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Buying a house is not for everyone, but it's becoming more and more favorable compared to renting! |
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Just like the housing market, the employment situation is more favorable locally than nationally |
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The national headline (and excerpt) from the Daily News Record over the weekend.... The local headline (and excerpt) from last week's Daily News Record.... Just as with the housing market, the local news is often quite different than the national news, thank heavens! | |
Is the housing market "well" yet? |
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The front page of today's Daily News Record might make you wonder whether our local housing market has taken a turn for the worse. Do note, however, that today's article is focused on national housing trends, not local trends. The first line of the article tells us the negative trend that was seen nationally.... A gauge of Americans who signed contracts to buy homes fell in April from nearly a two-year high in the previous month. Let's re-write that for our local market.... A gauge of those who signed contracts to buy homes in Harrisonburg and Rockingham County rose 10% in April to the third highest level in the past two years. Ahhhh...that's better. I was having heartburn at first, worried that our local housing market was not well, and that I might have to take it to see the housing doctor. Alas, our local market is apparently (again) outperforming the overall national housing market (if there is such a thing). Stay calm Harrisonburg and Rockingham County homeowners --- the local housing market still seems to be on the mend. | |
Are sellers accepting home sale contingencies? |
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Plenty of houses are going under contract, but are sellers accepting home sale contingencies? Based on the analysis above, it would seem that they are not (in almost all cases) accepting home sale contingencies. Here's the logic....
I must say, I was quite surprised to find this to be the case --- I thought perhaps 10% - 20% of contracts might have kickout clauses (and thus home sale contingencies) because plenty of buyers have to sell before buying. It would seem that most buyers are likely waiting to make offers until they have their own properties under contract (thus eliminating the need for the kickout clause) AND/OR most sellers are not accepting offers with home sale contingencies unless the buyers' houses are already under contract (thus eliminating the need for the kickout clause). If you are a buyer, I would certainly suggest the strategy outlined above (and the only one that is apparently working with sellers right now) --- get a contract on your house and THEN make an offer on the property you would like to purchase! | |
Understanding Real Estate Assessments |
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As published yesterday in the Shenandoah Valley Business Journal. Many people believe the assessment of their property istheir home's value. In actuality, theassessed value of a property is the value assigned to the property by the localassessor's office, for the purpose of determining how much you will pay intaxes. Certainly, the assessed value is intended to be the precise valueof your home – but quite frequently there is a disparity in this assessed valueand market value. The market value ofyour home is the price at which it would sell in the current market. Of interest, the City of Harrisonburg real estateassessments are currently a bit more accurate than those in RockinghamCounty. As can be seen in theinfographic, homes sold during 2011 in the City of Harrisonburg sold for 95.1%of their current assessed value. Breaking it down further, 64% of the homes that sold during 2011 in theCity of Harrisonburg sold at a lower price point than their assessed value. This is an indication that many City propertyassessments are likely a bit too high. In Rockingham County, most property assessments are too low –as 70% of properties that sold in 2011 sold for more than their assessed value– and on average, properties sold for 110% of their assessed value. Of note, homes in the City of Harrisonburgare re-assessed every year, while homes in Rockingham County are onlyre-assessed every four years. In thepast, this has resulted in lower than expected assessments in Rockingham Countydue to the infrequent updates to their assessed values. Given the great variation in assessed values and marketvalues, homeowners should not rely on their tax assessment for an understandingof their property's value. Furthermore,home buyers should not rely on assessed values to guide them in understandingthe market value of a home that they might purchase. Both buyers and sellers should strive tounderstand the market value of a particular piece of real estate my analyzingsimilar homes that have recently sold and those currently on the market in agiven neighborhood or price point. Click on either image below for a printable PDF.... | |
Nationally, sales are up, inventory down per NAR, Calculated Risk |
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Just as we have seen over the past 6 to 12 months in Harrisonburg and Rockingham County as well as in Virginia, home sales are increasing and inventory levels are dropping on a national level as well. Read more from NAR and Calculated Risk. | |
Overall Virginia housing market continues to gain strength |
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From the Virginia Association of Realtors this morning.... Home sales (# of sales) and median prices are both up across Virginia! Click the image below to download the full Virginia Home Sales Report. | |
Housing recovery more evident in lower price ranges |
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The graph above shows the average number of home sales per month (in each of four price ranges) when evaluating a 12-month time period. For example, the last data point shows the average number of home sales per month for May 2011 - April 2012. As is quite evident, the recovery (in the pace of home sales) is more pronounced in the lower price ranges. | |
Harrisonburg, Rockingham County housing market continues to gradually improve with home sales up 2%, prices up 4% |
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Many aspects of the local housing market have improved over the past year, and there are signs that this gradual recovery will continue. As shown above, most market indicators are positive when looking back at recent real estate activity in Harrisonburg and Rockingham County:
As another sign of an improving real estate market, inventory levels have dropped 15% over the past year, despite recent seasonal increases. Long term trends shown above (rolling 12 month calculations for sales pace and price) also indicate that the local housing market is stabilizing (price) and starting to grow (pace). Also, despite prior warnings of potential increases, mortgage interest rates remain extraordinarily low. There is plenty more to read, analyze and understand. Click here (or on the market report cover above) to download my full monthly market report. | |
If you bought during X your house is likely worth Y today |
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The chart above is calculated based on comparing this year's median sales price to the median sales price in each of the prior eleven years. Several key points to take away from this chart....
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Was the federal home buyer tax credit worthwhile? |
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I suppose it was helpful from a very short-term perspective --- it gave the market a boost between 2009-Q3 and 2010-Q2. But those artificially elevated sales levels didn't last -- sales declined to even lower levels after the tax credit than where they had been before it. Thankfully, the last year has shown steady growth in the number of home sales in Virginia, without the assistance of the tax credit. | |
National Association of Home Builders Remains Optimistic About Housing Recovery |
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"In its latest construction forecast, the NAHB on Wednesday stuck to its guns that "underlying fundamentals" such as low mortgage rates, decent economic growth, and pent-up demand for housing will drive double-digit percentage increases in home starts this year and next, and reverse catastrophic declines in new and existing home sales." Read the entire story at Builder Online. | |
Housing markets are improving all across Virginia! |
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From the Virginia Association of Realtors, Pace and price of home sales increase in Virginia during Q1 2012. Read on.... The First Quarter 2012 Virginia Home Sales Report has been released and brings good news for the Commonwealth! Several long-term trends indicate that Virginia's housing market is continuing to stabilize. As shown above, the pace of home sales in the first quarter of 2012 marked an improvement over both the first quarter of 2011 and 2010. The median residential sales price has increased 2.4% in Virginia over the past year despite a slight (-0.5%) decline over a three-year time period. Download the full First Quarter 2012 Virginia Home Sales Report to find out more about how different regions in Virginia fared in the first quarter of 2012. | |
Fooled by a narrow scope? |
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Thanks a lot Dustin, now things are even more confusing. So, Dustin suggested that I examine data prior to 2008 to see if we could learn more about why single family home values surged in the City of Harrisonburg in 2010. Well, as you can see above, we may have been fooled by looking just at 2008-2012 data. I have highlighted (in yellow) the time frames when the City and County median prices were relatively similar. Now you'll note that there were two surges in values --- City values surged ahead in 2010 (and then stepped back into line) --- but before that, County values surged head in 2005-2007 before stepping back into line. What explains it? Gas prices? Home buyer tax credits? | |
Caffeine-inspired readers solve mystery of Harrisonburg's temporary surge in single family homes values |
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Wow, there were a lot of great proposed explanations for why Harrisonburg single family homes saw an increase in value (median sales price) between 2009 and 2012. Thanks to all for your comments and perspectives, most of which surfaced via Facebook. Here is a re-cap of your perspectives:
Thank you all for your perspectives, and for engaging in some thoughtful debate as to why single family homes performed better in Harrisonburg than in Rockingham County between 2009 and 2012. As to the Starbucks reward for fantastic insights, I'm calling it a tie between Brett and Karl. I'll be in touch to get each of you a Starbucks gift card. Stay tuned for the next time I get stuck figuring out the WHY of some of our local housing market data. | |
Explain this to win a $10 Starbucks gift card: Why did single family home values diverge in Harrisonburg, Rockingham County between 2009 and 2012? |
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I'll give a $10 Starbucks gift card to the person who can provide the correct explanation of the graph below. OK, I'll be fair, I don't know what the correct answer is. :) So, I'll give the gift card to the most believable answer. Leave your answer as a comment below, or e-mail me (scott@HarrisonburgHousingToday.com). | |
Real Estate Tax Analysis in Harrisonburg and Rockingham County |
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The City of Harrisonburg is considering increasing the real estate tax rate from $0.59 per $100 of assessed value to $0.63 per $100 of assessed value. Rockingham County is also considering a $0.04 increase, from its current tax rate of $0.60 per $100 of assessed value to $0.64 per $100 of assessed value. To understand the potential rationale behind such an increase, let's examine funding levels given a few assumptions to make the math a bit easier. First, we will assume that all tax assessments are at exactly 100% of the market value of properties. Second, we will assume that both Harrisonburg and Rockingham County are comprised of 1,000 privately owned homes. Third, we will assume that all homes have market values (and assessed values) of the median sales price. As shown in the table above, the median sales price in the City of Harrisonburg declined 20% between 2008 and 2012 from $213,500 to $170,000. If the City of Harrisonburg were comprised of 1,000 median-priced homes, the tax base and thus the tax revenue would also decline by 20% from $1.26M to $1M. Even with the proposed $0.04 proposed increase in the tax rate (from $0.59 to $0.63) the tax revenue would still decline by 15% from $1.26M to $1.07M. In fact, the tax rate would need to increase to $0.74 (a 25% increase) in order to maintain the same tax revenue as in 2008 --- assuming that assessed values have tracked precisely with median sales prices. As shown in the table above, the median sales price in Rockingham County declined 20% between 2008 and 2012 from $215,000 to $171,750. If Rockingham County were comprised of 1,000 median-priced homes, the tax base and thus the tax revenue would also decline by 20% from $1.29M to $1.03M. Even with the proposed $0.04 proposed increase in the tax rate (from $0.60 to $0.64) the tax revenue would still decline by 15% from $1.29M to $1.1M. In fact, the tax rate would need to increase to $0.75 (a 25% increase) in order to maintain the same tax revenue as in 2008 --- assuming that assessed values have tracked precisely with median sales prices. | |
Home Values compared to Tax Assessments in Rockingham County |
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I'm asked quite frequently about the relationship between home values and tax assessments. After a lengthy analysis of the 528 home sales in Rockingham County during 2011, as recorded in the HRAR MLS, here is what I'm finding.... (click here for the same information for the City of Harrisonburg) click the infographic above for a printable PDF version. The bottom line here is that County properties seem to be under-assessed by an average of 10%. Most buyers pay more than assessed value for the properties they purchase. | |
Home Values compared to Tax Assessments in the City of Harrisonburg |
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Positive trends in the first quarter of 2012 |
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Sales are up.... Prices are starting to stabilize.... Inventory is down.... | |
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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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