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Harrisonburg Area Housing Market Reaches New Heights |
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 Happy Friday morning, friends... and Happy Summer! If you have school age kids, or college age young adults, I hope the school year finished out well and that they (and you) are ready to relax a bit over the summer. Luke just finished 11th grade and is gearing up for his senior year (gasp!) and Emily finished out middle school and will be in 9th grade in the fall. Here they are in the obligatory "last day of school" photo...  Transitions it seems, are upon us. School is ending and summer is beginning. Cooler spring days are being replaced by hot and humid summer days. And... as some folks seem to be wondering these days... are we seeing a transition in our local housing market? I don't think any of us will really know the answer to that question for another six to twelve months when we can look back and reflect on what happened in the second half of 2022, but here are some things that seem to be true... [1] Mortgage Interest Rates Are Rising [2] Some Home Buyers Are Getting Priced Out Of the Market [3] The Stock Market Is Not Doing So Well [4] Inflation Is Upon Us ...and yet, with all of these transitions taking place, this month you'll learn that... [1] More homes sold in the past 12 months than ever before in any 12 month period in Harrisonburg and Rockingham County. [2] The median sales price in the past 12 months is the highest it has ever been. So, is our local housing market transitioning? Is it cooling? Is it leveling off? Is it settling down? Maybe it is and the data doesn't show it yet? Maybe it will eventually? Maybe there are some early signs that it might soon? We'll explore the data together below, but I'm not finding many, if any, signs that our local housing market is undergoing significant changes. But first... My Favorite Spots... Each month in this space I highlight one of my favorite spots to enjoy a meal, a cup of coffee, or an experience. This month, I'd encourage you to check out Village Juice & Kitchen on West Bruce Street in downtown Harrisonburg where you'll find delicious smoothies, smoothie bowls, salad and grain bowls, juices and so much more! My favorite smoothies (so far) are Mint Chip and Mocha Nana. Explore the menu at Village Juice & Kitchen, on me, by entering to win a $50 gift certificate here. I'll pick a winner in about a week. Download All The Charts & Graphs... Now... let's take a look at the data together...  Looking at all of the numbers above, a few things jump out to me... [1] Looking only at the first five months of this year (Jan-May) we have seen a 4.75% increase in the number of homes selling in Harrisonburg and Rockingham County. [2] Looking at a slightly longer timeframe, the past 12 months, the increase in the number of home sales has been over 7%. [3] The median price of homes sold thus far in 2022 has been $297,450... almost 19% higher than a year ago when it was only $250,000! [4] Looking at a full year of data, the median sales price in Harrisonburg and Rockingham County over the past year was $285,000... which is 14% higher than a year ago when it was $250,000. This is a significant increase in home sales prices over a single year. Can we break it down any further to understand why these prices are going up so much?  At least one observation that can be made is that change in prices are happening a bit differently when looking at detached homes compared to attached homes... [1] The median sales price of a detached, single family home, is now up to $311,000 in Harrisonburg and Rockingham County, over 12% higher than a year ago. ...but... [2] The median sales price attached homes (townhomes, duplexes, condos) has increased 21% over the past year to $238,285! This much larger increase in the median sales price of attached homes seems likely to be a result both of townhomes selling at higher prices... and most newly built townhouses being larger and more expensive than townhomes as a whole. Beyond property type (detached vs. attached) can we find any other differences in changes in property values? Why yes, we can...  Above you'll note that... [1] The median sales price of homes sold in the City of Harrisonburg over the past year has increased 5% to $231,100. ...while... [2] The median sales price of homes sold in Rockingham County has increased over 13% during the past year. Again, this may be at least partially a result of what happens to be selling... with many newer, larger, more expensive homes being built in the County right now... which causes the median sales price (of what has sold) in the County to increase. Now, looking visually at how this year has played out on a month by month basis...  After a comparatively strong month of home sales in April 2022 (well above previous months of April) we saw a slight decline in monthly home sales from 146 sales in April to only 139 in May. Looking ahead, it's anyone's guess as to what exactly will happen in June. It seems somewhat unlikely that we'll exceed the shockingly strong 175 home sales seen last June... but perhaps we'll be in the 160 range, or maybe right around 140 again (like this month) or could we have the slowest June in the past three years? Stay tuned to find out. Sorting the data out and stacking it up a bit differently, you'll notice that 2022 is looking pretty solid...  Those circled brown numbers might look pretty similar, but one is 569 and one is 596... so we have seen more home sales in the first five months of 2022 than we saw in the first five months of last year, and of the year before that, and the year before that! We're still on track to meet or exceed the 1,673 home sales seen last year, though we are certainly experiencing some headwinds now with rising mortgage interest rates. If our local housing market does slow down a bit, when will it happen, or when will we see it? In June? July? Again, illustrating the story of the market that has not yet slowed down...  Two "highest ever" or "most ever" data points above... [1] The median sales price of $285,000 over the past 12 months is the highest such median sales price we have ever seen in Harrisonburg and Rockingham County. [2] The 1,700 home sales seen in Harrisonburg and Rockingham County in the past 12 months is the most, ever, that we've seen in that timeframe in our local market. So, yes, there are plenty of reasons why our local market could be slowing down, or might eventually slow down, but thus far the data doesn't seem to be showing it. If or when the data does show it, I'll be sure to point it out. There are a few possible leading indicators below...  I suppose I could take the title and numbers off of the graph above and we could imagine it to be a graph of any variety of things these days... the cost of health care, the cost of higher education, the cost of gas, the cost of groceries, but in this case... it's the cost of housing. The median sales price just keeps... on... going... up! This might be the third year in a row where we will see a 10% increase in the median sales price in our local market! OK... now... to "cool our jets" a bit, as my mom used to say...  While it's still quite a bit higher than May 2020... only 158 contracts were signed for properties in May 2022, down a bit from the 166 that were signed a year ago in May 2021. Furthermore, over the past year there have been 1,694 contracts signed... compared to only 1,673 in the prior year. So... as a possible early, early, early leading indicator that the market might be slowing, slightly... contract activity might be getting close to leveling off. Right now, it's still on the rise... more homes went under contract in the past year than the previous year... but they're getting close to being even. And another indicator that we might be seeing a transition in the market...  Inventory levels, as shown above, are starting to creep up, a bit in our local market. The market bottomed out with fewer than 100 homes for sale a year ago... but now we're up to 152 homes for sale in Harrisonburg and Rockingham County. Admittedly, many of these options are new homes in a handful of communities that will only appeal to some pockets of the buying public (based on size, price or location) but regardless of what the options are that are for sale... there are more options for sale now than there were a year ago. There are, clearly, still well fewer options now than two years ago or earlier, but inventory levels are no longer declining... and they seem to actually be increasing! But, despite a possible leveling off of contract activity... and despite inventory levels creeping up a bit... most homes seem to be selling just as fast as ever...  As shown above, the median "days on market" for homes sold in Harrisonburg and Rockingham County fell all the way down to five days about a year ago... and has been there ever since. Two years ago, the median was over two weeks, but we're just not in those times any longer. If the market does slow, we should see it taking an extra day or two (or 7 or 10) for homes to go under contract... but that is not yet happening in our local market. Finally, how about those mortgage interest rates?  Towards the end of last year, mortgage interest rates were as low as 3% but have since risen to 5%, and in the past few weeks (not shown on this graph) they have risen even higher... now exceeding 5.5%. Your mortgage payments will, clearly, be higher if you buy a house this year as compared to if you had bought a house last year. These higher mortgage interest rates could (should?) decrease the demand for housing... which might cause the real estate market to slow down or cool off a bit. Again, we haven't seen it yet. And with that, I'll draw this to a close. In summary... [1] More homes are selling on an annual basis than have ever sold before. [2] Homes are selling at higher prices than ever before. [3] Rising mortgage interest rates could cause our local housing market to slow down or cool off. [4] We don't yet seem to be seeing any slowing down or cooling off. [5] Even though we aren't seeing it yet, that doesn't mean it won't happen. Is a five point summary condensed enough to be considered a summary? Hopefully so. BUYERS: Check in with your lender to update your expectations as to mortgage payments. If you'd like to buy a home soon, let's chat about what to expect related to contingencies, competing offers and escalation clauses. SELLERS: You should probably get your house on the market sooner rather than later to hedge against interest rates rising even further, causing some portion of would be buyers to not be able to afford your home any longer. If you're planning to get your house on the market this summer or fall, let's talk sooner rather than later to discuss timing, pricing and more. If I can be of any assistance to you, feel free to call or text me at 540-578-0102 or email me here. 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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