Archive for April 2023
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The Probability Of Selling Your Home Is Still Hovering Around 99 to 100 Percent |
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 Will I be able to sell my home? Almost certainly, YES! For the past few years, the probability of selling one's home (just about any home!) has been extraordinarily high. Will it sell? Yes, almost certainly. Now, of course... this has to fit within the context of pricing, preparation/condition, and marketing... but most homes sold. This has not always been the case. Five or more years ago there wasn't a guarantee that every home would sell... though I suppose some would argue that at SOME price EVERY home would sell. That said... right now, we are still very much in a time when it is extremely probable, highly likely, nearly certain... that your home will sell. So if we don't have to wonder WHETHER your house WILL sell, these then are the questions we'll be focused on... 1. How should I price my home? 2. What do I need to prepare my home for the market? 3. How should my home be marketed? We may very well get back to a (normal!) time again when it is not as certain that every house will sell (quickly and at a favorable price) but until/unless we get there... home sellers can keep on enjoying this strong seller's market. | |
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Run The Numbers On Selling And Then Buying A Home |
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 If you will be selling your home to buy another, there are a lot of numbers floating around....
Above you will see a spreadsheet I put together to help you think about some of these numbers as you are evaluating if and when you will make a move to a new house. In yellow, are all of the inputs you will need to provide, or that you and I can determine together, such as your current payment, your home's current value, your mortgage payoff, whether you will be putting any additional money into the transaction, etc. In green, I have identified your potential future mortgage payment and the net change in your monthly payment. All of the numbers without a background color will automatically calculate for you. Click here to download this worksheet as an editable Excel file. | |
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No, You Do Not Need To Round Your List Price Up To Give Yourself Room To Negotiate |
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 Let's say that after we review the market analysis of your home together we decide your home is likely worth $550,000 in the current market. Being a reasonable home seller you decide you would like to try to sell your house to someone for $550,000. Seems like a solid plan. So, which is the correct list price? a) $575,000 b) $565,000 c) $549,000 or $550,000 d) $525,000 The answer is... C. I think the answer is always C!? In the current market (in most price ranges, in most locations, with most houses) you don't generally need to round your list price up to give yourself room to negotiate with a buyer. Buyers in today's market will come see your house if it is for $565K or $575K, but they likely won't make an offer. Thus, if you believe your home is worth $550K, and you hope to sell for $550K... in many cases, the best list price will be $550K... or maybe $549K. Clearly, this can't be one size fits all for all properties, in all price ranges, locations, etc.-- but the point I'm driving at here is important -- you shouldn't feel the need to round up your list price (in the current market) in order to get the price you really hope to have a buyer pay for your home. | |
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Will A $300K Townhouse Be More Expensive In The City Or The County? |
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 It sounds like a trick question, right? Will A $300K Townhouse Be More Expensive In The City Or The County? Certainly, my monthly payment for a $300K townhouse in the City will be the same as for a $300K townhouse in the County, right? Nope. The difference is the real estate tax rate... City of Harrisonburg = $0.93 per $100 of assessed value Rockingham County = $0.68 per $100 of assessed value As such, here's how the monthly mortgage payments break down if you financed 90% of the purchase price over 30 years with an interest rate of 6.25%... City of Harrisonburg = $1,958 Rockingham County = $1,895 So, they're close... but you'll pay approximately $63 per month more on your $300K City townhouse as compared to a townhouse at the same price point in the County. Or, annually, you'll pay about $750 more to live in the City than in the County. | |
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Higher Mortgage Interest Rates Are Making Would Be Home Buyers More Thoughtful About Offers |
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 Back when mortgage interest rates were 3% - 3.5%... 10:00 AM - new listing hits the market 10:10 AM - drive by 10:11 AM - text Realtor to set up showing 1:30 PM - walk through the house 1:55 PM - get kicked out by the next buyer in line to see it 2:30 PM - make an offer on the house (90% chance you'll make one) Home buyers didn't have to think very hard at all about whether to make an offer on a house they liked because their mortgage payment would be pretty darn low given historically low mortgage interest rates at the time. Now a days, with mortgage interest rates of 6% - 6.5%... 10:00 AM - new listing hits the market 12:15 PM - drive by 12:30 PM - text Realtor to set up showing (next day) 10:00 AM - walk through the house 4:00 PM - talk through the mortgage payment details with lender (next day) 9:00 AM - make an offer on the house (33% chance you'll make one) Buying a $350K house (for example) is a big decision! Buying a $350K house can seem like a smaller decision with 3.5% mortgage interest rates. It's only a $1600/month mortgage payment given a 20% down payment. Buying a $350K house can seem like a really big decision with 6.5% mortgage interest rates. It's a $2,115/month mortgage payment given a 20% down payment. As noted in the comparison above, buyers are still making decisions relatively quickly -- but they're thinking things through a bit further -- and they're not always choosing to make an offer. These higher mortgage interest rates do impact the market, even though they haven't caused home prices to drop in Harrisonburg and Rockingham County. | |
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Home Sellers Still Are Not, For The Most Part, Accepting Home Sale Contingencies |
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 As we make our way through the spring real estate market, plenty of folks are getting geared up to buy a home. Some of those would-be home buyers also need to sell their current home. No worries, right? We can just make an offer to buy contingent on you selling your home. Right? Right??? Maybe not. There still seem to be MANY, MANY more buyers in the market to buy than there are homes available for them to purchase. As such, home sellers are not, for the most part, accepting home sale contingencies. An offer with a home sale contingency technically means the seller has their house under contract -- but does it really matter? The sale won't head to closing unless some other house (your house) also goes under contract. If you are selling a home this year, I am likely going to tell you that you won't have to accept an offer with a home sale contingency. If you are buying a home, the same logic applies, a seller is unlikely to have to accept an offer with a home sale contingency. Case in point... there are 266 houses under contract right now in Harrisonburg and Rockingham County in the HRAR MLS. Of those...
* These are houses marked as "Pending" in the MLS ** These are houses marked as "Active with Kickout" in the MLS So... if you're looking to buy, and you need to sell, we need to talk through the logistics of how you can accomplish that in this competitive market where most other buyers are likely making offers on houses without home sale contingencies. | |
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Many New Residential, Commercial Developments Planned Or Underway In Urban Development Area |
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 (click the map above for a larger version) There are LOTS of new developments (both residential and commercial) planned, proposed or under construction in the Urban Development Area - located in Rockingham County, just southeast of the City of Harrisonburg, surrounding Sentara RMH Medical Center. Here are some that were new to me... [1] another 7-11 [2] another car wash [3] an extended stay hotel [4] Tots N Toyland [5] Woodspring Suites [6] Oriental Cafe [7] CubeSmart And of course, multiple large proposed residential developments. Change and growth seem to be the only constants on this side of the County right now. | |
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Harrisonburg Considers An Additional Increase In The Real Estate Tax Rate |
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 It's that time of year again... the City of Harrisonburg must decide how much money it can, will or must spend... and where that money will come from. City Council met last week and began to discuss a draft budget for Fiscal Year 2023-2024 presented by City staff. You can read more about the meeting and discussion here. You can view the draft budget here. In summary... the City is planning on a budget of around $362M in FY24, which is about a $27M increase from FY23. Where does all of that money come from? A variety of sources, including these top four funding sources... 34% from real estate taxes 11% from personal property taxes 11% from sales taxes 11% from restaurant food taxes The amount of real estate taxes collected (to fund the budget) depends on... [1] the value of real estate in the City [2] the real estate tax rate The planned budget includes (as shown on the graph above) a $0.03 increase in the real estate tax rate, from $0.93 to $0.96. What impact will this 3% increase in the real estate rate have on owners of real estate in the City of Harrisonburg? The median sales price of homes sold in the City of Harrisonburg over the past year was $255,000. Real estate taxes with a tax rate of $0.93 on this $255K home would cost a homeowner $2,371.50 per year. Real estate taxes with a tax rate of $0.96 on this $255K home would cost a homeowner $2,448.00 per year. So... a $76.50 increase per year... or about $6.38 per month. Two important notes related to these calculations... [1] The $255K figure of the median sales price is not necessarily perfectly aligned with the median tax assessed value of all residential properties in the City. The $255K figure is based on their sales prices... not the assessed values... and just of the homes that have sold... not all homes that exist. [2] The median sales price has increased 12% in the City of Harrisonburg over the past 12 months. This may mean that assessed values will rise when properties are next assessed by the City, which would result in a further actual increase in real estate taxes based on new assessed values. Finally, two other general notes... [1] For anyone wondering what the City spends $362M on in a year, the "Budget in Brief" document found on this page is a very helpful summary of the City budget. [2] From the article on The Citizen linked above (and here)... "This tax increase is a continuation of the city’s plan to raise that tax by 10 cents over three years to pay for the new Rocktown High School, which is expected to cost about $100 million." | |
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Will We See Thousands Of New Rental Properties In The Harrisonburg Area Over The Next Few Years? |
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 Here's a summary of potential upcoming rental developments in or near Harrisonburg... Altitude Apartments, Phase 2 (102) Bluestone Town Center (~600) Apartments at Peach Grove (460, Peach Grove Avenue) Lingerfelt Development Apartments (376, also on Peach Grove Avenue) Apartments at Regal Cinemas (274) The Wentworth (271, in StonePort) Epoch (265, near the Wellness Center) Valley View Village (420, on Reservoir Street) The Edge (156, on East Market Street) Two41 (142, on East Market Street) Mixed Use on Reservoir Street (100) Wilson Avenue (34, North Main Street) Boyers Crossing (48) Stoney Ridge (72, South Main Street) Chicago Avenue Apartments (48) Thus, there are approximately 3,368 rental units under construction, approved, planned, proposed, etc. This does not include the ~280 unit rental neighborhood that will soon be proposed on the far end of Boyers Road backing up to Mystic Woods Lane. This also does not include the multiple recently completed rental developments such as Preston Lake Apartments, Congers Creek Apartments, Locust Grove Village, etc. If you're looking to rent in or near Harrisonburg, you might have LOTS of options in the coming years. | |
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Home Prices Still On The Rise Despite Fewer Home Sales In 2023 |
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 Happy Thursday afternoon, friends! The spring real estate market is upon us -- though it looks and feels a bit different than it did over the past few years. Read on for stories of fewer home sales, rising prices and stubbornly low inventory levels. Speaking of spring... if you're looking for a home with landscaping that really pops each March, check out this beautiful, four bedroom, brick home over on Meadowlark Drive that came on the market earlier this week...  On a personal note, can you spot any proud parents of a soon-to-be high school graduate in the photo below? :-) Wow, the past 18-ish years have flown by quickly. Luke will be graduating in early June and Shaena and I couldn't be more proud of this guy!  << Insert Here: Quick transition to some other topic so I can stop thinking about how old I must be if my son is about to be a high school graduate!?! >> OK, then... Each month I offer a giveaway, of sorts, for readers of this market report, highlighting some of my favorite places, things or events in Harrisonburg. Recent highlights have included Taste of India, A Bowl of Good and a Steel Wheels concert. This month... I'm giving away a $50 gift card to one of my favorite lunch (or dinner) spots downtown... Cuban Burger! I almost always order the Cuban Chop Chop with Chicken, but everything on their menu seems likely to be delicious! Click here to enter for a chance to win the $50 gift card! And now... let's move on along to the most recent data on our local real estate market. First, let's see what "fewer home sales" looks like right now...  A few observations related to the chart above... [1] While the number of home sales taking place this March was 11% lower than a year ago -- that's not quite as much of a drop as we see when we look at the past three months (-21%) or the past six months (-25%). So, maybe things are picking back up -- a bit -- here in March? Maybe? [2] There have been 1,501 home sales over the past year in Harrisonburg and Rockingham County which is a 9% drop from the previous 12 months when there were 1,658 home sales. This drop of 157 home sales for the year seems almost certainly to be a one-sided supply side issue -- not enough sellers selling. You'll note later on in this report that inventory levels haven't risen by 157 homes (due to buyers not wanting to buy) so the constraint on the number of home sales is almost certainly directly tied to how many sellers want to or are willing to sell. But despite fewer homes selling, home prices keep on rising...  Yes, we could pick on the one red number on the chart above -- showing a 1% decline in the median sales price between March 2022 and March 2023 -- but the small sample size (of one month of data) means that this is not necessarily a meaningful indicator of an actual downward trend. This is made even more evident by the 10% - 11% increases in the median sales price when looking at three, six and 12 months of data in the chart above. Perhaps more importantly, yes, we're still seeing double digit annual increases in the median sales price in Harrisonburg and Rockingham County. One year ago the median sales price was $276,200. It has risen 10% over the past year, cleared $300K, and is now at $304,900. Just to refresh one's memory on what "median" signifies -- it means that half of the homes that are selling are priced at or above $304,900 and half are at or below $304,900. Prices just keep on rising! Buyers who are frustrated that they can't wait even just a day to make a decision about an offer on a hot new listing might be encouraged by these next stats...  There has been an ever so slight (ok, technically 20%) increase in the median days on market stat over the past year. A year ago homes were going under contract after a median of five days... and now that has risen to... six days. Yes, I know, that one day might not seem that significant -- but if we look at just the past three months we'll note that the median days on market has jumped up to eight days! So, some new listings are lasting an extra day (or three) on the market before they're going under contract. So, the market is slowing down... barely. It will be interesting to see if this metric continues to rise, falls again, or stays at about the same level as we move into and through the spring market. Now, as to what is actually selling, there are some interesting trends to be noted between existing homes and new homes. I have highlighted the numbers below that I think deserve attention. Here's the existing home sales data...  ...and here's the new home sales data...  So, while the overall market has seen a 9% decline in home sales over the past year... [1] There has been a 15% decline in existing home sales. [2] There has been a 12% increase in new home sales. If you want to buy a home that is of the property type, size, price and location of one of our area's new home communities -- these trends work in your favor. If you want to buy an existing home (not a new home) in an established neighborhood -- these trends aren't all that exciting. There haven't been 9% fewer homes to buy over the past year -- there have been 15% fewer homes to buy!?! Now, circling back to the monthly data...  March was... not as slow as January and February!?! ;-) We saw significantly fewer home sales this past January and February as compared to the same month last year. January sales were 27% below the prior year. February sales were 24% below the prior year. March sales were only... 10% below the prior year! So, I suppose that's a bit encouraging... we're starting to see a slight increase in monthly home sales... though yes, we're definitely still well behind 2022. And for anyone who likes a good participation trophy...  ... First Quarter Home Sales In 2023 came in at... 4th Place... oh, out of five contestants! Indeed, the 249 home sales we have seen in the first quarter of 2023 was fewer than we saw in 2020, 2021 and 2022. We are slightly ahead of the first quarter of 2019, though, so there's that... Looking at the big picture of our market over the past few years, in visual form...  There are two main things to note in the graph above... [1] Home prices have been increasing at a much faster pace than is historically normal. We're in the third year in a row of double digit (per year) increases in the median sales price in our area. [2] After a two year boom in the number of homes selling (due to Covid and super low interest rates) we are now almost a year into a steady decline in annual home sales (from 1,727 per year to 1,502 per year) mostly related to rising mortgage interest rates. Now, let's look ahead by looking behind...  Home sales this month are most directly influenced by contracts last month. So, how did things go in the March market? Lots of sellers listing their homes for sale? Lots of buyers contracting to buy homes? Well... not really. [1] Contract activity declined 26% in February 2023 compared to February 2022. [2] Contract activity declined 37% in March 2023 compared to March 2023. So, yeah, the spring market (sooo many listings, sooo many contracts) doesn't quite seem to be showing up this year like it did last year. Maybe the buyers (and much more importantly, the sellers) will start showing up in April? Unsurprisingly, several slow months of signed contracts brings on a lower than ever number of pending sales in Harrisonburg and Rockingham County...  There are 256 homes currently under contract in Harrisonburg and Rockingham County. One year ago there were 398 (!!!) homes under contract. Over the past four years we've seen an average of 293 homes under contract at this time of year. So, yeah, based on the low number of pending sales right now, we are likely to see at least another month or two (or more!?) of slow(er) months of home sales. Why have there been so few homes going under contract? Are the listings pouring onto the market and buyers are just deciding not to buy? If that were the case, we'd see inventory levels starting to climb, so, let's take a look...  In fact, no, inventory levels are not rising. They are staying stubbornly low. There are 116 homes on the market right now (for sale, not under contract) in Harrisonburg and Rockingham County. This is compared to 135 being on the market a year ago at this time... and an average of 185 being on the market over the past four years at this time of year. So, buyers seem to not be buying because... there's nothing to buy. Or, at least, there's less to buy. Plenty of homes (-9% year over year) are still selling, but this decline in sales activity seems to still be entirely related to sellers not selling, and not related to buyers not buying. And yet, despite inventory levels staying super low, we are actually seeing a slightly change in how quickly homes are going under contract...  Over the past six months the "median days on market" has been eight days in Harrisonburg and Rockingham County. That means that half of the homes that have sold were under contract within eight days of hitting the market and half were under contract in eight or greater days. The change here is a slight increase from five days up to eight days over the past few months. We were seeing a median days on market of six days or less for almost two straight years (April 2021 - January 2023) but that is starting to drift upwards a bit. So, (some) listings are lasting an extra day or two (or three) on the market right now -- though these days on the market levels are still well below long term historical norms. Maybe it's taking buyers an extra day or two to make an offer because they have to keep checking in with their lender because rates are constantly jumping up and down from week to week and month to month?  Rates dropped in March, after rising in February, after dropping in January -- you get the picture. We're currently seeing mortgage interest rates that are definitely and absolutely not the best we've seen in the past year -- but that also are a good bit below the worst that we've seen in the past year. Where mortgage interest rates go from here is anyone's guess -- but I'm thinking they will continue to fluctuate on a weekly and monthly basis for much of 2023. OK! That was a lot of data, and charts and graphs, oh my! If you made it all the way to the end, thanks for reading and I hope you are feeling more informed than ever as to the latest trends in our local housing market. If you're thinking about selling your home this spring or summer -- all of the would-be buyers of Harrisonburg and Rockingham County would REALLY like you to decide to do so. ;-) Let me know if you'd like to set up a time to walk through your home together to talk about preparations, pricing, timing, etc. If you're hoping to buy a home this spring or summer -- I'd be delighted to be in your corner helping you navigate this rapidly moving, competitive market. Let's chat about what you're hoping to buy, get you connected to a local lender to become pre-approved, and then let's try not to develop a twitch as we keep checking for new listings again, again, again and again. That's all for today, folks. I hope the balance of your month of April goes well and that you aren't struggling too much with the seasonal allergies that seem to affect so many of us at this time of year. I think the beauty of the blooming flowers and trees generally outweigh the not-so-exciting allergy symptoms that I'm currently working through. Be in touch anytime if I can be of help to you -- with real estate or otherwise. You can reach me most easily at 540-578-0102 (call/text) or by email here. P.S. If you want even more charts and graphs than I have included above, you'll find them here. | |
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Make The Offer You Are Comfortable Making Even If You Suspect It Will Not Succeed |
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 As a would-be buyer in a competitive seller's market you might find yourself thinking that you need to... [1] offer over asking price [2] include an escalation clause [3] waive an inspection contingency [4] waive an appraisal contingency Indeed, for some properties (in some price ranges in some locations) the only way to secure a contract to buy the home of your dreams is to do some or all of the above. But yet, I do encourage you to only make the an offer you are comfortable with... even if you suspect that offer will not succeed. If a hot new listing is priced at $400,000 and that seems like a reasonable price for the house... YES -- it is OK to offer $400,000 without an escalation clause, with an inspection contingency and with an appraisal contingency. Will that offer succeed? Quite possibly not -- especially if there are multiple offers. But... if that is the strongest offer you are comfortable making then that is the offer you should make. It won't necessarily lead to you securing a contract on the house -- but it might -- and if it does, you'll be under contract to buy with contract terms you are comfortable with. | |
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The Amount You Are Comfortable Paying For Your Next Home Might Be Different Than The Amount Your Lender Would Let You Spend |
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 So, you took my advice and talked to a mortgage lender to get a sense of what you are qualified to spend and to get a feel for potential mortgage payments. Great! You had been hoping to spend up to $350K on a house. But your lender said you could spend up to $475K on a house! But... when you look at the monthly mortgage payment associated with a $450K home purchase... WOW!!! How does your lender expect you to pay this much per month, and still have money for other life expenses, travel, emergency savings, etc.?!? This is not an uncommon place to be. Plenty of well qualified buyers discover that their lender will qualify them for a home purchase price that would involve a monthly mortgage payment much higher than is comfortable. So... start with a conversation with your lender about how high you *could* go on price... but be prepared to possibly need to do a bit more work with your lender to dial back that potential purchase price until you get to a monthly mortgage payment that is comfortable for you! | |
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Homes Are Selling Quickly, Often At Or Above The Asking Price, But... |
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 Homes are selling quickly... often at or above the asking price... but... ...that doesn't mean you can put any price on your home and successfully sell quickly and at or above the list price. -- Let's say you own a townhouse and you are getting ready to sell it. Three other townhouses on your street sold for $250K in the past two months. If you list your home for $250K or $255K (or possibly even $259K) you'll likely find early success in securing a buyer for your home at or above the list price. If you list your home for $275K you are much less likely to quickly secure a contract with a buyer at or above your list price. If you list your home for $299K you are very (very) unlikely to quickly secure a contract with a buyer at or above your list price. -- If you own a home that you think might be worth $450K and we discover that other recent buyers have paid $460K and $470K for similar homes... great! A list price of $459K or $465K or $470K will likely result in an early, strong offer. A list price of $489K is much less likely to result in an early, strong offer. A list price of $510K probably won't get you very far at all. -- So, yes, many or even most buyers are paying very close to the list price -- the list price -- or above the list price -- BUT that's because most home sellers price their homes appropriately for the market. | |
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How Patient Are You Willing To Be To Get Into THAT Neighborhood? |
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 There are some neighborhoods in the City of Harrisonburg and Rockingham County where it seems like homes NEVER come on the market. They are often GREAT neighborhoods for reasons related to the fact that there is very little turnover... homeowners stay in their homes for a long time, and wonderful relationships are built between neighbors over many years of living next door or down the street. So, if you decide you're interested in buying a home in THAT neighborhood.. where it seems like homes NEVER sell... you will likely have to decide how patient you are willing to be to get into that neighborhood. It may very well be worth the wait, but it might mean staying in your current home longer than you'd like (if you're local) or renting for longer than you'd like (if you're moving into the area). | |
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Consider How Soon You Will Need To Replace These Items When Purchasing A Home |
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 Many aspects of any home that you might purchase will likely never need to be replaced, for example... [1] the foundation [2] the wall framing [3] the plumbing Some items may need to be replaced at some point but when you choose to do so will be more elective than necessary... [1] flooring [2] interior paint [3] light fixtures But... some items will definitely need to be replaced at some point in your home's lifetime (or multiple times in your home's lifetime) and as such you should consider how soon they will need to be replaced when contemplating a home purchase. These "definitely will need to be replaced at some point" items are... [1] roof [2] heating and/or cooling system(s) [3] water heater [4] kitchen appliances If you're considering the purchase of a home that has recently had all four of those items replaced... great! Alternatively, if all of them are 30+ years old... not so great! Ask about the age of the main systems of the house you are purchasing... preferably before you are already under contract to buy it! | |
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First Look At Contract Activity In March 2023 |
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 In the next week or so I'll provide a much fuller analysis of what March (and the first quarter of 2023) looked like here in the Harrisonburg and Rockingham County real estate market. Until then, here's a first look at buyer activity last month. A total of 119 home buyers signed contracts to buy homes in March 2023... which is... [1] Much lower than the second and third March of Covid -- 2021 and 2022 -- when mortgage interest rates were super low and buyers were stumbling over themselves to buy. [2] Slightly higher than the first March of Covid -- 2020 -- when we were all still trying to figure out what Covid was and how it would impact the economy and housing market. [3] A good bit lower than the three years just before Covid -- 2017, 2018 and 2019. Housing inventory levels still aren't rising, so I think the lower contract numbers are related to a limited number of sellers being willing to sell -- not related to a limited number of buyers being interested in buying. | |
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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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