Archive for May 2023
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Buying A Home In Harrisonburg When You Do Not Yet Live Here Is Particularly Difficult Right Now |
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 TUESDAY: Nice! A pretty sweet new listing just hit the market. I will definitely plan to make the (four hour) drive to Harrisonburg this weekend to see that house! THURSDAY: Oh, shoot. It's already under contract!? Argh. Anyone who lives out of town right now, but is attempting to move to Harrisonburg and buy a house in Harrisonburg is likely experiencing some variation of the scenario described above. It is a challenging time to buy a house in Harrisonburg if you don't already live in (or pretty close to) Harrisonburg right now... and it's all because of how quickly homes are going under contract. If you want to see a home in person before you make an offer to purchase it, and you live a few hours away and have a work or life schedule that doesn't allow you to hop in the car for a day (or overnight) trip on a moment's notice -- it can be hard to lock down a contract on a house. Enough about the problem... what's the solution? Here are a variety of the strategies you could employ... [1] Keep Hoping. Keep Trying. Hope that a great property will hit the market on a Friday when you're already planning to drive to Harrisonburg on Saturday, such that your timing and the timing of that new listing will work together perfectly. [2] View Houses Remotely. I can certainly walk you through (and around) a house via FaceTime or Zoom to allow you to more quickly see a house even if you can't make it to town. The question will then be whether you are willing to commit to purchasing a house that you have only seen via a phone (or tablet, or computer) screen. [3] Rent First, Buy Later. Go ahead and move to Harrisonburg, renting an apartment, townhouse or home, so that you are "on site" and ready to look at homes as they come on the market and pursue a house when you find the right now. Low inventory levels make it hard for even local home buyers to buy a house -- and it is even more difficult if you are trying to buy here but are not yet physically located here. If you find yourself in this situation, I'm happy to support you with any or all of the strategies noted above. Just reach out to connect so that we can talk about a game plan. | |
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An Absence Of Competing Listings In A Broad Price Range Does Not Mean You Can (Or Should) Round Your List Price Up To The Top Of That Range |
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 Most (all?) home sellers want to sell their homes for as high of a price as is possible. Makes sense. Why wouldn't you want the best possible price for your home? Pricing in a low inventory can lead to some interesting questions... If we look at recent sales that are comparable to your home, and we see a sale for $395K, $400K and $405K... we might conclude that your home is worth right around $400K in the current market. Different sellers then might choose different pricing strategies:
But what if, as you are choosing a price for your home, and you see these list prices of homes in your school district...
It might be a bit tempting, for some sellers, to then round up from that intended $400K target sales price all the way up to $449K or $450K. After all, if someone wants to buy in that school district, and they're going to pay $400K or more, they don't have any options until they get up to $455K. So, why not just price a bit under that competing house? Well, maybe you can already tell from the information laid out above, but buyers will likely look at your $449,500 price and think... [1] This house seems a lot more similar to those other homes that recently sold for $400,000. [2] This house is a good bit smaller than the competing $455,000 listing. [3] I don't think $449,500 is a reasonable price for this house. [4] It's hard to imagine negotiating a $449,500 house down to $400K or even $410K, so I won't make an offer. | |
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The First Buyer To Make An Offer Will Likely Not Include An Escalation Clause, At Least Not At First |
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 Yes indeed, we're still in a market where we often see multiple offers on new listings... and when there are multiple offers, we are likely to see some escalation clauses. If you are selling one of these popular new listings, should you expect that the first offer you receive will have an escalation clause? Probably not. Here's why... An offer only needs an escalation clause if it is in competition with another offer... and thus, if a buyer is making the first offer, the escalation clause is not needed. For example, if a house is listed for $325K, an interested buyer might offer $325K - but they are unlikely to offer $325K with an escalation clause going up to $350K. Why not include the escalation clause up front? If the first offer a seller receives includes an escalation clause, they are almost certainly going to be motivated to... wait for other offers. If your home is listed for $325K, and you have eight showings lined up, and the first buyer to see the house makes an offer of $325K that escalates to $350K -- you'll want to wait to see if you have any other offers, hopefully above $325K, that would cause that escalation clause to kick in. Now, certainly, that first buyer will want the opportunity to consider adding an escalation clause if or when there is a second offer with which they are competing. Thus, they may ask to be notified if any other offers are received -- and it would make sense for a seller to give them a heads up if or when a second offer is received. So... BUYERS: You likely don't need to have an escalation clause in your offer if you are the first buyer to make an offer -- but you should be ready to adjust your offer (to add one) very quickly if/when you hear that there is a second offer. SELLERS: Don't be surprised if the first offer you receive does not include an escalation clause. Likewise, don't be surprised if those buyers add an escalation clause once a second offer exists. | |
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Home Buyers Seem To Be Drawing The Line In A More Rational Place Now When Making Offers |
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 In 2021 and most of 2022, it wouldn't be surprising to see these type of offers... [1] price escalates $50K above asking price [2] no home inspection [3] no appraisal contingency [4] will pay up to $20K over appraised value This was also in the context of often having 5+ (or 10+) offers within the first 48 hours a house was on the market. Right now, we are still often seeing multiple offers within the first 48 hours that a house is on the market -- but it is often 2 or 3 offers -- and not 5 or 10. Furthermore, current offers (in many but not all price ranges, locations, etc.) are more along these lines... [1] price escalates $5K to $10K above asking price [2] yes, I'd like an inspection contingency, please and thank you [3] contingent on the property appraising at/above the contract price [4] no willingness to pay more than the appraised value Now... don't get me wrong... these terms are still very favorable for sellers. Many or most sellers are still likely to have more than one offer from which to choose, and they are also relatively likely to sell for more than their list price -- but they are likely to see inspection and appraisal contingencies in those offers. As such, it seems that buyers are drawing the line (of how far they'll go on an offer) in a more rational place -- perhaps because of higher mortgage interest rates and the accompanying higher monthly mortgage payments. | |
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Buy A House For Yourself, Not The Next Owner |
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 What are you focused on as a buyer when you walk through a home you might purchase? [1] Does this home work well for my needs? [2] Will this home be easy for me to sell when that time comes? Thankfully, with many homes, the answer to both questions can be "yes" - but that is not always the case. Sometimes, you'll walk through a home that is just perfect for you -- but you started to wonder whether this aspect or that aspect of the home will make it more challenging for you to sell it when that time comes. We should talk about those aspects of the home, acknowledge them, discuss whether they might impact the future resale of the home, talk about your intended length of ownership of the house, and then... focus in again on how the home works for your needs. After all, you should be buying a home for yourself, not the next owner. Certainly, if there is a high likelihood that you will need to sell the home again within a very short timeframe, perhaps we think a bit more about the future sellability of the house -- but in most circumstances, I'll encourage you to be focusing on how any particular house works well for you... rather than the next owner. | |
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Home Sellers Will Not Voluntarily Sell Their Homes For Lower Prices Because Of Higher Interest Rates Unless Competition Forces Them To Do So |
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 Quite a headline, I know. All for something that isn't actually happening in the local market. Here it is again... Home Sellers Will Not Voluntarily Sell Their Homes For Lower Prices Because Of Higher Interest Rates Unless Competition Forces Them To Do So Looking back a bit... Mortgage interest rates declined from 5% to 3% between 2018 and 2020 and then remained around 3% until early 2022. Median sales prices rose from $212K to $300K between 2018 and 2022. When mortgage interest rates started rising (quickly) in early 2022, many thought or said... Home prices rose so quickly between 2018 and 2022 (+41%) because mortgage interest rates were so low. ... and ... Now that mortgage interest rates are rising, home prices are destined to decline. We're now more than a year past the rising / higher mortgage interest rates and what can we now conclude? [1] It is quite possible that the rapid rise in sales prices between 2018 and 2022 was partially fueled by super low mortgage interest rates. That wasn't the only thing that caused home prices to increase, but it definitely kept sales moving briskly and prices rising quickly. [2] Despite mortgage interest rates rising from 3% to 6% in a year's time, home prices have not declined in the local real estate market. Which is what causes me to conclude that... Home Sellers Will Not Voluntarily Sell Their Homes For Lower Prices Because Of Higher Interest Rates Unless Competition Forces Them To Do So Certainly, if higher mortgage interest rates slowed down home buyer activity AND if inventory levels started to rise... then we might see home prices start to flatten out or decline as sellers competed with other sellers to attract buyers. But now that we're more than a year into having mortgage interest rates higher than 5% (and eight months into having rates higher than 6%) I think it's safe to say that rising mortgage interest rates have not caused home prices to decline in our local market. | |
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Homes Are Still Selling Quickly, So You Should Know (Or Think About) Where You Are Going Next Before You List Your Home For Sale |
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 Perhaps you are one of the many homeowners living in homes in Harrisonburg and Rockingham County who has lived in their home for 20+ years but are now ready for a change. [1] You might be downsizing because you don't need as much space now that the kids are grown and gone. [2] You might be downsizing to a home that offers one level living. [3] You might be looking for a home with fewer ongoing maintenance needs such as lawn care, gardening, etc. [4] You might be relocating to another part of the country where your kids (and grand kids) now live. [5] You might be moving into a retirement community. Regardless of the generalities of the "where" -- we should pause to think about the specifics of the where before we put your house on the market. If you know you want to do one of the things listed above, let's think through or look into the details of what it will take to buy and move into such a "next place" after you sell your home. We shouldn't just put your house on the market for sale and figure out where you'll live next while we wait a few months for your house to sell -- because -- it is not likely that it will take a few months for your house to sell! Homes are still selling quickly, and thus, you should know (or think about) where you are going next before you list your home for sale. I'm happy to help you think through, research and strategize on these items - just let me know if or how I can be of help. | |
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Are You Ready To Sell Your Rental Property? |
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 If you own a rental property, you might wonder from time to time whether you should keep or sell that property. I generally advise my clients to keep their rental properties, and not to sell them unless there is a good reason to do so. Here are some of those good reasons... VALUE - If the value of your rental property is currently high, and there is a reasonable chance that it won't be quite as high in the coming years, then now could be a good time to sell the rental property. INVENTORY - If there are very few competing properties for sale right now (which would lead to a speedy sale) but there will be many, many new properties built in the near future (which could result in a slow sale) then it might make sense to sell the rental property now vs. later. EQUITY - If you have owned the property for a decent period of time you may have a good bit of equity tied up in the property - and perhaps you'd like to do something else with that money. Maybe you'll use the sale proceeds for another investment (real estate or otherwise) or to pay off some debt, make a large purchase, go on a trip, who knows, but sometimes selling a rental property is a key part of freeing up some cash to make some other financial moves. HASSLE - Maybe you are tired of dealing with owning a rental property. Regardless of whether you manage the property yourself, or have a professional property manager, there can still be some annoying details to attend to with property maintenance, uncooperative tenants, etc. MAINTENANCE - Perhaps your rental property is 20 years old and you're pretty sure that if you keep it for another 3 - 5 years you'll have to pay for a new roof, new heating system and new water heater. If so, it might make sense to sell the property now to avoid those major capital expenses. TENANTS - If most of the prospective buyers for your rental property will be owner occupants, then the time between tenants might be the perfect time to sell your rental property. PARTNERS - If you purchased the rental property with a friend or family member, and they would like to move their investment dollars elsewhere, then it might be a good time to sell the property. RENTAL RATES - If rental rates are starting to decline, changing the performance of your investment, it might make sense to go ahead and sell, unless you see a turn around happening in the near future. IMPROVEMENTS - Perhaps your most recent tenant absolutely trashed the property, and you have just completely renovated it, such that the property has never looked better. This could be an ideal time to sell before the condition starts to deteriorate again. | |
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Should We Let Buyers View Your Home Before It Hits The Market? |
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 Q: Should we let a buyer (or two or three) look at your house before it is listed for sale? A: Usually... no... though it depends on your goals. Despite higher mortgage interest rates, there are still lots of buyers in the market (more than there are sellers) and thus we still have a shortage of houses available for sale in many/most price ranges in Harrisonburg and Rockingham County. This shortage of housing inventory means that there will still probably be a good bit of buyer interest in your home when it is listed for sale. During the first week that your house is listed for sale there are likely to be quite a few showings - many with buyers who have been searching for a home for months and have not been successful in buying a home because of competition from other buyers. Here's why this early, steady flow of eager buyers is great for you as a seller...
All of this happens, though, because your house is simultaneously available to all local buyers and thus they feel the pressure of competing with other potential buyers. When a seller is preparing their home for sale, they will sometimes hear through a neighbor or co-worker that there is someone interested in their home that would like to come view it before it hits the market. Should you allow for that? In most cases, in my opinion, probably not. Letting a buyer (or buyers) view your home before it is officially on the market might result in that buyer making an offer before your house is on the market, thus not giving you the opportunity to see how much other interest existed. One buyer making an offer without other buyers possibly coming in with their offers simultaneously almost always leads to offer terms that are not as favorable to you. Why would the only buyer to have seen your house (because it is not yet listed for sale) include an escalation clause in their offer? Why would they waive a home inspection? They wouldn't. It's the competition from other buyers that causes them to do so. So, as exciting as it is to hear that someone is interested in your house even before it is listed for sale -- you are almost always going to sell your house with more favorable terms if you list it for sale and expose it to the broadest possible pool of buyers currently in the market to buy. The main exceptions I can think of are...
So -- if you're getting ready to sell, and you hear from a buyer that they are interested in viewing the house before you list it for sale -- considering telling them "I'm so sorry, but I want to wait until the house is on the market..." and letting them know the date that you anticipate that it will be hitting the market. | |
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Almost Half Of Homes For Sale Are New Homes |
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 There are 136 homes for sale right now in Harrisonburg and Rockingham County. But... of those 136 homes for sale... only 76 of them are resale homes. New Homes For Sale = 60 Resale Homes For Sale = 76 Thus, if you happen to want to buy a house of the property type, location, size and price of a new home community in our area -- you're in luck. If none of the new home communities in our area are of interest to you -- it's not as great of news -- instead of having 136 homes from which to choose, you only have 60 homes from which to choose. Here are the new home communities with the most homes currently for sale...
If you have questions about any of these new home communities, be in touch with me by phone (540-578-0102) or email. | |
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Where Are Most New Homes Being Built Right Now? |
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 Over the past 12 months there have been 376 new home sales in Harrisonburg and Rockingham County! That's a lot! Here are all of the neighborhoods with more than five new home sales in the past year:
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16 Apartments, 4 Rowhouses Proposed For Final Phase Of Locust Grove Village |
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 Locust Grove Village, located on Boyers Road, seems likely to be expanded from 86 residential units to 106 residential units. The final configuration will include 64 apartments and 42 rowhouses...  The townhouses (rowhouses) offer three bedrooms, two full bathrooms, one half bathroom, 1306 square feet and have recently been selling for $260,000. This is a minor expansion of a new residential development on Boyers Road compared to quite a few others that have been recently completed, are currently underway, or are getting ready to be proposed. Check out all (most?) current, planned and proposed new developments in and around Harrisonburg on a list and on a map. | |
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Building Your Lists Of Definitely Yes, Definitely No, Maybe When Preparing Your Home To Sell |
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 Walking around and through your house together can be help us build three lists related to preparing your house to go on the market... [1] Definitely Yes [2] Definitely No [3] Maybe The first two lists are usually the easiest to compile. There are usually some things that you should DEFINITELY do to prepare your home for the market and some things that you DEFINITELY don't need to do to prepare your home for the market. Then, there are usually a variety of items that go on the maybe list. What you end up doing from the "maybe list" will likely depend on... [1] Your time frame for getting the house on the market. [2] The resources you have available (time, know how, money) to get the jobs done before your house goes on the market. [3] The amount of buyer demand in your segment of the market. If you are looking to get your home on the market quickly and you don't have the time, know how or money to get things on the "maybe list" completed and there is an abundance of buyer demand in your segment of the market... then maybe you don't address very many of the items on the maybe list. If you plan to get your home on the market sometime in the next few months, and you have the time, know how and/or money to get things completed and there aren't as many buyers looking to buy in your corner of the market... then you probably should address most of the items on the maybe list. This all starts with walking around and through your home and having a conversation about all of the above. If you're looking to sell your home this summer, the best time to have this conversation would be now or soon. | |
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Different Segments Of Our Local Market Are Performing Differently. This Is Normal. |
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 Over the past few years almost every house, in any location, at any price point, would have double digit showings and multiple offers and would likely sell over the asking price. This is still happening (10+ showings, multiple offer, selling over list price) for many new listings... but not all. Plenty of other new listings are having 1 - 5 showings, receiving only one offer, and selling at the list price. Which houses have tons of interest and which have less interest can be related to all sorts of things these days... [1] property type [2] property location [3] price range [4] appropriateness of pricing [5] age and condition [6] marketing Is it normal for different segments of our local market to be performing... differently? Yes, it is quite normal. As always, this means that the pricing, preparations of your home, and marketing of your home are very important as we see different segments of the local market in flux. | |
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Median Sales Price Up 10% In 2023 Despite 19% Decline In Home Sales |
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 Happy Tuesday morning, friends! We are now -- wait for it -- more than a third of the way through 2023!? How can it be!? And how's the market you might ask? Fewer homes are selling this year, but at higher prices than last year!? Again, how can it be!? -- This whirlwind of a start to 2023 has involved a rather busy few months in the Rogers household -- with a soon-to-be-graduating high school senior (Luke) attending a Junior-Senior banquet and playing in his last few baseball games, and an ever-speedier ninth grader (Emily) running (and jumping) in multiple events on the track team. Whatever is keeping you busy and running all around town this Spring, I hope it is just as fun and fulfilling as it has been for Shaena and I to see our kids growing up over these recent years. Time surely does fly by quickly! -- But, back to real estate. Below I'll delve into all the juicy details of the latest happenings in our local housing market... after I make you hungry... 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 Cuban Burger, Taste of India and A Bowl of Good. -- OK, now, I'm really getting to the real estate. Jumping right in to where my headline began... home sales (not prices) are declining, rather significantly in Harrisonburg and Rockingham County right now...  As shown above... [1] There were 17% fewer home sales in April 2023... which I suppose isn't too much of a surprise given several other recent months of slower home sales. [2] Looking at the year thus far (Jan - Apr) home sales have declined 19%. During the first four months of 2022 we saw 461 home sales in Harrisonburg and Rockingham County while there have only been 374 home sales thus far in 2023. Generally, there are two reasons why home sales decline: [1] Fewer buyers want to buy. [2] Fewer sellers want to sell. In our local market, the 19% decline in home sales seems to be almost entirely a result of fewer sellers wanting to sell. I come to this conclusion based on continued low inventory levels, which we'll get to in a bit. Despite the 19% decline in the number of homes that are selling, as the headline referenced, we're still seeing home prices rise in Harrisonburg and Rockingham County...  Indeed, when analyzing multiple different timeframes, we are consistently seeing increases in the median sales price in our local area... [1] The median sales price over the past 12 months ($306,160) is 9% higher than it was in the previous 12 months ($279,900). [2] Looking just at the first four months of the year, the median sales price is 10% higher this year ($324,985) than last ($295,490). Will home prices keep rising forever? I can make no promises, but generally speaking, so long as demand (buyers wanting to buy) continues to exceed supply (sellers wanting to sell) we are likely to continue to see prices rise. Will home prices keep rising at a rate of 10% per year? This seems less likely, especially given higher mortgage interest rates right now... though I've been saying this for at least six months now, and thus far, home prices are still rising at about 10% per year. One metric that is running slightly contrary to most others is the time that it takes for a home to go under contract once listed for sale. We have actually seen a slight increase in this "median days on market" statistic over the past year...  I suppose the "gotcha" headline would be that it is taking homes 40% longer to go under contract now as compared to a year ago. :-) But... this was a change from a median of five days to a median of seven days... and seven days is still mighty speedy. I should also note that this slight (two day) slow down is not much consolation to would-be home buyers who are frustrated by how quickly the market is moving right now. Pausing for a moment, as you may or may not know, I compile a bunch of data that is not highlighted in this monthly market narrative. You can find lots of other data tables and graphs over here. Pulling from the variety of other charts and graphs that I generate each month, let's take a peek at one subset of our overall market... home sales within the City of Harrisonburg.  Home sales actually declined *even more* in Harrisonburg than in the market as a whole. The entire market (City + County) has seen a 19% decline in home sales in the first four months of the year... but the City alone has seen a 25% decline. If you're hoping to buy a home in the City of Harrisonburg, it's a tough time to do so based on very limited inventory of homes offered for sale. Now, moving past these charts, to some graphs, for the visual learners amongst us...  Follow the red line on the graph above to see each month of 2023 home sales in Harrisonburg and Rockingham County and you'll find that it is lower than each month on the blue line, which represents home sales last year. March 2023 came close to March 2022 (101 vs. 113) but the gap widened again in April (123 vs. 149) and I am expecting we'll continue to see slower home sales (fewer home sales) for most or all of 2023. I'll talk more about mortgage interest rates further down in this report, but it's worth noting that higher mortgage interest rates seem to be limiting the number of home sales that we're seeing right now -- but it might be stopping just as many sellers from selling as it is stopping buyers from buying. Many homeowners aren't all that interested in selling their homes with mortgages in place with a three-point-something interest rate, to then be replaced by a new mortgage at a six-point-something interest rate. I can't blame them. This is only one of the factors limiting the number of homes that are selling, but I don't think we should overlook its impact. So long as mortgage interest rates stay high, we are likely to continue to see a lower number of home sales this year as compared to last year. Moving on to the opposing trends of price and pace of home sales...  Many assumed that if home sales started to decline (they definitely have) that home prices would be sure to follow. Not so. It seems that the combination of continued strong levels of buyer demand, paired with a smaller number of sellers willing to sell, has resulted in fewer home sales, but higher prices. Over the past year we have seen 1,480 home sales in Harrisonburg and Rockingham County. Back the clock up a year and we were seeing 1,687 home sales a year. That's a rather significant change in the pace of home sales activity in our local market. Over the past year the median sales price has been $306,160 in Harrisonburg and Rockingham County. A year ago, the median sales price was only $279,900. This is, again, a rather significant change, though in the opposite direction (up) that we're seeing when it comes to the number of homes selling (down). Looking at the change in median sales prices a bit differently, here's a startling change over a relatively short timeframe...  If you bought a median priced home four years ago, that home may very well be worth $100,000 more today!?! Now, before you get too excited about this newly discovered six figure pile of equity in your home, keep in mind that these numbers ($223K in 2019 to $325K in 2023) are simply showing overall market-wide trends. Some homes certainly have appreciated by $100K over the past four years -- but not all homes. That said, almost universally, homeowners have been shocked to see how much their home value has increased over the past four years! Now, let's try to guess at where things might go from here over the next few months...  This first graph is showing the number of contracts being signed per month, as compared to previous graphs that showed the number of home sales taking place each month. Over the past two months we have seen 242 contracts signed for buyers to buy (and sellers to sell) in Harrisonburg and Rockingham County. This is quite a decline compared to last year when we saw 337 contracts signed during the same timeframe. Bottom line... this spring (red line) has just not been as active of a "spring market" as last year (blue line)... and it also hasn't kept pace with recent historical trends (grey line). These lower contract numbers have lead to fewer properties being under contract and waiting to get to closing...  One year ago, there were 416 properties under contract just waiting to get to closing. Now, that "pending sales" figure is only at 275. This is the clearest predictor we can get as to the slower months of home sales that seem to be headed our way in May and June. With such a significant decline in contracts signed, and with a much lower number of properties being under contract, are we seeing ever higher inventory levels of homes available for sale?  Mostly, no. Over the past four years (2019-2022) the average number of homes for sale at this time of year (early May) has been 183 homes. Today, that number is 129 homes for sale. So, despite fewer sales and fewer contracts, we are still seeing inventory levels that are well below where inventory levels have been over the past few years. That said, for the first time this month we are seeing the inventory level of homes for sale (129) sneaking past (just barely) the number of homes for sale (127) a year ago. Is this significantly? Give it another month or so to see how things shake out. Keep in mind that to continue this trend (more homes for sale in 2023 than in 2022) we'd have to see inventory levels climb above 152 homes for sale over the next month. Stay tuned. Earlier I mentioned that homes are taking an extra day or two to go under contract right now, as compared to a year ago...  Indeed, after about a year of the median "days on market" statistic hovering right at five days... we have now seen the pace at which homes go under contract slowing, slightly, over the past five months. If I had to hypothesize as to why this number has risen (barely) I would guess it is related to higher mortgage interest rates. I am seeing three things happen when new listings hit the market right now... [1] Slightly fewer showings than we would have seen a year ago. [2] Fewer offers than we would have seen a year ago. [3] Many buyers needing to take a day or two to run numbers with their mortgage lender before making a decision about making an offer. The speed at which homes are going under contract certainly varies quite a bit based on the price range, location and property type -- but as shown above -- it is taking an extra two days (ish) for homes to go under contract right now. This is slightly slower than in 2022, but drastically faster than just about anytime prior to 2021. Finally, mortgage interest rates, which have been mentioned (and blamed) throughout this report...  After multiple years of mortgage interest rates below 4%, we saw them climb quickly through the 5% range (within six months!) and they have stayed above 6% since that time. We are now entering the ninth month of most buyers likely buying homes with mortgage interest rates above 6%. These higher mortgage interest rates, combined with higher sales prices, are significantly increasing the monthly housing cost for any would-be home buyer considering a purchase in 2023. Will mortgage interest rates edge back down below 6%? I think there's a chance they will later in 2023, but it is certainly not... certain. ;-) So... given all of this data, given all of these trends, where does this leave us? Home buyers should still be prepared to go see new listings quickly when they hit the market, and must have their lender on speed dial to confirm a potential mortgage payment given ever changing mortgage interest rates. Depending on the popularity of the home you will be buying, we may very well still be competing with multiple other offers and considering which contingencies you might be willing to omit from your offer. You'll be buying in a challenging market for buyers -- with limited inventory and increasing prices. Buying a home in 2023 is definitely still possible, but it will require patience and perseverance. Home sellers are still in good (great) shape with lots of buyer demand in many or most price ranges... but home sellers should *not* assume that they will definitely have multiple offers, over asking price, with limited contingencies. That might be the situation you find yourself in (hooray!) but if you only have one offer, at the asking price, with some "normal" contingencies - I'll encourage you to still be excited. Pricing your home appropriately, preparing it thoroughly and marketing it professionally are just as important as ever in 2023. That's all for today, friends. I hope you now consider yourself a bit more informed about our local housing market, and a bit hungrier for a delicious meal at The Little Grill. ;-) The next month or so is a busy time for many of us with school years ending, summer beginning, and many other changes. Even as the days inevitably seem to start moving by more quickly than ever, I hope you are able find the time to slow down and meaningfully connect with the people who are important in your life. Send a friend, family member, neighbor or colleague a quick text to check in - or give them a call just to say hello. Make the time to make those connections, and I'm confident you will be glad that you did so. As always, please reach out 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. | |
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Low Housing Inventory Levels Did Not Sneak Up On Us Overnight |
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 Low housing inventory levels did not sneak up on us overnight -- nor are they a new phenomenon that just came to be during Covid. As show above, we have seen a general decline in housing inventory levels for more than a decade now. This graph shows how many homes are actively for sale at this time (early May) each year, starting in 2009. Why have inventory levels declined so much over the past decade plus? Basically, the number of buyers who want to buy in this area has been larger than the number of sellers who want to sell combined with the number of new homes being built. If, for example, every year for the past 14 years...
...then we would see a 100 home decline in inventory levels each year. New Inventory = Existing Inventory + 700 New Listings + 100 New Homes - 900 Buyers Buying ...would mean that... New Inventory = Existing Inventory - 100 Moving forward, assuming the Harrisonburg area continues to be just as popular as it has been over the past decade and a half... and assuming there isn't a mass exodus of homeowners (creating inventory by selling but not buying) then the only way we'll get out of this low inventory situation is by building more new homes. | |
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Tell Me What Type Of Home You Want To Buy And I Might Be Able To Tell You Where You Will Buy It |
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 Wouldn't it be nice if you could buy a restored early 1900's home in five different areas in Harrisonburg, east of the City, west of the City, etc.? Wouldn't it be nice if you could buy a mid-range $300K single family home in any school district you'd like in Harrisonburg and Rockingham County? Wouldn't it be nice if you could buy a four bedroom home built in the past 10 years in downtown Harrisonburg, or on a variety of one acre lots in many different parts of the County? Yeah -- it would be nice. But, this is a rather small area. Sometimes, the home you want to buy will dictate where you will live. This is the most surprising to buyers moving here from larger metro areas -- where any different type of home (style, price range, age, etc.) is available in countless areas in and around the ___ metro area. Not so much in Harrisonburg and Rockingham County. So -- we can talk about what you want to buy -- and where you want to buy. But then we'll have to pause to make sure the what and the where appropriately overlap to give you a chance of finding that home. If not, we'll either have to adjust the what, or the where! | |
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In The Real Estate World, It Is Almost Time For Kids To Go Back To School |
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 Yes, I know, I know, the school year hasn't even ended yet. So why am I already thinking about when school aged kids are going to be going BACK to school in the Fall!?! Well, because buying a home is not an overnight process. Neither is moving into a home. If you are planning to sell your home in the next six months -- and you think some of the buyers who might have interest in your home would have school aged kids -- consider this... June 1, 2023 - we put your house on the market June 10, 2023 - we have the house under contract (could be faster, could be slower) July 31, 2023 - closing on your house (typically 45 - 60 days) Mid/Late August - school starts So, as you can see, if a buyer is going to buy your home -- and move in before the next school year starts -- they need your house to be on the market soon! | |
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90 Acres Of Land In The City Of Harrisonburg Sold For $6,775,000 For Development Of Bluestone Town Center |
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 It's official -- the 90 acres of land to be used for the development of Bluestone Town Center has been officially purchased, as of yesterday, by a corporate entity (EP HARRISONBURG OWNER LLC) that seems likely to be the new partnership between Equity Plus and the Harrisonburg Redevelopment and Housing Authority. The land purchase was in three parts (from three separate land owners) as follows...
Again, that's a total of just under 90 acres for $6,775,000. Presumably at some point soon a more detailed site plan will be submitted to the City for review. Sifting through the court records, it was also interesting to note that... [1] EP HARRISONBURG OWNER LLC immediately put a loan in place via the National Housing Trust Community Development Fund for $6,480,000. [2] A Land Use Restriction Agreement was also recorded with a variety of details such as... [2a] There seems to only be a requirement that the housing be rented within certain affordability guidelines for 10 years. Hopefully the developer will continue to keep the rental rates at affordable levels after that even if the land use restriction agreement doesn't require it? [2b] At least 8% of the units shall be rental housing that is affordable to those with incomes at or below 30% of the Area Median Income. [2c] At least 38% of the units shall be rental housing that is affordable to those with incomes at or below 80% of the Area Median Income. [2d] All remaining units will be for sale units affordable to those with incomes at or below 120% of the Area Median Income. | |
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Employment Growth, Not Just Population Growth, Is A Leading Cause Of Local Housing Inventory Shortages |
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 In conversation with a friend a few weeks ago, he commented that we wouldn't have as much of a shortage of housing inventory if there weren't so many people moving to the Harrisonburg area. I agree... that the housing inventory shortage is a result of more people wanting to live in this area than there is housing to support them... but... With some exceptions, many or most of the people moving to the Harrisonburg area are doing so because they got a job in the area. Merck, Sentara, four local colleges, and many other small, medium and large employers are continuing to bring new jobs to this area. So, if you were really dead set on solving the housing shortage by convincing people not to move here... you'd probably have to convince employers to stop hiring employees. :-) As a growing community, HOW we grow can be one of the most controversial topics up for debate in various circles within the community.
This is just the tip of the iceberg as far as the questions people ponder as they think about growth in the Harrisonburg area -- and most of them are very subjective questions -- there is not a single correct or best answer. I'm glad to have been living in Harrisonburg for the past 27 years... and I have enjoyed seeing the growth in this area... but I do recognize that it does create some unintended consequences along the way. | |
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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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