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Changes in Housing Inventory Levels By Price Range |
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Not all price ranges are created equally, it seems. The hardest hit price range, perhaps unsurprisingly, is the under $200K price range -- where we have seen a 52% decline in the number of homes for sale over the past two years. Of note -- part of the problem here is increasing home values -- which prices some homes out of the "under $200K" price range. Regardless, though, buyers looking to stay under $200K for their home purchase are having an ever more difficult time doing so. The $200K - $300K market also had a sizable (28%) decline in the number of homes actively listed for sale as compared to two years ago. The $300K - $400K inventory levels stayed relatively level and the "over $400K" market saw a decline in the number of homes for sale, though this would certainly impact a much smaller number of buyers. Depending on the price range (and location, property type, condition, size, age) you are shopping in, you are bound to find something slightly different as to the current inventory levels and recent trends in those levels. | |
Home Sales Accelerating Faster In City Over Past Five Years |
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Now, for the annual showdown between the City of Harrisonburg and Rockingham County, though first noting that:
There are any number of factors that affect whether buyers end up buying in the City or County, including what type of property they are seeking, how much land they desires, school systems, employer locations, and much more. | |
How Much Did City Single Family Homes Increase in Value in 2018? |
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If you own a single family home in the City of Harrisonburg, you might be wondering how much your home's value increased (or decreased) over the past year. 194 single family detached homes sold in the City of Harrisonburg in 2017 with a median sales price of $232,750 and a median price/SF of $121. 231 single family detached homes sold in the City of Harrisonburg in 2018 with a median sales price of $235,000 and a median price/SF of $122. The increase in median sales price from $232,750 to $235,000 is a 0.97% increase. The increase in median price per square foot from $121 to $122 is a 0.83% increase. So, if we round up (just by a bit) then based on changes in both the median sales price and the median price per SF, it seems that single family homes in the City of Harrisonburg increased in value by 1% in 2018. | |
Who Is Winning In The Local Real Estate Market? |
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Sellers are winning - rather universally. Every market metric works in their favor. Hooray if you get to be a seller in the current market! Buyers are losing - in all but a few categories. Certainly, buyers are happy to have low mortgage interest rates (cheap money) and low unemployment (you need a job to buy a house) but otherwise, all market metrics are working against buyers. Homeowners are winning - but are indifferent to most of what is going on in the market. Homeowners are certainly happy that home prices are increasing, that folks have jobs, and that not many people are losing their homes to foreclosure. As to all of the other market shenanigans - they are rather indifferent. So, again, a great time to be a seller. And if you have to be a seller AND a buyer -- perhaps it will be a wash. You'll benefit as a seller and struggle as a buyer. Welcome to the Seller's Market of 2019! | |
Perhaps The $225K Median Sales Price Is More Sustainable This Time |
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The median sales price of detached homes (single family homes) cleared $225K in 2018! Oh, but wait, this happened before, didn't it? Yes, actually, we saw a median sales price of $226,800 in 2006 -- and then in the five years that followed, the median sales price slid downward to $184,000. So, are we more likely to stay north of $225K this time around? I think we are, and here's why...
Only time will tell whether these $225K+ median sales prices can stick around in Harrisonburg and Rockingham County this time around -- but the broader contextual data suggests that it is more likely this time than last. | |
Did The Local Housing Market Slow At The End Of 2018? |
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Oh my heavens! Take a look at the graph above! DID the local housing market slow at the end of 2018??? I am going to lean towards: sort of, maybe a bit, but not much. The graph above...
So -- if you like the high stress graph above that unintentionally uses Christmas colors, and might make you feel unsettled about the changing tide of the local home sales market -- then stick with that one and close your email/browser. If you want an alternate perspective on the same data, keep reading... This graph (above) shows the same data as the first graph -- but by taking the Y axis all the way down to zero we get a better sense of the fact that the slight declines in the annualized pace of homes sales in the second half of 2018 were just that -- slight. So -- is the sky falling? Are home sales declining? Did we peak in mid-2018? Well, maybe, but I don't think we can conclude that definitely or with much conviction at this point. The overall downward adjustments were rather small compared to the total number of homes selling on an annual basis. Stay tuned, then, for 2019 -- eventually we'll be able to draw some more conclusions about what actually happened in 2018! :-) | |
Do Lower Housing Inventory Levels Matter In Our Local Market? |
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Inventory levels have fallen rather consistently over the past several years:
And yet -- somehow -- buyers were able to buy pretty much the same number of homes for each of the past three years:
So -- what gives? How does this work? Does it matter that inventory levels are much lower now than they have been over the past few years? Let's ignore, for the moment, any homes that come on the market and never sell and are taken back of the market. If we do so, then the information above might mean: 2016 = 1166 New Listings? Starting the year with 560 homes for sale, and selling 1313 during the year, and ending the year with 413 homes on the market would mean that around 1166 owners listed their homes for sale in 2016. (560 + 1166 - 1313 = 413) 2017 = 1128 New Listings? Starting the year with 413 homes for sale, and selling 1261 during the year, and ending the year with 280 homes on the market would mean that around 1128 owners listed their homes for sale in 2017. (413 + 1128 - 1261 = 280) 2018 = 1291 New Listings? Starting the year with 280 homes for sale, and selling 1302 during the year, and ending the year with 269 homes on the market would mean that around 1291 owners listed their homes for sale in 2018. (280 + x - 1302 = 269) So -- after all that -- Lower inventory levels at the beginning of the year (560 to 413 to 280) and during the year did not seem to affect the number of buyers who were able to find homes to buy. Sales stayed consistent-ish over the past three years despite these declining inventory levels. But -- Lower inventory levels make it less fun to be a buyer. Buyers have fewer choices at any given time and they will often have competition from other buyers when the home of their dream comes on the market. Lower inventory levels make the market move faster. With fewer options to choose from, buyers must be ready to act quickly. We saw this with a reduction in the median days on market over the past several years from 52 days to 33 days to 25 days. So, yes, lower housing inventory levels do matter -- mostly to buyers. Sellers are, usually, quite delighted to have lower inventory levels when they are ready to sell. Sellers will have less competition, and more likely to sell more quickly and negotiate less. | |
Harrisonburg Year End Housing Market Report Shows Increases in Sales and Prices |
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Happy Cold and Snowy January - and Happy New Year! Before we look back at a summary of our local real estate market in 2018, take a few minutes to explore the featured home pictured above, a spacious four bedroom home with views on a private cul-de-sac street at 3931DixieRidgeRunRoad.com. As per the norm, you can find a PDF of my full market report here. And now, let's take a thorough look at the overall performance of our local housing market in 2018... Overall, 2018 was a great year for the local housing market. Here are some key takeaways from December and the full year of 2018...
The City of Harrisonburg has been a particularly interesting market over the past year, as detailed above. Home sales increased 9.29% between 2017 and 2018, accompanied by a 6.89% increase in the median sales price (up to $190K) and home sold with a median days on the market of only 13 days! Homes went under contract quickly in the City of Harrisonburg last year -- and that seems likely to continue into 2019 given continued high buyer demand and low inventory levels. Home sales have bounced back and forth (up and down) over the past few months in Harrisonburg and Rockingham County. August, September and November were low to average as compared to the same month in previous years -- but October was a new high (120) and sales bounced back in December to a high-ish pace which helped round out an overall strong year of sales. Just another look at the pace of home sales, above, for those (like me) who prefer pretty data visualizations. We came so (so) close to matching the 1,313 sales seen in 2016. And yes, we bounced back from the slight dip we saw in 2017. What, then, might be in store for 2019? Another 1,300+ year of home sales? I think so -- but we shall see! OK - a few IMPORTANT things to note here. Despite the fact that the overall median sales price for residential properties increased 7% in 2018 -- I don't believe home values increased 7%. Much of the 7% increase in the overall median sales price was a result of a larger number of (higher priced) detached homes selling in 2018 (as compared to 2017) and a smaller number of (lower priced) attached homes selling. This graph (above) then becomes important, as it shows the trend for detached homes only -- which is often a better indicator of changes in market value. You'll note that we saw a 6% increase in the pace of detached home sales and a 2% increase in the median value. So -- if you own a detached home in Harrisonburg and Rockingham County, it is likely that the value of that home increased 2% over the past year. Oh -- and I should point out that last year's median sales price of $228,000 for detached homes is THE HIGHEST median sales price we have ever seen on an annual basis in this market. As shown above, we have seen a steady stream of buyers in the market over the past two years -- fluctuating from 620-ish to 660-ish in a six month period. Unfortunately for those buyers, however, they have had an smaller and smaller number of homes from which to choose. The number of sellers in the market -- as measured by inventory levels on a monthly basis -- has steadily decreased over the past two years. These two trends have combined to create an increasingly strong seller's market in Harrisonburg and Rockinhgham County. OK - this one is interesting - and I believe it is a sign of a healthy-ish real estate market. As shown via variety of graphs above, home sales are up, inventory is down, days on market is down -- and yet, the median sales price seems to have only increased by 2%. So - the strong seller's market has not (thank goodness!) resulted in irrational, unreasonable, unsustainable increases in sales prices. That said, sellers are negotiating less and less (as shown directly above) from their last list price. I say "last" list price because some sellers don't start with the best list price out of the gate, and have to reduce their list price. But in the end, sellers are negotiating less (around 1%) than they have in any recent year. For the purposes of at least a small sneak peak ahead -- we saw only a small number of contracts (62) in December -- which is to be expected in this first month of Winter. We're likely to see a small number of contracts in January and February as well, if past years are any indicator, before home sales (contracts) start to pop again in March. And there (above) are those low inventory levels I was referencing. In fact, the 269 properties currently listed for sale in Harrisonburg and Rockingham County is THE LOWEST inventory level we have ever seen in this area. So -- perhaps the small-ish (4%) year-over-year decline is an indication that we're getting about as low as we possibly can/could/will in this market. As one might expected, different price ranges are performing differently in our local market. The pace of home sales in the "under $200K" market continues to decline -- likely a result of properties appreciating out of this price range. We saw a sizable increase (+16%, +14%) in the middle market segments of $200K-$300K and $300K-$400K, and the largest increase in the $400K+ price range where home sales have increased 33% over the past year. Another sign of health in our local real estate market is the ever declining number of foreclosures taking place. As shown above, there were only 85 foreclosures in Harrisonburg and Rockingham County last year -- a 37% year-over-year decline. One last note -- we have seen a decline over the past few months in the average mortgage rate, which is exciting for buyers currently signing contracts to buy homes. We spent all of 2018 above 4% and we seemed to be quickly climbing towards 5% between August and October -- but the last few months of the year we saw things turn around and we are back closer to (or even below in some cases) 4.5%. OK - that wraps up my year-end overview of the state of our local housing market. I went into a bit more detail than usual this month -- though there is still PLENTY more in my full market report. You can download a PDF of the entire report here. And finally, a few quick links for you if you are thinking of buying or selling soon -- SELLERS -- even though it is a seller's market in just about every price ranges right now, you must still focus on price, condition and marketing. For further reading on buying or selling in this area, check out.... | |
When Will Home Buying Activity Ramp Up in 2019? |
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It should be no surprise that buying activity (contracts being signed) slows down over the Winter. As shown above -- an average of 75 buyers sign contracts in January, which then increases a bit, to 87, in February, and then makes an even larger jump in March to an average of 134/month. So, we're going to say the March is when we first seem a big jump in buyer activity. For that reason, many sellers wait until March (or even April) to put their homes on the market -- though the Spring market brings more competition from other sellers in addition to meaning that we'll start to see more buyers. Of note -- so far there have been 19 contracts signed in 2019 -- so still a ways to go to get to that average of 75 in January. | |
When Are You Least Likely To Sell Your Home? |
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OK - these numbers are a bit abstract, but still interesting, in my opinion. The graph above is NOT showing a distribution of when buyers are buying homes. The likelihood of selling your home in a given month, per the graph above, is calculated by dividing the number of houses listed for sale at the start of each month by the number of houses that then go under contract that month. So -- if 300 houses are listed for sale at the start of the month, and 150 houses go under contract that month, you had a 50% chance of your house selling. This is somewhat inaccurate (we'll call it abstract, instead) because other houses do come on the market during that month. But still - by calculating the likelihood of selling in the same way each month we get a relatively reasonable comparative analysis of the likelihood of selling in any given month of the year. As should come as no surprise, you are most likely to sell your home in March, April, May or June -- or October! The months when you are least likely to sell your home are November, December and January -- and good news -- two of those months are already behind us! | |
My Predictions for the 2019 Real Estate Market |
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As is my annual tradition, I am making some predictions about what we'll see in the Harrisonburg and Rockingham County real estate market in 2019. As you'll note above, I am predicting that we will see 1,325 home sales this year - which is simultaneously a bold and conservative prediction. :-) If we see 1,325 home sales, it will be the HIGHEST number of home sales seen any time in the past year. But yet, those 1,325 home sales would only be a 2% increase over the pace of home sales in 2018 -- which would be the smallest annual increase in the pace of home sales seen over the past few years. I think we will still see relatively low inventory levels this year, but yet buyers will still find enough homes that match their criteria to allow for this increase in home sales. With a growing local population, a steady local economy and relatively low mortgage interest rates, it seems likely that we'll see a continuation of slow annual increases in the pace of home sales. And how about those prices? Above, you'll note that I am predicting that the median sales price in Harrisonburg and Rockingham County will increase 2% to $217,000 in 2019. Going with bold and conservative again -- this is a bold prediction, in that it be the highest median sales price ever seen in this area -- but at the same time is only a small increase in median price over last year, and a much smaller increase than seen between 2016 and 2017. Keep in mind (I know I've said it a lot lately) that the 7% increase in the median sales price in 2018 was not necessarily an actual 7% increase in home values -- but rather a shift towards more (higher priced) single family homes selling and fewer (lower priced) townhomes, duplexes and condos selling -- resulting in 7% increase in the median sales price of the combination of those two property categories. OK - enough about my predictions --what about for you? Email me (scott@HarrisonburgHousingToday.com) and let me know where you think our local market will go in 2019. And keep up with all the market data between now and next January by signing up to receive my monthly housing market report by email if you are not already receiving it. | |
Comparing My 2018 Housing Market Predictions To Reality |
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As shown above, I was a bit too conservative in predicting 2018 home sales. After we saw a 5% decline in the pace of home sales between 2016 and 2017 I was predicting we'd see another (smaller) decline of 2% between 2017 and 2018. As it turns out, we actually saw almost a 3% *increase* between 2017 and 2018. Even though we had low inventory levels all year long, buyers still found homes to buy -- which created a slight increase in the pace of sales, and a further decline in "days on market" in 2018. And -- I was a bit too conservative on the change in median sales price as well! After a 3% increase between 2016 and 2017 I was predicting another 3% increase between 2017 and 2018. But no, we actually saw almost a 7% increase between 2017 and 2018 up to $212,000. Please note, again, that this 7% increase in the median sales price might be (almost certainly is?) the result of a change in the mix of what (detached vs. attached) as opposed to all values actually increasing by 7%. Read more here. Stay tuned for some predictions for 2019 in the coming days! | |
Home Sales Rise By (at least) 2% in 2018 |
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All home sales have not yet been reported but it is seems that we will see around a 2% increase in the pace of home sales in Harrisonburg and Rockingham County between 2017 and 2018. With 1,288 home sales recorded in the MLS thus far for last year, we may see that figure rise a bit more over the next few days, but not by much. This is a slight increase compared to last year -- though still a slight decline as compared to the high seen in 2016...
Stay tuned for my full market report in the next week or so, as well as predictions for the 2019 housing market. Oh, and HAPPY NEW YEAR! | |
Pending Home Sales Down 7.5% |
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The graph above shows the number of properties "under contract" at the end of the month for each month over the past three years. As you can see, at the end of November there were 160 properties under contract in Harrisonburg and Rockingham County -- down 7.5% from the 173 properties that were under contract at the same time one year ago. Of note, this past Spring (end of April, May) we reached a high point for this metric that we had not seen over the past few years. | |
Some Perspective on Changes in Mortgage Interest Rates |
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In some ways, my alarm bells are going off!
But yet -- it looks like the average rate for 2018 will only be 0.54% higher than in 2017 -- and the graph above puts that in what might be a somewhat more helpful context. The last red bar (all the way to the right) is an indication of how much the annual average rate will have increased between 2017 and 2018. Any red bar is an increase in the average annual rate. Any blue bar is a decrease in the average annual rate. As such -- the increases we have seen in 2017 and in 2018 are a far cry from the crazy increases seen in 1978, 1979, 1980 and 1981. And there have been several times in the past thirty years when there has been a year or two of increases of less than 1% in a year, that were then followed by decreases in subsequent years. So -- back to real rates -- you could get a mortgage with a rate less than 4% a year ago, and now it would be just under 5%. And it's possible that the rates will keep rising in 2019. But in the big picture:
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Despite Slower November, Home Sales Still Stronger Than Last Year |
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Before we dive into this month's market report, check out this featured home by visiting 819GreenbriarDrive.com. Now, on to our local real estate market -- I just published my most recent monthly market report, and as usual, you can read on for an overview, download the full report as a PDF or tune in to my monthly video overview of our local housing market... VIDEO OVERVIEW: Click here to watch (and listen) to my overview of the market. Now, let's take a look at some the trends we're currently seeing in our local housing market... As we can see above...
This has been a bit of an odd year, as shown above. We have seen quite a few months of new "highs" for monthly home sales. They aren't all shown above, but you can see that June, July and October were the highest such months in the past several years. But then you have months such as November -- where we fell to one of the lower such months of sales in recent years. So -- what about December? I'll guess we'll end up around 90 or so home sales -- maybe 95 -- or even 100? This graph shows each month of home sales stacked upon the previous months -- and you can see that we're beating every recent year except 2016 when you look at home sales through November -- shown in a light brown color. It seems almost certain that we'll beat the 1,261 total we saw last year -- but will we get up to 1300 home sales this year? We'd need 99 home sales in December! As I have mentioned in a few recent market reports -- the 7% (or so) increase that we're seeing in the median sales price for all residential sales might not mean that homes are selling for 7% more than they were last year. That 7% rise seems to be more a result of a greater number of (higher priced) single family homes selling in 2018 as compared to how many sold in 2017. Read more about this phenomenon here. That said, the graph above might give us a better idea of value trends -- where we see that the median sales price of single family homes has increased 2% over the past year. It's a good time to be a seller right not -- and not as exciting of a time to be a buyer. As shown above, the supply of buyers is steady -- with right around 650 buyers buying in a six month period. But at the same time, the number of sellers (and their homes) in the marketplace keeps on declining -- giving those buyers fewer and fewer options from which to choose. Hmmm -- 99 home sales in December might not be completely realistic after all. As shown above, only 72 buyers (and sellers) signed contracts in November 2018. This, combined with some lingering October contracts, means we're probably more likely to see 80 - 90 home sales in December. And -- for you current or near future sellers out there -- buyer activity is likely to stay a bit lower over the next few months. A strong surge of buyers is likely to return in March. Well -- we dropped below 300 homes for sale again this month -- and we're likely to dip a bit lower as we move through December, January and February. Last year it took until March to rise above 300 homes for sale. So -- if buyers don't want to buy in the Winter, it seems that sellers also might not want to sell. Unless you're paying cash -- it will cost you more (in your monthly housing payment) to buy a house now as compared to a year ago. The average mortgage interest rate on a 30 year mortgage has risen almost an entire percentage point (from 3.90% to 4.81%) over the past year. It ticked down slightly in November -- and hopefully we'll (somehow?!) stay below 5% as we roll into the new year. I'll pause there, for now. As usual, you can download the full report as a PDF, or tune in to my monthly video overview of our local housing market And a few tips for anyone thinking of buying or selling soon -- SELLERS -- even though it is a seller's market in many price ranges right now, you must still focus on price, condition and marketing. For further reading on buying or selling in this area, check out.... | |
The Value of Your Home Based On When You Bought It |
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Can historical median sales prices give you some sense of your home's current market value? Perhaps so! The values in the chart above are calculated by comparing the 2018 median sales price to the median sales price in each of the past 17 years. Do remember, of course, that while this might provide a general guide to market changes over the past 18 years, every home and neighborhood is unique. Let's chat about your specific house if you want to know what it is worth in today's market. | |
Contract Activity Slows Heading Towards Thanksgiving |
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And -- as we might have expected -- home sales activity is slowing as we roll into late November. The graph above shows the number of contracts signed per month for each of the past eight months -- and those signed in the first 19 days of November. Now, it's possible that we'll have a huge surge of contracts on Black Friday (oh wait, homes aren't going to be on sale that day) but if not, we're likely to see pretty big drop in contract activity this month. Again, nothing new or surprising - just the seasonal shift that we always see in November. We should expect to see low levels of contract activity for the next few months before buyer activity jumps up again in March. If you're a seller who just listed their home for sale, or if your house is lingering on the market, we should talk about strategies related to pricing and timing to meet your goals for selling your house. | |
Home Sales Rise Yet Again In October 2018 |
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Before we dive into this month's market report, check out this featured home in Highland Park by visiting 4350BrownRoanLane.com. Now, on to our local real estate market -- I just published my most recent monthly market report, and as usual, you can read on for an overview, download the full report as a PDF or tune in to my monthly video overview of our local housing market... VIDEO OVERVIEW: Click here to watch (and listen) to my overview of the market. Now, let's take a look at some the trends we're currently seeing in our local housing market... As shown above --
Now let's look at the monthly home sales visually... This past June and July were stellar months of home sales -- with the highest sales level seen in the past three years. Then, sales fell in August and September, and it was seeming that rising interest rates might have finally started to affect buyer behavior. But then, October. We saw a sharp increase in home sales in October -- the strongest month of October home sales in the past several years. So -- where do we go from here? Will we have the best November of late? Or will we slip back into the middle of the pack? Regardless of how November goes, it seems 2018 will be a strong year... We've seen 1,117 home sales in the first ten months of 2018 -- this is the strongest first ten months of the year seen anytime in the past six years, not all of which are shown above. It seems, thus, that we're likely to get back up to a 1300/year pace of homes selling in Harrisonburg and Rockingham County. Can it happen? What is your prediction? As mentioned earlier, even though the market-wide median sales price has increased 9% in 2018 -- that is not an indication that home values are up 9%. There are more single family homes selling this year than last, which is affecting the overall median sales price. The graph above, then, is a reasonable substitute for understanding value trends in our local market. When we look only at single family homes (not duplexes, townhouses or condos) we see that the median sales price has increased 2.4% over the past year. This seems much more sustainable than a 9% increase. In some ways, it is surprising that home values aren't increasing more than they are. We have been in an increasingly strong seller's market for the past two years -- with more and more buyers fighting over fewer and fewer seller's homes on the market at any given point. Certainly, "enough" sellers are selling -- as the total number of closed sales is increasing -- but strong buyer activity is keeping overall listing inventory down at most times of the year. Why do I think we'll finish out the year with 1300 or so home sales? Partly because of the strong month of contract activity seen in October. A total of 111 contracts were signed in October, most of which should turn into closed sales by the end of the year. As a side note, winter is coming. Contract activity is likely to slow over the next four months. And there are those inventory levels -- low and getting lower. We've seen an 11% decline in the number of homes on the market over the past year -- and inventory levels didn't rise all that much during the Spring / Summer markets this year. So, basically, as fast as sellers are listing their homes, buyers are snapping them right up -- in most price ranges, in most locations, etc., etc. And finally -- mortgage interest rates. Most folks don't pay with cash -- they finance part of their home's purchase price -- and it is getting more expensive to do so these days. We have seen a 23% increase (from 3.94% to 4.86%) in the average 30 year fixed mortgage interest rate over the past year. This means that today's buyers are paying more per month than they would have last year, for the same home, even before we start calculating how that sales price would have increased over the past year. I'll pause there, for now. As usual, you can download the full report as a PDF, or tune in to my monthly video overview of our local housing market And a few tips for anyone thinking of buying or selling soon -- SELLERS -- even though it is a seller's market in many price ranges right now, you must still focus on price, condition and marketing. For further reading on buying or selling in this area, check out.... | |
Early Preview of October Home Sales Activity |
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I'll put my full market report together later this week, but an early look at October home sales data shows that buyers turned out in force during October 2018 -- in fact -- it appears that there were more buyers in October 2018 than in any other October in the past 10 years! This shouldn't be entirely surprising, since September contracts (102) were a good bit stronger than last September (87). Stay tuned for more data as later this week. | |
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Scott Rogers
Funkhouser Real
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scott@funkhousergroup.com
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