Archive for December 2021
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Record Number of Building Lots Sold In Harrisonburg, Rockingham County in 2021 |
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 While we are still a few days short of a full year, it is already quite clear that there was a significant surge in the number of building lots sold in Harrisonburg and Rockingham County in 2021. There have been 144 sales of building lots of less than an acre in Harrisonburg and Rockingham County in 2021. To put that in context...
Clearly, these 144 lot sales is a big jump from the number of lots that typically sell in a year in this area. Breaking it down a bit, here are the top locations where lots sold in 2021...
It seems plenty of would be home buyers may have elected to buy a lot and build a home given the shortage of available homes to purchase at any given time... and/or there may be some builders purchasing lots to build spec homes. | |
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Moving to Harrisonburg, From Out of Town, and Buying A House Can Be.... |
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 Many people move to Harrisonburg, Virginia (or the surrounding area) each year and in 2021 many of those individuals and families have found it challenging to find a home to purchase. Why, you might ask? It's an "inventory at any given time" sort of problem. As I have mentioned quite a few times lately, more homes have sold this year than last... Jan - Nov 2020 = 1,385 home sales Jan - Nov 2021 = 1,525 home sales (12% more than in 2020) But most homes are under under contract less than a week after having hit the market for sale. The median "days on market" of homes sold in 2021 is a mere five days! So, most out of town buyers can identify plenty of homes that they'd would like to view -- and possibly buy -- in an extended timeframe of a month (for example) but if they are in Harrisonburg for a weekend for a home buying visit they are likely to see very, very few options of homes that they can tour and consider purchasing. So, what then, is the out of town (but moving into town) buyer to do? Idea #1 - Move first, buy later. Perhaps you can put most of your belongings into storage temporarily, and live with a friend or family member in Harrisonburg for a few months while you house hunt, viewing new listings in person shortly after they are listed for sale, and potentially making an offer on such a new listing and purchasing a home. Idea #2 - A Local Home Buying Ambassador Perhaps you have a family member living in Harrisonburg, or a long time friend, who can go see new listings on your behalf as soon as they hit the market to help you decide whether you want to make an offer on such a new listing even without having seen it in person. Idea #3 - Rent For A Year This is a variant of the first idea, but some would be home buyers relocating to this area resign themselves to renting a property for a year to get into the area and start viewing new listings in person so that they can take their time to find the right home to purchase in the Harrisonburg area. Idea #4 - FaceTime or Zoom If you don't have a local home buying ambassador to send along in your stead to view new listings, I am happy to walk you through new listings virtually, via FaceTime or Zoom. It's certainly not the same as seeing a house in person, but it can provide much more context for you as you consider a home purchase from afar. If you are moving to Harrisonburg in 2022, from out of town (or out of state), start giving some thought to how you will approach the remote home buying experience. I'd love to tell you that you'll be successful in just scheduling a weekend to come see a bunch of homes and make a decision -- but it seems unlikely that we are going to see inventory levels meaningfully rise in 2022, so you will likely need to consider one or several of the ideas above. | |
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Will Mortgage Interest Rates Really Rise In 2022? |
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 Will mortgage interest rates really rise in 2022? Yes, he said, knowing he has said "yes" for years and has been wrong over and over. ;-) To be fair, I guess interest rates did rise between 2012 and 2014 and again between 2016 and 2018. But, they've been below 5% for over a decade now -- and have been below 4% for eight of the past ten years. So, again, will interest rates really rise in 2022? After steadily declining since 2018, yes, it seems likely that interest rates will start rising again in 2022. But, it seems quite likely that I could be wrong, again. :-) | |
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City of Harrisonburg Housing Inventory Levels Fall Below 20 Homes For Sale... For First Time Ever!? |
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 There are now fewer than 20 homes for sale in the entire City of Harrisonburg! As you can see, above, the number of homes for sale at any given time has been falling rather consistently over most of the past five years. The several times when you see inventory levels rising are typically in the spring season. These extremely low inventory levels do not mean that fewer houses have sold in the City over the past five years. Here are the annual City home sales during that timeframe...
So -- plenty of homes are selling in the City this year -- more, in fact, than any of the past five years. These extremely low inventory levels thus mainly mean that as soon as City homes are coming on the market they are almost always quickly going under contract -- keeping inventory levels at any given moment QUITE low! | |
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Median Sales Price of Detached Home Up $50K Over Past Two Years! |
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 This graph was in my full market report yesterday but it sort of deserves a bit of special attention by itself. Over the past two years, the median sales price of detached homes selling in Harrisonburg and Rockingham County has increased by $50,000. Before that, it took five years to increase by $50,000. As such, over the past seven years the median sales price has increased by $100,000. So... if you bought a median priced detached home seven years ago ($190K in 2014) it very well might be worth $100,000 more today! These are startling changes in property values in our area over the past seven years, especially if you haven't been reading my monthly report each month for the past 84 months! ;-) | |
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Harrisonburg Housing Market Is Hot, Hot, Hot In 2021 |
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 Happy Tuesday Morning, and welcome to day two of another surprisingly warm December week in the Shenandoah Valley! This month's market report is brought to you by... fire...  Why fire, you ask? Partly because the local real estate market is... on fire! ;-) OK, perhaps that one was too obvious. Secondly, though, because it's a great time of year to gather around a fire in the evening and spending time talking about the important things in life. Be that around the fireplace in your home... or huddling around a fire pit, barely staying warm as an evening stretches on. The fire above is in our recently built fire pit in our backyard... where I recently gathered with several friends and we talked and laughed well into the night. However you spend your evenings in the coming weeks... around a fire, or otherwise... I hope it is a time of conversation and connection with those who matter most in your life. But now, back to that local real estate market... which, yes, is on fire... The photo on the cover of this month's market report is an aerial view of Congers Creek where new townhomes are being built and offered for sale near Sentara RMH Medical Center. Also, before I start into the charts and graphs, you can also download a full PDF of my market report here. Now, let's throw another log on the fire and sort through this month's data...  A few things to point out in the data table above... [1] Home sales were actually a bit slower this November than last. We saw 135 home sales this past month -- compared to 143 last November. [2] Despite a slightly slower November, we have seen quite a few more home sales in the first 11 months of this year than last. There were only 1,358 home sales in the first 11 months of last year and we've seen 1,525 home sales in the same timeframe this year. [3] The median sales price of homes sold in Harrisonburg and Rockingham County is 10% higher this year (Jan-Nov) than last year... having risen from $244,900 to $269,450! [4] Homes are selling almost twice as fast this year (5 days) as last year (9 days) as per the change in the median days on market. Now, just to point out a few differences in the market for detached homes and attached homes, which includes townhouses, duplexes and condos...  As shown above... [1&3] We've seen almost a 9% increase in the number of detached home sales selling this year as compared to last year -- but a much more significant 20% increase in the number of attached homes that have sold. [2&4] The median sales price of detached homes has risen 9% this year -- but -- wait for it -- the median sales price of attached homes has risen 18% over the past year. This is a significant increase for attached homes, from a median sales price of $191,000 up to $225,000. When we start looking at month to month sales data, things get a bit odd...  Perhaps everything is a bit odd this year? :-) The red line above shows the number of home sales each month in Harrisonburg and Rockingham County, as compared to the blue line which is showing 2020 home sales. As you can see, home sales were extraordinarily strong in August and October... and then slower than last year in September and November. So... what does December hold in store for the local housing market? It's anyone's guess! :-) But regardless of what happens in December... this year has already outperformed last year...  Indeed, after just 11 months this year we have seen 1,525 home sales as compared to only 1,495 in all of 2020. There was a significant increase in local home sales in 2020 and in early 2021 there were doubts as to whether 2021 could really stay on pace with such a robust year last year. Well, 2021 is finishing out strong.. already having broken through the high water mark set last year. Now, a quick -- startling -- observation about the changing values of detached homes in our area... Maybe you already picked up on it based on the graph above... but... WOW! [1] Over the course of five years (2014-2019) the median sales price of detached homes increased by $50,000. Then, over the course of only two years (2019-2021) it did it again! ...and... [2] Over the past seven years (2014-2021) the median sales price of a detached home in Harrisonburg and Rockingham County has increased by $100,000... from $190,000 up to $290,000! These are startling changes in property values in our area over the past seven years, especially if you haven't been reading my monthly report each month for the past 84 months! ;-) Now, moving beyond what's selling, let's look for a moment at current inventory levels of homes that are available for sale. Remember, though, that these figures are showing "moment in time" inventory levels. There have been plenty of homes offered for sale in recent months even if very few are on the market now. First, let's look at houses for sale by property type...  This one surprised me. I knew that inventory levels were dropping, but I didn't know how far they had declined when it came to attached homes -- townhouses, duplexes and condos. A year ago there were 43 attached homes on the market for sale -- now, only 17 are currently available for sale. This 60% decline means that buyers are snapping up attached homes faster than sellers are listing them for sale or building them. But wait, there's more. Take a look at this breakdown between the City and County...  Again, this graph reveals a rather surprising trajectory. A year ago there were 46 homes for sale (detached or attached) In the City of Harrisonburg. Today there are only 18 homes for sale in the City. Read that twice, perhaps. There are only 18 homes (detached homes, townhouses, duplexes, condos) currently available for sale in the City of Harrisonburg. Again, this is an indication that buyers in the City are snapping up homes more quickly than sellers are selling them. Despite the 50 to 60 degree temperatures of late, you might be wondering if the market is remaining strong as we head into the winter...  Indeed, the market is remaining strong. The graph above shows the median number of days it took for houses to go under contract - with each data point calculated from the properties going under contract in the previous 12 months. As you can see, we have sort of bottomed out at a median of five days on the market here over the past five months. If the market is starting to cool off or slow down, this graph is one of the places we are likely to first see that show up in the data. Given the low availability of houses to purchase, are some buyers thinking about building a house?  Maybe so! The graph above shows the number of building lots (of less than an acre) sold per year over the past six years. As you can see, the market demand for building lots has been increasing for several years now. Unfortunately, construction costs are also increasing, which may make it at least somewhat difficult for these lot buyers to build a home and stay on budget -- but at least they will have a bit more control over getting the house they want, as compared to competing with many other buyers in the resale market. One last graph and then I'll let you go out in your backyard to start gather kindling for the fire you plan to have this evening. ;-)  For years I've been thinking mortgage interest rates will be starting to increase. It keeps not happening. Over and over. This year, it seemed -- again -- they were definitely going to increase. Back in January through March it seemed we were headed that way -- but, nope. Then again in August, September and October, but then, maybe not. So, the cost of money is still extremely low! Alright, that brings this month's overview of our local housing market to a close. Thanks for hanging in there with me if you made it to the end, and I hope the information and context I have provided has been either helpful or entertaining, or both! I hope the last two-ish weeks of 2021 go well for you, and that you are able to enjoy some down time with family and friends. If you enjoy some time around a fire, maybe you can make a s'more for me -- I like the marshmallow to be toasted very, very, very slowly and thoroughly until it is a golden brown on the outside and completely gooey in the middle -- constant rotation of the stick helps. I also find it best to leave the chocolate resting on the graham cracker next to the fire while I toast my marshmallow so that the chocolate will start to melt as well. I know, I know. It's overwhelming to get both gourmet outdoor cooking tips AND real estate updates at the same time. ;-) Finally, as we all look towards 2022, if you are contemplating a home purchase or a home sale in the New Year, let's find a time to talk further about your plans. You can reach me via phone/text at 540-578-0102 or by email here. | |
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Median Residential Harrisonburg Real Estate Assessment Increases 10.5% In 2022 |
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 If you own a property in the City of Harrisonburg you likely recently received a "Change of Assessment Notice" in the mail. Harrisonburg updates the assessed value of every parcel of real estate every year... and some years (like this year) the assessed values increase quite a bit! The sample change in assessment notice above, for a townhouse in the City of Harrisonburg, shows the following assessed values...
You might also note that the tax rate changed a bit over time...
The increased assessed value, combined with the increase in tax rate results in the following increase in annual taxes...
In speaking with Lisa Neunlist, the real estate director for the City of Harrisonburg, she shared that there has been a 10.5% increase in the median assessed value of the approximately 9,600 residential properties (single family, townhomes, duplexes, condos that are not primarily students) in the City of Harrisonburg. Should this increase in assessed values surprise us? Probably not. The median sales price in our local area (City+County) has increased 12% over the past year. As such, a 10.5% increase in the median assessed value is not shocking. It will be interesting to see whether the tax rate is changed at all for 2022. The tax rate increased 4.6% (from $0.86 to $0.90) between 2020 and 2021 -- at least in part to help pay for building a second high school in the City of Harrisonburg -- though there was discussion of a possible need to increase that rate even further in 2022. Perhaps the increase in tax assessed values of properties in the City of Harrisonburg will provide enough additional tax revenue that the tax rate will not need to increase further at this time? Of note -- for the sample property I referenced above, if the tax rate remains at $0.90 in 2022 the annual taxes will increase by $176, which is a $15 per month increase. | |
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Selling Your Home In The Next Six Months? Selling Now Is A Good Plan. Waiting For Spring Is A Good Plan. |
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 So, you are thinking about selling your home sometime in the next six months? Two common concerns I have heard lately from folks thinking about selling in the next six months are... [1] I was thinking about listing my home for sale now but I have heard that the market is super slow during the winter months, so maybe I should not list my home right now? [2] I was thinking about waiting to list my home for sale in the spring but I have heard that the market might have cooled down and prices might have started declining by spring, so maybe I should act more quickly? In my opinion, either path forward (list now, list in the spring) are good plans... Selling Your House Now Is A Good Plan. Last December and January a total of 211 buyers signed contracts to buy homes. In March and April of this year a total of 283 buyers signed contracts to buy homes. So, yes, the market is slightly slower in the winter months but we'll still see about two thirds as many buyers in these winter months as we would see in the spring. Furthermore, inventory levels tend to be the lowest in the winter months, giving buyers who are in the market very few choices of homes to pursue. As such, I believe homeowners who choose to sell their house now (Dec, Jan) will do quite well and do not need to wait until spring to list their home for sale. Waiting For Spring To Sell Your House Is A Good Plan. While it is possible that the pace of the local housing market might not be quite as hectic or frenetic next spring as it was this past spring, it does not seem likely that the market will significantly cool or that home prices will start to decline. As such, I believe homeowners who choose to wait until spring (Mar, Apr) to list their home for sale will do quite well and do not need to hurry up and get their house on the market now before the market significantly slows. Maybe this advice (it's okay not to wait OR to wait) wasn't helpful. Did you need me to help you make up your mind as to when to get your house on the market? Just let me know... I'll tell you there is only one right choice. ;-) | |
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Kid Heads To College In Harrisonburg, Graduates, Stays, Parents Relocate Too |
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 It's my story. It's my wife's story. It seems to be an ever more frequent story these days. I left Maryland back in 1996 to attend JMU. I graduated in 2000 and again in 2002 - got married in 2002 (19 years ago yesterday!) and Shaena and I decided to stay in Harrisonburg. Some years later both of my sisters (though not my brother) were also in Harrisonburg and it wasn't too much of a surprise that my parents relocated to Harrisonburg after my dad retired. With Shaena and her sister both living in Harrisonburg when their parents retired, it also wasn't too much of a surprise that they relocated to Harrisonburg after retiring. And so it seems to go for lots of folks these days. I frequently find myself working with home buyers who are the parents of JMU or EMU graduates who are either... [1] Buying a second home in Harrisonburg to be able to spend more time in Harrisonburg with their kids and grand kids. [2] Relocating to Harrisonburg after retiring to be able to spend more time in Harrisonburg with their kids and grand kids. ...and a newer trend... [3] Relocating to Harrisonburg before retiring -- because Covid created an opportunity for them to work remotely -- to be able to spend more time in Harrisonburg with their kids and grand kids. So, some part of the continuing strength of our local real estate market is the double impact of a local college student deciding to stay in this area after graduation. They become Harrisonburg area residents -- and there then ends up being a decent chance that their parents may end up being Harrisonburg area residents at some point as well! P.S. I can't understate the impact of the grandkids. Once the grandkids are on the scene, for some reason the grandparents are even more interested in considering relocating. :-) | |
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The New Flow Of Home Buying Decisions |
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 Inventory levels are so low right now -- it must be hard for a home buyer, because they have so few choices, right? Not exactly... 1,213 homes sold in the first ten months of last year 1,384 homes sold in the first ten months of this year So, buyers have actually had MORE options this year than last. But... those options of what to buy have come on the market and often/usually gone under contract VERY quickly... thus, keeping inventory levels at any given time quite low! As such, the flow of home buying decisions looks quite different now as compared to -- for example -- three years ago. Three (or so) years ago... Once you decided to buy a home you might have ten or so houses you could go see that would generally fit your home buying criteria. You could compare and contrast each of them, prioritize them, decide which one you might want to buy, make an offer, and if it didn't work out, pursue one of the other houses. Today... Once you decide to buy a home you likely won't find any houses on the market that will work for you. We'll wait for a new listing to hit the market, go see it within a day or two and you'll need to make a decision very quickly about whether you want to make an offer on the house. If not, someone else will buy it, and we'll be waiting on the next new listing of interest to hit the market, and we'll repeat the process again. The difference... Before, you could view 10 houses and compare them and pick your favorite and pursue that house. Now, you can consider 10 houses, but you only get to consider them one at a time... and if you don't decide to buy house #2 because you didn't realize how unexciting houses #3 through #10 were going to be, you can't go back and buy house #2 because it will already be under contract. So, you are likely to have just as many options to buy houses right now -- but the flow of decision making is much different than it used to be! | |
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Strong Contract Activity In Local Housing Market, Again, In November |
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 Another month -- lots more contracts. 120 buyers (and sellers) signed contracts to buy (and sell) homes in Harrisonburg and Rockingham County during November 2021. One might have thought it would have been a slow month for contracts, but not so. This puts it in the 120-139 range, along with January, June, July and September. In the past year, the two slowest months for contracts being signed were December and February. Perhaps this December will follow suit and also will be slow -- or maybe it will be another unexpectedly strong month of contract activity. | |
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Home Inspection Contingency Modifications |
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 In this competitive real estate market -- when buyers are often finding themselves competing with multiple other buyers for their perfect home -- some buyers find themselves considering whether to make an offer without a home inspection contingency. Certainly, an offer without a home inspection contingency is likely to be seen by the seller as a stronger than an identical offer with an inspection contingency. Of late, I have seen some buyers (or their agents) trying to find space between having a home inspection contingency and not having one. Here are three modifications of home inspection contingencies I have seen lately that don't seem to be all that helpful... Repairs Will Only Be Requested If Total Repair Cost Exceeds $1,000 - I suppose this is intended to communicate that a buyer won't ask the seller to make small or minor repairs, but most sellers still see this as being almost identical to a regular old home inspection contingency. After all, just about every inspection report has enough needed small repairs that they would have a total cost of over $1,000. So, this ends up being some "feel good language" that doesn't actually make an insightful seller feel any better than a contingency without the language. Inspection For Informational Purposes Only - This is usually accompanied by language that allows a buyer to terminate the contract if they do not like what they find during the home inspection, so this modification really just seems to be a promise to terminate the contract instead of asking for repairs if there are issues. This often isn't seen as much stronger than an offer with a regular old home inspection contingency. If There Are Issues, Buyer Will Request Repairs, Not Terminate - Again, I think this is often intended to try to make the seller feel better about the inspection contingency. The buyer is promising not to just give up and walk away -- they will at least request repairs and try to work things out. But, this one is also pretty subjective -- those repairs that are requested (instead of terminating the contract) can be requested in a manner that would make it almost impossible to come to an mutually acceptable resolution -- essentially working a buyer back towards being able to get out of the contract, technically by having required repairs instead of having terminated the contract. I have nothing against a buyer (or buyer's agent) trying to soften the impact of a home inspection contingency -- but most sellers look at things in a bit more of a black and white perspective -- is there an inspection contingency or not? So... instead of spending lots of time and energy trying to fine tune the language of a cleverly crafted modification of an inspection contingency... focus on deciding whether you want the opportunity to reconsider whether you will purchase the property after having gathered additional information during a home inspection. If you do want the chance to reconsider the purchase, then you're going to have an inspection contingency - and regardless of what additional language you add in to try to soften the impact of that contingency - a seller is almost certainly going to see it as being less favorable than an offer without an inspection contingency. | |
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Updates On Rezoning Proposals For Several Proposed Residential Communities |
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 A few updates today on proposed residential communities in Harrisonburg and Rockingham County...  Harrisonburg's City Council approved the development of a six story apartment complex on Peach Grove Avenue. The prior approval allowed for one level of commercial space which was converted to more apartments in the updated approval. This development is now planned to be a 460 bedroom apartment on 5.44 acres.  The Rockingham County Board of Supervisors tabled a request for a rezoning that would have allowed for 95 townhouses at Massanutten Resort.  The intended developer of a proposed 155 home neighborhood in McGaheysville withdrew their request for a rezoning to allow for the development.  The Rockingham County Board of Supervisors approved a rezoning request to allow for an additional apartment building at the Altitude apartment complex. | |
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Demand Is HIGH For Income Generating Properties |
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 Everybody wants to buy a rental property. OK, well, not everybody... but seemingly, lots of people do! Two quads (four unit apartment buildings) in the vicinity of Eastern Mennonite University recently came on the market for $450K each. Both were under contract within a week with multiple offers, some with escalation clauses. One such recent multi-family listing had nine offers... the second had ten offers! So, yes, there seem to be plenty of investors seeking out income generating properties in the Harrisonburg area. Let me know if you are interested in considering the purchase of a rental property in the Harrisonburg area. As should be evident, you'll have LOTS of competition, but I'm happy to help you explore the opportunities if you are interested. | |
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
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