. As shown above, inventory levels have been steadily dropping over the past six years -- from over 200 homes for sale to less than 100 homes for sale. Now, of note, this is not an indication that fewer homes are selling in the City -- but rather, that with as fast as homes are selling in the City, there are a smaller number available for sale at any given time. Buyers in the City, thus, are finding themselves in competitive offer situations more often, or are having to make decisions much more quickly when a house of interest is listed for sale. Learn more about our local housing market in my most recent monthly market report -- click on the image below to read it.  | |
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Local Home Sales and Prices Surge in July |
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First, learn more about this fantastic home (my dad's house), via a 3D Walk Through and more by visiting 3120PrestonLakeBoulevard.com. Now, back to our local real estate market -- 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...  Now, let's take a look at some the trends we're currently seeing in our local housing market...  As shown above, it has been an exciting month -- and year -- in our real estate market...
 OK -- this one is a random snippet. Above you will find a STARTLING statistic about the housing market in the City of Harrisonburg -- not including Rockingham County. When we look at all homes that sold in the past 12 months, in the City, half of them were under contract within 14 days of being listed for sale! Wow!  Back to the big picture -- June 2018 home sales (all 174 of them) was the third highest month of home sales we have ever seen in our local market -- topped only by two summer months back in 2005 and 2006. I thought we'd see home sales drop off in July, as a result, but we had the best month of July sales in recent years -- with 127 home sales! Next month I'm not expecting we'll pop back up to August 2016 levels -- we're more likely to be in the 120 - 130 range for sales in August.  August, oh August, that magical month. Last year at this time (end of July) we had seem more home sales (in 2017) than during that same timeframe the prior year (2016). And then, August. After August passed, 2017 never caught back up -- and ended up being a slower year than 2016 when all sales were accounted for. So -- what will happen this August? Will we keep on pace with 2017? Or even with 2016? Will we fall behind again? Stay tuned.  When I see the YTD market-wide median increasing by 10%, I get a bit worried -- wondering if these are sustainable increases. Then, however, when I look at single family home sales alone, I am (at least a bit) reassured. You'll note that thus far the median sales price has increased only 4.2% between 2017 and 2018. This is much more in line with (or close to) long-term historical averages, and makes me think that the strong seller's market might not be leading to unsustainable price increases. Why, might you ask, is the single family detached market a better indicator of changes in market value? Mainly because it is not as easily affected by the number of investors engaging in our market. When the market gets hot we often see lots of investors buying properties -- often townhouses or other attached dwellings -- which can affect price trends. Most single family home purchases are made by folks who actually intend to live in the properties.  Which would you rather do, buy or sell in the current market? The answer should be "sell" -- given the strong seller's market we're currently experiencing. A few things to note above -- first, there are still plenty more buyers in the market than there are sellers. Second, the number of sellers in the market continues to decline (and decline, and decline). Third, after a brief slow down in buyer activity, the pace seems to be increasing again.  What comes next for our local market? Looking at contract activity (above) we can see the pop in May 2018 that lead to a wild month of June sales. Looking, then, at July -- we actually see a sizable increase from last July -- so maybe we'll have a stronger than expected month of sales in August after all!?  If you're buying soon, you might have already passed the time in our local market cycle when you would have the most options from which to choose. That's not to say that plenty of new listings won't be coming on the market in the next 30 / 60 / 90 days -- they will -- but inventory levels have likely peaked and will start to decline as we (eventually) head into Fall and Winter.  Lastly, how about those interest rates? We were actually close to 4.5% about 20 months ago -- but then dropped below 4% again. Now, over the past year, we have seen steady increases to where we are currently hovering around 4.5%. I have not seen this playing a major role in whether buyers are willing and able to buy -- but I do wonder if buyer activity (or interest or capability) would start to be affected if the interest rates rose to 5% or 5.5%. OK -- I'll stop there for now. Again, you can 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 One last note for anyone thinking of buying or selling soon -- 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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Will It Be Harder to Sell Your Home Or Buy The Next One? |
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 If you are getting ready to sell your home AND buy your home, it can sometimes be difficult to determine where to start... Do you start by finding a house you want to purchase? Or do you start by listing your home for sale? I would suggest that you start with whichever you anticipate will be the most difficult part of the two step process. If it will be difficult to sell your home (because of price, location, layout, features, age, etc.) and it will be at least slight easier to buy the next one (plenty of viable options are listed for sale) then you are likely best off starting with listing your home for sale. Work to get the more difficult half of the transition underway by getting your current home under contract, and then work on the easier side of the transition. If it will be more difficult to buy the next house (because of the specificity of your housing goals, or because of low inventory levels, etc.) and it will be at least slightly easier to sell your current home (because the property type, location or price are in high demand) then you are likely best off focusing first on finding the home to buy -- and then listing your home for sale. There are plenty of nuances we can discuss further to formulate a plan for attempting to simultaneously sell and buy -- but as a general rule of thumb, you'll be best off to start with the harder half of the transaction. | |
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Prices of Single Family Home Sales Relatively Close to Harrisonburg |
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 Here is a break down of a year's single family home sales by price range:
A reader asked the following in response to my analysis earlier this week of all home sales in Harrisonburg and Rockingham County... "These stats don't seem to portray the same market in which I hunted unsuccessfully for months in the 200-300k range and, ultimately, felt pushed to purchase far beyond my comfort zone amid intense competition. How does the picture change if you include only detached single family properties? (i.e., are the numerous sales of sub-100k student townhome units skewing things?) I'm just trying to understand why my experience seems to have differed so greatly from the market reality." This is an excellent point. When we look at a large amount of data (all sales in Harrisonburg and Rockingham County) the large number of home sales in a particular price range can obscure some market realities that are hiding just below the surface. In the case of the buyer commenting above, the reason that she found very few options in the $200K - $300K price range relates to property type, location, size, age and features. Property Type - Indeed, the original analysis includes all property types, including townhouses and condos. Under $100K, this includes many student rentals. Between $100K and $200K, this includes many townhouses, some of which are rental properties. Between $200K and $300K this also includes quite a few townhouses. In the new analysis (above) I have only included single family detached homes. Location - Rockingham County is a large county. It's actually the third largest county in Virginia, behind Pittsylvania and Augusta. Many buyers looking to be close-ish to Harrisonburg aren't going to be looking at homes in Broadway, Elkton or Massanutten, based simply on location. In the new analysis (above) I have only included areas close-ish to Harrisonburg, as shown below.  Size - It's easy to look at the data above and wonder how there could really be 182 homes that sold between $200K and $300K, in the geographic area bounded above, and to not (as a buyer) have thought any or many were good options. A whole lot of this has to do with the size of the home -- many buyers need more than X bedrooms, or more than X square feet. When we start putting some lower bounds on the space needed in a house, we quickly narrow down the number of viable homes. Age - The age of a home doesn't narrow things down quite as quickly as the size of a home, but it makes an impact. Many buyers are going to be significantly less excited about buying a 60 or 80 or 100 year old home as compared to buying a home that has been built in the past 10 to 20 years. Features - Then, when we start adding on needs (garage, basement) or wants (open floor plan, level lot), we narrow it all the way down to a relatively small number of homes that often match exactly what a buyer is hoping to buy. So -- when you look at the large number of homes selling in a given price range, don't think that all of those homes will be homes that will be viable options for you and your family. Once we add some of your additional (reasonable) criteria, the options will start constricting, often rather quickly. | |
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107 Apartments, Retail, Office Space Proposed on Lucy Drive |
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 The owners of two parcels on Lucy Drive are applying for a rezoning to allow for a mixed use development to be built on the corner of Lucy Drive and Deyerle Avenue. Here is the intended site plan...  Here are some basic details, per today's Daily News Record article (see below) and from the rezoning application:
Read today's Daily News Record article about this potential development here. Review the full rezoning application packet to be reviewed by the Planning Commission on Wednesday here. The public hearing for this rezoning will take place on Wednesday, August 8th at 7:00 PM in City Council chambers. | |
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Fewer Than 1 In 4 Home Buyers Spend Over $300K |
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 So much that can be unpacked here...
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Housing Inventory Levels May Have Peaked For The Year |
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 The number of options that you have today, as a buyer, may be the most options you'll have at any given point between now and the end of the year. As shown above, inventory levels (the number of active listings in the MLS at the end-ish of each month) climbed through the first six months of the year, but seemed to peak in May/June and now would appear to be starting to decline again. Now, certainly, there will be new listings over the next five months of this year -- so there will be some new inventory options -- but the total inventory available at any given point is not likely to increase again until next Spring. | |
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How Are Your City of Harrisonburg Tax Dollars Spent? |
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 I found the infographic above to be helpful. The largest portions of our local tax dollars are being spent on Education, Public Safety and Public Works! If you found the above interesting, you'll likely enjoy reading the entire (8 page) "Budget in Brief" developed by the City of Harrisonburg this year, with a high level analysis of the Fiscal Year 2018-19 budget for the City of Harrisonburg. Click below to download the report.  | |
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
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