Archive for May 2019
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Monthly Housing Costs Actually Decline, A Bit |
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 The monthly cost of a mortgage on a median priced house has actually declined a bit this year! For this analysis, I am measuring "monthly housing cost" by determining the mortgage payment amount (principal, interest, taxes and insurance) for a median priced home in Harrisonburg and Rockingham County, if a buyer were financing 80% of the purchase price and paying Harrisonburg real estate taxes. Over the past year, the median sales price has only increased 1%, and the average mortgage rate has declined 6%, which results in a slight decline in the median housing cost -- if you are buying your home, and you have a 20% downpayment. So - monthly housing costs are still relatively high from a historical perspective, but we're not seeing a 12% increase in that monthly cost like we did between 2017 and 2018! | |
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Be Careful of Asking For Little Repairs When Also Asking for Big Repairs |
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 After a home inspection, a buyer knows more about the house than when they agreed to pay $X to purchase the house. In order for them to still want to pay $X for the house, they may ask the seller to address some of the deficiencies found during the home inspection. Imagine a hypothetical scenario where the following deficiencies are found:
So - which items should the buyer ask the seller to repair? Some could say ALL of them - the buyer didn't agree to pay $X for the house with all of these large and small issues. But I'd advise most buyers to only request that the seller address a subset of those issues:
All of the other items (3-7) are minor issues that won't cost too much (in time or money) to repair after you buy the house. But why not ask the seller to repair these items?
This is not a one-size-fits-all strategy, but I do urge you to carefully weight whether to ask for a home seller to make minor repairs if there are some major repairs that need to be addressed. | |
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Can Parents of JMU Students Buy Any House And Put Lots of Students In It? |
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 With great regularity, potential buyers (either investors or parents of JMU students) will ask if a single family home can be purchased and rented to a group of JMU students -- often an intended group of four or more students. I let them know that it will be no problem at all -- the adjoining property owners in the quaint neighborhood probably won't mind as long as the students aren't too bothersome -- and the City doesn't mind at all if their zoning ordinances are violated, so long as it's just "nice college kids".... WAIT! NOT REALLY! READ ON!!!! It seems that some buyers are really getting that feedback of "sure, it will be fine" -- though I'm not sure if they're getting it from their Realtor, or from someone else advising them in the transaction, or if they just aren't thinking about whether their planned use of a property is allowable. The REAL answer, and the feedback that I ACTUALLY provide to my clients is.... 1. We need to check to see how this property is zoned, and whether that zoning classification allows for that number of unrelated people to live in the property. 2. We need to check to see if there are recorded restrictive covenants for this neighborhood that restrict the number of unrelated people who live in the property. A few notes.... 1. Most single family homes in the City of Harrisonburg are zoned R-1 or R-2 and do NOT allow for three or more unrelated people (students or otherwise) to live in the property. 2. If a property has been used in a non-conforming manner (for example, four students living in it) since before the zoning ordinance was put in place, without a 24 month gap in the non-confirming us, it MIGHT be possible to continue to use the property in that non-conforming manner. And, if #2 above is starting to get confusing, then we arrive at my main reason for writing today.... CALL COMMUNITY DEVELOPMENT TO UNDERSTAND ALLOWED USE OF A PROPERTY! Yes, in fact, there are very helpful City staff in the Community Development department -- who can very quickly help you understand whether a property can be legally used as you intend to use it. And it is imperative that you make this call BEFORE you buy the property, and even BEFORE you make an offer on the property! | |
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Get Out Your Mixing Bowl and Bake Some Cookies When You List Your Home |
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 When the home buyers walked into the next home, they were greeted by the pleasant, and heart-warming fragrance of freshly baked cookies. They walked into the kitchen and were delighted to find cookies, indeed -- freshly baked cookies -- prepared especially for them. This house already felt like a home, as they started enjoying a tasty cookie while touring the kitchen and beyond. :-) I always have a few clients each year who prepare a large batch of cookie dough when they list their home and they then pop several cookies into the oven to bake before each showing. Full disclosure -- I do love cookies -- so it's a win/win/win if I'm showing the house... | |
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Most Home Sellers Do Not Seem To Accept Offers With Home Sale Contingencies Unless Those Houses Are Already Under Contract |
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 Based on the analysis above, it would seem that sellers are not (in almost all cases) accepting home sale contingencies unless the home that must be sold is already under contract. Here's the logic....
It would seem that most buyers are likely waiting to make offers until they have their own properties under contract (thus eliminating the need for the kickout clause) AND/OR most sellers are not accepting offers with home sale contingencies unless the buyer's house is already under contract (thus eliminating the need for the kickout clause). If you are a buyer, I would certainly suggest the strategy outlined above (and the only one that is apparently working with sellers right now) --- get a contract on your house and THEN make an offer on the property you would like to purchase! | |
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Settle In And Read These Reflections On the Dynamics of Our Local Housing Market |
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 Settle in with a nice cup of coffee (or your beverage of choice) and enjoy some excellent recent articles about the state of our local housing market from The Citizen and Brent Finnegan. Harrisonburg's housing crunch leads to fewer homes on the market — and those that are don't stick around long The Citizen - May 3, 2019 The Citizen - May 6, 2019 The Citizen - May 13, 2019 Brent Finnegan - May 16, 2019
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Why Sell A Rental Property? |
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 If you own a rental property, you might wonder from time to time whether you should keep or sell that property. I generally advise my clients to keep their rental properties, and not to sell them unless there is a good reason to do so. Here are some of those good reasons... VALUE - If the value of your rental property is currently high, and there is a reasonable chance that it won't be quite as high in the coming years, then now could be a good time to sell the rental property. INVENTORY - If there are very few competing properties for sale right now (which would lead to a speedy sale) but there will be many, many new properties built in the near future (which could result in a slow sale) then it might make sense to sell the rental property now vs. later. EQUITY - If you have owned the property for a decent period of time you may have a good bit of equity tied up in the property - and perhaps you'd like to do something else with that money. Maybe you'll use the sale proceeds for another investment (real estate or otherwise) or to pay off some debt, make a large purchase, go on a trip, who knows, but sometimes selling a rental property is a key part of freeing up some cash to make some other financial moves. HASSLE - Maybe you are tired of dealing with owning a rental property. Regardless of whether you manage the property yourself, or have a professional property manager, there can still be some annoying details to attend to with property maintenance, uncooperative tenants, etc. MAINTENANCE - Perhaps your rental property is 20 years old and you're pretty sure that if you keep it for another 3 - 5 years you'll have to pay for a new roof, new heating system and new water heater. If so, it might make sense to sell the property now to avoid those major capital expenses. TENANTS - If most of the prospective buyers for your rental property will be owner occupants, then the time between tenants might be the perfect time to sell your rental property. PARTNERS - If you purchased the rental property with a friend or family member, and they would like to move their investment dollars elsewhere, then it might be a good time to sell the property. RENTAL RATES - If rental rates are starting to decline, changing the performance of your investment, it might make sense to go ahead and sell, unless you see a turn around happening in the near future. IMPROVEMENTS - Perhaps your most recent tenant absolutely trashed the property, and you have just completely renovated it, such that the property has never looked better. This could be an ideal time to sell before the condition starts to deteriorate again. All of these potential reasons to sell are quite general - so feel free to touch base if you want to chat more specifically about your rental property and whether it would make sense to sell it now, or keep it for the next few years. | |
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Do We Focus On Buying Or Selling First? Which Will Be Harder? |
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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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The Danger Of Focusing On Just One Comparable Sale |
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 It's easy to want to do this -- as either a buyer or a seller. Let's think about it using the mostly fictional illustration below...
THE BUYER'S STATED PERSPECTIVE I know that your house is listed for $400K, but this one other home a few streets over sold for $350K last month, and it was a larger, so I'm not paying any more than $350K for your home. THE LARGER CONTEXT Just a few items...
Furthermore, aside from all of these differences in the two houses --- the other ($350K) house is not available any longer --- and there aren't three other houses just like it that the buyer can decide to buy. In this case, by focusing on this one not-actually-that-similar sale, the buyer has put themselves in a situation where they might miss out on purchasing a great home because of how they are viewing the market based on one comparable sale. THE SELLER'S STATED PERSPECTIVE I am confident that I can sell my house for $350K. After all, my friend owned a very similar house and he just sold it in a week, with multiple offers, for $360K! THE LARGER CONTEXT Just a few items...
Again, by focusing on this one not-actually-that-similar sale, the seller has put themselves in a situation where they might miss out on selling their home because of how they are viewing the market based on one comparable sale. So -- as a buyer or as a seller -- don't focus on just one comparable sale when deciding on a reasonable price to pay or to ask -- look for the larger context! | |
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If You Are Buying A House With A Basement, Test It For Radon |
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 As you can see above, Rockingham County is in Zone 1 -- which means we are in an area that is likely to have high radon levels. What is radon, and what does it mean for you? Read on, from the EPA.... Radon is a radioactive gas that comes from the natural breakdown of uranium in soil, rock and water and gets into the air you breathe. Radon typically moves up through the ground to the air above and into your home through cracks and other holes in the foundation. Radon can also enter your home through well water. Your home can trap radon inside. Learn more about radon and real estate here. | |
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Will All 264 Currently Listed Homes Be Appealing To You? |
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 If you are entering the market to buy a home, the number of homes you will have to choose from will vary widely based on what you are looking for in a new home. Some buyers have a very narrow scope and find themselves on a prolonged hunt for what seems to be an elusive or mythical home. Some buyers find plenty of options, evaluate quite a few, make a decision and move forward with an offer. However -- keep in mind that as you consider the 264-ish homes currently on the market for sale, that some of them have been on the market for 3 months, 6 months, 9 months or even longer. The freshest of fresh listings are those that have come on in the past 30 days -- which (this time of year) is less than 100 of the 264-ish homes currently listed for sale. Depending on your time frame for buying, and the narrowness of your scope, sometimes it makes sense to quickly evaluate the current options -- and then to wait and see what new and exciting listings will be coming on the market in coming days and weeks. Steps to get started include talking to a lender to get a sense of your target price range, and then chatting with me (in person, by email, by phone) so that I can also be keeping an eye out for suitable properties for you. Learn more about the home buying process at...  Keep up with new listings at ...  | |
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Second Highest Month of Contracts In Three Years |
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 April 2019 was a busy month for buyers (and sellers) with 158 contracts being signed for the sale of homes in Harrisonburg and Rockingham County. This is the second highest monthly rate of contract signing seen anytime in the past three years! It was topped only by last May when 171 contracts were signed. This is bound to lead to strong months of closed sales in May and June. Find out more about our local real estate market by reading my most recent monthly market report. | |
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Highest Month of April Home Sales in 10 Years |
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 It's been a while -- more than 10 years -- since we've seen so many home sales in a month of April. As shown above, the 112 sales seen in April was higher than any month of April all the way back through 2010. There were a few years (2006-2008) where we saw more sales than that -- which was during the real estate boom when median sales prices were (unrealistically) increasing by more than 10% per year. Find out more about our local real estate market by reading my most recent monthly market report. | |
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Home Sales and Contracts Surge in April 2019 |
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 After a somewhat slow start to 2019, the local real estate market has now picked up speed in April! But before we start looking at the data, two quick links for you...
Now, onward!  Lots going on above...but here are the high points...
 OK - here's what I was talking about earlier. January, February and March sales were simply nothing to write home about. This February was the slowest February out of the past four years. January and March were the 3rd slowest such months from the past four years. But April -- wow! Home sales surged in April, up to 112 home sales -- the best month of April seen in the past four years!  Zooming out from the granular data, this graph looks at long term trends -- the slowly shifting 12-month trend line for the pace and price of home sales. As you can see, sales prices have been increasing despite somewhat slower sales.  It shouldn't be too much of a surprise that stable sales, rising prices, low inventory levels and low days on market are leading to very little negotiating on price. Homes are selling at a median of 99% of their list price. This means that half of homes are selling for 99% or more of their list price.  OK - this one was a bit surprising. And I squished all of the data down so far to fit a large context on the graph above that the image is not quite as crystal clear as I'd like it to be. But the message is quite clear - buyers came out in full force in April 2019 -- the 158 contracts signed last month was the second highest month of contracts seen in the past three years! That said - prepare yourself to be at least a bit disappointed next month. I think it's relatively unlikely that we'll be able to see a spike of contract activity all the way up to the showing 171 contracts that were signed last May!?  Home buyers like choices, right? Well, right now, they don't have many. In all of Harrisonburg and Rockingham County there are only 270 properties listed for sale. This number has been steadily declining over the past few years -- and the supposedly busy Spring of plenty of listings has not been able to increase these inventory levels -- probably because buyers keep snapping the new listings up as soon as they hit the market.  As some welcome news for buyers who are able to find a home to buy - they're able to finance that purchase at a relatively low interest rate! After having risen all the way up to 4.86% (it seemed like 5% was bound to be seen) mortgage interest rates have now dropped all the way back down to the low 4% range. This gives buyers the ability to lock in low monthly housing costs for the long term! OK - we'll cut it off there for now - though there is plenty more that you can scroll through in the PDF of my full market report. My guidance to local soon-to-be home buyers and sellers remains consistent... SELLERS -- even though it is a seller's market in just about every 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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Mixed Use Development Proposed on Peach Grove Avenue |
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 The Harrisonburg City Council will hold a Public Hearing on May 14, 2019 at 7:00 PM on a variety of topics, including the potential rezoning of land on Peach Grove Avenue for the development of "The Residence and Shoppes at Peach Groves". UPDATE: The applicant has tabled the request until May 28. The public hearing will not take place on May 14.  Here are some key points to know based on the information packet provided during the Planning Commission meeting in April.
If you want to provide input on this potential rezoning for this potential development, attend the City Council meeting on May 14, 2019 at 7:00 PM. UPDATE: The applicant has tabled the request until May 28. The public hearing will not take place on May 14. | |
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Merck Announces $1 Billion Investment in Elkton, Virginia Facility, Over Three Years, To Create 100 Jobs |
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 In a major employment announcement for Rockingham County, Virginia Governor Ralph Northam announced yesterday that Merck will be investing up to $1 Billion over the next three years to expand its manufacturing facility in Elkton, Virginia and create a new Gardasil Purification Center. This growth will add up to 100 new jobs and 120,000 square feet to the Elkton facility. Here's an excerpt from this report from NBC29... "As part of the expansion, Blue Ridge Community College (BRCC) and James Madison University (JMU) will collaborate to address Merck's short- and long-term workforce needs through the development of a custom workforce solution. BRCC and JMU will establish a pipeline of biotechnology engineering and computer science talent that will allow the Shenandoah Valley to accommodate the future growth of Merck and other life science industries and manufacturers in the region." Read more via this article at NBC29... Governor Northam Announces Significant Investment in Rockingham County Merck & Co., Inc. to expand Elkton manufacturing facility, creating about 100 new jobs. | |
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Operating a Short Term Rental in the City of Harrisonburg |
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 After quite a long time (over a year?) of debating different paths for regulating short term rentals (such as through airBNB) the City of Harrisonburg has finally made a decision and set forth their official regulations. Lots (and lots) of information is can be found here, but let's review some of the key points to remember:
Again, you can find much more information here as well as links to additional information to get you started with registering your Short Term Rental. One interesting part of this new requirement is that we're now seeing somewhat more clearly where these Short Term Rentals are being operated. These are the property owners that have applied for Special Use Permits thus far, with a public hearing on each of them scheduled for May 8, 2019. The packet of information with context for these five applications, and staff recommendations is here.
You can track public hearings here. | |
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Get Excited! Preston Lake Is Getting A Pool! |
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 Preston Lake, located just east of Harrisonburg offers single family homes, townhomes, duplexes, a community center -- and soon, a pool! The fate of the planned pool was uncertain, as a recent version of the proffers for the neighborhood only required the developer to build a pool if two-thirds of owners voted to indicate that they wanted the pool to be built. Here's the official word that was sent out earlier this week to Preston Lake homeowners...
So, it seems that a pool will be built at Preston Lake!  Can't wait for a new home to be built at Preston Lake? Here are two homes available for sale in the neighborhood that are move-in ready...  3071 Vera Vista Path - learn more  3120 Preston Lake Boulevard - learn more | |
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Understanding Price Per Square Foot When Talking With A Builder |
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 If you're thinking about hiring a builder to build you a new home, you may eventually be thinking about or talking about Price Per Square Foot. Let's try to create some context. Stick with me here... $111 = The average Price Per Square Foot for all properties sold in Harrisonburg and Rockingham County in 2018. But that includes condos, townhouses and duplexes - maybe those are throwing off our understanding of PPSF. $121 = The average Price Per Square Foot for all detached homes sold in Harrisonburg and Rockingham County in 2018. OK -- it didn't change much -- but perhaps the middle aged homes and really old homes are throwing us off as well. $149 = The average Price Per Square Foot for all detached homes less than 10 years old that were sold in Harrisonburg and Rockingham County in 2018. So -- new-ish homes sold in the MLS have been selling at an average of $149 per square foot. Though I should point out that the price per square foot does run all the way up to $218 in this same set of sales. A 2400 SF home at $149/sf (including the land) would cost $357,600. That's using the PPSF from the MLS for detached homes built in the past ten years. But your builder is likely quoting you a price per square foot for just the house -- and not the land. So if a builder says they can build for $125/SF... As a final (important) disclaimer here -- I'm not a builder. Talk with your builder about how they price the homes that they build for their clients. Carefully weight the pros and cons (financially and otherwise) of building vs. buying. In the end, you'll probably be able to get a house that is a better fit for you if you build -- but it might be at a slight premium over the price you might pay for a re-sale home. | |
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
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