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Median Sales Price Up 10% In 2023 Despite 19% Decline In Home Sales |
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![]() Happy Tuesday morning, friends! We are now -- wait for it -- more than a third of the way through 2023!? How can it be!? And how's the market you might ask? Fewer homes are selling this year, but at higher prices than last year!? Again, how can it be!? -- This whirlwind of a start to 2023 has involved a rather busy few months in the Rogers household -- with a soon-to-be-graduating high school senior (Luke) attending a Junior-Senior banquet and playing in his last few baseball games, and an ever-speedier ninth grader (Emily) running (and jumping) in multiple events on the track team. Whatever is keeping you busy and running all around town this Spring, I hope it is just as fun and fulfilling as it has been for Shaena and I to see our kids growing up over these recent years. Time surely does fly by quickly! -- But, back to real estate. Below I'll delve into all the juicy details of the latest happenings in our local housing market... after I make you hungry... Each month I offer a giveaway, of sorts, for readers of this market report, highlighting some of my favorite places, things or events in Harrisonburg. Recent highlights have included Cuban Burger, Taste of India and A Bowl of Good. -- OK, now, I'm really getting to the real estate. Jumping right in to where my headline began... home sales (not prices) are declining, rather significantly in Harrisonburg and Rockingham County right now... ![]() As shown above... [1] There were 17% fewer home sales in April 2023... which I suppose isn't too much of a surprise given several other recent months of slower home sales. [2] Looking at the year thus far (Jan - Apr) home sales have declined 19%. During the first four months of 2022 we saw 461 home sales in Harrisonburg and Rockingham County while there have only been 374 home sales thus far in 2023. Generally, there are two reasons why home sales decline: [1] Fewer buyers want to buy. [2] Fewer sellers want to sell. In our local market, the 19% decline in home sales seems to be almost entirely a result of fewer sellers wanting to sell. I come to this conclusion based on continued low inventory levels, which we'll get to in a bit. Despite the 19% decline in the number of homes that are selling, as the headline referenced, we're still seeing home prices rise in Harrisonburg and Rockingham County... ![]() Indeed, when analyzing multiple different timeframes, we are consistently seeing increases in the median sales price in our local area... [1] The median sales price over the past 12 months ($306,160) is 9% higher than it was in the previous 12 months ($279,900). [2] Looking just at the first four months of the year, the median sales price is 10% higher this year ($324,985) than last ($295,490). Will home prices keep rising forever? I can make no promises, but generally speaking, so long as demand (buyers wanting to buy) continues to exceed supply (sellers wanting to sell) we are likely to continue to see prices rise. Will home prices keep rising at a rate of 10% per year? This seems less likely, especially given higher mortgage interest rates right now... though I've been saying this for at least six months now, and thus far, home prices are still rising at about 10% per year. One metric that is running slightly contrary to most others is the time that it takes for a home to go under contract once listed for sale. We have actually seen a slight increase in this "median days on market" statistic over the past year... ![]() I suppose the "gotcha" headline would be that it is taking homes 40% longer to go under contract now as compared to a year ago. :-) But... this was a change from a median of five days to a median of seven days... and seven days is still mighty speedy. I should also note that this slight (two day) slow down is not much consolation to would-be home buyers who are frustrated by how quickly the market is moving right now. Pausing for a moment, as you may or may not know, I compile a bunch of data that is not highlighted in this monthly market narrative. You can find lots of other data tables and graphs over here. Pulling from the variety of other charts and graphs that I generate each month, let's take a peek at one subset of our overall market... home sales within the City of Harrisonburg. ![]() Home sales actually declined *even more* in Harrisonburg than in the market as a whole. The entire market (City + County) has seen a 19% decline in home sales in the first four months of the year... but the City alone has seen a 25% decline. If you're hoping to buy a home in the City of Harrisonburg, it's a tough time to do so based on very limited inventory of homes offered for sale. Now, moving past these charts, to some graphs, for the visual learners amongst us... ![]() Follow the red line on the graph above to see each month of 2023 home sales in Harrisonburg and Rockingham County and you'll find that it is lower than each month on the blue line, which represents home sales last year. March 2023 came close to March 2022 (101 vs. 113) but the gap widened again in April (123 vs. 149) and I am expecting we'll continue to see slower home sales (fewer home sales) for most or all of 2023. I'll talk more about mortgage interest rates further down in this report, but it's worth noting that higher mortgage interest rates seem to be limiting the number of home sales that we're seeing right now -- but it might be stopping just as many sellers from selling as it is stopping buyers from buying. Many homeowners aren't all that interested in selling their homes with mortgages in place with a three-point-something interest rate, to then be replaced by a new mortgage at a six-point-something interest rate. I can't blame them. This is only one of the factors limiting the number of homes that are selling, but I don't think we should overlook its impact. So long as mortgage interest rates stay high, we are likely to continue to see a lower number of home sales this year as compared to last year. Moving on to the opposing trends of price and pace of home sales... ![]() Many assumed that if home sales started to decline (they definitely have) that home prices would be sure to follow. Not so. It seems that the combination of continued strong levels of buyer demand, paired with a smaller number of sellers willing to sell, has resulted in fewer home sales, but higher prices. Over the past year we have seen 1,480 home sales in Harrisonburg and Rockingham County. Back the clock up a year and we were seeing 1,687 home sales a year. That's a rather significant change in the pace of home sales activity in our local market. Over the past year the median sales price has been $306,160 in Harrisonburg and Rockingham County. A year ago, the median sales price was only $279,900. This is, again, a rather significant change, though in the opposite direction (up) that we're seeing when it comes to the number of homes selling (down). Looking at the change in median sales prices a bit differently, here's a startling change over a relatively short timeframe... ![]() If you bought a median priced home four years ago, that home may very well be worth $100,000 more today!?! Now, before you get too excited about this newly discovered six figure pile of equity in your home, keep in mind that these numbers ($223K in 2019 to $325K in 2023) are simply showing overall market-wide trends. Some homes certainly have appreciated by $100K over the past four years -- but not all homes. That said, almost universally, homeowners have been shocked to see how much their home value has increased over the past four years! Now, let's try to guess at where things might go from here over the next few months... ![]() This first graph is showing the number of contracts being signed per month, as compared to previous graphs that showed the number of home sales taking place each month. Over the past two months we have seen 242 contracts signed for buyers to buy (and sellers to sell) in Harrisonburg and Rockingham County. This is quite a decline compared to last year when we saw 337 contracts signed during the same timeframe. Bottom line... this spring (red line) has just not been as active of a "spring market" as last year (blue line)... and it also hasn't kept pace with recent historical trends (grey line). These lower contract numbers have lead to fewer properties being under contract and waiting to get to closing... ![]() One year ago, there were 416 properties under contract just waiting to get to closing. Now, that "pending sales" figure is only at 275. This is the clearest predictor we can get as to the slower months of home sales that seem to be headed our way in May and June. With such a significant decline in contracts signed, and with a much lower number of properties being under contract, are we seeing ever higher inventory levels of homes available for sale? ![]() Mostly, no. Over the past four years (2019-2022) the average number of homes for sale at this time of year (early May) has been 183 homes. Today, that number is 129 homes for sale. So, despite fewer sales and fewer contracts, we are still seeing inventory levels that are well below where inventory levels have been over the past few years. That said, for the first time this month we are seeing the inventory level of homes for sale (129) sneaking past (just barely) the number of homes for sale (127) a year ago. Is this significantly? Give it another month or so to see how things shake out. Keep in mind that to continue this trend (more homes for sale in 2023 than in 2022) we'd have to see inventory levels climb above 152 homes for sale over the next month. Stay tuned. Earlier I mentioned that homes are taking an extra day or two to go under contract right now, as compared to a year ago... ![]() Indeed, after about a year of the median "days on market" statistic hovering right at five days... we have now seen the pace at which homes go under contract slowing, slightly, over the past five months. If I had to hypothesize as to why this number has risen (barely) I would guess it is related to higher mortgage interest rates. I am seeing three things happen when new listings hit the market right now... [1] Slightly fewer showings than we would have seen a year ago. [2] Fewer offers than we would have seen a year ago. [3] Many buyers needing to take a day or two to run numbers with their mortgage lender before making a decision about making an offer. The speed at which homes are going under contract certainly varies quite a bit based on the price range, location and property type -- but as shown above -- it is taking an extra two days (ish) for homes to go under contract right now. This is slightly slower than in 2022, but drastically faster than just about anytime prior to 2021. Finally, mortgage interest rates, which have been mentioned (and blamed) throughout this report... ![]() After multiple years of mortgage interest rates below 4%, we saw them climb quickly through the 5% range (within six months!) and they have stayed above 6% since that time. We are now entering the ninth month of most buyers likely buying homes with mortgage interest rates above 6%. These higher mortgage interest rates, combined with higher sales prices, are significantly increasing the monthly housing cost for any would-be home buyer considering a purchase in 2023. Will mortgage interest rates edge back down below 6%? I think there's a chance they will later in 2023, but it is certainly not... certain. ;-) So... given all of this data, given all of these trends, where does this leave us? Home buyers should still be prepared to go see new listings quickly when they hit the market, and must have their lender on speed dial to confirm a potential mortgage payment given ever changing mortgage interest rates. Depending on the popularity of the home you will be buying, we may very well still be competing with multiple other offers and considering which contingencies you might be willing to omit from your offer. You'll be buying in a challenging market for buyers -- with limited inventory and increasing prices. Buying a home in 2023 is definitely still possible, but it will require patience and perseverance. Home sellers are still in good (great) shape with lots of buyer demand in many or most price ranges... but home sellers should *not* assume that they will definitely have multiple offers, over asking price, with limited contingencies. That might be the situation you find yourself in (hooray!) but if you only have one offer, at the asking price, with some "normal" contingencies - I'll encourage you to still be excited. Pricing your home appropriately, preparing it thoroughly and marketing it professionally are just as important as ever in 2023. That's all for today, friends. I hope you now consider yourself a bit more informed about our local housing market, and a bit hungrier for a delicious meal at The Little Grill. ;-) The next month or so is a busy time for many of us with school years ending, summer beginning, and many other changes. Even as the days inevitably seem to start moving by more quickly than ever, I hope you are able find the time to slow down and meaningfully connect with the people who are important in your life. Send a friend, family member, neighbor or colleague a quick text to check in - or give them a call just to say hello. Make the time to make those connections, and I'm confident you will be glad that you did so. As always, please reach out anytime if I can be of help to you -- with real estate or otherwise. You can reach me most easily at 540-578-0102 (call/text) or by email here. | |
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Home Prices Still On The Rise Despite Fewer Home Sales In 2023 |
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![]() Happy Thursday afternoon, friends! The spring real estate market is upon us -- though it looks and feels a bit different than it did over the past few years. Read on for stories of fewer home sales, rising prices and stubbornly low inventory levels. Speaking of spring... if you're looking for a home with landscaping that really pops each March, check out this beautiful, four bedroom, brick home over on Meadowlark Drive that came on the market earlier this week... On a personal note, can you spot any proud parents of a soon-to-be high school graduate in the photo below? :-) Wow, the past 18-ish years have flown by quickly. Luke will be graduating in early June and Shaena and I couldn't be more proud of this guy! ![]() << Insert Here: Quick transition to some other topic so I can stop thinking about how old I must be if my son is about to be a high school graduate!?! >> OK, then... 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 Taste of India, A Bowl of Good and a Steel Wheels concert. This month... I'm giving away a $50 gift card to one of my favorite lunch (or dinner) spots downtown... Cuban Burger! I almost always order the Cuban Chop Chop with Chicken, but everything on their menu seems likely to be delicious! Click here to enter for a chance to win the $50 gift card! And now... let's move on along to the most recent data on our local real estate market. First, let's see what "fewer home sales" looks like right now... ![]() A few observations related to the chart above... [1] While the number of home sales taking place this March was 11% lower than a year ago -- that's not quite as much of a drop as we see when we look at the past three months (-21%) or the past six months (-25%). So, maybe things are picking back up -- a bit -- here in March? Maybe? [2] There have been 1,501 home sales over the past year in Harrisonburg and Rockingham County which is a 9% drop from the previous 12 months when there were 1,658 home sales. This drop of 157 home sales for the year seems almost certainly to be a one-sided supply side issue -- not enough sellers selling. You'll note later on in this report that inventory levels haven't risen by 157 homes (due to buyers not wanting to buy) so the constraint on the number of home sales is almost certainly directly tied to how many sellers want to or are willing to sell. But despite fewer homes selling, home prices keep on rising... ![]() Yes, we could pick on the one red number on the chart above -- showing a 1% decline in the median sales price between March 2022 and March 2023 -- but the small sample size (of one month of data) means that this is not necessarily a meaningful indicator of an actual downward trend. This is made even more evident by the 10% - 11% increases in the median sales price when looking at three, six and 12 months of data in the chart above. Perhaps more importantly, yes, we're still seeing double digit annual increases in the median sales price in Harrisonburg and Rockingham County. One year ago the median sales price was $276,200. It has risen 10% over the past year, cleared $300K, and is now at $304,900. Just to refresh one's memory on what "median" signifies -- it means that half of the homes that are selling are priced at or above $304,900 and half are at or below $304,900. Prices just keep on rising! Buyers who are frustrated that they can't wait even just a day to make a decision about an offer on a hot new listing might be encouraged by these next stats... ![]() There has been an ever so slight (ok, technically 20%) increase in the median days on market stat over the past year. A year ago homes were going under contract after a median of five days... and now that has risen to... six days. Yes, I know, that one day might not seem that significant -- but if we look at just the past three months we'll note that the median days on market has jumped up to eight days! So, some new listings are lasting an extra day (or three) on the market before they're going under contract. So, the market is slowing down... barely. It will be interesting to see if this metric continues to rise, falls again, or stays at about the same level as we move into and through the spring market. Now, as to what is actually selling, there are some interesting trends to be noted between existing homes and new homes. I have highlighted the numbers below that I think deserve attention. Here's the existing home sales data... ![]() ...and here's the new home sales data... ![]() So, while the overall market has seen a 9% decline in home sales over the past year... [1] There has been a 15% decline in existing home sales. [2] There has been a 12% increase in new home sales. If you want to buy a home that is of the property type, size, price and location of one of our area's new home communities -- these trends work in your favor. If you want to buy an existing home (not a new home) in an established neighborhood -- these trends aren't all that exciting. There haven't been 9% fewer homes to buy over the past year -- there have been 15% fewer homes to buy!?! Now, circling back to the monthly data... ![]() March was... not as slow as January and February!?! ;-) We saw significantly fewer home sales this past January and February as compared to the same month last year. January sales were 27% below the prior year. February sales were 24% below the prior year. March sales were only... 10% below the prior year! So, I suppose that's a bit encouraging... we're starting to see a slight increase in monthly home sales... though yes, we're definitely still well behind 2022. And for anyone who likes a good participation trophy... ![]() ... First Quarter Home Sales In 2023 came in at... 4th Place... oh, out of five contestants! Indeed, the 249 home sales we have seen in the first quarter of 2023 was fewer than we saw in 2020, 2021 and 2022. We are slightly ahead of the first quarter of 2019, though, so there's that... Looking at the big picture of our market over the past few years, in visual form... ![]() There are two main things to note in the graph above... [1] Home prices have been increasing at a much faster pace than is historically normal. We're in the third year in a row of double digit (per year) increases in the median sales price in our area. [2] After a two year boom in the number of homes selling (due to Covid and super low interest rates) we are now almost a year into a steady decline in annual home sales (from 1,727 per year to 1,502 per year) mostly related to rising mortgage interest rates. Now, let's look ahead by looking behind... ![]() Home sales this month are most directly influenced by contracts last month. So, how did things go in the March market? Lots of sellers listing their homes for sale? Lots of buyers contracting to buy homes? Well... not really. [1] Contract activity declined 26% in February 2023 compared to February 2022. [2] Contract activity declined 37% in March 2023 compared to March 2023. So, yeah, the spring market (sooo many listings, sooo many contracts) doesn't quite seem to be showing up this year like it did last year. Maybe the buyers (and much more importantly, the sellers) will start showing up in April? Unsurprisingly, several slow months of signed contracts brings on a lower than ever number of pending sales in Harrisonburg and Rockingham County... ![]() There are 256 homes currently under contract in Harrisonburg and Rockingham County. One year ago there were 398 (!!!) homes under contract. Over the past four years we've seen an average of 293 homes under contract at this time of year. So, yeah, based on the low number of pending sales right now, we are likely to see at least another month or two (or more!?) of slow(er) months of home sales. Why have there been so few homes going under contract? Are the listings pouring onto the market and buyers are just deciding not to buy? If that were the case, we'd see inventory levels starting to climb, so, let's take a look... ![]() In fact, no, inventory levels are not rising. They are staying stubbornly low. There are 116 homes on the market right now (for sale, not under contract) in Harrisonburg and Rockingham County. This is compared to 135 being on the market a year ago at this time... and an average of 185 being on the market over the past four years at this time of year. So, buyers seem to not be buying because... there's nothing to buy. Or, at least, there's less to buy. Plenty of homes (-9% year over year) are still selling, but this decline in sales activity seems to still be entirely related to sellers not selling, and not related to buyers not buying. And yet, despite inventory levels staying super low, we are actually seeing a slightly change in how quickly homes are going under contract... ![]() Over the past six months the "median days on market" has been eight days in Harrisonburg and Rockingham County. That means that half of the homes that have sold were under contract within eight days of hitting the market and half were under contract in eight or greater days. The change here is a slight increase from five days up to eight days over the past few months. We were seeing a median days on market of six days or less for almost two straight years (April 2021 - January 2023) but that is starting to drift upwards a bit. So, (some) listings are lasting an extra day or two (or three) on the market right now -- though these days on the market levels are still well below long term historical norms. Maybe it's taking buyers an extra day or two to make an offer because they have to keep checking in with their lender because rates are constantly jumping up and down from week to week and month to month? ![]() Rates dropped in March, after rising in February, after dropping in January -- you get the picture. We're currently seeing mortgage interest rates that are definitely and absolutely not the best we've seen in the past year -- but that also are a good bit below the worst that we've seen in the past year. Where mortgage interest rates go from here is anyone's guess -- but I'm thinking they will continue to fluctuate on a weekly and monthly basis for much of 2023. OK! That was a lot of data, and charts and graphs, oh my! If you made it all the way to the end, thanks for reading and I hope you are feeling more informed than ever as to the latest trends in our local housing market. If you're thinking about selling your home this spring or summer -- all of the would-be buyers of Harrisonburg and Rockingham County would REALLY like you to decide to do so. ;-) Let me know if you'd like to set up a time to walk through your home together to talk about preparations, pricing, timing, etc. If you're hoping to buy a home this spring or summer -- I'd be delighted to be in your corner helping you navigate this rapidly moving, competitive market. Let's chat about what you're hoping to buy, get you connected to a local lender to become pre-approved, and then let's try not to develop a twitch as we keep checking for new listings again, again, again and again. That's all for today, folks. I hope the balance of your month of April goes well and that you aren't struggling too much with the seasonal allergies that seem to affect so many of us at this time of year. I think the beauty of the blooming flowers and trees generally outweigh the not-so-exciting allergy symptoms that I'm currently working through. Be in touch anytime if I can be of help to you -- with real estate or otherwise. You can reach me most easily at 540-578-0102 (call/text) or by email here. P.S. If you want even more charts and graphs than I have included above, you'll find them here. | |
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First Look At Contract Activity In March 2023 |
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![]() In the next week or so I'll provide a much fuller analysis of what March (and the first quarter of 2023) looked like here in the Harrisonburg and Rockingham County real estate market. Until then, here's a first look at buyer activity last month. A total of 119 home buyers signed contracts to buy homes in March 2023... which is... [1] Much lower than the second and third March of Covid -- 2021 and 2022 -- when mortgage interest rates were super low and buyers were stumbling over themselves to buy. [2] Slightly higher than the first March of Covid -- 2020 -- when we were all still trying to figure out what Covid was and how it would impact the economy and housing market. [3] A good bit lower than the three years just before Covid -- 2017, 2018 and 2019. Housing inventory levels still aren't rising, so I think the lower contract numbers are related to a limited number of sellers being willing to sell -- not related to a limited number of buyers being interested in buying. | |
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Nationwide Median Sales Price Declines For First Time In More Than 10 Years... But, What About Locally? |
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![]() I saw the headline over at CNN yesterday... home prices are falling (nationwide, barely) for the first time in over a decade. The median sales price of a home in the United States was $363,000 in February 2023... ...marking a (tiny) 0.2% decline from a year ago. How do those numbers compare to Harrisonburg and Rockingham County? February 2022 - February 2023
February 2023
So, as usual, we're just doing our own thing over here in Harrisonburg and Rockingham County. Will we see home prices decline in Harrisonburg and Rockingham County? Before that happen, we'd need to see them level out (stop going up) which isn't happening at this point. So, read the national news (if you must) but as usual, it's much more important to keep tabs on the local trends. | |
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Buyer Demand Exceeds Supply In Varying Degrees By Price Range |
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![]() As one might expect, there are more buyers able to and interested in buying a home for $200K than for $300K... and more buyers able to and interested in buying a home for $300K than for $400K. You get the picture. As such, we currently find buyer demand exceeding supply in varying degrees by price range. These numbers are completely made up, but are likely not too far off base given recent listings or transactions I have been a party to or have heard about in our local market... SHOWINGS IN WEEK ONE, BY PRICE RANGE:
If you're seeing more showings than outlined above, your house may be slightly more popular than the average house based on its location and condition - or you might have priced it "just right" for the current market. If you're seeing fewer showings than outlined above, your house maybe slightly less popular than the average house based on it's location and condition - or you might have priced it "a bit too high" for the current market. Again, the data above is completely fictional (not based on actual showing data) but is included to paint a general picture of the differing amounts of buyer demand in different price ranges in the current market. | |
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Pending Home Sales Data Points To Slower Months Of Home Sales Ahead |
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![]() Pending home sales is the most timely indicator of what we should expect in the very near future for closed home sales. A pending home sale is a house that is under contract. Two springs ago (2021) the number of pending sales peaked at 373. Last spring (2022) the number of pending sales peaked at 416. There are currently only 261 pending home sales. As such, it seems likely that we'll see fewer closed home sales over the next few months. But, interestingly, this lower level of pending home sales does not necessarily seem to be a result of an insufficient number of buyers wanting to buy -- but rather, an insufficient number of sellers willing to sell. This seems to be a supply side issue inventory levels (the number of homes on the market for sale) remain stubbornly low. If we were seeing fewer pending home sales, and inventory levels climbing, this would be an indication that buyer demand is declining. That is not what we're seeing. So long as fewer sellers are willing to sell, we are likely going to continue to see lower numbers of pending home sales, and lower numbers of closed home sales unless new construction options increase to provide additional housing options for home buyers. | |
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Fewer Home Sellers, Thus Fewer Home Buyers, But Ever Higher Sales Prices In Early 2023 |
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![]() Happy Tuesday morning, friends! Indeed, February flew by quickly -- such a short month ;-) -- and now we're headed into what is typically a very busy spring in our local real estate market. Read on for an overview of everything happening right now in our local market... but first... a local highlight and an opportunity for you to be a winner! :-) 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 A Bowl of Good, a Steel Wheels concert, and Grilled Cheese Mania. This month... I'm giving away a $50 gift card to another of my favorite local restaurants, Taste of India. My go to order is the Chicken Tikka Masala, but you will find an extensive menu of unique and flavorful dishes at Taste of India, located on University Blvd. Click here to enter for a chance to win the $50 gift card! And now, let's move on along to the most recent data on our local real estate market... ![]() As per my headline, there are definitely fewer buyers buying homes right now, but I am fairly confident that it is a result of fewer sellers selling homes right now - as inventory levels are not rising. As shown above... [1] There were 28% fewer home sales this February (71) compared to last February (98) in Harrisonburg and Rockingham County. [2] Looking at the past three months (Dec, Jan, Feb) there was an even larger drop off in home sales... with a 34% decline from last year (346 home sales) to this year (230 home sales). [3] If we look back at an entire year of sales we will only find an 11% decline in home sales (from 1,687 sales to 1,509 sales) indicating that the majority of the slow down is in the more recent months. [4] Despite these decreases in the number of homes that are selling... home prices keep rising! The median sales price during the past three months (when the number of sales was 34% lower than last year) was $309,205... which is 8% higher than the median sales price one year ago of $285,750. [5] Looking back at the entire year again, the median sales price over the past 12 months was $304,485 which is 11% higher than in the 12 months before that when it was $274,000. [6] The number of days it takes for a home to go under contract is -- maybe, possibly -- on the rise. This (most recent) December through February homes went under contract with a median "days on market" of nine days... which is (50%) higher than the median of six days a year ago during those same three months. So, fewer homes are selling, slightly slower, but at ever higher prices!?! Now, let's look at the number of home sales January and February compared to past norms for these months... ![]() The red line above is the current year -- 2023 -- and you can see that the number of home sales in January and February is quite a bit lower than... [1] The number of home sales last January and February -- shown in blue. [2] The average number of home sales in each month over the past four years -- shown in grey. So, there have been fewer home sales this January and February than in other recent years. Thus, what comes next? I expect we will continue to see lower number of home sales per month as we move through March, April and May 2023 as compared to last year and as compared to the average of the past four years. Let's put the declining number of home sales in a bit of a historical context... ![]() The annual pace of home sales peaked at 1,374 home sales back in March 2020 after declines in monthly home sales in early 2020 due to the start of the COVID-19 pandemic. The annual pace of home sales slowed for a few months... but bottomed out at 1,302 home sales per year just three months later. Then, the annual pace of home sales started climbing, and climbing, and climbing. Two years ago, homes were selling at an annual pace of 1,520 home sales per year in Harrisonburg and Rockingham County. Then, annual home sales accelerated all the way up to 1,727 home sales per year in in June 2022 -- before they started declining again. Now, as we close out February 2023, the annual pace of home sales (1,509) has returned to the same approximate place that we were in two years ago. I expect that this annual pace of home sales will continue to decline over the next six months. But, yes, sales prices keep on rising, as shown with a green line above. The annualized median sales price seems intent on continuing to rise, month after month. It has now risen from $222,150 to $304,485 in just three years! But, perhaps the increase in the median sales price is... slowing? ![]() If you stare intently at the green line above, you'll see the slope changing a bit, which perhaps is an indicator that the rate of price increases is slowing. Maybe. 2020 increase in median sales price = 9.8% 2021 increase in median sales price = 10.2% 2022 increase in median sales price = 11.1% 2023 increase in median sales price = 6% Don't read this too quickly... home prices are not declining... but the pace at which home prices are increasing... might be slowing. Or, then again, maybe not. We are only working with two months of data for 2023. Stay tuned over the next few months to see how the 2023 median sales price adjusts as we move further through the year. Now, to predict where home sales might go next, let's look at contract activity... ![]() After a decent month of contract activity in January (116 this year compared to 110 last year) we saw a marked decline in contract activity in February. The 93 contracts that were signed in February 2023 was significantly lower than the 125 contracts signed last February, and also well below the four year average of 107 contracts in a typical February. Thus, it is unlikely that we'll start to see an increase in home sales in March, given the decline in contracts signed in February. Furthermore, the number of pending sales (homes under contract) also declined in February... ![]() There are currently 239 homes under contract (pending) in Harrisonburg and Rockingham County which is quite a bit lower than a year ago (blue line) when there were 318 homes under contract... and is also lower than the four year average of 241 homes typically being under contract at this time of year. All of these different metrics are all showing the ways in which our market is cooling off -- as it pertains to the *number* of homes that are selling -- not as it relates to the value of homes in our area. Circling back to my headline this month... I think the cause of fewer home sales is mainly due to fewer sellers selling, which is resulting in fewer buyers buying, because... ![]() Inventory levels are lower than ever. There are currently 119 homes for sale (not under contract) in Harrisonburg and Rockingham County which is even lower than the inventory levels a year ago at this time of the year (131 for sale) and significantly lower than the four year average of 173 homes for sale at this time of year. If fewer buyers were buying... and just as many sellers wanted to sell... we would start to see inventory levels increasing. Fewer home sales, combined with ever lower home sales, is a very good indicator that the decline in the number of home sales is a result of fewer sellers being willing to sell -- more so than a result of fewer buyers wanting to buy. All that said, there is one trend in our local market that runs at least a bit counter to all of the other trends... ![]() The median "days on market" figure has started to trend upwards over the past few months. For over a year, the median number of days it took for a home to go under contract was only five days. That has now drifted slightly upward to seven days. This means something... but maybe not much. Homes are going under contract *slightly* more slowly now than they were over the past few years. It is now taking them (as per the median calculation) about seven days to go under contract, instead of only five days. I'll continue to monitor this over the coming months to see if this trend continues when we get into the thick of the spring market. And one last graph... that looks like it had one too many cups of coffee this morning with all of its jittering all over the place... ![]() Mortgage interest rates have been all over the place over the past year. A year ago the average 30 year mortgage interest rate was 4%, and now it's 6.5%. But during the past year we have seen multiple months of increases and some decreases. It's hard to say what will happen next with mortgage interest rates. Perhaps the only reasonable prediction is that rates will go up and go down in the next six months. ;-) So... if you're looking to buy or sell a house in Harrisonburg or Rockingham County this spring, what should you conclude based on all of the data above? If you will be selling... [1] The market is still very favorable for home sellers. [2] Home prices have never been higher. [3] Half (or more) of homes that well are still going under contract in a week or less. [4] Diligent preparations, proper pricing and thorough marketing will likely still result in a speedy and favorable home sale for most sellers of most homes in most price ranges and locations. If you will be buying... [1] The market is still very competitive in most price ranges and for most property types. [2] It is still important to be pre-approved and to go see homes within the first day or two that they are on the market. [3] There will likely be fewer options for buying this year than last as fewer home sellers are seeming willing to sell. There's plenty more that we can discuss about your particular scenario if you are thinking of selling or buying, so feel free to reach out (call or text me at 540-578-0102 or email me here) if you'd like to chat or find a time to meet. If you're not quite ready to sell or buy yet, but have questions about the market or the process, I'd also be delighted to hear from you. Touch base anytime. That's all for today, folks. I hope that March treats you well and that you enjoy the suspense of not knowing whether we'll get that surprise March snowfall that we sometimes see in the Valley. ;-) Regardless of whether we get some snow or not, I hope you enjoy the changing of the seasons as we move through March. It is certainly a beautiful time in the Shenandoah Valley! P.S. If you want even more charts and graphs than I have included above, you'll find them here. | |
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First Look At February 2023 Home Sales |
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![]() Perhaps unsurprisingly, February 2023 home sales don't quite match up to February 2021 or 2022. Of course, during 2021 and 2022 we were experiencing... [1] Surging buyer interest due to super low interest rates. [2] Many, many buyers trying to upgrade their living arrangements due to Covid induced life changes with working from home, etc. Interest rates are higher now, and there is a bit less urgency to upgrade ones living arrangements if you haven't already done so as we seem to be settling back into life after Covid. And what do you know... home sales in 2023 aren't quite as crazy high as they were in 2021 and 2022. I should also note that... [1] Home sales in February 2023 were (a bit) higher than in 2019 and 2020. [2] The decline in home sales is not (thus far) leading to an increase in housing inventory levels. Fewer buyers are buying... but fewer sellers are selling as well... so inventory levels are remaining low. I'll publish a full accounting of February housing market updates soon. | |
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Home Sales Still Slowing, Home Prices Still Rising, In Harrisonburg, Rockingham County |
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![]() Happy Friday morning, friends! We're about halfway through February, so it's time to take a moment to look back and see what we can learn about our local real estate market based on January's data. Thanks for joining me as I break things down so that we can all better understand the data and trends. ![]() I hope you have had a fun start to your year. Some fun on our end included a quick extended weekend trip to the beach for Shaena, Luke, Emily and I a few weeks ago. I was reminded anew of the value of disconnecting (at least partially) from work for a bit, and spending time with loved ones. Whether it is the beach, the mountains, a long walk on an unusually warm February day, or relaxing on your back porch, I hope you find some time to disconnect from the busyness of life and spend time with those who you love in the coming days or weeks. Before I get into the market data, I also want to encourage you to check out my featured listing of the month, a newly renovated in downtown Harrisonburg pictured above and located at 142 Broad Street. Find out all about it at 142BroadStreet.com. Finally, a fun giveaway, just for you... 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 a Steel Wheels concert, Grilled Cheese Mania, and Walkabout Outfitter. This month... I'm giving away a $50 gift card to one of my favorite local restaurants, A Bowl of Good. If you haven't checked out A Bowl of Good yourself, make plans to do so - they have a delicious menu of comfort foods and many items with an international flair. Click here to enter for a chance to win the $50 gift card! And now, let's move on along to the most recent data on our local real estate market... ![]() Looking first at the overall home sales data above, I'm noting a few things of interest... [1] Home sales are still slowing. We saw a 28% decline in home sales this January, with only 75 home sales as compared to 104 last January. When we stretch the window out a bit further to three months (November through January) we see an even larger, 35% decline in the number of homes selling in Harrisonburg and Rockingham County. [2] When we look at a full year of data (February through January) we see a smaller, 8%, decline in the number of homes selling in our market, though this may become a larger decline as we continue through the year. [3] Despite fewer homes selling, home prices keep on rising! The median sales price has risen 11% over the past year, and even if you narrow the focus down to the past three months (when home sales were slower) the median sales price was 10% higher than during the same three months one year prior. So, home sales are definitely slowing, but home prices are definitely still rising. Now let's start to slide into some graphs to further understand these most recent trends... ![]() The 75 home sales seen in January 2023 (the red "75" above) marked a significant decline from last year's 104 January home sales. If we look back a bit further, and average out the number of January home sales between 2019 and 2022 we find an average of 94 home sales in January... and we also fell short of that bar in January 2023. Where do we go from here? Interestingly, we usually see a decline in home sales between January and February... so will we see fewer than 75 home sales in February 2023? Or will we see a reversal of that trend and see more than 75 home sales this month? Stay tuned! Here's a visual reminder of how much things have changed over the past two years... ![]() A little less than two years ago, the median sales price in Harrisonburg and Rockingham County was only $250,000. Now, less than two years later, it has just surpassed $300,000! But yet, despite the steady increases in the price of homes in our area, we have seen significant ups and downs relative to how many homes are selling. As per the blue line above, we flew past 1,500 home sales a year about two years ago -- saw that annual pace of home sales climb all the way up to 1,727 home sales per year -- before declining even more rapidly to the current annual pace of 1,535 home sales per year. What does the rest of 2023 have in store for us? I'm predicting that we'll see continued (slower) increases in the median sales price -- and continued (slower) decreases in the number of homes selling in Harrisonburg and Rockingham County. One interesting dynamic to watch in 2023 seems to be the mix between new home sales and existing home sales... ![]() For each of the past four years we have seen an increase in the share of new home sales in Harrisonburg and Rockingham County. Back in 2018, only 11% of the homes that sold were new homes -- but last year (2022) that rose all the way up to 26% of home sales being new homes. With only one month of data thus far it is probably too early to draw any significant conclusions yet about 2023, but in January 33% of the homes that sold were new homes. To get some glimpse of what the next few months might look like for how many homes are selling, we can take a peek at contract activity... ![]() And... surprise! :-) Despite lower than expected home sales activity in January... we saw higher than expected contract activity! Over the past four years (2019-2022) we have seen an average of 106 contracts per month signed in January. Last January (2022) we saw 110 contracts signed. This January that monthly contract figure rose to 116, making it a busier January (for contract signing) than we might have otherwise expected. It's possible that declines in mortgage interest rates (referenced again later on) helped spur on some of that January contract activity. Another interesting trend to watch is the number of pending sales at any given time... ![]() A "pending sale" is a house that is under contract, waiting to get to closing to become a home sale. One year ago there were 271 pending sales in Harrisonburg and Rockingham County. Today there are only 234 pending sales -- which is lower than where we were last year -- but is higher than the average January pending sales figure over the past four years. So, to roughly extrapolate from the past two data sets, home sales in 2023 seem likely to be lower than in 2022, but higher than the average of the past few years. But to be clear, in order for homes to sell, they need to be for sale... ![]() Some folks might observe a decline in sales activity and assume that inventory levels are starting to climb -- with sellers wanting to sell but buyers not wanting to buy. That is not what we are currently observing in the Harrisonburg and Rockingham County real estate market. Fewer sales may very well be equally caused by fewer buyers buying AND fewer sellers selling. There are currently 109 homes on the market for sale (not under contract) which is slightly less than a year ago (115) and much (!) much less than the average over the past four years of 172 homes being listed for sale at this time of year. The big questions for just about every buyer is whether we will start to see meaningful increases in inventory levels as we move into the spring months. Buyers should be encouraged to know that we typically see lots of new listings hitting the market in March, April and May -- but if there are still lots of buyers waiting in the wings for those new listings we may not see inventory levels rise all that much. Lots of new listings plus lots of new contracts will still equate to rather low inventory levels. I mentioned earlier that a slightly higher than expected number of contracts in January might have been related to mortgage interest rates. Take a look at why I'm guessing that might have been the case... ![]() It has been a wild and crazy year with mortgage interest rates. Just a year ago, interest rates were below 4%, then climbed all the way up above 7% and have now decline back towards 6%. Those highest months of interest rates in September, October, November and December almost certainly contributed to the much slower (-35%) months of home sales in November, December and January. The decline over the past three months may have contributed to the increase in contract activity in January 2023. Where will mortgage interest rates be headed in 2023? Probably not above 7%. Probably not below 5%. Probably not anywhere for more than a few weeks in a row. Does that help? Probably not. ;-) Given all of the market data above, when I look ahead to the remainder of 2023, I believe the following will likely be true: [1] We will see fewer home sales than in 2022. [2] Home prices will likely be higher than in 2022. [3] Inventory levels will likely remain low most or all year. [4] The decline in the number of existing home sales will likely be larger than the decline in the total number of existing and new home sales. [5] Mortgage interest rates will likely close out the year lower than where they started the year. As you look ahead to 2023... do you hope to buy a home... or do you plan to sell your current home? If you are thinking about heading down either path, let's find a time to connect soon to talk about your hopes and plans and dreams and how they will be best accomplished amidst the market trends outlined above. Feel free to reach out to start that conversation by emailing me or texting or calling me at 540-578-0102. If you don't plan to buy or sell a home this year, but want to learn more about our local housing market... [1] You can review even more charts and graphs with further analysis of our local housing market here. [2] I publish a variety of articles about the market, new housing developments, and more over on my blog several times a week here. And that's a wrap, folks! I hope you have a wonderful Friday and weekend ahead. Please be in touch if I can be of any help to you -- with real estate or otherwise! | |
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Are Home Prices Cooling? Move Beyond The Headlines To Be Sure! |
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![]() Many news outlets (typically national news outlets, not local news outlets) are running stories with headlines referencing cooling home prices. Are home prices cooling? Here's a funny one, once you read it... US home prices continue to cool off, reflecting weak housing market Reading that headline, you'd think home prices are dropping, right? Well, here's what the start of the article actually goes on to say... "Single-family home price appreciation eased to a 6.9% pace in December, the lowest rate recorded since the late summer of 2020." Oh... so it's not that home prices dropped... it's that they *only* increased by 6.9%... and that's a smaller increase in home prices than previous increases. ;-) So... before you read a few headlines about cooling home prices and conclude that home prices are falling... click through to read the story. In this area, home prices continue to rise. In many other markets, the same is true, though headlines might not always make that clear. | |
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An Early Look At January 2023 Home Buying Activity |
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![]() Contract activity slowed considerably in the fourth quarter of 2022 compared to the fourth quarter of 2021... Oct- Dec 2021 = 383 contracts signed Oct - Dec 2022 = 230 contracts signed That's a 40% decline in contract activity! Those higher mortgage interest rates seemed to finally make an impact in the fourth quarter last year. As a result, one of the indicators I am watching closely this year is contract activity in 2023. The graph above shows the number of contracts signed in January for each of the past five years including 2023. Here's what we find...
I expected we would see fewer contracts signed than in the past two to three years when super low interest rates and Covid's impact on the real estate market were driving record amounts of home buying activity. It's encouraging to see that where were more contracts signed in in January 2023 than in January 2019. It will be interesting to see how things continue to track as we move through the rest of the first quarter of 2023. | |
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Home Sales Slowed Considerably In Late 2022 But Home Prices Kept On Rising |
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![]() Happy Thursday afternoon, friends! And... Happy New Year! It's hard to believe the New Year is upon us. Actually.. we're already more than halfway through January at this point. What a whirlwind. I hope you had a delightful finish to 2022. I capped off the year with a slightly warmer than anticipated New Years Eve Glow Run, another fantastic community running event put on by VA Momentum. Below is a photo just prior to the start of the race... after which it became progressively darker and our glow bracelets and necklaces were lighting up the hilly course at Heritage Oaks Golf Course... ![]() Two other items of business before we get into the real estate data... First, take a few minutes to check out my featured home of the month... 3078 Preston Lake Blvd... This beautiful cottage home with a finished basement is located in the Preston Lake community with a clubhouse, pool, walking paths and playground, all just minutes from Sentara RMH, JMU, Merck and Coors! You can check out the house here or walk through it here. Finally, 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 Grilled Cheese Mania, Walkabout Outfitter and Bella Gelato. And this month... This month it's back to music... I'm giving away a pair of tickets to see The Steel Wheels and Sierra Hull at JMU's Wilson Hall on February 11th! Read all about the event, and the artists, here - and if you're interested in a pair of free tickets, enter to win them here. :-) Now, onward to the latest data on our local housing market! First, how many homes have been selling lately... ![]() There's a lot to note in the graph above, and some of these numbers informed the headline for this article... [1] There were only 83 home sales in December 2022... compared to 144 in December 2021. That's a rather surprising 42% decline in home sales for the month of December. [2] When we pile in a few more months (October and November) we see that there were 28% fewer home sales in the fourth quarter of 2022 than in the fourth quarter of 2021. [3] Finally, when looking at the full year of 2022... there were 7% fewer home sales than in 2021. After several years of rapidly increasing numbers of home sales, it seems that higher mortgage interest rates finally slowed down buyer activity... though not very significantly until the very end of 2022. But yet, despite slowing sales, home prices did what!? ![]() Home prices... kept on rising! [1] Starting from the bottom of the chart (above) this time we see that there was an 11% increase in the median sales price when comparing all of 2021 to all of 2022. That's a rather significant increase in the median sales price and it follows on after two preceding years of 10% increases in the median sales price. Needless to say, homes have become quite a bit more expensive over the past several years. [2] The median sales price in December 2022 was 3% higher than in December 2021. This could be an indication that we'll start to see a slow down in the rate at which home prices are increasing... or, as is more likely, it may be lower than the longer term trend (+11%) because it is a smaller data set of only the homes that sold in a single month. So... was it just December when we were seeing slowing home sales? ![]() The decline in home sales was certainly significant in December... but if you track that red line (2022) back to November and compare it to the blue line (2021) you'll see that the slow down started before December rolled around. The graph above (and many of the graphs in this month's report) are in a slightly different format than in past months. I spent some time going through to revamp my monthly market analysis process to hopefully make the resulting graphs and analysis even more helpful and pertinent for all of us as we see how 2023 unfolds. As such, the graph above is showing the current (just finished) year of 2022 with a red line -- and the previous year of 2021 with a blue line -- and the grey line is showing a longer term trend calculated by averaging 2018 through 2021. Next up, let's look at monthly cumulative home sales... ![]() The graph above provides another illustration of the fact that 2022 was keeping pace with 2021 all the way through the end of October... and then November and December fell short. This resulted in the second strongest recent year of home sales in Harrisonburg and Rockingham County. Indeed... there were 7% fewer home sales in 2022 than in 2021... but there were well more than in 2019 and 2020! Next, let's look at general long term trends over the past few years... ![]() The top green line is showing the median sales price of all homes selling in Harrisonburg and Rockingham County... measured monthly by looking at the median of the previous 12 months. In tiny letters underneath someone (ok, me) wrote "can't stop, won't stop, can't stop, won't stop" -- but, I should definitely, definitely clarify that -- yes -- the median sales price could stop increasing. It didn't do so anytime in the past three (plus) years as illustrated above, but as they say, past performance is not a guarantee of future results. The bottom blue line (above) is a monthly check-in on the annual pace of home sales. During Covid the annual rate of home sales in our area shot up from around 1,300 sales per year all the way up to 1,700 sales per year... but as mortgage interest rates rose during 2022, eventually the annual pace of home sales started to decline again. Where did we finish out 2022, you might ask, within the context of the past few years? ![]() We ended up seeing 7% fewer home sales in 2022 than in 2021 -- though there were 5% more home sales in 2022 than in 2020. So, again, this past year was the second best year of home sales in recent times. You can see again here (in the graph above) that the median sales price has been aggressively climbing for multiple years. Five years ago (in 2017) the median sales price was $198,250... and it closed out 2022 just shy of $300K with a median of $299,912. This marks an 11% increase in the median sales price in 2022 after a 10% increase in both 2020 and 2021. Wow! This next one might surprise you. It surprised me, at least for a moment... ![]() The 7% decline in home sales in 2021 was actually a much larger decline if we focus in on resale homes. There was actually a 14% decline in resale homes during 2022! We only ended up seeing a 7% decline in overall market activity because of the sale of new homes. We saw a 24% increase in new home sales in 2022. As a result (and as circled above) the balance between new home sales and existing home sales continues to shift with over a quarter of all home sales (26%) being new homes in 2022. I think there is a decent chance this ratio will be similar in 2023, or that we might see even more new home sales as plenty of homeowners will sit tight and enjoy their super low mortgage interest rate rather than selling their home. What comes next, I wonder... ![]() The graph above tracks how many contracts are signed (by buyers and sellers) each month... and here you can see that the slow down actually started halfway through 2022. Each month of contract activity in the second half of 2022 (red line above) was lower than the corresponding month in the second half of 2021 (blue line above) though the gap became much more pronounced in the last three months of the year. Interestingly, if we look at the typical November to December trend in contract activity per the grey line (four year average) we see that it is typical to see about 74 contracts in December... and December 2022 was only slightly below that with 67 contracts. Here's a new graph that provides a bit more insight into how many contracts are out there waiting to get to closing... ![]() The graph above shows the number of properties that are pending (under contract) at the end of any given month. If you look at the second half of 2021 (blue line) you can see there were anywhere from 260 to 321 contracts pending from month to month. As we moved our way through 2022 the number of pending sales sank lower and lower... below that previous low of 260 all the way down to 189 pending sales at the end of the year. This graph (and the prior graph) would indicate that we will likely see a relatively slow month of closed sales in January and February. But again, looking a bit further back for context... the 189 pending sales at the end of 2022 is... just a smidgen below where we might have otherwise expected to be in a month of December. The anomaly here, it would seem, was the end of 2021 when things were still bonkers in the local real estate market due to super low mortgage interest rates among other factors. And how about those inventory levels -- they must be moving up given slower sales, right? ![]() Well... maybe not. We closed out the year with 127 homes on the market in Harrisonburg and Rockingham County. Yes... this is a higher inventory level than one year prior when there were only 119 homes on the market... but it's not that much higher. Furthermore, even though the inventory levels in 2022 (red line above) were higher than in 2021 (blue line) they were still well below (!!!) the average of 2018 through 2021. These are still times over very low inventory... much to any home buyer's dismay. Oh, and how quickly are homes selling now? Slower, probably, right? ![]() Not so much. The graph above shows the median days on market -- how quickly properties go under contract after being listed for sale -- within a six month timeframe. For over a year this metric stayed right at five days... so as to say that half of homes were under contract within five days and half took longer than five days. That has risen to... six days now. Clearly, not a significant shift, but perhaps we will see it shift further as we move forward. Of note, the median days on market two years ago was seven days... but that was after dropping steadily from double digits the summer prior. Interest rates, interest rates, all you talk about is interest rates... ![]() Well, yes, that's true. I have talked a lot about mortgage interest rates this month (and over the past year) because they have been rising, quickly. A year ago (as shown above) the average mortgage interest rate (on a 30 year fixed rate mortgage) was only 3.11%. We closed out 2022 with an average of 6.42%. Thankfully, these rates have continued to decline a bit further in the first few weeks of 2023... but the cost of financing a home purchase is still MUCH higher now than it was a year ago. And yes... these higher mortgage interest rates directly contributed to the slow down in home sales in the second half of 2022. Well folks, that's all for today. I hope the analysis above provides you with a bit more insight into all that has transpired in our local housing market in 2022... and a few thoughts as to where things might be headed in 2023. If you are thinking about selling or buying a home in 2023, I would be happy to assist you with that process. Yes, I spend a good bit of time analyzing our local housing market to educate our local community -- but the majority of my time is spent helping individual home sellers and home buyers. Feel free to reach out to start that conversation by emailing me or texting or calling me at 540-578-0102. I'll provide another update in about a month -- looking back at the first full month of 2023. Until then, I hope you and your family stay healthy and enjoy (???) the constant fluctuations between winter and spring temperatures we seem to be experiencing this year. ;-) Happy New Year! P.S. You can review a few more charts and graphs with further analysis of our local housing market through the close of December 2022 here. | |
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Was Contract Activity Slower Than Expected In November And December 2022? |
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![]() Were this past November and December (2022) a bit slower than expected when it came to contract activity? Did fewer buyers (and sellers) sign contracts to buy (and sell) homes during the last two months of 2022? I suppose whether contract activity was "slower than expected" depends on what you expected. If you were expecting the same amount of contract activity as we saw in those same months in 2021 then yes, contract activity was definitely slower than expected. As shown above, 222 contracts were signed in November and December of 2021... but only 138 were signed in those same two months in 2022. Quite a bit slower! And they went under contract... slightly (+/-) slower as well. The median "days on market" in the last two months of 2021 was seven days... and that figure rose to a median of 10 days when looking at the last two months of 2022. The super, really important, disclaimer here is that after having risen throughout all of 2022 from about 3% up to about 6%, mortgage interest rates peaked just above 7% in... November. Stay tuned to see how things unfold in January and February of 2023! | |
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Existing Home Sales Declined 15% Last Year In Harrisonburg and Rockingham County |
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![]() Above you can see the breakdown of sales of existing homes (blue bars) and the sales of new homes (green bars) over the past few years. While home sales declined 7% between 2021 and 2022... Existing Home Sales declined 15% in 2022... and... New Home Sales increased 28% in 2022! So, if you were hoping to buy a home last year... but you weren't interested in the particular sizes, styles or locations of the new home communities being developed in our area... and you felt like you had fewer options than you would have hoped... ...you were right... 15% fewer homeowners sold their (existing) homes in 2022 as compared to in 2021. | |
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My Predictions for the 2023 Real Estate Market in Harrisonburg and Rockingham County |
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![]() After several years of an ever increasing number of homes selling in Harrisonburg and Rockingham County, we saw a slowdown in 2022. There were 7% fewer home sales last year (2022) than the previous year (2021). One of the main reasons for this decline in the number of home selling is the increase in mortgage interest rates during 2022. The average 30-year mortgage interest rate was just above 3% at the start of 2022... and just above 6% at the end of 2022. Understandably, some would be home buyers were a bit less interested in or a bit less capable of buying with that magnitude of a change in mortgage interest rates. Looking ahead to 2023, I believe we'll see yet another decline in the number of homes selling in Harrisonburg and Rockingham County... for a few reasons... [1] I don't think we are going to see significant declines in mortgage interest rates in 2023. Perhaps they get back down to 5.5% or maybe 5.25% but I don't think we'll see them get down to (or below) 5% in 2023. With continued high(er) mortgage interest rates, I don't think we're going to see a big influx of buyers back in the market to buy who stopped looking in the second half of 2022 when rates rose. [2] I think there will be far fewer "elective" home sales and purchases. Over the past few years it was so easy to sell one's home quickly (with multiple offers, at an amazing price) and this lead to plenty of homeowners electing to upgrade to a new house. Sell easily, quickly, at a great price and buy with a super low interest rate... easy... let's do it! Now, homes won't necessarily quite as quickly and the mortgage interest rate on a purchase would be much higher... so I don't think as many buyers will sell and then buy unless they really want or really need to sell and buy. [3] Fewer home buyers upgrading (selling and buying) means fewer existing homeowners selling... which will also limit the number of homes that buyers could buy... because of the limited number of sellers selling. All that to say... I think we're going to see even fewer home sales in 2023 than we did in 2022. As per the graph above, I'm predicting another 7% decline in the number of homes selling in Harrisonburg and Rockingham County in 2023... which would take us back to a bit less active of a market than in 2019... though quite a bit more active than in 2018. And how about those sales prices... of the number of homes selling declines, will we see home prices start to decline? ![]() After three years in a row (2020, 2021, 2022) of double digit growth in the median sales price... I am predicting that we will see a smaller increase in that median sales price in 2023... but yes, still an increase. Here are a few of the reasons why I think we will see an increase in home prices in 2023... [1] To the extent that the price of everything keeps going up (inflation) it seems likely that home prices will continue to rise. Inflation doesn't seem to be cooling off anytime soon (yikes, no fun, not a fan) which would make it even more surprising if we saw home prices start to decline. [2] The decline in home sales in 2022 -- and the predicted decline in 2023 -- have been a result in lower levels of buyer interest, but despite that, inventory levels have not meaningfully increased. Slightly fewer buyers are buying, but because slightly fewer sellers are selling, inventory levels have remained consistently low, which does not provide any downward pressure on home prices. [3] The Harrisonburg area continues to be a popular place to live, work, relocate, retire... and this continued interest in this growing area seems likely to keep home prices rising. All that is to say, I think we'll see an increase in home prices over the next year... but not as large as we have seen for the past three years. I am predicting a 5% increase in the median sales price over then next year. So... I'm predicting fewer home sales and a continued increase in sales prices... how could I be wrong? How could I be wrong? Plenty of ways. ;-) 1. We could see an even sharper drop in the number of homes selling if mortgage interest rates go even higher or if inflation gets even more out of control or if we enter into a full blown recession or if there are other major economic and job market changes in 2023. 2. We could end up seeing an increase in home sales if mortgage interest rates start to decline significantly, or if there is major employment growth in the area resulting in ever more would be residents seeking to buy a home. 3. We could end up seeing another 10% (or higher) increase in the median sales price if buyer demand continues to outpace seller supply. We're still in that territory now... but I think that price growth is going to soften a bit in 2023. But yes, prices really could rise another 10% or more in 2023. 4. We could see a decline in the median sales price if mortgage interest rates keep rising and if home buyer activity falls significantly and if inventory levels start rising. There you have it folks... my predictions for local housing market in 2023. What are your predictions? Where is our local market headed next? | |
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Looking Back At My Predictions For The 2022 Harrisonburg Real Estate Market |
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![]() Within the first week of 2022 I made two predictions for the 2022 Harrisonburg and Rockingham County real estate market related to how many home sales we would see, and what changes we would see in the median sales price in our market. As shown above, I was predicting a 2% increase in the number of home sales in our market... from 1,668 sales up to 1,695 sales. But... higher mortgage interest rates intervened, cooling buyer demand, leading to a 7% decline in home sales... from 1,668 sales down to 1,555 sales. And how about those prices... ![]() As you can see above, I was predicting that after two years (!!) of 10% increase in the median sales price that we would only see a 5% increase in the median sales price last year... which would have been an increase from $270,000 to $284,000. But, in actuality, high levels of buyer demand throughout most of the year lead to an increase in the median sales price that was much larger than I had predicted. The median sales price in our local market increased 11% in 2022, from $270,000 up to $299,900! Stay tuned later this week for my predictions for the local housing market in 2023. | |
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Median Sales Price In A Larger (Longer) Context |
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![]() We have seen three distinct periods of changes in the median sales price in the Harrisonburg and Rockingham real estate market... 2000 - 2006 = Growth 2007 - 2014 = Minor, Slow, Correction 2015 - 2022 = Growth What's on everyone's mind now is... what comes next! Will we see prices continue to rise in 2023? Will they level out? Will they decline a bit? I have no answers. ;-) I'll make some guesses next week. | |
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Home Sales Slow In November 2022, But Prices Keep On Rising |
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![]() Happy Tuesday morning, friends! Winter is upon us. The holidays are upon us. I hope you have been enjoying the variety of Christmas light displays in and around Harrisonburg. Shaena and I, with several other family members, greatly enjoyed visiting the "Winter Wander" light display at the Boar's Head Resort in Charlottesville a few nights ago. Next time maybe we'll have to dine there or stay over as it was quite lovely! Check out the lights at Winter Wander yourself between now and January 7th... ![]() Before we move onto the real estate data we're all waiting for, each month I offer a giveaway, of sorts, for readers of this market report, highlighting some of my favorite places (or things) in Harrisonburg. Recent highlights have included Walkabout Outfitter, Bella Gelato and the JMU Forbes Center. This month, I encourage you to go check out Grilled Cheese Mania on Main Street in Harrisonburg. If you find me at GCM, you'll likely find me enjoying the Triple Lindy with a side of Miss Tess' Tomato Mac. :-) Click here to enter to win a $50 gift certificate to Grilled Cheese Mania! Finally, take a few minutes to check out this month's featured home... a spacious, remodeled farmhouse on an acre in the Turner Ashby district with some excellent outdoor amenities located at 3667 Dry Hollow Road! Now, let's take a look at the latest data in our local real estate market... ![]() Let's drive right into a few of the main metrics of our local housing market outlined above... [1] Home sales slowed considerably this November compared to last November... declining 35% from 138 sales to 90 sales. You'll see a clearer (and more startling) visual of that shortly. [2] This significant decline in the number of home sales in November 2022 resulted in an overall 3.5% decline in 2022 home sales as compared to 2021 home sales when viewing the first 11 months of the year. [3] But yet... the median sales price in our area keeps on rising, up 11.3% from a year ago to $299,900 when looking at the first 11 months of 2022. [4] Furthermore, homes are (as a whole) still selling just as quickly... with a consistent median of five days on the market thus far in 2022, which matches the speed of home sales a year ago. Now, that startling visual of the November 2022 dip in home sales... ![]() Lots to note regarding the graph above... [1] We saw slower (fewer) home sales in each of the four months leading up to November. This was not altogether surprising, as mortgage interest rates have been steadily rising throughout 2022. [2] Home sales really (!!!) slowed down in November 2022... dipping down to 90 home sales as compared to 138 in the same month last year. [3] The 90 home sales this November is not actually that different than the 93 seen back in November 2019. [4] The past two years (2020 and 2021) may very well be anomalies given that they were during the Covid induced overheating of the local real estate market. If we look at the five Novembers prior to 2020 (thus, 2015-2019) we'll find an average of 94 home sales in November. So... home sales dropped significantly in November 2022. That's somewhat surprising, as it finishes off a long, multi-year, run of a super exuberant local housing market. It's also not that surprising, given rising mortgage interest rates, and given what usually happens in November if we're not in Covid times. As we'll see below, the temporary (crazy) boom in home sales brought on by Covid and super low mortgage interest rates may be coming to an end... ![]() Prior to Covid (2020-2021) we had been seeing a relatively consistent 1300-ish home sales per year. Then, the market went crazy during 2020 and 2021 and home sales approached 1500 sales in a year, and then almost reached 1700 sales in a year. That string of two record breaking years in a row... won't continue in 2022. All the way up through September 2022, it was seeming that we'd have yet another record breaking year this year. But 2022 fell slightly behind in October, and even further behind in November. Looking ahead, it seems likely that 2022 will end up being the second strongest year of home sales ever in Harrisonburg and Rockingham County... just behind 2021. Looking at things from a slightly longer term perspective, we can see yet again how the local real estate market is slowing a bit after having peaked in 2021/2022... ![]() A year and a half ago (ish) we were seeing home sales at an annual pace of 1,617 sales per year... back in July 2021... which included sales from August 2020 through July 2021. Now, we're seeing home sales at an annual pace of 1,620 sales per year... which includes sales from December 2021 through November 2022. So, the market has retreated a bit... with fewer sales per year now than we've seen for the past year and a half-ish. This was highly predictable given rather dramatic increases in mortgage interest rates. It is somewhat surprising, however, that the decline in annual sales has been as small as it has been given how much mortgage interest rates have increased. The pace of annual sales peaked at 1,726 sales... and we have only seen a 6% decline from that peak... to 1,620 sales per year. Now, then, given that home sales are slowing, we're almost certainly seeing inventory levels rising, right? ![]() I'll make this point a few more times as we continue through these graphs, but here's your first visual showing that even if the market is starting to transition a bit, it's not doing it very rapidly. Yes, home sales are slowing. The graph above shows how many buyers are buying in a six month timeframe. We have seen a decline over the past year from 833 buyers buying every six months down to 810 buyers buying. So, yes, the pace of buyers committing to buy is certainly slowing. But... we're not seeing as much of an increase in sellers selling (inventory levels) as we might otherwise expect. We've seen an increase over the past year from 115 homes for sale up to 138 homes for sale, but that's still a notable net decline in inventory from two years ago and three years ago. So, is it a slightly less strong seller's market now? Yes. Is it still a strong seller's market now? Yes. Now, looking at contract activity for a moment, to predict where things might be headed from here... ![]() As becomes evident with my handwritten note on the graph above... contract activity this October and November was MUCH slower than last October and November! After a combined total of 297 contracts being signed during that two month period last year... we have seen only 166 contracts signed this October and November, which is a 44% decline! Again, first, not a total surprise. Buyers are a bit less excited to sign contracts to buy homes with interest rates of 6% to 7% (this Oct/Nov) as compared to when interest rates are 2.5% to 3.5% (last Oct/Nov). Second, these lower contract numbers have started to result in lower sales numbers and that is likely to roll into December sales and January sales. Finally, it's important to remember that past two winters (2020, 2021) were a bit abnormal given Covid (lots of buyers wanting to buy a house) and super low interest rates (lots of buyers qualifying to buy a house) and this winter we seem to be returning to what was previously a typical seasonal trend of fewer contracts and sales during winter months. Now, then, back to inventory... certainly it must be rising, given fewer closed sales and fewer contracts being signed, right? ![]() And... nope! Inventory levels rose through much of 2022... but have now been declining for the past four months... as is relatively normal for the fall into winter timeframe. Furthermore, inventory levels are still lower now than they were two years ago. This coming spring will be interesting, depending on how mortgage interest rates look at that time. It's typical to see lower inventory levels in the winter, and that makes the lower contract numbers less consequential. Lots of folks choose to sell in the spring and summer, and if we have lower contract numbers at that time, then we could see inventory levels starting to measurably increase. Driving this point home one more time... ![]() The graph above shows inventory levels by property type. Inventory levels of attached homes (townhomes, duplexes, condos) have stayed relatively consistently between 25 and 40 over the past year and a half. Inventory levels of detached homes were rising between June 2021 and June 2022... but then have declined for the past four months. So, as my notes point out... higher mortgage interest rates did indeed lead to slower sales... but slower sales are not necessarily leading to higher inventory levels. Come spring, we may have new insights as to a potential new trajectory of the market if more sellers want to sell and this lower number of buyers are willing to buy. This next graph has become a bit more complex since I last referenced it... ![]() First, conceptually, the timeframe in which homes are going under contract (days on market) is often an excellent indicator of the tone of the local market. As such, for some time I have been tracking the "median days on market" for homes that are selling in Harrisonburg and Rockingham County. The annual median days on market (blue line above) fell to five days (!) back in July 2021 and has remained at that level ever since. As the market has started to feel like it might be transitioning, or as we have though that maybe the market would have to be transitioning, several of you insightful and intelligent readers have asked if this "median days on market" trend looks different if we weren't looking at an entire year of data at a time. Basically asking the question... well, if the median days on market is five days over the past year... certainly it must be (might be?) higher if we looked only at the last few months, right? The new lines on this graph above address this inquiry. The gold/yellow line evaluates median days on market in a six month timeframe... and the red line shows this same metric in a three month timeframe. All that to say... even if we narrow our scope all the way down to the past three months... the median days on market has only risen to... six days instead of five. Half (or more) of the homes that have sold in the past three months were under contract within six days of being listed for sale. If (when?) the market transitions further, we will likely start to see this metric (median days on market) start to trend higher... but we're not seeing it yet. One of the main market impacting factors that I mentioned multiple times throughout this report is the change in mortgage interest rates over the past year... ![]() A year ago buyers enjoyed mortgage interest rates right around 3%. Today... rates are twice as high... with an average rate of 6.58% for a 30 year fixed mortgage interest rate as of the end of November. Rates have actually trended down a bit further since that time... with a current average of 6.33% that is not yet shown on the graph above. Will significantly higher mortgage interest rates cause some buyers to not be able to buy? Yes. Will significantly higher mortgage interest rates cause some buyers to not want to buy? Yes. Will significantly higher mortgage interest rates cause a significant (10% or more?) decline in the number of buyers buying homes in our local housing market? Thus far, it seems not. And there you have it... the latest trends in our local housing market as we roll into the last two(ish) weeks of 2022. [1] We're starting to see fewer home sales... though the "fewer" is compared to a "higher" time that we might later conclude was well outside the norm for our local market. [2] We're still seeing higher and higher sales prices in our local market despite (non-cash) buyers financing their home purchase at some of the highest mortgage interest rates we've seen in over 10 years. [3] Despite slightly less buyer activity, inventory levels are remaining stable and may be starting to return to historical seasonal trends of fewer homes on the market in the winter and inventory levels rising again in the spring and summer. As we near the end of 2022, some of you may be considering the sale of your home (or the purchase of a new one) in 2023. If so, we should start chatting sooner rather than later about how all of these market trends potentially impact your plans and the timing of those plans. Feel free to reach out to start that conversation by emailing me or texting or calling me at 540-578-0102. I'll provide another update after the first of the year. Until then, I hope you enjoy the remainder of what is one of my favorite months of the year. December includes Shaena's and my anniversary, Shaena's birthday, and Christmas! Celebrations all month long. ;-) I hope you have an enjoyable, peaceful, fulfilling remainder of 2022 -- and that you find opportunities to spend time with the people you love during this holiday season! | |
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High Buyer Demand Keeps Prices Rising Despite High Interest Rates, But What If... |
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![]() Between 2019 and 2021 we saw very high levels of buyer demand... and very low mortgage interest rates... which lead to higher and higher sales prices. In 2022 we saw continued high levels of buyer demand... combined with much higher mortgage interest rates... and yet, prices kept rising. Perhaps we'll never need to know the answer to my "what if" above... since buy demand might remain quite high in the Harrisonburg and Rockingham County area for years to come... But what if.... buyer demand declined... and mortgage interest rates remained high... would prices remain high? Or would prices level out? Or would prices start to decline? Again, so long as buyer demand remains high, we may never need to know the answer to this hypothetical question... but feel free to let me know what your guess is as to how our local market would respond... | |
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Current Housing Market Trends In Four Lines, Two Curves |
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![]() I sent out a long and detailed market report yesterday with lots of data, charts and graphs. You can find it here. But maybe you don't want to read something that long. ;-) For those that don't, enjoy a comprehensive(ish) understanding of the market described above with four lines and two curves. SALES - we have started to see fewer sales over the past four months PRICES - the median sales price keeps on rising INVENTORY - after starting to see some increases we are now seeing what is likely a seasonal decline in the number of homes for sale CONTRACTS - we have seen multiple months of declining contract activity DAYS ON MARKET - homes are still selling fast... very fast RATES - mortgage interest rates keep on rising Sure, this leaves out some of the nuance in yesterday's report, but it should give you a good enough primer to understand the basic market dynamics at play right now in the Harrisonburg and Rockingham County real estate market. Questions? Thoughts? Observations? Email me: scott@hhtdy.com | |
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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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