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Harrisonburg Area Home Sales and Prices Rising Quickly In 2021 |
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 Happy Friday morning to you, friends in the Harrisonburg real estate world and beyond! It is a wild and crazy time right now in the local real estate market with many (many!) homes selling in a matter of a day or two -- often with multiple offers. It is not uncommon to have 5+ (or 10+) offers on a house within the first 48 hours of the house being listed for sale. Which means, as you might imagine, that... [1] It is a delightful time to sell! [2] It is a difficult time to buy! [3] If you need to do both, perhaps it's a wash!? Read on for some numbers and charts and graphs that can help us gain a deeper understanding of some of the current dynamics of our local real estate market -- or download my entire market report as a PDF here. First, the basic overview of how things are looking so far this year...  Several things to unpack here, actually... [1] We saw about 1% more home sales this May (the month that just ended) as compared to last May. This is actually a bit surprising. Home sales were rather sluggish last May due to Covid. As a result, I expected we'd see more home sales than we did this May. That said, the limitation on the number of home sales happening these days seems to be more in the area of how many sellers are willing to sell -- as opposed to how many buyers want to buy. So, sometimes when we see fewer homes selling -- it may simply be a result of fewer sellers being ready and willing to sell. [2] Despite only seeing a 1% increase in home sales during May, there have been 15% more home sales in the first five months of this year as compared to the first five months of last year. Thus, don't knock 2021 just yet -- we're well ahead of the pace of home sales that we saw last year. Later on I'll show you an even broader picture to see how 2021 compares to earlier years. [3] When we look at a full year of home sales there has been an impressive 19% increase in the pace of sales. There have been 1,568 home sales in the past 12 months -- compared to only 1,314 home sales in the 12 months before that! [4] Prices keep on rising! The median sales price of all homes sold in Harrisonburg and Rockingham County was $250,000 over the past 12 months -- which is a 9% increase over the median of $230,000 during the prior 12 months. [5] Homes are selling fast -- FAST! The median days on market has dropped 60% over the past year, from a median of 15 days to a median of 6 days. The median days on market is a measure of how many days it takes for a house to go under contract once it is listed for sale. OK, phew, now -- onto one slight nuance that bears noting...  The chart above is comparing detached home sales (green section) to attached home sales (orange section) over the past year. While we have seen a respectable 11% increase in the number of detached homes selling -- we have seen an astonishing 42% increase in the number of attached homes selling! These attached homes are duplexes, townhomes and condos -- and a good number of those are likely new homes. Most new dwellings currently under construction are attached homes -- which contributes to the larger increase in the sale of attached homes. Here's another visual look at what was actually a somewhat surprisingly low month of home sales in May 2021...  As stated previously -- home sales in May 2021 were lower than I thought they'd be given past months of May. During May of 2018 and 2019 we saw 130 and 158 home sales -- but that dropped down to only 111 home sales in May 2020, largely due to Covid. So, yes, I was surprised to only see 113 home sales in May 2021. I expect we'll see home sales pop back up in June -- but as also stated previously, this will largely depend on enough sellers having been willing to sell! Now, let's look at the first five months of this year compared to the same timeframe for the past three years...  As shown above, we've seen 556 home sales thus far in 2021 -- which is well ahead of the pace we saw for each of the past three years. Thus, even though 2020 ended up being a wildly active year for home sales (1,493) it would seem that 2021 might be on track to surpass that pace! Buckle your seat belts -- if we're going to get there, to perhaps 1500+ home sales -- it's going to be a wild ride for the next seven months of the year. Here's a visualization of how the annual pace of home sales has been speeding up...  As I have described it above -- [1] We have seen STEADY growth in the median sales price over the past year, plus. The current median sales price of $250,000 is 9% higher than it was a year ago. [2] We have seen EXPLOSIVE growth in the pace of home sales over the past year. The current pace of 1,568 home sales a year is 20% higher than it was a year ago! Will home prices keep rising forever? Maybe so. Will the pace at which they increase start slowing? Maybe so. Here's a brief look at that dynamic just five months into the year...  When looking just at single family homes, above, we find that... In the five years before 2020 we saw between a 2% and 7% increase per year in the median sales price. On average, the median sales price increased 4.8% per year between 2014 and 2019. But then, 2020. :-) We saw a 12% increase in the median sales price of single family homes between 2019 and 2020. So, what will happen in 2021? Well, we're only five months into 2021 thus far -- AND, if you ask most active Realtors in this area, they'd likely tell you that, anecdotally, home prices seem to be accelerating even more this year than last year -- BUT, thus far we have only seen a 2% increase in the median sales price in 2021. So, stay tuned. I'll keep monitoring this as the year continues. I don't think the median sales price is going to actually flatten out or decline -- but I also don't think we'll necessarily see another 12% increase this year. OK, this next one requires a bit of thought and explanation, but bear with me...  When it comes to contracts signed per month, as shown above, here's what I'm trying to point out... [1] Last spring (March, April, May) only 375 buyers (and sellers) signed contracts. This was likely a bit slower than normal because of Covid. [2] This spring (March, April, May) things were much more active, comparatively, with 434 contracts signed. [3] Last summer (June, July, August) was extremely active -- with 495 contracts signed. This was likely somewhat the result of the market bouncing back after a slower spring. So, what's in store for summer 2021? It's hard to say if we'll have as strong of a summer as we saw last year -- and as mentioned several times thus far, a huge impact on the pace of sales, and contracts being signed, is how many sellers are ready and willing to sell. The buyers are certainly there waiting to pounce! Now, perhaps one of the most confusing and most depressing graphs...  Lots going on here in this relatively simple graph... [1] A year ago a buyer would have found 228 homes on the market for sale in Harrisonburg and Rockingham County. That end-ish of May inventory figure has tumbled 58% over the past year to where current buyers are only finding 96 homes for sale right now!? [2] Bear in mind that low inventory does not mean no options. While buyers at this exact moment have 58% fewer choices than they did a year ago -- technically, they have had about 19% more options of what to buy over the course of the past year as compared to the prior year. After all -- the 19% increase in the number of sales in the past 12 months (compared to the prior 12 months) is a result of 19% (or more) new listings having coming on the market in the past year as compared to the prior year. [3] How can this be? How can a buyer have had 19% more options over the past year but 58% fewer options today? It's a result of the how quickly homes are going under contract. Lots of new listings have come on the market over the past year but they have been going under contract faster and faster and faster, resulting in fewer and fewer and fewer homes left on the market for buyers at any given point in time. What's one of the reasons why so many buyers are buying right now?  Low mortgage interest rates are making it a very compelling time for buyers to buy right now. Even if prices are going up, interest rates are super low -- and buying with such a low interest rate allows you to lock in the largest part of your monthly housing cost (principal and interest) at a super low payment given these super low rates. Alrighty then! If you made it through all of the charts and graphs and commentary above, hopefully you are feeling like you have a relatively good understanding of some of the market dynamics affecting our local real estate markets. Now, the "so what" of all of these market dynamics... HOME BUYERS - It's definitely possible to buy a home right now, but you're going to have more competition than ever before. You need to have a lender letter in hand, see a house within the first day (or two) of it being listed for sale, be ready to make an offer very quickly, and be willing to consider paying over the asking price and limiting your contract contingencies. It's a tough market, but well prepared, decisive, strategic buyers are winning contracts on houses. HOME SELLERS - You will likely sell your home more quickly, at a more favorable price, and with more favorable terms than you would have a year ago. That said, if you do receive multiple offers within the first week of being on the market, we'll need to make sure we're picking the offer with the most favorable terms overall, that stands the best chance of making it successfully to closing. HOME OWNERS - If you love your home, or even if you just like it pretty well, great! Settle in and enjoy owning a home during a time when home values are increasing quickly and when homes are hard for buyers to buy. Just like toilet paper, swimming pools, lumber, gasoline, and cars -- houses are in short supply and are getting more expensive. Enjoy the fact that you already own one! If you're looking to connect with me to talk about buying or selling a house, perhaps this summer, feel free to reply to this email or call/text me at 540-578-0102. Until next month, I hope you are able to find some time this June to relax and enjoy this first month of summer 2021! Recent Articles:
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
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Commonwealth of Virginia
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