Archive for November 2018
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The Latest on Possible Harrisonburg Short Term Rental Regulations |
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 As reported in last week's Daily News Record, the City of Harrisonburg is continuing to discuss if they should try to better regulate short term rentals and if so, how. The lay of the land in Harrisonburg currently seems to be...
And so, the discussions continue -- and are likely to continue to continue -- as there does not seem to be a neat and tidy, balanced solution to this issue. Maybe there will be new regulations in 2019 that will allow or prohibit or limit or regulate short term rentals. Or, maybe, the zoning ordinance will remain the same, it will be illegal to rent all or part of your home out on a site like airbnb.com and some property owners will do it anyhow. | |
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When To Make An Offer To Buy If You Still Need to Sell Your Home |
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 Here's a good opportunity to practice patience... If your dream home is on the market -- either as a new listing, a newly reduced listing, or an old and stale listing -- it might be tempting to go ahead and make an offer to buy the house, even if you still need to sell your house. I'll recommend, in almost all instances, that we wait to make the offer until we have secured a contract on your house. And here's why... NOTHING GAINED - In almost all instances, the seller of your dream house will counter back (to our contingent offer) with a "kick out clause" allowing them to continue to market their house for sale to other buyers, and to allow them to move on to an alternative buyer who does not have to sell their home after giving you 48 or 72 hours to remove your home sale contingency after the new offer comes in. As such, unless you can buy without selling, having a contingent contract with a kickout clause is pretty similar to not having a contract at all. If another buyer comes along to buy your dream house, the only reason why you'd have an upper hand (over that new buyer) in already having a contingent contract in place is if you can somehow pull together a contract on your current house within that 48 or 72 hours period after that new buyers hows up. So -- having the contingent contract (with kick out clause) doesn't do a whole lot to defend your spot in line to buy your dream home. NEGOTIATION - We are likely to do better in negotiating a deal for you to buy your dream home if we already have your current house under contract. The seller of your dream home is not likely to be willing to negotiate as much if you still don't have your house under contract (or if you haven't even listed your house for sale) as your purchase of their house will seem significantly less certain. LEVERAGE - Any savvy seller (or seller's agent) will use your (contingent) offer against you. It's not personal of course, they're just trying to do their best to sell their home. If there have been other recent showings of your dream home, the moment your contingent offer is received, they are likely to notify all of those other buyers that they have received an offer -- and will try to use the existence of your (contingent) offer to generate enough interest and urgency for another buyer to also make an offer, which they would hope would not have a home sale contingency. Now, even if we make an offer once your current house is under contract, the seller will likely still try to generate additional offers to compete with us -- but at that point we can compete much better, already having your house under contract. Why allow the seller to use your contingent offer (with your house not yet under contract) to drum up other actionable interest from other buyers? So -- as hard as it may be for you to do -- I will almost always recommend that we **wait** to make an offer on your dream house until we have your current house under contract. | |
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The Value of Your Home Based On When You Bought It |
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 Can historical median sales prices give you some sense of your home's current market value? Perhaps so! The values in the chart above are calculated by comparing the 2018 median sales price to the median sales price in each of the past 17 years. Do remember, of course, that while this might provide a general guide to market changes over the past 18 years, every home and neighborhood is unique. Let's chat about your specific house if you want to know what it is worth in today's market. | |
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Mortgage Interest Rates At Highest Point in Eight Years |
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 Mortgage interest rates keep on rising. The current average rate for a 30 year mortgage is 4.81%. These two statement are equally true... 1. Current mortgage interest rates are now higher than they have been for the past eight years. 2. Current mortgage interest rates have been higher than the current rate for 38 out of the past 46 years. The lingering question over the past few years has been whether rising interest rates, which pushes monthly housing costs higher, will eventually slow down buyer ability and buyer interest. We don't seem to be seeing that as a current widespread effect, but the more the rates increase the more likely that becomes. | |
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Contract Activity Slows Heading Towards Thanksgiving |
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 And -- as we might have expected -- home sales activity is slowing as we roll into late November. The graph above shows the number of contracts signed per month for each of the past eight months -- and those signed in the first 19 days of November. Now, it's possible that we'll have a huge surge of contracts on Black Friday (oh wait, homes aren't going to be on sale that day) but if not, we're likely to see pretty big drop in contract activity this month. Again, nothing new or surprising - just the seasonal shift that we always see in November. We should expect to see low levels of contract activity for the next few months before buyer activity jumps up again in March. If you're a seller who just listed their home for sale, or if your house is lingering on the market, we should talk about strategies related to pricing and timing to meet your goals for selling your house. | |
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Owners, Operators of Short Term Residential Rentals in Rockingham County to Pay Transient Occupancy Tax |
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 If you are renting part or all of your Rockingham County home out on AirBNB you will need to start collecting and paying a transient occupancy tax of 5% of the gross rent starting January 1, 2019. Read on from yesterday's update from Rockingham County... ### NOTICE TO ALL OWNERS AND OPERATORS OF SHORT TERM RESIDENTIAL RENTALS LOCATED IN ROCKINGHAM COUNTY Beginning January 1, 2019, all owners of residential properties located in Rockingham County, Virginia, who rent all or any portion of a residential property for not more than 30 consecutive days must collect from the tenant the transient occupancy tax of 5% of the gross rent and remit the tax collected to the Commissioner of the Revenue for Rockingham County. The tax must be collected at the time of rental, and the remittance is made quarterly with the filing of a return. Owners and operators of short term rental properties should contact the Office of the Commissioner of the Revenue of Rockingham County for more details and information. 540-564- 3073. ### A short term rental is defined here as being a rental period of less than 30 days. | |
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Will housing inventory levels improve next year? |
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 If you have been looking for a new home to buy all Spring and Summer and Fall of this year -- and didn't find one, which you blame on having very few homes from which to choose -- are you likely to have better luck next year? I'm guessing not. The graph above shows that inventory levels have dropped significantly over the past two years based on how many homes are on the market at the start of the main buying season, which I'm defining as April in the graph above. So -- after seeing a 20% decline in inventory levels between April 2017 and April 2018 -- are we likely to see inventory levels start increasing again in 2019? Again, I don't think so, and here's why.... To reverse this trends of declining inventory we would need one or more of the following to happen in our local market....
Again -- none of the changes above seem likely to happen at a scale that would allow inventory levels to see much, if any, of an increase next year. As such, I am expecting we'll see relatively similar inventory levels next Spring and Summer. | |
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Foreclosures Slow Considerably in 2018 |
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 Fewer and fewer homeowners are finding themselves in a situation where they are being foreclosed on in Harrisonburg and Rockingham County. The data above reflects the number of completed foreclosure sales in the first ten months of the year for each of the past four years as well as the current year. The number of foreclosures (in the first 10 months of the year) has fallen 35% over the past year -- and an astonishing 52% from where we were four years ago. This is likely a result of rising home values, leaving fewer homeowners in a situation where they cannot sell their home if they are no longer able to make their mortgage payments. | |
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Home Sales Rise Yet Again In October 2018 |
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 Before we dive into this month's market report, check out this featured home in Highland Park by visiting 4350BrownRoanLane.com. Now, on 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 or tune in to my monthly video overview of our local housing market... VIDEO OVERVIEW: Click here to watch (and listen) to my overview of the market. Now, let's take a look at some the trends we're currently seeing in our local housing market...  As shown above --
Now let's look at the monthly home sales visually...  This past June and July were stellar months of home sales -- with the highest sales level seen in the past three years. Then, sales fell in August and September, and it was seeming that rising interest rates might have finally started to affect buyer behavior. But then, October. We saw a sharp increase in home sales in October -- the strongest month of October home sales in the past several years. So -- where do we go from here? Will we have the best November of late? Or will we slip back into the middle of the pack? Regardless of how November goes, it seems 2018 will be a strong year...  We've seen 1,117 home sales in the first ten months of 2018 -- this is the strongest first ten months of the year seen anytime in the past six years, not all of which are shown above. It seems, thus, that we're likely to get back up to a 1300/year pace of homes selling in Harrisonburg and Rockingham County. Can it happen? What is your prediction?  As mentioned earlier, even though the market-wide median sales price has increased 9% in 2018 -- that is not an indication that home values are up 9%. There are more single family homes selling this year than last, which is affecting the overall median sales price. The graph above, then, is a reasonable substitute for understanding value trends in our local market. When we look only at single family homes (not duplexes, townhouses or condos) we see that the median sales price has increased 2.4% over the past year. This seems much more sustainable than a 9% increase.  In some ways, it is surprising that home values aren't increasing more than they are. We have been in an increasingly strong seller's market for the past two years -- with more and more buyers fighting over fewer and fewer seller's homes on the market at any given point. Certainly, "enough" sellers are selling -- as the total number of closed sales is increasing -- but strong buyer activity is keeping overall listing inventory down at most times of the year.  Why do I think we'll finish out the year with 1300 or so home sales? Partly because of the strong month of contract activity seen in October. A total of 111 contracts were signed in October, most of which should turn into closed sales by the end of the year. As a side note, winter is coming. Contract activity is likely to slow over the next four months.  And there are those inventory levels -- low and getting lower. We've seen an 11% decline in the number of homes on the market over the past year -- and inventory levels didn't rise all that much during the Spring / Summer markets this year. So, basically, as fast as sellers are listing their homes, buyers are snapping them right up -- in most price ranges, in most locations, etc., etc.  And finally -- mortgage interest rates. Most folks don't pay with cash -- they finance part of their home's purchase price -- and it is getting more expensive to do so these days. We have seen a 23% increase (from 3.94% to 4.86%) in the average 30 year fixed mortgage interest rate over the past year. This means that today's buyers are paying more per month than they would have last year, for the same home, even before we start calculating how that sales price would have increased over the past year. I'll pause there, for now. As usual, you can download the full report as a PDF, or tune in to my monthly video overview of our local housing market And a few tips 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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Pricing Your Home Above $212,500 Eliminates Half Of All Potential Buyers |
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 Pricing your home above $200,000 eliminates 44% of all buyers. Pricing your home above $212,500 eliminates HALF of all buyers! Pricing your home above $300,000 eliminates 79% of all buyers! Pricing your home above $400,000 eliminates 92% of all buyers! Pricing your home above $500,000 eliminates 97% of all buyers! As you can see, most (50%) buyers are only paying $200K-ish for a home. Even as we see prices climb, the vast majority of buyers are still not paying that much for their housing. | |
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Any Part Of A Bathroom Is A Full Bathroom To Zillow |
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 Zillow often has helpful and accurate data -- though with some frequency there are some issues with their data. A somewhat frustrating one for home buyers is that they count bathrooms is a bit different than most buyers and sellers would count them. Basically, their main "4 Bedrooms, 4 Bathrooms" (for example) description does not necessarily mean that there are four full bathrooms. It could mean any of the following....
Right -- so -- when checking out homes on Zillow....
Oh -- and when I say that they often have helpful and accurate data -- I'm not necessarily referring to their "Zestimate" data. Those prices may or may not have much of a correlation with actual market value for properties in Harrisonburg and Rockingham County. | |
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Early Preview of October Home Sales Activity |
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 I'll put my full market report together later this week, but an early look at October home sales data shows that buyers turned out in force during October 2018 -- in fact -- it appears that there were more buyers in October 2018 than in any other October in the past 10 years! This shouldn't be entirely surprising, since September contracts (102) were a good bit stronger than last September (87). Stay tuned for more data as later this week. | |
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Last Chance To Sell Your House in 2018 |
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 "I sold my house in 2018!" - You? This is (right now) just about the last chance to sell your house in 2018 -- if we mean closing on the sale in 2018. After all, it will probably take 35 days (or a bit more) to close on the sale of your house after it is under contract, so you'd need your house to be under contract in the next week or two in order to close by December 31. Did you have a goal of selling your house in 2018? This might be your last chance. Right now. This week or next. Happy November! :-) | |
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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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