Local Home Sales Slow Slightly But Prices Are Up 10% in 2020!


Local Home Sales Slow Slightly But Prices Are Up 10% in 2020!
By Scott Rogers • August 18, 2020
Happy Tuesday Morning! Summer is winding down, and it's been a bit of an unusual one... kids haven't been inside a school building for five months instead of the usual three it has rained so much in the past two weeks that the grass is green instead of the brown we usually see in August home sales are picking up pace instead of slowing down like the usually do at this time of year As your summer comes to a close, I hope you have found some ways to relax and take a break, despite everything going on right now. Go for a run! Head out on a bike ride! Plan a day hike! In the latest adventures of the Rogers family, I took Emily zip lining and Luke water skiing this past weekend. :-) Whatever your version of fun and relaxation, I hope you can find some of it in these last weeks of summer. And now, if you have been looking for a distraction from the craziness in your everyday life, read on for some crazy news about our local housing market. :-) But first -- check out this beautiful home (shown above) in Chatham Square by visiting 2378AlstonCircle.com. Also, feel free to download a full PDF of my market report here. OK, OK, now, on to the data... Quite a bit to note above... July was a solid month of home sales! The 150 (!!) home sales in July 2020 was about 1% higher (1 more sale) than the impressive 149 home sales seen last July. We're still slightly behind in 2020. Despite a strong month of sales in July, the year-to-date pace of home sales (January through July) is still 2.8% behind where we were last year at this time. There is virtually no slow down in the annual pace of home sales. There have been 1,301 home sales in the past 12 months which is just less than half a percent behind the 1,307 home sales seen in the previous 12 months. I'll examine this a bit more further on in this report, but the median sales price has risen significantly over the past year. The median sales price during the first seven months of 2020 was $239,900 which is 9.54% higher than the $219,000 we saw last year at this time. This is a drastic increase and one that makes you start to say "hmmm...." Read on. Homes are selling faster and faster and faster, oh my! The median days on market is 29% lower this year (12 days) than it was last year (17 days) and any recent home buyer can tell you how frustrating that is! To pick up on a few nuances, let's break things down by detached homes (single family homes - shown in green below) as compared to attached homes (townhomes, duplexes, condos - shown in orange below)... We start to see some differences when breaking things down by property type... Fewer (-6%) detached homes have sold this year as compared to last year. More (+7%) attached homes have sold this year as compared to last year. The median price of detached homes has risen 11% over the past year! The median price of attached homes has risen 9% over the past year. Now, let's contextualize those 150 home sales we saw in July... As shown above, home sales often or usually peak in May or June with sales then slowing down as we roll into July. But not this year! Home sales seem to be accelerating month by month as we have seen steady increases between April, May, June and July. In fact, the 150 home sales see in July was the third strongest month of home sales we have seen since at least 2017! This next graph might be a bit confusing, but let's see if we can make sense of it... OK - starting with the orange line at the bottom of the graph... The annual pace of home sales had risen all the way up to 1,374 home sales per year by the end of March 2020. This was a slow and steady increase over several years -- but that all started to shift downward once we started incorporating April and May data into the mix. Home sales did decidedly slow down for several months, causing the annual pace of home sales to slide. It seems we may now be seeing that trend line stabilize in July as the annual pace of sales is no longer declining. But yet -- as noted next to the green line -- home prices have continued to go up, up, up. Back in March and April I wondered whether we'd see a slow down in sales and whether we would see a slight downward shift in home prices. It seems I was half right. Sales slowed, but prices have continued to rise! These two contradictory trends may best be understood by realizing that sellers drive trends during a seller's market. Fewer sellers wanted to list their homes for sale during the "time of COVID" and thus fewer sales happened in April and May (if the houses aren't listed for sale, they surely won't sell) but there were seemingly just as many (or more) buyers ready to buy. An unusual (and temporary) decline in sellers combined with just as many (or more) buyers caused home prices to continue to climb, perhaps even higher and faster than they would have otherwise! OK - thanks for sticking with me on that one. Now, let's predict the future by looking at contract activity... First, the big, red, handwritten numbers will quickly show you that the pace of contract signing this year (916 between Jan and Jul) is quite a bit higher than last year (860 between Jan and Jul), but there's more! Last year in June and July we saw 247 buyers (and sellers) sign contracts to buy and sell homes. This year there were 337 contracts signed during that same timeframe! It is almost as if buyers (and sellers) are trying to make up for lost time -- as contract activity has been ramping up for the past few months after a slower than expected spring market. OK, I told you I'd circle back to it... OK - so - about those home prices. As shown above, you'll note that the median sales price of detached homes (not townhouses, duplexes or condos) has increased 7% between 2019 and 2020. That's more than the 4.8% average over the past five years -- though we did also see a 7% increase between 2015 and 2016. So, should we be concerned about prices increasing this much? After all, didn't prices skyrocket back in 2004 and 2005 leading to eventual declines in housing prices? Why yes, you are correct - we did see significant increases in the median sales price in 2004 (+16%) and 2005 (+24%) and those increases were unsustainable -- prices eventually came back down, slowly, between 2006 and 2011. But this time, perhaps it's different? It's hard to say for sure whether the price increases we are seeing are "too fast" or "too much" to be sustainable. We'll only really know a year or two from now, looking backward. I suppose it is important to note that while a 7% increase is much higher than any long term average, it is also not as crazy as we were seeing back in 2004 and 2005. One of the things that is driving these prices up is the vast number of would-be buyers competing over an ever-shrinking number of homes for sale... Yes -- you're reading that correctly -- there are currently 30% fewer homes for sale now as compared to a year ago. Further -- the current inventory level (189 homes for sale) is actually lower than this past winter, which is rather unusual for July/August! There are many things causing so many buyers to want to buy, and buy now, which is driving down the inventory levels, but one of those motivators for buyers is... ...super low interest rates! Mortgage interest rates have been below 3% for the past few weeks -- yes, the 30 year fixed mortgage interest rate -- below 3%! I have had a few clients lock in at 2.65% and 2.75% which is rather hard to fathom. So, not to encourage you to jump on the bandwagon if you're not ready to do so, but if you're thinking about buying soon, these interest rates sure do make it compelling to try to buy sooner rather than later. OK - that wraps it up for now. A few closing notes... SELLERS - Even though it is a seller's market, it is still essential that we prepare, price and market your home well! Read more about that here and shoot me an email if you want to meet to start talking about getting your house on the market in the coming weeks or months. BUYERS - Be prepared to be patient, as you'll likely be competing with plenty of other buyers. Make sure to talk to a lender ASAP (ask me if you need a recommendation) so that we have a pre-qualification letter in hand when making an offer. HOMEOWNERS - Yes, certainly the vast majority of those who receive this market report won't be buying or selling next month. So, for the rest of you, enjoy the fact that your home's value has likely increased over the past year! If that makes you want to think about selling - let's chat. Otherwise, just enjoy knowing that your home's value has likely increased. :-) That's all for now, folks. If there is any way that I can help you or your family with real estate, or otherwise, let me know. Otherwise, enjoy the balance of August and I'll be back to crunch the numbers all over again in mid-September. 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? 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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 22, 2024 (unless otherwise noted).
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