Archive for April 2024
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Million Dollar Home Sales Peaked In 2021, 2022 |
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 Between 2018 and 2020 there were only three million dollar home sales in Harrisonburg and Rockingham County area as recorded in the HRAR MLS. Then, in 2021, we saw (10) million dollar (+) home sales, and then (10) more such sales in 2022! Home prices were certainly increasing between 2018 and 2021, so one of the reasons we saw more million dollar home sales was certainly because of increases in those home values. But then -- we only saw (4) such sales in 2023. One theory here is that the increase in mortgage interest rates in 2022 and then 2023 resulted in fewer buyers being willing to pay a million bucks (or more) for a home. Thus far in 2024, we have seen two of these million dollar (+) home sales in the first four(ish) months of the year -- though there are four other million (+) dollar listings that are under contract and waiting to make it to closing. If you're eager to purchase a million dollar home in Harrisonburg or Rockingham County, these are your (14) current options. | |
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What Would You Buy If EVERY Existing House Were Offered For Sale? |
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 What Would You Buy If EVERY Existing House Were Offered For Sale? This can be a helpful question -- though often not specifically productive. Sometimes it can be worthwhile in a home search to take a step back and think about what home (or type of home) you would buy if EVERY existing home were offered for sale. In the current local housing market, with a limited number of homes for sale at any given point, it can be easy to get stuck within the confines of thinking about only the homes that are for sale yesterday, today and tomorrow. But ignore those confines for a moment... what if EVERY existing home in Harrisonburg and Rockingham County were currently offered for sale?!? What would you buy?? This can be a helpful question for broadly exploring what you like, hope for, strive for, and more. It's worth taking the time to work through this exercise. We will then, of course, have to dial it back into the confines of reality... and how often such a home might come on the market for sale and how long you are willing to wait for that ideal vision. So, it's not always a specifically productive question -- but it can be helpful in exploring what you really want in your next house. | |
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How Much Can You, And Should You, Spend On Your Next Home? |
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 There are LOTS of ways to answer this question, usually within the context of a monthly payment...
The other question (how much should you spend) could be discussed with your spouse, your family, your loan officer, your peers, me, etc. The most important part -- is to have these conversations. We need to know how much money you can spend and how much you are willing to spend on your new home, so that we can be looking for the right houses for you! | |
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How Much Will Your Mortgage Payment Change If You Sell Your Home And Buy A New One? |
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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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Many (Or Most?) Home Sellers Prioritize Certainty Over Price |
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 When a seller signs a contract with a buyer, they want to be as certain as possible that the contract will proceed to settlement. The king of all offers, providing the most certainty to a seller would be a cash offer with no contingencies whatsoever. As each of the contingencies below are added to a contract, the seller's certainty decreases...
It is important, as a buyer, to remember that most sellers are thinking about certainty alongside price. Which of these offers is likely to succeed?
When presented with these three offers I think many or most sellers would choose offer #1 even though it is $1K or $5K lower than the other two offers in hand. Give careful thought to the contingencies you do and do not include in your offer and understand how they affect the seller's view of the certainty that your contract will make it to settlement. | |
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What Prices Did Buyers Pay For New Homes Over The Past Year? |
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 Over the past year, 322 new home sales have been recorded in the HRAR MLS. The full breakdown is above, but here are a few highlights of what buyers paid for new homes in Harrisonburg and Rockingham County over the past 12 months...
A few more details not shown in the data above...
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It Is Not Your Imagination. There Have Been Fewer Resale Homes Listed For Sale This Year |
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 Quite a few home buyers (or would-be home buyers) have asked me lately about whether we are seeing fewer resale homes (not new construction) being listed for sale in Harrisonburg and Rockingham County. Indeed, as shown above, we have seen fewer resale homes listed for sale in the first quarter of this year than in any other recent year. So, it's not just your imagination -- if you're looking to buy a resale home, you have had fewer choices thus far in 2024. But... we're in the thick of the spring market now... with 75 homes listed for sale thus far in April... so the spring and summer market of 2024 will be kinder to would-be buyers than the first three months have. | |
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Inventory Levels Are Rising, But Consider The Larger Context |
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 Inventory levels are rising. That much is true. At the end of last month there were 172 homes for sale in Harrisonburg and Rockingham County... well more than the 111 to 135 at the end of March each of the past three years. But... if you consider a context of any length of time longer than four years, you start to see a pretty different story. It's hard to believe, but back in 2008 - 2011 there were over 800 homes for sale at the end of March!?! All the way through 2016 we were generally around or above 600 homes for sale. We did see large year over year declines between 2016 and 2017 (570 down to 400) and between 2020 and 2021 (226 down to 111). So, while we're now seeing "the highest inventory levels we have seen in four years" = it's important to consider the larger context of where we have been over the past 15+ years. | |
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City Of Harrisonburg Considers 8% ($0.08) Increase In Real Estate Tax Rate |
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 The current real estate tax rate in the City of Harrisonburg is $0.96 per $100 of assessed value. That means that if you owned a home assessed at $280,000 (median City sales price over the past 12 months) you would pay $2,688 of real estate taxes each year... or $224 per month. City Council is considering an increase of the real estate tax rate to $1.04 per $100 of assessed value. If this change is approved, your real estate tax bill on your $280,000 home would increase to $2,912 pear year... or $243 per month. Looking at the details and the big picture, both of these statements seem to be true... [1] This $19 increase in monthly real estate taxes is not a huge change. [2] Home values have increased significantly over the past four years and so has the city real estate tax rate. Four years ago the median sales price was $200,000 and the real estate tax rate was $0.86. This cumulative twofold increase has resulted in a significant increase in city real estate taxes. Four years ago ($200K, $0.86) the tax bill would been $1,720/year or $143/month compared to today's tax bill ($280K, $1.04) of $2,912 or $243/month. In whole, over four years, a monthly real estate tax bill may have increased by $100/month. The potential increase in the city tax rate seems to be primary due to the opening of Rocktown High School. From the City's "budget in brief" (link below) we read... "For some time, we have known that the 2024-2025 budget would need to accommodate staffing the soon-to-open Rocktown High School. That effort, in addition to other needs within Harrisonburg City Public Schools, resulted in the school system's ask for an additional budget transfer of $6.6 million, equating to the 8-cent tax increase you will see in this year's budget proposal. Of the $6.6 million increase, $4.2 million is requested specifically for Rocktown High." Read more about the potential upcoming changes in the City real estate tax rate here... Daily News Record: City Council Hears Budget Proposal The Citizen: City leaders mull 8-cent property tax increase to pay for new school's opening, other services | |
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Strong Contract Activity Continues Into April |
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 We saw a surprisingly high number of homes go under contract in March this year... 143 of them, compared to only 118 last March. And... this April is also starting off strong compared to last April. In the first 12 days of this month (through this past Friday) we saw 44 houses go under contract in Harrisonburg and Rockingham County compared to only 33 last April. It is turning into a busy spring in the local housing market! | |
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Home Sales Are On The Rise Again In 2024 With Slightly Smaller Increases In Home Prices |
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 Happy Friday morning, friends! We're having some warmer (and mostly sunny) days this week in the Shenandoah Valley. We probably needed yesterday's rain, though unfortunately it didn't result in another rainbow like the incredible double rainbow that showed up last week...  Warmer weather finds me running outside more these days, preparing for a few races over the next few months... which leads me to my monthly giveaway for readers of my monthly market report. This month you have a chance to win a $50 gift certificate to Sole Focus Running, a new running shop in downtown Harrisonburg. Click here to enter for a chance to win a $50 gift certificate to Sole Focus Running! Now, let's dive right into the latest data from our local real estate market...  A few items to call out from the data table above... [1] Home sales in March were actually slightly slower this year (98) than last year (103) but not by much. [2] When we look at the first three months of 2024 we'll note a 10% increase in home sales this year (279) compared to last year (254) - which is a reversal of the downward trend seen between the first quarter of 2022 and 2023. [3] When looking at a full year of data, we're still seeing a 19% decline in home sales in the city and county, but again, it seems that trend may be reversing itself in 2024... at least thus far. [4] The median sales price is undoubtedly still increasing in Harrisonburg and Rockingham County... but maybe not as quickly as over the past few years. When looking a year of data we see a 10% increase in the median sales price. When we look just at the most recent six months, it's a 9% increase. When we look just at the most recent three months, it's a 7% increase. So, prices are still rising, but the pace at which they are rising might be declining. Say that five times fast. One particularly squeezed portion of the local housing market is the City of Harrisonburg. It's a tough time to try to buy a home in the City of Harrisonburg because of how few homes are available to purchase...  As shown above, yes, we're seeing a slight (8%) increase in home sales in the first quarter of 2024 in the City of Harrisonburg -- but that is against a backdrop of a 26% decline over the past year (from 485 to 360) and a 40% decline over the past two years (from 602 to 360). Far fewer sellers are selling, resulting in far fewer buyers being able to buy. The bottom half of the data tables above show that prices keep on increasing in the City of Harrisonburg, in some instances at faster rates than in the overall market. Now, then, let's get to some pretty graphs to help us further understand the market...  As shown above, home sales in February were a bit higher than expected and March were a bit lower than expected. Home sales popped up from 75 to 87 in February... and then dropped from 103 to 98 in March. Looking ahead, it seems likely that we will continue to see stronger months of home sales as we move through April and May... which will become even more evident when you read a bit further on in this report and see the amount of contract activity in March. :-) But, before we get there, let's look at the first quarter of 2024 compared to the past few years in our local market...  As 2024 began, I wasn't sure what to expect as to how many homes would sell this year in Harrisonburg and Rockingham County. The number of annual sales peaked at 1,673 homes sold in 2021 -- before falling in 2022 and 2023 down to only 1,206 homes sold last year. How, then, would 2024 shape up in our local housing market? Now three months into the year, we can start to have a sense of what we might expect this year. We have seen more home sales in the first quarter of this year (279) than we saw in the first quarter last year (254) and more than in the first quarter of 2020 (273) -- but we have certainly seen fewer than in the first quarter of 2021 (327) and 2022 (312). As such, perhaps we'll see a slight uptick in home sales in 2024? It's probably still too early to tell, but maybe we'll see more than 1,206 home sales this year in Harrisonburg and Rockingham County. Now, let's look at that annual pace of home sales in a slightly different way...  As shown above, for a year and a half we were consistently seeing 1,600+ home sales in a 12 month period... largely due to super low (historically low) mortgage interest rates during the Covid pandemic and our recovery from it. We have definitely shifted out of that high gear now and have been in the 1,200 - 1,300 home sales per year range over the past six months. As mentioned above, while it is possible that we will see further declines in the number of homes selling in our market, it is starting to seem more likely that things are stabilizing in that 1,200 to 1,300 range. Stay tuned through the remainder of 2024 to see if we continue to see a leveling out or increase in the number of homes that are selling. In addition to the likely conclusion that we are seeing a rise in home sales, it also seems quite possible that we are seeing a slowing in the pace at which home prices are increasing...  We have been seeing steady 10% per year increase in the median sales price in Harrisonburg and Rockingham County over the past four years -- but maybe this year we will see a slightly smaller increase in the median sales price? The median sales price in Harrisonburg and Rockingham County is definitely still rising... but maybe not as quickly as it has been over the past few years. Or, maybe it is still rising just as quickly, and we're just not seeing it yet with only three months of data. Given that mortgage interest rates have been much higher (sub-3% to over-6%) for over a year now, I don't think we need to think that the higher mortgage interest rates are going to cause home prices to fall. Next up, new home sales... if you bought a home last year, there is a 1 in 4 chance that you bought a new home...  Back in 2019 only about 1 in 7 home sales was a new home... but for the past three years we have consistently seen 1 in 4 home sales being a new home. This is not likely to change much moving forward as many homeowners are choosing not to sell because they love their low mortgage interest rate. I suppose, then, we need to be thankful for so many new homes being built -- as without them, home buyers would have had even fewer options from which to choose last year when buying a home in Harrisonburg and Rockingham County. Next up, contract activity, where we'll see a bit of a surprise...  Woah! After rather typical months of contract activity in January and February (compared to previous months of January and February) we saw a sharp uptick in contract activity in March 2024. Last March we only saw buyers (and sellers) sign 118 contracts... but that figured jumped up to 143 contracts in March 2024! It will be interesting to note over the next month or two whether we continue to see elevated levels of contract activity (compared to last year) or if this was a one month phenomenon. All that contract activity may have been a part of what caused inventory levels to inch down a bit over the past month...  Usually (see the grey line above) we see inventory levels rise between the end of February and the end of March -- but this year that number fell between the end of February and the end of March. For as many sellers as put their homes on the market, buyers kept showing up, causing inventory levels to decline slightly over the past month. That said, inventory levels this year (172) are still well above where they were a year ago (116) so buyers do have more options now than they did a year ago. And how about how quickly homes are (or are not) selling these days...  Over the past six months, homes have been going under contract with a median of nine days on the market. That is to say that half of homes that went under contract did so in nine or fewer days and half in nine or more days. This time on the market is certainly higher than it was back in 2021 when it was a median of five days... and higher than the four days back in early 2021... but it's not meaningfully or drastically higher. Many homes in many price ranges are still going under contract very quickly - often with more than one offer. Finally, those silly mortgage interest rates... silly high mortgage interest rates, that is...  Mortgage interest rates were below 3% just three years ago... and below 5% just two years ago... but they have been above 6% for the entirety of the past year... and I expect them to stay there. While it's tempting to say that mortgage interest rates *might* decline below 6% soon, it just doesn't seem likely. I believe we'll likely see mortgage interest rates above 6% for the remainder of 2024. So, where then does this leave us? First -- If you're interested in even more charts and graphs, I create many more each month than I highlight here. Check them all out here. Next -- If you're planning to buy a house this year, talk to a lender sooner rather than later to become preapproved and to understand your potential monthly housing costs. If you need some lender recommendations, just let me know. Also -- If you're considering selling your home this year, feel free to reach out to me to set up a time to meet at your house to discuss the market, the process, your house, your timing and your goals. Finally -- If you have questions about anything I've mentioned above, or other real estate questions in general, feel free to be in touch anytime. You can contact me most easily at 540-578-0102 (call/text) or by email here. | |
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A Year From Now, Mortgage Interest Rates Seem Unlikely To Be Much Below Six Percent |
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 The current average 30 year fixed mortgage interest rate is 6.82%. If you are waiting to buy a home until mortgage interest rates fall below 6% you might be waiting a while. A compilation of mortgage interest rate projections by Fast Company (here) show the following projected mortgage interest rates for the first and second quarter of 2025... Mortgage Bankers Association: 5.9% in 2025-Q1 5.8% in 2025-Q2 Fannie Mae: 6.3% in 2025-Q1 6.2% in 2025-Q2 Wells Fargo: 6.0% in 2025-Q1 5.9% in 2025-Q2 It seems that mortgage interest rates may very well stay near, at or above 6% for at least the next year. Read more here. | |
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How Long Will You Stay In Your Home? |
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 It seems homeowners are staying in their homes much longer now than they did two decades ago... with the median homeowner tenure having risen from 6.5 years in 2006 to 11.9 years today. This analysis of homeowner tenure is thanks to a recent analysis by Redfin... A few reasons for this increase in homeowner tenure seem to include... [1] Older Americans staying in their homes longer. [2] More recently, the sticky-ness of low fixed mortgage interest rates. A few results of this increase in homeowner tenure seem to include... [1] Lower inventory levels of resale homes. [2] Continued increases in home values. When I ask folks that I encounter on a day to day basis how long they will stay in their current homes, I often am told that they will stay in their current homes for a very long time, if not forever. This is largely because... [1] They bought their home when home values were lower or significantly lower than they are now, and they are enjoying a relatively low mortgage balance compared to current home values. [2] They bought their home when mortgage interest rates were below 4%... or they refinanced their mortgage when interest rates were below 4%, and they do not want their housing payments to increase if they obtain a new mortgage above 6%. How long will you stay in your home? I plan to stay in mine for quite a while! | |
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Another Buyer May Be Able Or Willing To Pay More Than You |
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 Many homes in many price ranges are still receiving multiple offers. Thus, a variety of questions may run through your mind if you are making an offer on a popular new listing... [1] How much is this home worth? [2] How much am I willing to pay for this house? [3] Will I win the bidding war? The challenge in answering #3 above is often not in the answer to #1 but in other buyer's answer to #2. It's note quite this black and white, but let's pretend that you and the three other buyers who are making an offer all conclude that the home is worth $350K. You love the house but your budget is capped at $360K. You offer to pay up to $360K. The second buyer won't pay a dime over market value, so they offer $350K. The third buyer has a budget that goes up to $500K, so they are willing to pay up to $370K for the house. Depending on the other terms of the offer, the third buyer is likely to secure the contract on the house. As another example... Let's again pretend that the home in question is worth $350K, but it needs some updates. You love the house, but given the need for some updates you are not comfortable paying more than $350K. The second buyer offers $340K because of the need for updates. The third buyer is super handy and will make all of the updates themselves and has plenty of cash to spare for supplies, etc., so they offer to pay up to $360K. Again, depending on the other terms of the offer, the third buyer is likely to secure the contract on the house. In any given multiple offer scenario, you must remember (as a buyer) that other buyers might be able or willing to pay more than you. | |
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You Can Change A Lot About A House, But Not The Location Or Neighborhood |
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 That house is PERFECT! It has the right amount of bedrooms, it's the perfect size, I love the flow of the main living spaces, and the exterior siding and landscaping are just what I'm looking for in a home. But... it's not in the neighborhood or location where I'd like to live. Most buyers won't buy the house described above, because they won't be able to change the location or neighborhood of the house. You can finish some basement space to add a bedroom. You can build an addition to create more living space. You can open up some walls or close in some openings to affect the flow of the main living spaces. You can paint or replace exterior siding. You can add, remove or change the landscaping. But... you can't change the location or neighborhood where that house is situated. ** Yes, I understand that technically you could move a house, but it's rather cost prohibitive. ;-) So... if you see a house that you love, but it's in the wrong neighborhood or location... chances are, you won't end up buying it. Buy a house based on the things you cannot change... and be willing to change the things you can. | |
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How To Think About The Market Value Of Your Home When There Have been No Recent Sales In Your Neighborhood |
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 I think this is going to be a more common phenomenon over the next few years... In preparing to list your home for sale we start to take a look, together, at recent sales of similar homes to predict the price a buyer will be willing to pay for your home. But... there have been no sales in your neighborhood over the past year... or two years... or three years!?! What does one then do? It's probably best not to focus on sales prices in your neighborhood from more than two or three years ago as they won't be a very accurate indicator of the value of your home in the current market. We'll likely need to work to identify comparable sales outside of your neighborhood that are as similar to your home as possible to potentially include... [1] the same school district [2] a similar size home [3] a similar structure of home (one story vs. two story) [4] a similar age of a home [5] a home with similar interior and exterior materials and finishes We will then make adjustment to the sales prices of each comparable property based on differences in both the neighborhood and the other attributes listed above. It is certainly ideal when there are highly similar comparable sales right in your very own neighborhood to use as reference points when pricing your home -- but that is not always going to be our current context right now given that fewer homeowners are selling from year to year. | |
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Home Sellers In Many Price Ranges Still Need To Plan To Be Kicked Out Of Their Houses For A Few Days |
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 Plenty has changed since the times of real estate during a pandemic... [1] Mortgage interest rates are now 6% instead of 3%. [2] Sellers are often receiving a few offers instead of a flurry of offers. [3] Homes are often selling at or just above asking, instead of waaaay above asking. But some things have not changed... Home sellers in many price ranges (and locations and property types) still need to be plan to be kicked out of their homes for a few days when they list them for sale. Is this happening for all new listings? No Are all or most of the showings turning into offers? No Can it get a bit logistically challenging for sellers to have so many showings within the first few days on the market? Yes Do most sellers decide it is worth it? Yes Happy Spring, and let me know if you want to get kicked out of your home for a few days... ;-) | |
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Make The Most Of Each New Listing This Spring! |
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 With mortgage interest rates still above 6% and with the vast majority of homeowners having mortgage interest rates below 4%, there will likely be far fewer new listings this spring. Why, after all, would a homeowner want to sell, pay off their mortgage with a 4% interest rate and buy, obtaining a new mortgage above 6%? Certainly, there are still plenty of reasons why homeowners will sell their homes even give the mortgage interest rate dynamic described above. Some may be moving out of the area, or moving to a different neighborhood or school district, or moving to have more space, or to have less maintenance. But the difference in most current mortgage holder's rates and current market rates is likely to continue to suppress the number of new listings we will see hitting the market. As such, if you're looking to buy a home this spring -- because you are moving into the area, or because you are currently renting, or for any other reason -- you should make the most of each new listing. Talk to your mortgage lender to get pre-approved... now. Go see each new listing of potential interest.. .quickly. Be ready to make a decision about an offer... quickly. | |
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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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