Archive for September 2023
 |
 |
Many (Most) Home Sellers Are Adjusting Their List Price If Their Home Is Not Under Contract Within 30 Days |
|
 Here's how I get to the conclusion above... Today, there are... 200 homes for sale in Harrisonburg and Rockingham County per the HRAR MLS. Of those 200 active listings... 116 homes have been on the market for 30+ days. Of those 116 listings that have been on the market for a month or more... 65 homes have seen a price reduction in the past 30 days. So, yes, it would seem that many (most -- 56%) home sellers are adjusting their list price if their home is not under contract within 30 days. It makes sense... If a buyer hasn't made an offer, a price reduction may... 1. Cause existing buyers to reconsider your home. 2. Cause a new buyer consider your home for the first time. 3. Cause a buyer who has viewed your home to make an offer. Should all home sellers reduce their list price after 30 days on the market? Not necessarily. Should it be a discussion about the merits of making such a price change? Absolutely! | |
 |
 |
|
|
How Much Have Home Prices Increased, Locally, When Adjusted For Inflation? |
|
 At first glance (above) the changes in the median sales price in Harrisonburg and Rockingham County have been CRAZY... with around 10% (or higher) increases in the median sales price every year since 2020. Wow! But... what if we adjust for inflation? The Consumer Price Index is the most widely used measure of inflation, and you'll see what the prices of most things have been increasing significantly over the past few years. Here's the change in CPI during the same timeframe as on the graph above...  As you can see, there were some rather large increases in the Consumer Price Index during 2022 and 2023. Inflation, if you haven't heard, is real and larger than life. So, what happens when we subtract out the changes in CPI from the changes in the median sales price? Let's take a look...  This graph starts to put the most recent price increases in a slightly different context. Yes, there were massive increases in the median sales price (when adjusted for inflation) during 2020 and 2021 -- which was in the midst of the Covid-19 pandemic. But when we adjust the median sales price (locally) for inflation (nationally) we see that the inflation-adjusted change in the median sales price over the past two years has been staying at 3.6%, not the 10% (+) increase we've seen in real dollars. But, yes, I know... you have to pay for a house with real dollars... and those real -- non inflation adjusted -- prices have been rising quickly. | |
|
|
|
|
Our Local Real Estate Market Keeps Testing Basic Economic Theories |
|
 Between 2019 and 2022 we saw an ever increasing number of buyers buying homes (or trying to do so) in Harrisonburg and Rockingham County. Demand for homes skyrocketed, mortgage interest rates fell to historic lows, supply increased a bit (new builds) but not a enough... and perhaps unsurprisingly, median home prices increased 10% per year for three years in a row. But then, 2023... Mortgage interest rates have increased 30% over the past year, and have increased 150% over the past two years, making mortgage payments higher than ever. But yet, the median sales price keeps rising. Demand seems to be falling, with 24% fewer home sales in the first eight months of 2023 as compared to the same timeframe last year. But yet, the median sales price keeps rising. Supply is now starting to increase, with 31% more active listings on the market now as compared to a year ago. But yet, the median sales price keeps rising. What comes next!? As I pointed out yesterday, the higher inventory levels are only higher than the Covid-era lows, and are in line with or lower than pre-Covid levels. And certainly, fewer home sales may be a result of fewer sellers selling just as much as it may be a result of fewer buyers trying to buy. So, over the next two years, will we potentially see slower home sales, higher mortgage interest rates, higher inventory levels -- and yet, still see stability and/or increases in the median sales price? Yes, it seems quite possible. Or, could slower home sales, mortgage interest rates and higher inventory levels lead to a decline in the median sales price? This seems more likely, in theory, but we're just not seeing it yet, and I don't know if we'll see it at all. | |
|
|
|
|
Recent Rises In Inventory Levels In Context |
|
 Inventory levels are on the rise in Harrisonburg and Rockingham County. January 2023 = 109 homes for sale August 2023 = 193 homes for sale That's a 77% increase in inventory levels! But... let's put it into a bit larger of a context... Just before Covid began (January 2020) there were 196 homes for sale. So, as shown above, other than during the weird years since the Covid pandemic began (2020-2023) inventory levels have always been above 200 homes for sale in Harrisonburg and Rockingham County... and sometimes well above that mark. So, higher inventory levels today do not necessarily mean we will see a marked change in home prices (for example) in our local market, but we'll have to continue to monitor changes in inventory levels over the next few months to see where they go from here. | |
|
|
|
|
How Many Homes Are Selling For Less Than The List Price? |
|
 If we look at homes that have sold in the past six months... [1] 68% have sold for the list price or higher. [2] 32% have sold for less than the list price. [3] 40% have sold for over list price. Maybe several of these stats surprise you. Maybe none of them do. I think the most surprising to me is that 32% of homes sold for less than the list price. If often feels like buyers are barely ever able to negotiate on price -- and sellers are barely ever willing to negotiate on price. Interestingly, let's look back a year and a half (ish) to 2021 when mortgage interest rates were in the 3.something range...  The numbers here are certainly different, though not quite as different as you might imagine. For all the homes that sold in 2021... [1] 73% sold for the list price or higher. [2] 27% sold for less than the list price. [3] 43% sold for over list price. So... is every home selling over asking price? Nope. Back in the crazy times of 2021, was every home selling over asking price? Nope. | |
|
|
|
|
Interstate 81 Through Harrisonburg Will Be Expanded Soon, But Will It Have Sound Barriers? |
|
 A nearly six mile stretch of Interstate 81 (from mile marker 242 to 248.8) will soon be expanded to have three lanes of traffic in each direction!
The noise barrier balloting is set to take place in October 2023. In 2024, VDOT will work on acquiring right of ways and will work on relocating utilities. In 2025, VDOT will advertise for construction. The widening of Interstate 81 is anticipated to be substantially complete by December 2029... in about six years. Read all about this I-81 Harrisonburg Widening Project here. | |
|
|
|
|
Sample Mortgage Payments In September 2023 |
|
 Mortgage interest rates are on the rise... they were 3% two years ago, 6% a year ago, and just above 7% today. Let's see how those 7-ish percent mortgage rates translate into some mortgage payments these days. All of these illustrations are for homes in the City of Harrisonburg, and (since I'm not a lender) they are not offers for mortgages with specific terms... $250K purchase with 5% down = $1,833 / month $350K purchase with 10% down = $2,449 / month $450K purchase with 20% down = $2,850 / month $600K purchase with 30% down = $3,400 / month Working backwards for a moment, if you were trying to keep your mortgage payment under $1500 (for example) you'd be looking at a $205K purchase price with a 5% down payment. With current mortgage interest rates above 7%, it's more important than ever to talk to a lender sooner rather than later to determine how much you can afford in a mortgage payment -- and/or how much you want to spend each month on your mortgage payment. If you need a recommendation for a great local lender, just let me know. | |
|
|
|
|
Fewer Homes Are Selling, Though Prices Keep Rising, And Now Inventory Levels Are Rising Too!? |
|
 Happy Thursday morning, friends in and around Harrisonburg and beyond! After I process all the data... and create all of the charts and graphs... and doodle on them to notate trends... I then go back and review it all again in order to write the headline of my monthly market report. As it turns out, this month's headline ended up being pretty similar to last month. Fewer home sales... higher sales prices... but also... higher inventory levels. We are definitely seeing some shifts in our local market, though it is not yet clear how significant of an impact those changes will have. But we'll get to all of that real estate data... First, whether you are a teacher, a student, a professor, a school administrator, a staff member at a local college, or a parent, I hope your school year has had a great start. On our end, Luke has started his first semester of classes at Wake Forest and Emily is a few weeks into 10th grade. It has been a fun but busy start to the year, and we're looking forward to visiting with Luke at WFU Family Weekend soon! Secondly, a few listings of potential interest to you... 9926 Goods Mill Road - A modern farmette on 3.3 acres with awesome mountain views in the Spotswood High School district for $575,000. 3986 Dixie Ridge Road - A spacious four (or five) bedroom home with the primary bedroom suite on the main level for $475,000. 3211 Charleston Boulevard - A like-new, upscale townhouse in Preston Lake with a two-car garage with access to many community amenities for $375,000 Congers Creek Townhomes - Three-level, new construction townhomes across Boyers Road from Sentara RMH Medical Center for $306,900 and up. And thirdly, 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 Merge Coffee, Jimmy Madison's and Red Wing Roots tickets. This month I am giving away a $50 gift certificate to a delicious local restaurant, Taste of Thai. I'm writing this report on Wednesday evening... you'll get it Thursday morning... and my writing this evening is powered by one of my go to dishes at Taste of Thai... Massaman Curry. Are you a fan of Taste of Thai as well? Click here to enter to win a $50 gift certificate! And now... on to the data, and charts and graphs...  This first data table above shows much of what we've seen for the past year or so now... [1] We're seeing fewer home sales now than we were a year ago. In the first eight months of this year (Jan-Aug) we've seen 24% fewer home sales than in 2022. If we look only at the summer months (Jun-Aug) we see a slightly larger 30% drop in the number of homes selling. [2] The median sales price continues to rise... it's up 10% in the first eight months of this year (Jan-Aug) as compared to the same timeframe in 2022. [3] Homes are still going under contract rather quickly with a median days on market of six days, which is just a smidge ahead of last year's median of five days. As alluded to above, the summer months were a good bit slower this year than last...  The three lines shown above are as follows... Red = This Year Blue = Last Year Grey = Average of Past Four Years As such, home sales in the summer (+/-) of 2023 were well below the average of the past few years, and even farther below last summer. We saw 102 home sales in August 2023... which is slightly less than we saw in... January 2022. That's actually sort of surprising... a summer month that we would expect to be rather active was slower than a winter month that we would expect to be rather slow. High mortgage interest rates -- we'll get to those below -- likely play a significant role in slowing down the number of homes that are being sold and purchased these days. Now, putting the lower and lower number of home sales in context...  We have seen the number of home sales in a 12 month period drop from about 1700 home sales (summer 2021 through summer 2022) down to only 1300 home sales. But... looking back a bit further, this just takes us back to... where things were at the start of or just before the pandemic. So... yes, we're seeing significantly fewer home sales right now... compared to the significantly higher number of home sales seen in 2020, 2021 and 2022... which were likely high points fueled by low mortgage interest rates and lots of buyers rethinking what they needed in a home during the pandemic and thereafter. And yes, despite the rapid increase (1300 to 1700) and then rapid decrease (1700 to 1300) in home sales, we've seen home prices steadily march on along, upward, during the entirety of the past three years. Looking back a bit further than three years puts the change in median sales price in an even wilder context...  Not too long ago (2017) the median sales price in Harrisonburg Rockingham County was just below $200K. This year (2023) that median sales price is now above $300K. That $100K(+) jump over the course of six years has significantly changed what it looks like to be a first time buyer (or a move up buyer) in our local market. Certainly, the higher mortgage interest rates we have seen in 2023 (and 2022) haven't helped either. The combination of higher sales prices and much higher mortgage interest rates have resulted in much, much higher housing payments for buyers in today's market. Looking for a trend that is heading in two different directions at once? Here's one...  We are currently seeing a downturn (blue bars) in the number of existing homes selling in Harrisonburg and Rockingham County... while at the same time seeing an increase (green bars) in the number of new homes selling in our market. Higher mortgage interest rates are causing many homeowners to have no interest in selling... which is resulting in fewer existing homes being on the market for sale. Thankfully, there are builders helping to add housing stock in our area, resulting in more new homes selling over the past few years. Shifting gears a bit to the here and now... the freshest data to watch for the most recent trends is contract activity...  Last month we saw an increase in contract activity... with 130 homes going under contract, compared to only 114 in the same month last year. It seemed that maybe we would see a sustained surge of buyer activity. But... maybe not. With only 112 contracts signed in August 2023, it seems that the surge of contract activity in July 2023 was an anomaly, and we will still see smaller numbers of contracts being signed in 2023. Darn. And here's the most interesting graph of them all, in my opinion...  Over the past two months we have seen a significant shift in inventory levels -- the number of homes available for sale in Harrisonburg and Rockingham County. For most of this year (red line) we have seen even fewer homes for sale than last year (blue line) but that all changed in July 2023. Over the past two months we have seen inventory levels build up beyond (above) where they have been for the past several years. These higher inventory levels are resulting in... [1] Buyers have slightly more choices of homes to go view. [2] Homes sometimes staying on the market a bit longer than before. [3] Many sellers seeing fewer showings than they expected. [4] Plenty of homes not going under contract in the first few weeks. Will higher inventory levels eventually translate into a higher number of home sales, bringing inventory levels back down? Maybe. Will higher inventory levels eventually lead to some sellers being more flexible on price, and a leveling out of the median sales price, or even a decline in the median sales price? Maybe. I'll continue to monitor inventory levels with interest as higher inventory levels can start to make it a slightly more favorable market for buyers than it has been for the past few years. As already mentioned in this report, despite higher inventory levels, we're still seeing prices rise... and most (50%+) homes are still going under contract quite quickly...  Just to translate the graph above into words... over the past six months the median "days on market" of homes that have sold was five days. Of note... that only measures the median days on market for sold homes... not those that are still on the market for sale. Furthermore, this is just a median -- it's not saying that all homes are going under contract in five or less days. As per how a "median" calculation works... 50% of homes are going under contract in five or fewer days... and 50% are going under contract in five or more days. And finally... I have mentioned higher mortgage interest rates so many times in this market report that you're probably wondering how high they are...  They are QUITE high... higher than they have been in many years... higher than they have been in several decades. It seems quite possible that mortgage interest rates will edge back down below 7% in the coming months... but I'm guessing we'll see mortgage interest rates above 6% for the next year or two. These higher mortgage interest rates significantly affect housing costs for buyers making a decision to buy in today's market. If mortgage interest rates were lower, we would likely see more sellers being willing to sell, and more buyers able to and interested in buying. And just like that, we've breezed our way through all of the charts and graphs I have for you today. My advice to buyers and sellers is relatively similar to recent months gone by, but I'll reiterate it here... Home Buyers -- You might be able to wait a day (or even two) to go see a new listing now, but don't assume that many or most will be there three or four days after they hit the market. Plenty of homes are still going under contract very quickly, particularly those in more desirable price ranges, locations, etc. Talk to a mortgage lender to understand your potential housing costs and get going to see some new listings as they hit the market. Home Sellers -- All homes won't go under contract within five days. Your home might be on the market for a few weeks or even a few months depending on it's condition, location, price range and other attributes that are appealing to either a wide or narrow pool of buyers. Price your home competitively, prepare it well for the market and market it thoroughly and professionally and you should still have success in securing a contract with a buyer -- but it won't necessarily happen overnight like it seemingly always was over the past few years. If you have a real estate question... reach out anytime. It's never too early to have an initial chat about your possible plans to buy, sell or move. I'm happy to provide feedback and input to help you think some things through and make a plan for your housing transition when you're ready to do so. You can reach me most easily at 540-578-0102 (call/text) or by email here. | |
|
|
|
|
Major Travel Center Proposed To Include 75,000 SF Building, 673 Parking Spots, 120 Gas Pumps, 24 Tesla Chargers Just Outside Mount Crawford |
|
 (The Buc-ee's shown above is a photo of a similar travel center - not a rendering of the proposed travel center.) This is old-ish news now, but I have still been getting questions about where the Buc-ee's will be located, so here's a bit of context for those who are interested... A major travel center is proposed to be built just outside Mount Crawford, on Friedens Church Road, along Interstate 81, across from the entrance to the Walmart Distribution Center...  Here's the potential layout of the site...  Download an info packet from the County related to the special use permit for the Buc-ee's sign here. | |
|
|
|
|
If Your Home Has Not Sold We Should Look At What Buyers Are Actually Buying |
|
 As an aside... the market is definitely shifting in some ways... as we are no longer seeing every house go under contract in hours or days with multiple offers. We're still not seeing prices adjust, overall, but some homes are sitting on the market longer than they would have over the past few years. That nuance aside... let's say your house is listed for sale, and it just hasn't sold after 30, 60 or 90 days. How should we think about that? What information would be helpful in understanding why your house has not sold? I believe context is key here... [1] How many buyers have contracted to buy homes that are similar to your house since your house has been on the market. If you are selling a 3 bedroom, 2 bathroom, 2000 SF home -- let's look at how many buyers have contracted to buy 3 - 4 bedroom, 2 - 3 bathroom, 1800 - 2500 SF homes in the same timeframe that you have been trying to sell your home. Have lots of buyers contracted to buy similar homes? Or just a few? How have the prices of those other homes compared to your list price? [2] How many other sellers of similar homes are trying to sell their homes right now? If you are selling a 3 bedroom, 2 bathroom, 2000 SF home -- let's look at how many other sellers are trying to sell a 3 - 4 bedroom, 2 - 3 bathroom, 1800 - 2500 SF home right now. Do you have lots of competition? Or not very much? How do the list prices of those competing homes compare to your list price? -- As the local housing market continues to shift over the coming months it will be important to understand the context in which you are selling your home and making sure you are pricing and marketing your home in a way that will give it the best chance to sell relative to what buyers are buying and what other sellers are trying to sell. | |
|
|
|
|
Home Buyers Might Not Request Showings Of Your Home With Minutes. Gasp! |
|
 Looking back, one of the humorous things about the (crazy) real estate market in 2020, 2021 and 2022 was how quickly buyers would jump on every new listing when it hit the market. When I would launch a new listing for sale via the MLS, Realtor.com, Zillow, local and national websites, Facebook, etc. -- I would invariably start getting showing requests within the first 15 minutes. It was surreal how quickly home buyers were responding to new listings, running out to go see them that very first day that they were listed for sale. After all... there would often be 20 - 30 showings within the first three days, and 5 to 15 offers within the first three days... so it's not surprising that the showing requests would roll in so quickly. But now, it's back to pre-Covid normals, at least in this regard. When a new listing is launched, I will often have a showing request or two within the first few hours or on that day -- but my phone doesn't immediately blow up with texts from buyer agents in that first 15 minutes any longer. Certainly, the speed at which showings are requested, and the number of showings that are requested varies by price range, location and more -- but the requests aren't starting off quite as quickly as they were during the Covid era. | |
|
|
|
|
Going, Going, Gone. Make An Offer Before That House Is Under Contract. |
|
 Home buyers aren't making decisions quite as quickly these days. That doesn't mean that homes aren't going under contract as quickly -- they often are -- but individual buyers aren't making decisions about whether to make an offer on a house quite as quickly as they have over the past few years. As a result, sometimes buyers are missing out on buying houses for new reasons. Over the past few years buyers often missed out on houses because there were multiple offers on most new listings and they were always competing with other buyers. What I am finding in the current market is that some buyers are missing out on houses because they are waiting a bit too long to make a decision to make an offer. How could this be? Aren't sellers waiting days and days for offers to roll in before they consider moving forward with one? Sometimes. But not as often as in 2021 and 2022. If a seller has 10 showings and four days later they receive their first offer -- they might decide to wait a few days to see what other offers might roll in -- or they might just sign the contract and move forward with the buyer who went ahead and made the offer. So... if you go to see a house that you like, and you're thinking about making an offer but you haven't done so yet... realize that it could very quickly become unavailable if a seller receives a reasonable offer. I don't think all buyers need to universally speed up their decision making process... but they should realize that many sellers are currently more likely to move forward with a favorable offer rather than let it sit for a few days in hopes of receiving additional offers. | |
|
|
|
|
Price Changes, Even If Small, Can Remind Buyers That You Really Do Want To Sell Your Home |
|
 Consider these two listings that a buyer might be considering in today's market... Home #1 A home priced at $435K that has been on the market for 75 days without a price change. Home #2 A home priced at $425K that has been on the market for 75 days and... [1] was initially listed for $439,000 [2] was reduced to $435,000 after being on the market for 30 days [3] was reduced to $429,000 after being on the market for 45 days [4] was reduced to $425,000 after being on the market for 60 days Certainly, buyers are going to see a $10K difference between the two homes ($435K vs. $425K) but they are also likely going to believe that the sellers of the second home are more motivated to sell. A seller who has priced their home at $435K and who hasn't budged at all is likely more motivated to sell for a particular price than they are motivated to make sure that their home sells. A seller who has made several price adjustments to their home over time is signaling to potential home buyers that they are definitely motivated to sell and want to be sure that their home will sell. | |
|
|
|
|
Does It Make Sense To Wait To Buy A Home? |
|
 Given high home prices and high mortgage interest rates, does it make sense to wait to buy a home? As usual, maybe yes and maybe no. Let's start with maybe no, you shouldn't wait to buy a home... [1] If you are waiting to buy a home because you want to wait until home prices come down, that might be a long wait. I can't guarantee that home prices will be stable or will increase forever, but there aren't any current signs that we should expect to see home prices declining in the next year or two so that it would make sense to wait until that time to buy. [2] If you are waiting to buy a home because you want to wait until mortgage interest rates get back down to 4% or 5%, that might be a long wait. With current mortgage interest rates at 7%, I understand the sentiment of wanting to wait until they drop back down somewhat -- but I wouldn't recommend waiting for them to get all the way down to 4% or 5% -- or even 6% for that matter. Mortgage interest rates may very well stay at or above 6.5% for the next year. But... maybe you should wait to buy a home... [1] If you are waiting to buy a home because you aren't comfortable with the mortgage payment on the home you'd like to buy -- that makes a LOT of sense. You need to be comfortable with the long-term financial commitment of buying a home. While home prices and mortgage interest rates might not decline over the next few years -- your income and savings might go up -- getting you to a place where you are more comfortable with a home purchase. So... should you wait to buy a home? Maybe. It depends on your overall financial picture and your plans and goals for the next few years. If you'd like to talk any or all of that through as you contemplate a possible home purchase, just let me know. | |
|
|
Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
Licensed in the
Commonwealth of Virginia
Home Search
Housing Market Report
Harrisonburg Townhouses
Walk Through This Home
Investment Properties
Harrisonburg Foreclosures
Property Transfers
New Listings
