Archive for July 2021
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This Housing Inventory Crisis Is Likely YEARS In The Making |
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 Is this inventory issue a new one? Nope! It's been sneaking up on us for YEARS now! We haven't had PLENTY of homes on the market for years and we're JUST NOW all of a sudden seeing that drop off. The number of homes on the market at any given time has been declining for years. Thus, the only way to have not been in the situation we are in now (very, very few homes for sale) would have been if many new homes had been built over the past four to five years. Some homes were built, but not enough. Now, It will, unfortunately, take a long time (likely years) for our market to dig its way back out of this housing inventory crisis. The many new home communities in the planning or building stages will help -- but hundreds or thousands of new homes don't pop up over night. | |
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I Just Sold My House. Should I Buy A House This Year Or Wait Until Next Year? |
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 Let's say you just sold your house -- and you're wondering -- should you go ahead and buy the next house now? Or wait a year? After all, home values seem quite high right now -- maybe you'd be better off waiting a year? Let's check -- from one very narrow scenario... Buying Today for $300K and Financing 80% of the Purchase Price Mortgage Payment = $1,259 per month (2.78% mortgage) $427 per month in principal reduction $832 per month in interest, taxes and insurance A year later you will have paid $15,108 for housing -- but $5,124 of that will have gone towards principal reduction. Thus, you will have "paid" a net of $9,984 during the year. Renting For A Year and Then Buying The Same House We will (generously) assume that interest rates will be the same a year from now. They'll probably actually be higher. We're going to assume you'll pay around $1,200 per month in rent for a year, which won't get you as nice of digs as your $300K purchase, but perhaps you keep the rental budget low to minimize your rental costs. A year later you will have paid $14,400 in rent as compared to $9,984 if you went ahead and bought now. Thus, your housing costs would be $4,416 higher for the coming year if you rented now instead of buying now. Now, let's fold that into how home values might change over the next year... Same Increase In Home Values As The Past Year (+10.9%) The $300K home you did not purchase will now cost you $332,700. As such, you will have paid an extra $4,416 in rent and you'll now pay an extra $32,700 in a purchase price. Ouch. That makes it $37,116 more expensive to wait a year,. This scenario is not necessarily very likely to occur as the 10.9% increase in our local median sales price was well above any long-term norm. Same Increase In Home Values As The Average Of The Past Five Years (+5.8%) The $300K home you did not purchase will now cost you $317,400. As such, you will have paid an extra $4,416 in rent and you'll now pay an extra $17,400 in a purchase price. Still relatively painful. That makes it $21,816 more expensive to wait a year. Same Increase In Home Values As The Average Of The Past Ten Years (+3.2%) The $300K home you did not purchase will now cost you $309,600. As such, you will have paid an extra $4,416 in rent and you'll now pay an extra $9,600 in a purchase price. That makes it $14,016 more expensive to wait a year. No Change In Home Values You pay the same ($300K) price for the same home a year from now and you just lose the $4,416 in extra housing costs that you paid by renting for a year. Home Values Drop 1.5% If home values drop 1.5% over the next year -- then you'd basically break even. You would pay $4,500 less in a purchase price after having paid $4,416 more in rent during the intervening year. Home Values Drop 3% or 5% of 10% If you get above a 1.5% decline in home values over the next year -- then, yes -- it would have made more sense to have waited a year after selling to buy your next house. So, What Do You Conclude? In the end, you'll need to decide which of these scenarios seems the most likely to occur in the next year...
But... don't forget... I'm leaving out a few factors that would probably cause most people to buy now (after selling) rather than waiting a year...
Yes, this analysis had a lot of detail -- but there is plenty of nuance in any scenario where you are thinking about buying or renting. Feel free to touch base with me if you want to think through or talk through your scenario and options. | |
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Now Can Be A Great Time To Sell An Investment Property |
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 Do you own a residential rental property? Or two? Or five? Or 10? Would you consider selling one or all of them? There are plenty of reasons why you might NOT do so...
But... if you are open to selling your residential rental property... it might be a GREAT time to do so, because...
If you own a rental property and the end of the lease is coming up, let's take a few minutes to chat about your options and whether it might make sense to sell that property instead of finding a new tenant. | |
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Are Inventory Levels Slowly Starting To Increase? |
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 We may (finally?) be seeing inventory levels creep up a bit in Harrisonburg and Rockingham County. As shown above, after having dropped all the way down below 100 homes for sale -- inventory levels have increased over the past two months. We're still at basically all time lows other than what we've seen in the past six months -- so don't get to excited about the inventory levels rising -- but it's nice for the inventory levels not to be heading down even lower. Stay tuned as we see how inventory levels continue to adjust as we make our way through the rest of the summer and into the fall. | |
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I Should Definitely Sell My House Right Now To Take Advantage Of This Market |
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 Yes. For sure. You should definitely sell your house right now to take advantage of this market. ... ... But... Where will you go? Where will you live? I have had this conversation (maybe I should sell my house!) with quite a few folks over the past few months. They are seeing homes sell in their neighborhood at prices that seem unrealistically high. It causes many neighboring property owners to say -- wow, maybe I should sell!!? And, indeed, it can be a great time to sell your home right now... ...if you have a plan for where you will go next and what you will do next! If you thought your home was worth $300K a year ago and now it seems like it could sell for $350K, that's exciting! It might make you want to just go ahead and sell and capture all of that equity that you now apparently have in your home. But... are you going to upgrade to that $400K house you were dreaming about a year ago? That house is likely now selling for $450K or higher. So, as exciting as it may be to think about selling your house to take advantage of the current market, we need to thoroughly examine what you will do (where you will live) after you sell to make sure that you are comfortable with the overall game plan. | |
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Why In The World Are You Buying A House Without A Home Inspection?? |
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 Yes, sometimes buyers these days are making offers on houses without a home inspection contingency. As Paige asked yesterday... Is everyone else in the world significantly more handy, a better gambler, or just have that much cash laying around? Good question, Paige! :-) Here are some of the reasons why buyers are making offers without home inspection contingencies...
A few more thoughts and observations...
Home buyers have some difficult decisions to make these days as they formulate a plan for pursuing a house in a housing market with very low supply levels. Deciding whether to include a home inspection contingency is just one of those difficult decisions. | |
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I Will Offer You ONE MILLION DOLLARS For Your House... Oh, Contingent On An Appraisal... |
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 I've seen buyers use this strategy quite a few times lately... and sellers usually aren't interested, or fooled, or entertained. Here's the scenario... A house is listed for sale, priced at $250,000. Three offers come in, each one higher than the last, as is typical in this market...
Then, the fourth offer comes in. Offer #4 is an offer of $350,000. Contingent on the property appraising at or above the contract price. I'm exaggerating a bit to make my point here -- but not by much. Basically, a buyer offers WAAAAAY above the asking price -- well beyond what anyone would think would be a reasonable offer for the property -- but makes their offer contingent on an appraisal. I suppose the thought is that surely a seller would pick an offer of $350K instead of an offer of $255K, $260K or $265K, right!? Maybe not. I have had the chance to see several sellers respond to these absurdly, unrealistically high offers and again, sellers usually aren't interested, or fooled or entertained by such offers. Almost every seller I know would happily take Offer #3 as described above before they'd even start to entertain Offer #4. Clearly, buyers can attempt to negotiate however they'd wish to do so, but this particular strategy does not seem, to me, to be a winning strategy. | |
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If Your Property Needs Improving, Do Not Price It As If It Does Not |
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 Buyers are tripping over themselves to buy houses these days. They'll pay a price higher than you'd expect for just about any property, regardless of condition, right? Well, maybe not all the time. If your property (where you live... or your rental property) needs painting, and flooring, and general repairs, and landscaping help... ...maybe you shouldn't price it as if it does not need those improvements. Again, in this market, anything is possible -- but if ten buyers come to see your house in the first week and they all would have liked the house at your list price if those improvements had been made -- but not without the improvements -- then you will probably find yourself needing to make a price adjustment. So, when you are pricing your home -- compare not only the specs (size, age, location) to other recent sales -- but also the condition! | |
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Over 4,000 New Homes Are Under Construction Or Being Planned In Harrisonburg, Rockingham County |
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 From time to time I post information here on my blog about new neighborhoods or communities that are being developed. I thought it might be helpful to compile all of that information in one place. Here are the new communities where dirt is moving for a combined total of over 1,800 new homes...
Here are the new communities currently being planned with a combined total of over 2,300 new homes...
I have compiled an overview document that includes all of the communities listed above as well as...
You'll find all of this information by visiting HarrisonburgNewHomes.com. If you have information about other new communities not currently on my list, let me know. If you see something on my list that is incorrect -- please email me with additional information so that I can make the list more accurate. | |
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Special Saturday Edition: Home Sales, Prices Flying High In Harrisonburg Area |
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 Happy Saturday morning to you! I hope you had a wonderful week. I am still unwinding a bit from a great time at the Red Wing Roots music festival last weekend. I enjoyed seeing many of you there, and if you missed it this year, you should consider attending next year!  Back to the here and now, though -- I'm not sure what your weekend looks like -- but thus far mine has involved sipping coffee while my daughter and I have been drawing on our iPads. Admittedly, Emily is creating art, and I'm doodling on graphs and charts as included below - but fun times nonetheless. :-) Regardless of whether your weekend will include relaxing at home, traveling out of state to see family, heading to the beach for a week, or working in the yard -- I hope it is a weekend that includes at least some moments of fun and relaxation. When you get to a few free moments in your weekend, take a look through the remainder of this market update to learn more about what is happening in our quickly moving local real estate market. First, the full PDF of my market report can be found here, second, the featured home shown above is located at 261 5th Street in Broadway and you find details of it here, and now, let's dive in...  Quickly glancing through the numbers above, you might find your eyes opening wider than normal and your eyebrows rising higher than normal. There are some rather surprising things going on in our local housing market. Anyone who is selling their home, or trying to buy their home, knows about these dynamics -- but it's good to put some numbers to it... [1] There were 171 home sales in June 2021, which was 28% more than last June! [2] Thus far this year (we're halfway through it) there have been 736 home sales, which is 19% more than the first half of last year! [3] The median sales price in the first half of this year was $260,000 (!!) which is 11% higher the median sales price during the first half of last year which was only $235,000. [4] Over the past 12 months it has taken a median of six days for houses (that sold) to go under contract -- compared to a median of 15 days during the 12 months before that. So, yeah, lots of homes are selling, at much higher prices than a year ago, and much more quickly! Breaking it down between detached homes and attached (duplexes, townhouses, condos) homes reveals a few other details...  Above you might notice that... [1&3] There have been a 19% increase in the number of detached homes that have sold in Harrisonburg and Rockingham County over the past year -- but a much higher 37% increase in the number of attached homes that have sold! [2&4] The median sales price of detached homes ($285,000) has risen a bit more (14%) over the past year than the median sales price of attached homes ($200,000) which has only (haha) risen 11% over the past year. Those (above) are the long term trends. When we dial in a bit and look at things on a monthly we find that this strong increase in the number of home sales thus far in 2021 has been a month after month after month occurrence...  I have highlighted each of the first six months of 2021 in yellow above, and the corresponding month last year in gray. Now, it certainly bears noting that home sales during some of the months in the first half of last year were likely a bit lower than they would have been otherwise because of Covid, but regardless -- each month of home sales in 2021 has been head and shoulders above the corresponding month of 2020. And now, let's see how this first half of the year stacks up against the first half of the past few years... look for the dark blue bars...  As you can see, with over 700 home sales (736) in the first half of 2021 this year is well ahead of the pace of home sales in the first half of each of the past three years. Looking ahead, it currently seems quite reasonable to think that we would see 1500+ home sales in 2021, with one significant exception. Home sales were tilted towards the second half of the year last year due to Covid, so while we are seeing stronger sales in the first half of 2021 (compared to 2020) things might level out a bit when we get to comparing the second half of 2021 to an abnormally strong second half of 2020. The next visualization is still shocking to me each time I update it with another month of data...  A year ago, 1300-ish buyers were buying homes a year -- now that has risen to 1600+ buyers per year!?! Indeed, it feels like EVERYBODY wants to buy a home... because, keep in mind, this 1600+ per year figure does not include all of the would-be buyers who made offers on houses in the past year but were not successful in securing a contract to buy a house!?! Imagine if there had been enough houses on the market for all of those buyers to have bought as well... The price change (orange line above) over the past year is also somewhat of an eyebrow raiser. The median price has risen $25,000 in the past year. Thus, if you own a home, the value of that property may have very well increased $25,000 over the past year! Admittedly, this varies based on property type, location, price range, etc., -- but suffice it to say -- home values have increased quite a bit in the past year!! Now, just to keep you levelheaded this morning, the next two graphs might make you (and me) say "hmmm..." and "well, let's see what comes next"...  Above, it would appear that the pace of buyers signing contracts has dropped off considerably in June 2021!?!?! ;-) But don't worry too much -- I don't think!? The pace of contract signing in any typical March / April / May is usually quite (!!) active. Last year, buyer activity was significantly suppressed during those normally active months because of Covid -- we didn't know what was happening, what was going to happen, whether the housing market was going to slow down, etc. Then, buyer activity exploded in June of last year and remained quite strong throughout most of the remainder of the year. So, as you look at the decline in June 2021 as compared to June 2020, keep in mind that it was a very unusual June 2020. So, wait and see -- but I don't think June contract numbers mean that our local housing market is slowing down. And now, the second graph to make you say hmmm.....  Inventory levels have risen over the past month -- to the highest level in almost six months! This is somewhat interesting and surprising -- but I do also wonder whether it is temporary. I should also point out that this increase in inventory levels only takes us from super-super-super-super low inventory levels up to super-super-super low inventory levels. In the end, most buyers in most price ranges will still find very few choices of homes on the market at any given time. So, I think this is a wait and see -- as to whether we'll start seeing inventory levels rising again, or if this is a one month blip. Lastly, just to remind everyone of at least one of the reasons why so many buyers would LOVE to buy a house right now -- mortgage interest rates are phenomenally low right now...  Interest rates have been up and down over the past year, falling as low as 2.67% and rising as high as 3.17%. Clearly, though, anything under 4% still has to be described as absurdly low from any sort of a long term perspective. The cost of financing your home purchase will be very, very low if you are fortunate enough to secure a contract to buy a home in 2021. OK, that's all of the charts and graphs I have for you this morning. A few short takeaways from a big picture perspective... BUYERS: Get prequalified now, see new listings quickly, and carefully consider each contract term of your offer to make it as strong as possible. SELLERS: Prepare your home well, price it reasonably, enjoy a short period of time when you have to put up with showings, and enjoy likely being able to select from multiple offers with favorable terms. HOMEOWNERS: Enjoy knowing that your home value is increasing. :-) If you have questions about buying, or selling, or just want to tell me about the exciting plans you have for the weekend ahead -- drop me a line via email or call/text me at 540-578-0102. Otherwise, enjoy the weekend! | |
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Just Because Home Prices Are High Does Not Necessarily Mean You Should Sell Your Home |
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 Yes, clearly, home prices are quite high right now! The median sales price of properties sold in Harrisonburg and Rockingham County increased 10% in the past year. The median sales price increased 21% over the past three years. So, yes, your home is likely worth a good bit more than it was a year ago... or three years ago... or seven years ago... and so on. But, that doesn't necessarily mean you should sell your home. Let's assume you can sell your home quickly AND at a higher price than you thought. Where will you go? Are you planning to buying again? You'll probably pay a higher price than you thought. Are you planning to rent for a while? Are you hoping to buy when (more likely if) the market cools off a few years from now? Before we rush right into getting your house on the market for sale because prices are so high, let's think through where you will live next -- to make sure it is the best overall financial decision to sell your house now. We might very well conclude that it would best for you to NOT sell your house right now -- and I am happy to talk things through with you to figure out whether to sell -- or stay! | |
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All The Right Spaces In All The Wrong Places!? |
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 Layout and room size is so important. It's delightful to have 2500 square feet -- but that amount of space could present itself very differently in a variety of homes...
As you can likely gather from these two exaggerated descriptions above...
Each house is probably "the perfect house" for some buyers, somewhere -- but I'm guessing that both houses aren't perfect for you. Most buyers would find themselves gravitating towards one of the houses at the exclusion of the other. As such, it is vital that we walk through houses to see how the floor plan and layout of the house will or will not support your needs and typical life activities. | |
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Drive By New Listings To See What Might Have Been Cropped Out Of The Photos |
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 It's almost always helpful to do a drive by of a new listing to see what might not have quite made it into the photo you're seeing online. Oftentimes, you won't find any surprises. But plenty of times, you will...
You get the picture. ;-) When marketing a house, a seller or seller's agent or photographer are rarely going to accentuate those "just outside the frame" features that might make you a bit less excited about the house. When you drive by, you'll be able to pick up on many more of those details that may affect your interest level. This is not to say that you should drive by a house before we schedule a time to go see the house -- it is merely to point out that driving by will often show a fuller context of a house than just what is presented in the photos! | |
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Yes, We Need More Townhouses To Be Built! |
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 When you see more townhouses being built -- or when you see plans being discussed for more townhouses to be built -- you might be thinking... What!? More townhouses!? Don't we have enough townhouses!? But if you ask nearly any local Realtor who has represented the seller of a townhouse in or near Harrisonburg in 2021 they will tell you... Yes, We Need More Townhouses To Be Built! Whenever a resale townhouse comes on the market it is almost always overwhelmed with showings in the first few days on the market -- and then the offers start coming in, fast and furious. Buyers are offering over asking price. Buyers are waiving inspection contingencies. Buyers are desperate to find a townhouse to buy. But yet, when there are 12 offers on a townhouse, the seller is only able to accept one of those offers. As a result, there are still 11 would-be townhouse buyers circling the market waiting on that next townhouse to become available. As quickly becomes evident, demand for townhouses FAR exceeds supply -- so... Yes, More Townhouses Need To Be Built! If I dialed in a bit further on this issue, I suppose I should point out that...
So, while it would be great to continue to see options over $250K, it would also be amazing to see new townhouse options much closer to $200K. | |
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155 Single Family Homes Proposed In New Neighborhood, Peak Mountain, In McGaheysville |
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 view a larger plat here We might see up to 155 detached single family coming to McGaheysville soon, located between McGaheysville Road, Power Dam Road and Three Leagues Road. Four tracts of land totaling 41.99 acres are currently zoned A-1 and A-2 but the owner is proposing that the County rezone them PSF-C... Planned Single-family Residential with Conditions. This neighborhood of detached homes is planned to include 155 homes...
The neighborhood would also include a shared-use path. View all of the details in the Rezoning Case Report here. | |
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225 Townhomes, 175 Single Family Homes or Duplexes Planned For Cobblers Valley |
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 view a larger jpg here A new neighborhood is under development on the south side of Harrisonburg, straddling the City / County line. As shown on the site plan above, this development will potentially include 225 townhomes and 175 single family homes or duplexes. Details are still scarce as to what exactly will be built on these lots, but if you drive by, you'll note that dirt is moving - presumably for the construction of roads and installation of water lines and sewer lines. Download the site plan here. | |
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It Is Not Possible For You To Ask Too Many Questions When Selling Or Buying A Home |
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 Most people do not buy or sell a home every year - or even every few years. Oftentimes, when buying or selling a home, you haven't done so in 5+ or 10+ or even 20+ years. Thus, it is natural to have some questions about how things work when buying or selling your home. Your likely lack of recent personal experience with buying or selling is also compounded by the fact that laws and contract documents continue to evolve over time AND market conditions at any given time can affect how transactions typically flow. So, when you are buying or selling a home OR when you are thinking about buying or selling a home -- feel free to ask questions -- a LOT of them! But they're silly questions... There aren't any silly questions when it comes to buying or selling a home. You are getting ready to buy or sell what may be your most valuable finance asset -- it's a big deal -- so if you have a question, as the question. I won't laugh or snicker or smirk. Promise. But maybe you don't have time for all these questions... Sure I do. Feel free to email me if that's how you prefer to get a bunch of questions out there and I can provide you with some detailed feedback by email. Or maybe you prefer to process things aloud, in which case we can sit down at my office or over coffee and talk things through. I want you to be well informed and to feel confident as you approach and make your way through the home buying or selling process. I can't always anticipate all of the questions you might have -- so please do ask the questions as they pop into your mind -- all of them! ;-) | |
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Pretend The Seller Is With You When Touring A House As A Buyer |
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 As a buyer, when you are walking through a home, keep in mind that the seller might be listening! These days, there are plenty of ways that a seller could be monitoring their home, with a security camera, or other recording device that could allow them to hear every word you are saying while you are in their house. And, these cameras (or other listening devices) are less and less obvious and less and less expensive! So..... 1. Don't insult their house. It won't help during negotiations.One way around this is to pretend (as a buyer) that the seller is walking through the house with you. By the way, sellers, it may not be legal for you to record conversations in your home while you are gone. You should likely either NOT record conversations, or disclose that it is taking place. P.S. I am not an attorney. Consult one if you want an actual legal opinion. Ask me if you need a recommendation. | |
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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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