Analysis
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How Quickly Are Homes Selling These Days? |
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![]() First disclaimer -- the graph above is based on a very small sample size -- I'm just looking at the homes that have gone under contract in the past week. Second disclaimer -- the graph above only looks at contracts signed on resale homes, not new homes. What does this graph show? Of the 22 resales homes that went under contract in Harrisonburg and Rockingham County over the past week... over half took more than a month to go under contract. Only 3 (of the 22) went under contract within a week. But wait, I thought homes were going under contract much more quickly than that!? Yes, indeed, I did think that. Here's what I have discovered looking just at this one week of data, which I'll explore a bit more broadly in the near future... Median Days On Market For Listings Going Under Contract In The Past Week: All (44) Homes = median of 6 days (22) New Homes = median of 0 days (22) Resale Homes = median of 38 days Wait.... what!!? Indeed, for a while now I have been observing a median days on market of six days in our market. But... [1] We are seeing an increasing number of new home sales in our market. [2] Many or most of those new homes are being built by Ryan Homes. [3] Ryan Homes appears to be waiting to list many homes in the MLS until they are already under contract, resulting in a "days on market" of zero for those homes intended to be built. And thus, the long standing 6 (or so) day median of how quickly homes were going under contract may have been a data set significantly skewed by how one new home builder is managing their listing data. I'll start working my way backwards here soon to evaluate median days on market ONLY of resale homes to try to provide a clearer picture of what the data actually shows about the pace of sales in our local market. Stay tuned. | |
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Home Prices Keep Climbing Despite Fewer Home Sales And Rising Inventory Levels |
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![]() Happy Monday, Friends! Before we get to the real estate news...can we just start by saying... Go Dukes!?! JMU has been on a roll over the past few weeks and months in multiple sports. The football team remains unbeaten at 10-0 and will host ESPN's College Game Day this Saturday. The men's basketball team defeated #4, Michigan State last week followed by two more wins. The men's soccer team beat #1 UCF two weeks ago. The volleyball team is entering the Sun Belt Conference tournament as the second seed of the east division. And on, and on. This has been a fun year for rooting for the Dukes. If you live locally in the Harrisonburg area I hope you have been able to get out to watch some of these exciting games at JMU... and if you're an out of the area alum, come on back to get in on the action! And now... on to the latest data and trends in our local housing market! First, an overview of a few key indicators... ![]() The highlighted trends above aren't all that new -- they are a continuation of what we have been seeing through most of 2023... [1] We continue to see fewer and fewer home sales in Harrisonburg and Rockingham County. This October there were 23% fewer home sales than last October. This year (Jan-Oct) we have seen 25% fewer home sales than last year during the same timeframe. [2] Despite fewer home sales taking place, home prices keep on rising. The median sales price thus far in 2023 is $330,000 which is 10% higher than the median sales price of $299,775 that we saw last year. [3] Homes are selling (as a whole) ever so slightly more slowly than last year -- even if it shows up as a 33% increase in the median days on market. Last year's median days on market in October was six days... and this year it's up 33% to eight days. So, many homes (at least 50%) are still selling quite quickly, even if ever so slightly more slowly than last year. Next up, though, let's take a look at a data table that might surprise you a bit... ![]() The top two tables above look only at new home sales while the third and fourth table look at existing home sales. First, the decline in the number of homes that are selling (2023 vs. 2022) is relatively similar between new home sales (-27%) and existing home sales (-24%). But... the change in median sales price over the past year is where we notice some differences. The median sales price of new homes has increased 13% over the past year -- while the median sales price of existing homes has only increased 5% over the past year. Hmmmm.... so while the market wide median sales price has increased 10% over the past year, if we strip out the new home sales (and their impact on pricing) we are only seeing a 5% increase in the median sales price. This 5% increase in the median sales price of existing homes in 2023 follows an 11.5% increase in that metric in 2022. So, perhaps the increase in (existing) home prices is slowing? Now, moving on to some visuals of the latest trends we're seeing in our local housing market for all the visual learners amongst us. First, how much slower has this year been than last year? ![]() My yellow scribbles above are filling in the area between last year's home sales figures (blue line) and this year's home sales figures (red line) to show how much of a gap we have seen in home sales between March and October. Last year (Mar-Oct) we saw 1,186 home sales. This year (Mar-Oct) there have only been 894 home sales. This is a big drop (25%) and it seems to mostly be a reduction in the number of sellers selling... though we can start to re-think that a bit as we move through another month of rising inventory levels. But all that is to come... keep reading. Next up, the long term trends in the number of homes selling and the prices of those homes... ![]() The number of annual home sales has now dropped all the way down to 1,226 home sales... which (as this graph points out) is the lowest number of annual sales in over four years. And... it's actually much longer than four years. The last time we were seeing homes sell at an annual rate lower than 1,226 homes per year was way back in July 2016... over seven years ago! With home prices being as high as they are (illustrated by the top line in the graph above) and with mortgage interest rates being so high (now) compared to rates most homeowners have on their current mortgages -- I don't think we will see this annual rate of home sales start to increase in the near future. Shifting gears a bit, let's look forward to the remainder of the final quarter of 2023 as it relates to contract activity... ![]() Only 83 contracts were signed in October 2023 which is slightly lower than last October (94) and significantly lower than the average October over the past four years (127). Looking ahead, it seems likely that we will see even fewer contracts being signed in both November and December. This is interesting to keep in mind when we get to the inventory graph in a bit. But before we get to the inventory numbers, here's a bit of a counter indication as to contract activity... ![]() Despite slower contract activity, of late, the number of pending sales (under contract homes) is hovering around 234 contracts right now... which is very much in line with where we would expect it to be based on where we were at the end of last October (229) and the average end of October data from the past four years (245). Thus, perhaps we'll see normal-ish numbers of closed sales in November and December, given the normal-ish number of homes that are currently under contract? Now, inventory, the most interesting, unexpected and atypical indicator in this month's report... ![]() Inventory levels are continuing to climb, as they have for the past four months now. The 230 homes that are currently on the market is 65% more homes than were on the market a year ago. What does this mean? [1] While the homes that are selling are still selling rather quickly, there is an increasing number of homes that are not selling right away and that is causing inventory levels to climb. [2] If you are listing your home for sale you might see it go under contract quickly -- contributing to the low "median days on market" figure -- or you might not see it going under contract quickly -- contributing to the increasing inventory levels. Yes, I understand very clearly which group every home seller would like to be a part of -- but every home seller is not automatically a member of the "my home sold in a flash" club any longer. Circling back a bit, here's the median days on market data, showing that plenty of people are still in that "my home sold in a flash" club, with a significant caveat to follow... ![]() Let's be clear on what this graph (above) does and does not show... [DOES] This graph does show that half of the homes that have sold in the past six months have gone under contract in six or fewer days and half of the homes that have sold in the past six months have gone under contract in six or more days. [DOES] This graph does show that the time it is taking for homes to go under contract is about the same now as it was in the crazy times of 2021 and 2022. We were seeing a median of four to five days then, and a median of six days now. [DOES NOT] This graph does not show that all homes that are listed for sale will go under contract with a median of six days. These median days on market figures are calculated only based on homes that sell, once they have sold. I'll speak more to the "so what" or "now what" portions of these indicators a bit later. And finally, one of the main reasons for fewer home sales in 2023, those pesky high mortgage interest rates... ![]() We now seen mortgage interest rates above 6% for more than a year... they have been over 7% for the past three months... and they were getting close to 8% at the end of October! These high (higher) mortgage interest rates put a damper on home sales activities... [1] Buyers think twice about buying after they calculate their monthly mortgage cost based on today's rates. [2] Sellers think twice about selling when they realize they'd be giving up their current (likely) low rate for a (likely) much higher rate today. I don't think we will see much of an increase in the number of homes that are selling until we see mortgage interest rates heading back down. It is worth noting that rates have come back down a bit in November, dropping from 7.79% down to 7.5% as of last week. Now, let's move on to the "so what" and "now what" portion of our conversation... If you plan to buy a home soon... [1] Yes, mortgage interest rates are high, so talk with a lender to make sure you have a clear understanding of your potential mortgage payment and make sure that it fits in your budget. [2] You likely are seeing more options of homes to consider now than you would have had over the past few years. Enjoy possibly having a few options at once instead of just one option at a time. [3] You might not have to make a decision about an offer within 30 minutes. Yay! Think it through, go back and look a second time, make sure you are comfortable with your potential offer and your buying decision. If you are selling your home and it's already under contract... [1] Congratulations. [2] Don't talk about it with anyone in the next category. ;-) If you are selling your home and it is not yet under contract... [1] We should take a look at how your pricing compares to other homes that buyers might currently be considering. We must make sure your pricing is competitive. [2] We should look at whether other buyers have contracted on similar homes in the past 60 days. Have buyers bought other houses -- and not your house -- or have they not been contracting to buy anything at all? [3] We will likely want to discuss if or how an adjusted list price might cause a buyer on the fence to make an offer... or a buyer looking at the fence to come view your home. ;-) [4] Sometimes the only solution is to be patient as there are no longer multiple buyers in the market, always, for every house regardless of size, location, features and price. If you plan to sell your home soon... [1] Pricing is key! Let's be super realistic (or overly realistic) with pricing so that you can join the "my home sold in a flash" club. [2] We will also need to take a look at how many buyers have purchased homes like your home over the past 60, 90 or 120 days to try to have realistic expectations for time on the market. [3] You might not have a flurry of showings in the first few days that your home is on the market. This does not mean that your home will never sell. It just means that it is not 2021 or 2022. :-) [4] Selling a home in 2021 and 2022 was a sprint... but you don't need to worry that it will now be a marathon... it is likely to be somewhere between a one mile run and a 5K. And for everyone... As all of these market trends (# sales, prices, inventory levels, time on market) adjust in our local market, it's more important than ever to delve deeper into the data related to your specific property type, price range, neighborhood, etc. - regardless of whether you are selling or buying. We must take a more thoughtful approach than ever to our selling strategy when it comes to pricing, preparation, marketing and negotiating... and a more thoughtful approach than ever to our offering strategy when buying. I'll wrap it up there for now, but feel free to reach out if you have questions about your particular housing situation -- or if you just want to talk things through. You can reach me most easily at 540-578-0102 (call/text) or by email here. | |
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Why Has The Median Sales Price Of Attached Homes Increased 20% In A Year? |
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![]() Spoiler alert - I have no concrete answers to the question above. :-) The median sales price of attached homes (duplexes, townhomes, condos) was $247,565 in 2022. Thus far in 2023, the median sales price is $296,990. This marks a 20% increase in the median sales price of attached homes over the past year. How could this be? The overall median sales price in our market (detached homes and attached homes) has risen 10% in that same timeframe -- so why has the median sales price of attached homes risen 20% rather than 10%? My theory - which I have now proven to be wrong - was that the median sales price was rising because we were seeing more new attached homes selling in 2023 at higher prices, causing the median sales price to rise. Certainly, if 20% of attached homes were new homes in 2022 and 40% were new homes in 2023 then it would not be surprising to see the median sales price rise since the prices of new homes are almost always higher than the prices of resale homes. But, here's what the data actually shows... ![]() So, again, comparing attached home sales in 2022 and 2023... 2022 - median sales price of $247,565 with 40% being new homes 2023 - median sales price of $296,990 with 34% being new homes So, it seems we can't necessarily attribute the unexpectedly high (20%) increase in the median sales price of attached homes in 2023 to a larger portion of those home sales being new homes. Darn. Theory #1 has been refuted. Anyone have any other theories? | |
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The Annual Pace Of Home Sales Has Fallen 27% Since June 2022 |
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![]() In June 2022 the annual pace of home sales activity in Harrisonburg and Rockingham County peaked at 1,727 home sales in the previous 12 months. Now, as of the end of September, the annual pace of home sales has dropped back down to 1,256 home sales in the past 12 months. That decline from 1,727 annual sales down to 1,256 annual home sales marks a 27% decline in the number of homes are selling in a year's time in Harrisonburg and Rockingham County. But... it may just be a retreat from a historically odd time. Prior to the onset of the COVID-19 pandemic, we had been seeing between 1,200 and 1,400 home sales per year for about four years... from 2016 through 2020. Those years are marked by the wide swath of green bars on the graph above. Prior to 2016 we were seeing fewer than 1,200 home sales a year, as shown by the blue bars on the graph above. But then, in 2020... [1] COVID-19 happened, and overnight everyone was asking their home to serve more purposes than ever. Students were learning from home. Adults were working from home. [2] Mortgage interest rates dropped below 3% and mostly stayed there for a year and a half. The two factors above (among others) fueled our local housing market (and many others) to rise to new heights -- as shown by the orange and red portions of the graph above. But by mid 2022, mortgage interest rates were rising, and then rising again, and then rising some more... all while home prices were continuing to rise to unprecedented new heights. So, perhaps it is rather unsurprising that we have seen a 27% decline in the annual pace of home sales as of the end of September. Two notes... [1] Being in the 1,200 to 1,400 range we are in what was a normal range for home sales for 2016 - 2020. [2] It is likely that the annual pace of home sales will fall further, possibly below 1,200. This will put us back in the normal range for home sales for 2014 - 2016. | |
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Fewer Home Sales, Rising Inventory Levels And Possible Slowing In Sales Price Gains |
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![]() Happy October, Friends! October is one of my favorite months of the year... for quite a few reasons... 1. Cool mornings, warm afternoons and then cool evenings again. 2. Beautiful changing colors of fall leaves. 3. Pumpkin pie! 4. My birthday. ;-) 5. Coaching middle school volleyball. 6. Apple cider. 7. Watching JMU football games. Goodness, there have been some stressful ones this season, though not this past weekend! ![]() Is October a favorite month for you as well? What would be on your list? While you're building your own list of all the reasons why October is amazing, let me mention my monthly giveaway, of sorts, for readers of this market report, highlighting some of my favorite places, things or events in Harrisonburg. Recent highlights have included Taste of Thai, Merge Coffee and Jimmy Madison's. This month I am giving away a $50 gift certificate to Hank's Grille, located in McGaheysville. I enjoyed a delicious meal this weekend of pork BBQ with baked beans and macaroni and cheese on the side, rounded out with some pecan pie. If you haven't been to Hank's Grille, you should go check it out... whether you win the gift certificate or not! Click here to enter to win a $50 gift certificate! And now... on to the data, and charts and graphs... ![]() OK, my highlighting on the chart above requires a bit of explanation. Let's work our way from the bottom of the chart upwards... [1] Year to date we have seen 927 home sales, which is 25% fewer than the 1,241 home sales we saw in the first nine months of last year. [2] When we look just at the past six months (April through September) we have seen a slightly larger 28% decline in the number of homes selling in Harrisonburg and Rockingham County. [3] When we look just at September (while keeping in mind that a small data set can lead us to erroneous conclusions) we'll see a 34% decline in the number of homes that are selling. So, far fewer homes (at least 25% fewer) are selling in Harrisonburg and Rockingham County this year as compared to last. But what about the prices of those homes that are selling? ![]() The prices, it seems, keep on rising, no matter how we slice and dice the data from a timeframe perspective. As shown above, the median sales price has increased 10% this year to date as compared to last year to date. When we look at a shorter timeframe (six months, three months, one month) we still see a double digit (10% - 11%) increase in the median sales price. All that said, later in this report I'll take a look at only detached home sales where we are starting to see a slightly different trend in median sales prices. I know... quite the build up... but don't skip ahead... keep reading. :-) These next numbers can be quite easily taken out of context... ![]() The median time that it takes for a home to go under contract (days on market) increased 60% in September 2023! Gasp! ;-) It's actually not as much of a story as you might think. Median days on market was five days last September and is eight days this September. Yes, that is a 60% increase... but eight days is still quite low and doesn't mark too much of a shift in how quickly homes are going under contract. Most sellers are just as delighted to have their home under contract in eight days even if it isn't under contract in five days. Also, above, you'll see that year to date the median days on market has only increased from five days to six days. Another graph below will put these numbers in a larger (longer) context. More suspense, I know. Now, on to some graphs for the visual learners amongst us... ![]() After a normal-ish January through April, we have been seeing far fewer home sales each month thereafter. May through September makes five months in a row where we saw significantly fewer home sales as compared to the same month last year (blue line) and as compared to the average of the past four years (grey line). Looking ahead, on the graph above, I think it is reasonable to assume we will continue to see slower months of home sales in October, November and December as compared to recent years. As I have pointed out in the past, this slow down in home sales seems to be a result in changes on both the supply and demand side of the housing market... SUPPLY - We are seeing fewer sellers willing to sell their homes as they don't want to give up their likely low mortgage interest rate in the 3% to 4% range. DEMAND - We are seeing fewer buyers willing or able to buy homes given the current higher mortgage interest rates in the 7% to 8% range. Now, then, for even more context... let's see how home sales have fallen... ![]() The blue line above shows the number of home sales in a year's time. That annual rate of home sales was hovering in the 1,300's pre-Covid and then surged up to a high of 1,727 in summer 2022. Now, however, we have seen the annual rate of home sales decline all the way below 1,300 home sales a year which is the lowest annual rate in over four years! But yet -- enter the green line -- the median sales price of those homes keeps on rising! However, maybe we are starting to see a slight change in the trajectory of the median sales price? See below... ![]() The graph above segments out only DETACHED home sales, also known as "single family homes" and excludes duplexes, townhouses and condos. Sometimes looking just at detached homes can be a more helpful or accurate view of changes in median sales prices as it removes one variable from the mix. When we're looking at market-wide changes in the median sales price the numbers can be affected by how many detached homes are selling (generally at higher prices) compared to how many attached homes are selling (usually at lower prices). Thus, I'm looking here just at the detached home sales. With all of that as context, you'll see that we saw a 12% increase in the median sales price of detached homes in Harrisonburg and Rockingham County in 2022... but thus far in 2023 we have only seen a 7% increase in the median sales price. Please note that I tried to choose my words very carefully in the latter part of my headline this month... "... Possible Slowing In Sales Price Gains" It is possible -- not certain -- that we are seeing a slowing of sales price GAINS. Sales prices are not declining, or even staying level. Prices are still rising, but they might be rising a bit more slowly now (7%) than they were last year (12%). But, yes, that's just for detached homes... because look at attached homes!?! ![]() As shown above, the median sales price of attached homes is shooting upwards, quickly! After a 9% increase in the median sales price of attached homes in 2022, we are now seeing a 21% increase in 2023!?! My only theory here (thus far) is that this may be a result of more new construction (higher priced) attached homes selling this year, which might be driving the median sales price of attached homes up this quickly. I'll look into that further in the coming days. But yes, the median price of an attached home... is rising very quickly right now. Now, on to the contracts that were signed in September that might predict the home sales we'll see in October and/or November... ![]() As shown above (highlighted in yellow) the rate of contracts being signed in June, July and August was a bit unpredictable. June was slower than last June. July was faster than last July. August was slower than last August. But September, it was just what we might have expected... we saw 112 contracts signed this September and 112 contracts signed last September. Now, then, the only thing I'll say looking ahead is that I expect we'll see fewer than 112 contracts signed this October and quite possibly fewer than the 94 that were signed last October. Next up, inventory levels, and as you know from the headline, they are rising... ![]() Over the past three months we have seen inventory levels rise from almost the lowest level in the past two years (131 in June 2023) to definitely and absolutely the highest level in the past two years (206 in September 2023). A few nuances to add here, though, as highlighted above... SLIGHTLY - This increase in inventory levels does put us above where we have been for the past few years (during/after Covid) but inventory levels are still well below where they were for much of the past decade. This increase in inventory levels provides slightly more choices for buyers -- not abundantly more choices for buyers. SOME - The increased inventory levels are not equally distributed across all price ranges, property types and locations. Some segments of our local market are still quite undersupplied and some are more oversupplied than others. So, some buyers have slightly more choices... but all buyers do not have slightly more choices. Now, to add a bit longer context to the recent rise in median days on market... ![]() We have started to see the median days on market figure bounce around a bit in 2023... but it has remained between five days and eight days for the past year. These very small increases still keep it well below where it was in 2020 and prior. Also of note here is that while the median days on market figure is staying within that five to eight day range there are plenty of homes that are selling in fewer than five days and plenty that are selling in more (or much more) than eight days. And finally, it's time to play the blame game! :-) Why are we seeing fewer home sales right now? Why are we seeing rising inventory levels? Why might price increase gains be slowing? It's all, arguably, because of those darn mortgage interest rates... ![]() Over the past two years we have seen steadily increasing mortgage interest rates. Over the past two years we have seen steady declines in the annual rate of home sales. Coincidence? Probably not. Higher mortgage interest rates have... [1] Caused some would-be sellers to decide not to sell as they do not want to give up their low mortgage interest rate. [2] Caused some would-be buyers to decide not to buy as they can't afford (or don't want to pay) the monthly payment associated with the house they would like to buy. Where, then, will we likely see the market headed through the remainder of 2023 and into 2024? I believe we'll see... [1] Continued high mortgage interest rates, at or above 6.5%. [2] Continued declines in the annual rate of home sales, though I suspect the declines will slow. [3] Continued increases in the median sales price, though I suspect the increases will slow. [4] Sustained higher inventory levels that might continue to creep upward. So... if you plan to engage in this current real estate market as a home buyer or a home seller... BUYERS - You might see a few more choices of homes to purchase at any given time over the next few months. Your monthly housing costs will likely still be high given continued high interest rates. Waiting a year probably won't result in a lower monthly payment as rates likely won't drop considerably and prices don't seem likely to drop. SELLERS - Prices are still high, and rising, but those prices convert into an ever higher monthly housing cost for buyers. As such, you'll likely have fewer showings on your house and fewer offers. Prepare your house well, price it appropriately, market it thoroughly, and bear in mind that you might have to negotiate on price and terms with a buyer depending on your home's price range, property type, location, etc. If you're thinking about buying or thinking about selling but don't know what to think... feel free to reach out. I'm always happy to talk things through with you to try to help you clarify your goals and priorities and to figure out if now is the right time to make a move. You can reach me most easily at 540-578-0102 (call/text) or by email here. | |
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Slight Bump In Contract Activity In September 2023 |
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![]() We saw a slight increase in contract activity this September as compared to last September... with 3% more contracts signed this year than last... 115 contracts were signed in September 2023 112 contracts were signed in September 2022 As you'd like imagine given the graph above, the total pace of contract signing this year is a good bit below last year... 1,226 contracts signed January - September 2023 1,033 contracts signed January - September 2022 So, we're seeing 16% fewer contracts signed this year than last -- though we had a few more than expected in September 2023. It will be interesting to see how October through December finish out in 2023. Stay tuned for a fuller market analysis in the next week or so. | |
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How Much Have Home Prices Increased, Locally, When Adjusted For Inflation? |
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![]() 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. | |
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Our Local Real Estate Market Keeps Testing Basic Economic Theories |
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![]() 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. | |
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Recent Rises In Inventory Levels In Context |
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![]() 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. | |
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Fewer Homes Are Selling, Though Prices Keep Rising, And Now Inventory Levels Are Rising Too!? |
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![]() 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. | |
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August Contract Activity Was Slower Than In Recent Years |
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![]() We are seeing fewer home buyers signing contracts to buy homes right now... compared to the past few years. The graph above shows the numbers of homes that went under contract in the first 28 days of August for each of the past six years. The 101 contracts signed in the first 28 days of August 2023 is decidedly lower than the contract activity seen in August 2020, 2021 and 2022 -- though most of those years were much more active than normal given COVID-induced buyer enthusiasm and super low mortgage interest rates. As such, it is not totally surprising to see us return to around 100 contracts signed in August, which is the average of how many we saw in August 2018 and August 2019. With mortgage interest rates around 7% right now, I expect we will continue to see slower months of contract activity as we continue into and through the fall months of 2023. | |
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Fewer Home Sales, But Prices Are Rising!? More Contracts But Inventory Levels Are Rising!? |
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![]() Happy Monday afternoon to you, friends! This monthly market report is one of some enigmas, some contradictions, some puzzlement. Some of these will be familiar, some new, some unrelated to real estate... [1] How can it be that we are seeing fewer home sales, but higher prices!? [2] So, contract activity is increasing, but inventory levels are also rising!? [3] How can I feel so young, yet have a son heading off to college this Friday!? :-) ![]() Indeed, Luke heads off to Wake Forest University this Friday! We are tremendously excited for this next step in his life and educational journey, but we will miss him and his friends greatly as they head off in new directions. Swiveling quickly back to real estate before I spend too much time thinking about the aforementioned major life transition (!!) I'll point you towards a few of my current listings that might be of interest... 9926 Goods Mill Road - A spacious home / farmette on 3.3 acres with wonderful mountain views in the Spotswood High School district. $585,000. 150 Autumn Bluff Drive - A like-new, upscale, custom-built, single-level home in Autumn Breeze on a large corner lot. $445,000. 1210 King Edwards Way - A four bedroom home in the City with an attached two car garage and a large back deck. $389,500. 3211 Charleston Boulevard - An upscale townhouse in Preston Lake with a two-car garage with access to many amenities. $375,000 Congers Creek Townhomes - Three-level, new construction townhomes across Boyers Road from Sentara RMH Medical Center. $306,900 and up. And finally, before we get to the real estate data... 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 Jimmy Madison's, Red Wing Roots tickets and The Little Grill. Now, then, on to the data. You can likely skim this chart of data rather quickly to get a sense of what I'm going to say... ![]() Regardless of the timeframe outlined above... [1] We are seeing fewer homes selling now than in the recent past in Harrisonburg and Rockingham County. Year to date (Jan-Jul) we have seen a 23% drop in the number of homes selling as compared to last year. [2] We are seeing higher and higher sales prices in Harrisonburg and Rockingham County. Year to date (Jan-Jul) we are seeing a median sales price that is 11% higher than a year ago. Here's a month-by-month visualization of those slower sales we're seeing this year... ![]() The grey line above shows the average number of home sales per month between 2019 and 2022. You'll note that a typical trend is to see more and more home sales (closings) as we move from April through June before starting to see things decline a bit in July. The blue line above shows last year, when April, May and June were well above where we might have expected them to be. Then, there's this year... the red line. We just haven't seen the typical boost in home sales during April, May and June that we would usually expect to see. In fact, July was the third month in a row of between 110 and 120 home sales. So, this year is not a typical year. We are experiencing a much lower spring and summer in the local real estate market. Why, you might ask? Likely because of mortgage interest rates -- which are quite a bit higher than over the past few years -- and because there aren't as many homeowners selling their homes. Stacking all of those months on top of each other, you can see how this year compares to previous years, thus far... ![]() Clearly, this year seems unlikely to come anywhere near the level of sales seen over the past few years (2021 and 2022) and we're likely to finish out the year with fewer home sales than in 2019 and 2020 as well. Here's an illustration of that puzzling increase in sales prices and decline in the number of homes selling... ![]() This is, as some of you would undoubtedly point out, both puzzling... and not. Typically, if demand decreases, sales decrease, and prices decrease. But despite fewer home sales (as shown above) we are not seeing prices decline. Which means... we are not seeing a net overall decrease in demand... but rather... a decrease in supply. So long as home prices keep climbing, I think the decrease in the number of home sales can be almost entirely attributed to fewer sellers selling. Given fewer homeowners being willing to sell, we're likely going to need new construction homes to fill in the gap to help meet buyer demand... ![]() Overall, over the past few years, we have seen new home sales (green bars above) increasing. After only 219 new home sales in 2020, that climbed to 405 in 2022... leading to one in four (26%) homes selling being new homes. We are still seeing similar (75% / 25%) numbers this year. During that same timeframe (2020-2022) we saw a decline in existing home sales... from 1,276 existing home sales in 2020 down to 1,159 existing home sales in 2022. I expect we will see even fewer existing home sales in 2023 based on data from the first seven months of this year. Now, here comes a surprise this month... ![]() Last year we saw a month after month decline in contract activity as we moved from May through July. This year we started to follow that same trend as we saw fewer home sales in June that in May. But, then, July. Contract activity was quite a bit higher than I expected it would be in July 2023. In fact, this was the month with the largest number of contracts signed thus far in 2023. And yet, two other indicators keep me scratching by head a bit... ![]() Despite that uptick in contracts being signed in July 2023... the number of pending (under contract) homes followed its normal seasonal trend of declining slightly between May and July. There are (as shown above) 252 homes under contract in Harrisonburg and Rockingham County right now... which is lower than a month ago (261) and lower than a year ago (297). Furthermore... ![]() Despite lots of homes going under contract in July... inventory levels jumped up quite a bit (131 to 177) in a single month's time. This brings current inventory levels to the highest point that we have seen anytime in the past year. I'll take a closer look at some of these overall trends in the coming days to try to dial in whether there is another story to be told and understood. For now, it's clear that there are quite a few more listings on the market now than anytime of late. Moving through the next few months, it will be interesting to watch... [1] Will inventory levels bounce back downward after buyers have a chance to contract on some of these new listings? [2] Will we see more price reductions on listings as sellers have slightly more competition from other sellers in some price ranges and with some property types? [3] Will we see homes staying on the market longer than they have in the past? I don't know that we need to instantly jump to any conclusions about this increase in inventory levels, but the data over the next few months will help color in the picture of whether we are seeing any sort of a transition in our local housing market. Speaking of median days on the market... is it starting to rise? ![]() Mmmm... nope. Most homes (at least half of them) are still going under contract very quickly (in six days or less) in Harrisonburg and Rockingham County. This metric will continue to be helpful to gauge whether buyer enthusiasm is slowing at all in the local market. What could slow buyer enthusiasm, you ask? How about those mortgage interest rates!? ![]() Don't look too far back on the chart above or you'll note that 2.8% mortgage interest rate two years ago. Wow! Even if we ignore the first year (first half) on the chart above, we still see a significant increase in mortgage interest rates over the past year... from 5.3% to 6.8%. We still aren't seeing any relief in sight with mortgage interest rates. Yet. I am hopeful that we move through the remainder of 2023 we'll start to see mortgage interest rates settle down a bit... but I'm guessing they will almost certainly stay above 6%. So, given all of the data above, what should you be thinking about if you are a home buyer, seller or owner? Home Buyers -- Many new listings are still seeing plenty of action... so you very likely may still find yourself in a competitive offer situation... but not always. Understand how current mortgage interest rates affect your potential monthly mortgage payment... and get out there quickly to see new listings. Home Sellers -- You might talk to friends who saw their home go under contract within three days with multiple offers. You might talk to other friends who have had their home on the market for three or four weeks without an offer. Both of those market realities currently exist... and it varies based on price range, property type, location, and many other factors. We need to take a close look at your corner of the local real estate market to devise a reasonable and realistic pricing and marketing strategy for selling your home in a timeframe that suits your needs. Homeowners -- Enjoy your ever increasing home value. If you're talking to a friend who is trying to buy a home, don't mention your mortgage rate, or how glad you are that you already own a home. ;-) And... that's all for today. I hope that the remaining days or weeks of your summer break (if you had one) are enjoyable, and that the start to the school year goes well for you if you are a parent, teacher or administrator. As always, feel free to reach out to me if I can be of any assistance to you as you make plans to buy or sell. You can reach me most easily at 540-578-0102 (call/text) or by email here. | |
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Two Startling (Nationwide) Stats That Show Why Many Homeowners Are Not Likely To Sell Within The Next Few Years |
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![]() Current mortgage interest rates for a 30 year fixed rate mortgage are averaging at 6.9% per Freddie Mac. Here are the two startling statistics as reported by Business Wire as well as by many others over the past few months... [1] 82% of homeowners have a mortgage interest rate below 5%. An enormous share of homeowners have super low mortgage interest rates on their homes because they bought their home between 2020 and 2022 when we were seeing ridiculously low, historically low, mortgage interest rates -- or they refinanced their mortgage during that time. Most of these 82% of homeowners with a mortgage interest rate below 5% are rather unlikely to sell their home (and pay that off) and buy a new home at current mortgage interest rates that are near 7%. [2] 60% of homeowners with mortgages have lived there for four years or less. We saw record numbers of home sales between 2020 and 2022, as the Covid-19 pandemic (and super low mortgage interest rates) prompted lots of folks to buy a home. Many homeowners eventually find that their home doesn't work as well for them -- based on size, layout, features, etc. -- but that doesn't usually happen within four years. As such, many or most of these 60% of homeowners who have been in their homes for less than four years are not likely to be selling anytime soon. What does all of this mean for our real estate market? We are likely to continue to see low numbers of resale homes coming on the market over the next few years as more homeowners opt to stay put rather than selling their home that likely has a super low mortgage interest rate - and that likely is a home they purchased in the past few years. | |
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We Are Starting To See A Few More Homes With Price Changes These Days |
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![]() There are 172 active listings (homes for sale) in Harrisonburg and Rockingham County right now. Of those... 27 have had price changes in the past two weeks... and 145 have not. I don't think this number of price changes suggests that homes are selling for less... or that home prices are or will be declining... but some home sellers seem ready to start make adjustments in their asking price if their home is not going under contract as quickly as anticipated. | |
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Quite A Few Home Buyers (And Sellers) Signed Contracts In July 2023 |
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![]() Looking back at the number of contracts signed last month in Harrisonburg and Rockingham County -- there were 133 contracts signed. These 133 contracts signed in July 2023 were... [1] The most contracts signed in a single month thus far in 2023. [2] About 17% more contracts than were signed last July. But... when you look (above) at all of last year and this year thus far, you'll see we never experienced the 150+ contracts per month that we saw last March, April and May. So, perhaps the pace of contract activity is picking up a bit as of last month... but we are still well behind where we were a year ago. | |
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Far Fewer Homes Are Selling, But Sales Prices Keep Rising |
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![]() Happy Friday Morning, Friends! As per the headline above, far fewer homes are selling this year, but sales prices keep rising. But before we dive into it... First, if you're looking for a spacious four bedroom home in a neighborhood in the Spotswood High School district, be sure to check out 350 Confederacy Drive... This beautiful, well maintained house in Battlefield Estates has had many updates over the past few years and is currently listed for sale. Find out more at 350ConfederacyDrive.com. Second, I hope you have had a fun first half to your summer. The weeks are flying by and before you know it, we'll be thinking about and planning for the coming school year. I was out of town for a few days last week for some fun on the water... ![]() I have always loved water skiing but in recent years I have become the boat driver so it was great to have Luke drive this year so I could ski again. It was a fun and relaxing time away with family, and I hope you find time to have fun this summer as well... whether at the lake, at the beach, or right here in the beautiful Shenandoah Valley. Third, and finally before we get to the market data, 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 Red Wing Roots tickets, The Little Grill, and Cuban Burger. This month I am giving away a $50 gift certificate to Jimmy Madison's... located in downtown Harrisonburg. If you find me at Jimmy Madison's, I'll be enjoying one of many favorite items from their fantastic menu... but always with a side of their delicious Jimmy Sprouts -- Caramelized Brussels Sprouts with sweet pecans, candied bacon and honey thyme vinaigrette. I'm getting hungry just talking about them! Click here to enter to win the $50 gift certificate to Jimmy Madison's. Now, on to the data... ![]() As shown above... [1] There were only 113 home sales in June 2023, which was a 40% decline from last June. We'll see this visually in a graph in a bit. [2] We've seen 603 home sales in the first half of the year which is a 24% decline from the first half of last year. This is the "far fewer homes are selling" part of my market report. [3] If we stretch back a full year (12 months) we will find 1,374 home sales -- a 20% decline from the 1,727 home sales seen in the 12 months before that. So, regardless of how you slice or dice the data, fewer homes are selling in Harrisonburg and Rockingham County this year than last. But... [4] The median sales price in June 2023 ($344,990) was 15% higher than last year when it was $299,622. [5] The median sales price in the first half of 2023 ($330,000) was 10% higher than the first half of 2022 when it was $299,000. [6] The median sales price over the past 12 months ($315,000) was 10% higher than in the in the 12 months before that when it was $286,000. As such, regardless of how you look at it, the median sales price is still on the rise in Harrisonburg and Rockingham County, despite far fewer homes selling. Here's a visual of the drop off in the number of homes selling... ![]() The blue line above shows the number of homes selling per month last year -- compared to the red line which shows this year's home sales. As is quite evident, the number of homes selling has been far lower this year than last, particularly over the past few months -- April, May and June. The grey line above shows the average number of home sales per month based on the past four years (2019-2022) of data. When looking at all three lines together it becomes clear that home sales last year were significantly above historical averages and home sales this year are now (particularly in May and June) significantly below historical averages. As I'll continue to discuss throughout this report... this decline in the number of homes selling is (perhaps obviously) both a result of fewer sellers selling and fewer buyers buying. We need both a seller and a buyer for a home sale to take place. As we'll see in later graphs, inventory levels remain low -- so it seems likely that the main constraint on home sales is the number of sellers selling... not a limit on the number of buyers who would like to buy. But before we get to inventory levels, let's look at a slightly longer historical perspective... ![]() The blue line above shows the number of home sales per year, updated each month. This snapshot looks back to late 2020 (in the thick of Covid) when home sales were surging upwards, from 1,365 annual sales all the way up to 1,727 annual sales. But over the past year we have seen annual sales steadily drop... all the way back down to 1,375 sales per year... about the same place as where we were in the early months of the pandemic. If the pandemic (and low mortgage interest rates, and lots of people working from home) drove the number of annual home sales up over the course of two years... it was immediately followed by much higher mortgage interest rates driving the number of annual home sales down over the course of the most recent year. When the number of home sales in our market was surging in 2020, 2021 and 2022 it certainly made sense that home prices were rising steadily, as shown in the green line above. But over the past year, even as the number of homes selling has declined, and even with higher mortgage interest rates, we have continued to see home prices keep on rising. This (ever higher prices) is an indication (along with continued low inventory levels) that the limitation of the number of homes selling is almost certainly primarily a supply side issue -- not enough sellers being willing to sell. To put rising home prices in context... take a look at this change in the median sales price in our local market over the past four years... ![]() The median sales price in Harrisonburg and Rockingham County has increased by more than $100,000 over the past four years. Wow! Four years ago your purchase of a median priced home would have had you spending $223,000 -- and today you'd be spending $330,000. This is certainly wonderful news if you have owned a home over the past four years -- or if you bought a home four years ago -- and less exciting news if you do not own a home and/or have been trying to buy a home for any or all of the past four years. It is important to note that these figures are not adjusted for inflation. I'll take a look at that separately, hopefully soon, as we have seen significant changes in what a dollar buys you over the past few years -- not just with houses, but across the majority of the economy. As should come as no surprise, the precursor to fewer home sales is... fewer contracts being signed... ![]() As to the point I made earlier, the blue line above (last year's monthly contracts) was certainly above the historical average (grey line) but this year's trajectory of monthly contracts (red line) is well (well!) below historical averages. Looking ahead to home sales for the rest of the summer and into fall, we are likely to see continued to declines in home sales based on continued low levels of contracts being signed. As mentioned previously, one of the main reasons why we are seeing fewer home selling... is because there are fewer sellers selling... ![]() Over the past four years (grey line above) we have seen an average of 180 to 190 homes for sale as we have rolled through March, April, May and June. This year (red line above) we have seen between 116 and 136 homes for sale during those same months. Inventory levels are remaining low despite far fewer home sales. This is the data point (alongside continued increases in the median sales price) that seems to rather clearly confirm that the decline in home sales is almost entirely related to fewer sellers selling -- and not fewer buyers wanting to buy. Across many (though not all) price ranges and property types, home buyers keep snatching up most new listings that come on the market -- which is keeping inventory levels quite low. How quickly are those new listings getting snatched up, you might ask? That is most readily measured via the "days on market" metric... ![]() The graph above tracks the median "days on market" metric -- looking at six months of data at a time. As such, the most recent data point of a median of six days on the market is based on January 2023 through June 2023 home sales. After dropping, dropping, dropping to a median of only four days on the market in mid-2021, we saw a steady report of a median of five days on the market all the way through the end of 2022. But then, it seemed that things might be changing as the median days on market crept up to eight days on the market in early 2023. But... maybe not, after all... as median days on market has shifted back down to only six days over the past few months. If we ever see a significant shift in market balance -- with more sellers trying to sell than there are buyers to buy -- we are likely see that reflected in this median days on market metric. As is likely evident from the graph above, we're not seeing that type of market shift right now, despite far fewer homes selling this year than last. Finally, how about those mortgage interest rates. :-/ ![]() Please only looking briefly (and wistfully) at that 3.02% rate from two years ago... and then focus more on the past year. We have seen relatively volatile mortgage interest rates over the past year -- starting at 5.7%, ending at 6.7%, drifting as high as 7.1% and as low as 6.1%. It seems likely that we will continue to see mortgage interest rates over 6% for the balance of 2023... though home buyers would certainly love to see that be closer to the 6.31% seen in January rather than the 6.7% at the end of June or the 6.96% seen this week. Having sifted through all of the data above, what does it all mean for current home sellers and would be home buyers? Home sellers are likely to still do quite well in the current market, as the median sales price keeps rising and inventory levels (your competition) remain quite low. Home buyers are likely to continue to have difficulty securing a contract on a home as we move through 2023 due to fewer sellers selling, homes still going under contract very quickly, and likely competition from other buyers for many new listings. If you are planning to sell your home, or buy a home, in the coming months I would be happy to chat with you about how your segment of the local housing market (based on location property type and/or price) is performing as it compares to the overall market. Feel free to reach out to me if I can be of any assistance to you as you make plans to buy or sell. You can reach me most easily at 540-578-0102 (call/text) or by email here. Until next month, I hope you find some time to disconnect and enjoy the summer season with your family, friends and loved ones... and if you need me to drive the boat while you water ski... just let me know... ;-) | |
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Contract Activity In June 2023 Was The Slowest It Has Been In A Decade, Much To The Dismay Of Would Be Home Buyers |
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![]() It remains a tough time to buy a home in many or most price ranges and locations -- with limited resale inventory leading to continued low levels of contract activity. As shown above, the 99 contracts that were signed in Harrisonburg and Rockingham County in June 2023 was the lowest number of contracts signed in a month of June for the past decade. At first glance some might assume that the low number of signed contracts is an indication that fewer buyers want to buy homes right now -- but with inventory levels starting the month low and ending the month low -- the bottleneck seems to be almost entirely on the supply side of the equation. There aren't enough sellers willing to sell their homes. Getting into the details of new homes versus resale homes for a moment, let's take a look at the highest and lowest data points... June 2020 = 124 resale homes + 49 new homes = 173 total contracts June 2023 = 73 resale homes + 26 new homes = 99 contracts So, if we take out new homes, not only did only 73 buyers sign contracts to buy home in June 2023 compared to 124 in June 2020... only 73 sellers were willing to sell their homes in June 2023 as compared to 124 in June 2020. I don't expect we'll see much of an increase in resale homes being listed for sale as we continue through 2023, so any upside potential for increased contract activity likely lies on the new home side of the equation. If you were one of the 99 buyers to secure a contract to buy a home in June 2023... congrats! | |
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Contract Activity In The First Half Of 2023 Was... Rather Slow |
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![]() It's the last day of the first half of the year! Wow! As such, I've taken a moment to look at contract activity in the first half of 2023 as compared to the first half of each of the nine years prior to 2023. As you can see, above, contract activity (buyers and sellers signing contracts) has been quite slow this year compared to every other year since 2014. Will we see contract activity ramp up in the second half of 2023? Maybe. But it will have to start with sellers being willing to sell. There are plenty of buyers ready to buy -- but not quite as many sellers willing to sell. | |
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Homes Still Selling Quickly, At Record High Prices, Despite Decline In Total Home Sales |
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![]() Happy Monday morning, friends! They say summer doesn't start until June 21st, but the 85 degree temps yesterday certainly felt like summer. Regardless of the formal start of the season of summer, most students have finished out their school year now, which also certainly makes it feel like summer. One such student who finished up his school year is this guy, below. Luke has now officially graduated from high school! :-) We are delighted for his accomplishment of this major milestone, and are excited for all that lies ahead. And yes, Emily also finished up 9th grade! These kids they sure do grow up quickly! ![]() Looking for a new (to you) house this summer? Look no further than this brand new listing (just listed this morning) in the City of Harrisonburg... Find out more about this spacious four bedroom City home on a large lot by visiting 3121HorseshoeLane.com. And finally, one last item of business before we get into the real estate data. 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 The Little Grill, Cuban Burger and Taste of India. This super relaxing and family friendly music festival from June 23 - 25 at Natural Chimneys Park in Mt Solon features wonderful music (on multiple stages throughout the weekend), great food, lots of activities (hiking, biking, running, yoga, kids events), and all around great fun with family and friends. Have you considered going to Red Wing but haven't been yet? Maybe this summer is the time for you to make it one of your favorite family traditions. I am looking forward to being there with my family and I'm hoping you'll join in on the fun... from June 23rd through 25th. If you're interested in going to Red Wing but don't have tickets... I'm giving away a pair of three-day general admission tickets. Click here to enter to win the tickets... I'll pick a winner later this week. Now, on to the real estate data... ![]() As mentioned in the headline, and as shown above, we're seeing far fewer home sales this year than last... [1] This past May (last month) we saw 112 home sales in Harrisonburg and Rockingham County, which marks a 25% decline from last May. [2] When looking at the first five months of this year, there has been a 20% decline in home sales compared to last year during the same (Jan-May) timeframe. [3] When looking at a full year of data (June - May) the number of homes selling in our area has declined 16%. A year ago we were seeing an annual pace of 1,714 home sales... and that metric has now declined to an annual pace of 1,445 home sales! But... fewer home sales has not resulted in lower sales prices... ![]() As home sales have started to decline, some folks speculated that prices would also start to decline. That hasn't been the case, and I believe it's because the decline in sales is a supply side issue, not a demand side issue. There seem to be plenty of buyers still wanting to buy... but fewer sellers willing to sell. We need both a buyer and seller in order for a home sale to happen... so fewer sellers results in fewer home sales... but the continued ready supply of buyers is keeping competition fierce for most new listings, which is causing home prices to keep on rising. As shown above, the median sales price thus far in 2023 ($325,000) is 9% higher than it was a year ago ($298,400) and when we look at 12 months of data (June - May) we also see a 9% increase in the median sales price over the past year. I should point out that each month I prepare many more charges and graphs than make it into this report. You can also view those over at HarrisonburgHousingMarket.com including this month's charts and graphs here. One of the data subsets I dive into in the extra charts and graphs at the link above is the breakdown of new home sales vs. existing home sales... ![]() As shown above, when we look at the past 12 months we see slightly different trajectories when it comes to new vs. resale homes... [1] There have been 2% more new home sales over the past 12 months as compared to the previous 12 months. [2] There have been 21% fewer existing home sales over the past 12 months as compared to the previous 12 months. Certainly, when we look at other timeframes above, we see declines in sales activity of both new and existing home sales, but it's worth nothing that a significant cause of fewer home sales in our market... is a lower number of homeowners who are willing to sell their existing (resale) homes. Why, might you ask? Mortgage interest rates are likely a key piece of the puzzle. Most homeowners have current mortgage interest rates under 5%, and many under 4%... compared to current mortgage interest rates that are above 6%. As such, the difference in mortgage payments is quite significant for a homeowner who would sell their home and pay off a mortgage with an interest rate under 4% (for example) to then take out a mortgage with an interest rate above 6%. I expect we will continue to see lower numbers of homeowners willing to sell their homes throughout the remainder of 2023. Getting into some visuals now, here's how slow May was... ![]() After a 17% decline in April home sales (149 to 123) we then saw a 25% decline in May sales (149 to 112) which is almost certainly going to result in an even larger decline in June home sales... since there were a LOT of sales in June last year. As I have already mentioned, sales prices keep on climbing, so a decline in the number of homes selling isn't really a concern for home sellers, or homeowners, but it is not as exciting of news for would-be home buyers. We are likely to continue to see fewer home sales throughout the remainder of 2023 in Harrisonburg and Rockingham County... and it will be a result of fewer homeowners being willing to sell... not a result of fewer would be home buyers being interested in buying. Here's another visual of the general trends we're seeing in our local housing market right now... ![]() We're still seeing a general increase in the number of homes selling per year if we compared pre-pandemic (early 2020 and prior) and post-pandemic (2023) but we've seen a steady decline in annual home sales over the past year, from 1,714 sales/year to 1,445 sales/year. So, after a steady increase in home sales during the pandemic (largely brought on by the pandemic - with super low mortgage interest rates and everybody needing their home to serve more functions than before) we have now seen a steady decrease in home sales as the pandemic has come to a close. We're returning to where we were pre-pandemic as far as how many homes are selling a year... with the home sales trendline being dragged down by a limited number of home sellers being willing to sell. There seem to still be plenty of buyers ready and willing and able to buy. With continued high levels of demand, but lower levels of supply, we have continued to see steady increases in sales prices as shown by the top line. That trendline (rising prices) seems unlikely to change course significantly anytime in the near future. But even if we aren't likely to see home prices stop rising, or to see them decline, perhaps we'll see a slight tapering off of the surge in sales prices? ![]() In the last full year before the pandemic (2019) we saw a 5% increase in the median sales price in Harrisonburg and Rockingham County. Then, we saw three years of double digit increases in the median sales price with a 10%, 10% and 11% increase in 2020, 2021 and 2022. Thus far in 2023, we are seeing a slightly smaller increase in that median sales price, with an 8% increase through the end of May. Of note... sales prices are not declining... they are just increasing slightly more slowly than they have over the past three years. Stay tuned to see how this metric does or does not continue to change as we move through the next few months. Looking ahead, though, contract activity is our best indication of what we are likely to see in the way of closed home sales over the next few months... ![]() As you can see, we have now closed out the fourth month in a row of significantly lower levels of contract activity in Harrisonburg and Rockingham County. The red line is measuring contracts signed per month this year, and the blue line shows the same months last year. As such, we are likely to continue to see lower levels of closed sales over the next few months, given lower numbers of contracts being signed. And finally, here's a visual of the supply side of the market... ![]() Despite 20% fewer home sales this year... inventory levels are lower than they were a year ago. The red line above shows inventory levels this year, compared to last year in blue. If we were seeing a shift in the market, with demand softening, we would start to see inventory levels increasing. We're just not seeing that. As such, the 20% decline in home sales seems almost certainly to be a result of an insufficient number of homes being available for buyers to buy. Now, for all the stats folks out there, here's the statistic that could be the most misleading... ![]() We have seen a 40% increase in the time it takes for a house to go under contract in Harrisonburg and Rockingham County! Gasp! Oh my! But wait... that just means that it is taking seven days for a house to go under contract... instead of five days? Yes, that is correct. The 40% increase in the median days on market is an increase from five to seven days. Ask just about any would-be buyer and they will report that this doesn't measurably change how quickly they need to act on seeing and pursuing new listings. And another interesting phenomenon in our current market, mortgage interest rates... ![]() Despite fewer homes selling... sales prices keep rising. Despite higher mortgage interest rates... sales prices keep rising. Two years ago the average mortgage interest rate was around 3%. A year ago that had risen to 5%. Now, it is bouncing around between 6% and 7%. And yet, buyers keep buying, and they are paying ever higher prices for the homes they are purchasing. As you can imagine, that means that mortgage payments are higher than ever for today's home buyers -- as a result of both higher sales prices and higher mortgage interest rates -- but these higher rates haven't seemed to have impacted buyer interest enough to then impact sales prices. So, given all of the data above, what does this mean for you? If you are planning to sell... you'll likely still have plenty of interest from buyers, you're likely to sell at a very favorable price, and your home is still likely to be under contract within a week. If you are hoping to buy... you'll need to see homes quickly when they come on the market, you will still have stiff competition from other buyers, and you should talk to a lender to understand mortgage payments based on current mortgage interest rates. If you own a home and aren't planning to sell... lucky you. Home values keep on increasing, and you likely have a low or low-ish mortgage interest rate. I hope this overview of the latest trends in our local housing market has been informative and helpful, especially if you are gearing up to buy or sell soon. Feel free to reach out to me if I can be of any assistance to you as you make those plans. You can reach me most easily at 540-578-0102 (call/text) or by email here. Until next month, I hope you enjoy the start to summer, and perhaps I'll see you at Red Wing! | |
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An Early Look At May 2023 Home Sales In Harrisonburg And Rockingham County |
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![]() May is over! Gasp! It's June. Already! Here's a quick look at a few early indicators of trends in our local housing market in May 2023... May 2020 = 112 home sales May 2021 = 122 home sales May 2022 = 149 home sales May 2023 = 106 home sales So... unless quite a few more (6+) home sales are reported over the next few days as having been sold in May via the HRAR MLS, it seems May 2023 may have been the slowest (number of sales, not speed of sale) month of May in several years. Mortgage interest rates were also a bit higher this May than last, and much higher than two years ago... Early May 2021 = 2.96% Early May 2022 = 5.27% Early May 2023 = 6.39% And yet, despite fewer home sales and higher mortgage interest rates, home prices seem to keep on rising... Median Sales Price, Jan 2022 - May 2022 = $298,400 Median Sales Price, Jan 2023 - May 2023 = $325,000 Stay tuned for a fuller analysis of local market trends in about a week. | |
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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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