Is Overbuilding Occurring In Harrisonburg That Will Affect Buyers Of Investment Properties


Is Overbuilding Occurring In Harrisonburg That Will Affect Buyers Of Investment Properties
By Scott Rogers • September 20, 2018
I am working with several real estate investors who are considering the purchase of townhouses in the $140K - $170K price range that they would intend to rent to young professionals / recent college graduates / young families, etc. A reasonable question for a thoughtful investor considering this type of purchase is whether our market is being overbuilt such that they may have difficulty renting their investment property in the future (higher vacancy) or that they may not be able to maintain their rental rate in the future. I do not believe that type of overbuilding is currently happening in our market -- though it could certainly happen in the future. But let's explore it together... Most of what one would see being built in Harrisonburg right now is either student housing or high end rentals -- and I don't believe either of these draws in the potential tenants described above -- and thus this construction would not negatively impact the investors purchasing the type of property described above. Student Housing - We continue to see more and more of this being built in our market. Young professionals are certainly not going to rent in a student housing complex -- and historically, when student housing supply has exceeded demand, the oldest and least desirable complexes have seen the biggest swings in vacancy rates (up) and rental rates (down) -- which again is not going to draw in the potential tenants we are discussing above. High End Rentals - The most obvious spot where these are being built is at The Reserve at Stone Port, though others are also planned at Preston Lake. These are apartments (instead of townhouses as discussed above) and the rental rates are much higher (for the amount of leased space) than our target tenant population would be finding in a townhouse. Again, I don't think these draw potential tenants away from the type of property that my investor clients are considering. Now -- even if the majority of what is currently being built is not likely to have a negative impact on the buyers of investment properties -- that's not to say that some other near-term construction would not have an impact. If a developer/builder started building (100) townhouses with 1400 SF, 2 or 3 bedrooms, 2 full bathrooms and intended to rent them for $950 - $1100 per month, that could impact the investment market I am describing. If a developer/building started building (100) townhouses with 1400 SF, 2 or 3 bedrooms, 2 full bathrooms and intended to sell them for $150K - $170K, that could impact the investment market I am describing. Neither of these types of developments are currently underway, though they are certainly both theoretically possible. So - given all of the above, it would seem to be a reasonable time to buy an investment property in that $140K - $160K price range, as I do not believe current inventory levels or new construction trends (for sale or for rent) are negatively impacting the buyers of these types of investment properties. Receive Updates by Email Recent Articles: There Are Plenty Of Types Of Houses That Exist That Just Are Not Available To Purchase Home Sales By Price Range In The City Of Harrisonburg Are You Compromising On Aspects Of Your Next Home That You Can Or Cannot Change Later? How Much Slower Are The Winter Months In Our Local Housing Market? Rockingham County and New Home Sales Drive Surge in Area Housing Market Find The Balance Between Optimistic And Realistic Home Pricing Room Size Is Difficult To Understand Solely From Real Estate Photos How Much Would You Value Not Having To Prepare Your Home For Showings? One Out Of Four Homes Is Taking Longer Than A Month To Sell Consider The Cost Of Your Planned Renovations When Planning Your Offer
Have any questions? Contact Scott Rogers at 540-578-0102 or scott@funkhousergroup.com
Based on information from the Harrisonburg-Rockingham Association of REALTORS® or its MLS, for the period Jan 1, 2000 through Nov 21, 2024 (unless otherwise noted).
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