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Home Sales Slow Slightly, Prices Still Climbing Quickly! |
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 Happy Tuesday morning, friends! I hope you are enjoying the warmer weather this week, and perhaps some sporting events! We have a baseball player and a runner here in our house and the warmer weather this week is a welcome change for these outdoor sports.  Whether you're watching baseball games, track meets or soccer games these days, I hope your kids are enjoying the sport and their teammates, and you are not freezing in the stands. :-) Before I get started on this month's market report, a few quick notes... Check Out Vito's Italian Kitchen... Each month in this space I highlight one of my favorite spots to enjoy a meal, or a cup of coffee, or maybe a few other surprises in the coming months. This month, it's Vito's Italian Kitchen... a familiar and favorite restaurant on Port Republic Road in Harrisonburg. If you find me enjoying a meal at Vito's, it will likely be their calzone... or of late, I have been partaking of their delicious Coconut Chicken & Fruit salad. If you haven't visited Vito's lately, do so, this week! And... maybe next week you can go back for free! I'm giving away a $50 gift certificate to Vito's... just for fun! Enter your name and email address here and I'll pick a winner in about a week. :-) Congrats to Michael S. who won the Magpie gift card last month! Featured Property... Are you tired of bidding on house after house and not having the seller select your offer? Maybe you should build your next house instead of buying one? ;-) The photo on the cover of this month's market report is a beautiful, flat building lot in McGaheysville, currently offered for sale... and ready for you to build your next home! Find out more here. Download All The Graphs... Finally, for those of you who like to download all the graphs and examine every data point, you can grab those here. Now, then, onto your data fix for the month...  First off, yes, it's really true... after month after month of "more sales" and then "more sales" and then "more sales" -- this month there are a few indicators that are showing "fewer sales" instead. Don't panic. Read the entire market overview below for some analysis, context and commentary. In the chart above you'll note that... [1] There were 24% fewer sales this March than last March. A knee jerk reaction here might be "oh, I knew it, interest rates went up and home sales declined" but keep in mind that buyers that closed on their purchases in March likely contracted on those homes in January and February, before much of the increase in interest rates. A better indicator of whether interest rates are having an effect on buyer activity will be... buyer activity... signed contracts... and we'll get to that a bit further down in the report. The data might surprise you. ;-) [2] That 24% comparative deficit in March contributed to a first quarter of home sales in 2022 that included 6% fewer home sales than the first quarter of last year. [3] Despite a slightly (6%) slower first quarter of the year for home sales, the prices of those homes keeps on increasing. The median sales price in the first quarter of 2022 was $294,400... which is 18% higher than it was in the first quarter of last year. As I do from time to time, let's look at the trends in detached home sales (in green below) compared to attached home sales (in orange below) which includes duplexes, townhouses and condos...  As shown above... [1] We've seen 1,104 detached home sales over the past year... which is 3% more than seen in the 12 months before that. [3] Comparatively, though, the number of attached home sales has increased much more over the past year. We've seen 546 attached home sales in the past 12 months, which is 15% more than in the 12 months before that! And how about prices... [2] The median sales price of a detached home in Harrisonburg and Rockingham County has increased 9% over the past year, to a nice (or not nice, if you're buying) round $300,000. [3] Prices of attached homes has increased at an even faster rate, with an 18% increase over the past year to a median sales price of $230,250! Here's one of my favorite graphs each month, showing monthly sales in our area...  So, plenty going on in the graph above. January 2022 was what we might have expected -- right in the middle of the pack as compared to past months of January. February sales were surprisingly high, easily exceeding previous months of February. But March, hmmm, not as exciting as we might have hoped. Why weren't there more buyers in March? Some of them might have bought in February. But more likely... home buyers didn't buy (close on a purchase) in March because there weren't enough home sellers listing their homes for sale in January and February. Fewer homes available to purchase means... fewer homes will be purchased. All that said, we are certainly seeing a significant shift in mortgage interest rates right now, and that may also affect buyer (and seller) behavior moving forward. It will be helpful to see what happens over the next three to six months to better understand the overall trends in our local housing market... which is a statement that is probably always true. The next six months of data will be the best indicator of what is going on right now. :-) Next up, stack 'em up...  Here's where we'll be able to keep good track of cumulative trends as we go through the year. The first three months of home sales this year (307) is slightly lower than those same three months last year... but higher than the two years before that. Will enough home sales pile on in April to make up that deficit? One indicator that might point to a yes or no will be contract activity in March. Keep reading... Slicing and dicing the data again, we end up reviewing our basic understanding of landforms...  OK, let's see how you did at geography... before you read the captions above... the green line is or is not a plateau? And how about the orange line? Indeed, the green line is definitely not a plateau... sales prices keep on climbing, higher and higher and higher again. But the orange line... might be (?) a plateau? The number of homes selling a year in Harrisonburg and Rockingham County dipped down to around 1300/year in mid 2020 at the start of the pandemic, but then accelerated well past 1600/year by the fourth quarter of 2021. Over the past eight months, however, we have been seeing a relatively steady number of home sales per year. So, lots of home sales, but that number is no longer increasing, at least for now. So, will we see annual home sales ever (even for a month) rise to 1700 sales per year? Maybe not, given the past eight months of hanging out in the 1650 - 1690 range. And below is one more sign of a possible change in a trend in our local housing market...  As can be generally observed above, the number of buyers buying has been flattening out over the past six to nine months -- and the number of sellers selling (inventory levels) have been stabilizing (at a really, really low point) during that same time period. So, is something changing in our local real estate market? Maybe? We probably shouldn't and wouldn't conclude that the balance in the market is shifting unless we see a measurable decline in buyer activity AND a corresponding increase in availability in homes offered for sale. Which brings us right back around to needing to remember that in order for a high level of buyer activity to be sustained.... we also need to see a sustained high level of seller activity. No houses to buy... no houses will be bought. But before anyone starts thinking that the balance in the market is changing, let's take a look at how negotiations are going these days...  Indeed, buyers and sellers in today's market will tell you that there is very little negotiating happening on price... unless you consider going well above the list price as negotiating. I listed three homes for sale last week... we had three offers on one, three offers on the second, and seven offers on the third. All are selling for more than the list price. So, even if buyer activity in the overall market is declining slightly, that might be simply a result of fewer sellers selling... because the competition for each singular listing is still quite fierce. So, no, Buyer Bruno, we certainly don't talk about negotiating. Nice try, though. OK, this next graph is what I've alluded to a few times earlier...  Yowzers! Contract activity was STRONG in March 2022! After a somewhat slow start to the year as far as buyer and sellers signing contracts to buy and sell... things took off in March! There were 187 contracts signed during March 2022, which was well above the 160 seen last March! And yes, as I alluded to a few times, this probably means we're going to see a rather strong month of closed sales in April. If that, indeed, happens, the slower month of March sales will then have quickly become a distant memory. Stay tuned. Maybe more buyers are buying (in March) because more sellers were willing to sell...  After many, many months of fewer and fewer homes for sale at any given time, we're finally seeing that metric staying stable and increasing ever so slightly. Maybe this is a win for buyers... at least inventory levels didn't drop any further? Whatever we can do to encourage home buyers in this market, let's do it, because it can be a discouraging time to try to buy a home right now! Below is another picture of why it can be discouraging to try to buy right now... and I guess this one is a reverse plateau...oops, a valley!?  This chart is measuring the annual trend of how long it takes for homes to go under contract once they are listed for sale. That very last data point of "5" means that over the past 12 months the median "days on market" was five days. So, half of the homes that sold went under contract in five or fewer days. So, so fast! This makes it somewhat more difficult to be a thoughtful, intentional, deliberate home buyer, because you are going to need to make a decision quickly!! And one last graph, that even shocked my Apple Pencil as I doodled on this month's graphs for you...  Yes, you are seeing that correctly. You can gasp as well if you'd like. Over the past two months, the average mortgage interest rate has risen from 3.55% to 4.67%. That was fast!?! For years now, I have incorrectly predicted that mortgage interest rates would really start to increase soon. As we entered 2022 it became clear that the time had really could when we would see rates start to increase... but I certainly wasn't expecting it to happen this quickly. Will rates push past 5% as we continue through the year? Will they stabilize between 4.5% and 5%? Any buyers who is hoping to buy in 2022 is carefully watching these rates as it relates to their potential monthly housing costs. OK! That brings us to the end of this month's recap of our local housing market. As you can see, there is a lot going on... home sales are slowing a bit, prices keep climbing, contracts are stronger than ever, interest rates are soaring... so much to watch as we move into the hustle and bustle of the spring market! Finally, some action items for you... [1] Go enjoy a meal at Vito's Italian Kitchen and take a friend, family member, or neighbor with you! [2] Are you preparing to sell your home this spring? Let's set up a time for me to swing by your house to walk through together and talk about house preparations, the market, the process and timing. Email me or call/text me at 540-578-0102 to get that process started. [3] Ready to buy? It can be done! Let's chat about what you hope to buy, and I can connect you with a few of my favorite lenders if you need some recommendations. Signing off now... reach out anytime if you need anything... and if you have a family member, friend, colleague or neighbor that is looking to buy or sell soon, feel free to send them my way. I'd be happy to help. Recent Articles:
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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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