Analysis
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Unwillingly keeping your townhouse might be your best (unintentional) financial move yet! |
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As I pointed out a few days ago, if you bought a townhouse a few years ago, you might be in a position where you can't sell it -- and thus end up being an accidental landlord. But there may be some unintended very positive consequences for keeping that townhouse. Let's examine what might happen if you kept your townhouse for the remainder of the term of your mortgage. In the illustration above, let's imagine you bought your townhouse for $160K in January 2005 and financed 100% of the purchase price. You stay in the townhouse for seven years, and then move out of the area for a new job. Faced with a tough townhouse sales market, you feel forced to keep the townhouse. What happens next.....
As you can see, after investing $0.00 on Day 1, you end up having a cumulative $230,352 benefit after 30 years. Wow! So, can this make you a bit more optimistic about being (or feeling) forced to keep your townhouse? | |
July 2011 Virginia Housing Market Report Released, Harrisonburg Looks Good |
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The graph above starts Harrisonburg (and Rockingham County) and Virginia on the same footing based on the number of sales in July 2010. Then, comparing the subsequent 12 months, we see that the Harrisonburg and Rockingham County housing market is (using this analysis tool) performing quite well compared to the entire state of Virginia. Our local housing market has especially performed well over the past four months, as shown above in yellow, which echos what we have seen in recently analysis of our local sales data. Click the image below to download a PDF of the entire July 2011 Virginia Housing Market Report. | |
Did the federal home buyer tax credit impact the pace of home sales in Harrisonburg and Rockingham County? |
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The federal home buyer tax credit did not seem to have a lasting, positive impact on the local housing market. While the federal home buyer tax credit (timeframe shown in green above) did cause the pace of home sales to increase, it was not lasting -- sales declined again after the tax credit expired. We're now roughly a year out from the expiration of the tax credit, so we are now getting close to being able to analyze the local housing market without a backwards reference to the (long) period of time with government intervention as an influencing external variable. It's great, thus, that the real estate market seems to finally be improving as of mid-August. | |
Seller concessions increase as market activity decreases |
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Thank you, Michael, for suggesting that I analyze this.... As seen above, more sellers are giving concessions these days to close the deal. These concessions are most often a credit towards closing costs -- and thus far in 2011, 41.2% of sellers have provided such concessions at closing in Harrisonburg and Rockingham County home sales. This is a 30% increase over just three years ago. Not only are more sellers making concessions, the average concessions are also on the rise --- from $1,213 three years ago to $1,858 thus far in 2011. This shows 53% increase, though the current average of $1,858 is less than 1% of the current average sales price of $201,364. | |
Halfway through August, and the real estate market still seems to be performing well in Harrisonburg and Rockingham County |
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For the past five years, I've had to answer the question of "so, how's the real estate market" with responses such as "well, not so great" or "well, it could be worse." Now, the answer is a bit different, more along the lines of.... While we're not out of the wood yet, there are many positive indicators in our local housing market that seem to show a modest and slow start to market recovery. As shown above, above:
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Should I be worried if I am paying more than the assessed value for a house? |
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If you're buying a single family home in Rockingham County, chances are, you're paying more than assessed value for the house. Should you be concerned? No --- it just means that the assessed values aren't currently as close to market value as they are intended to be. To check in on the relationship between purchase prices and assessed values, I pulled all single family homes that sold in the past month in Rockingham County that were not bank owned sales. I then compared each sales price to the assessed value and found that most buyers paid at least 5% more than the assessed value (shown in red above). If almost all buyers were paying significantly less than assessed value, I'd be concerned about you paying more than assessed value --- but assessed values in Rockingham County are still quite low right now, leading to the data above. For your reference, in these 38 transactions, buyers paid (on average) 15% more than the assessed value of the home. | |
What Monday's (rather positive) local real estate market report does and does not mean for you |
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There are lots of positive trends in the local housing market right now!
Is the future now rosy and bright? Will home value start going up, up, up again? While there are some wonderful, positive indicators in Monday's housing market report (PDF) here are some other not-as-exciting current market realities:
I would suggest cautious optimism. While we're not out of the woods yet, there are lots of indicators that would suggest that we're nearing a turning point in the market. | |
Just wait until all of these contracts turn into home sales! |
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It is exciting to see how quickly contracts are coming together on homes in Harrisonburg and Rockingham County compared to the past several years. At the rate that properties are currently going under contract, 2011 should finish out a (relatively) strong year of home sales -- very likely exceeding 2010 sales. Increased contracts will eventually lead to increased sales will eventually lead to stabilized home values will eventually lead to a more balanced real estate market. Stay tuned! | |
Home Sales Increase, Prices Increase, Contracts Increase! |
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Finally, some signs of hope for the local housing market! I just completed my monthly analysis of the Harrisonburg and Rockingham County real estate market, and there are plenty of reasons to be excited. Download the full market report (PDF, 7MB) or read on for some highlights. As seen above, July 2011 home sales shot past July 2010 by 48% --- which helped the year-to-date sales pace to come within 6% of last year's pace. Furthermore, we did not see a decline in median sales prices when comparing this July and last July....and....the average sales price INCREASED by 5% comparing July to July. But it gets better --- the next few months should be rather exciting as well, since July 2011 buyer activity (shown above) exceeded both July 2009 and July 2010 contract levels. Finally, some good news for local home builders, new home sales may finally be stabilizing, with both the pace and price of new homes looking to stay relatively consistent between 2010 and 2011 (as shown above). One of the reasons (among many) that we are continuing to see improvement in the local housing market is because mortgage interest rates continue to stay below 5%. As shown above, they have started to increase a bit, but are still at an average of 4.6%. Click on the image above to download my full Harrisonburg & Rockingham County Real Estate Market Report for further analysis of our local housing market. As always, I have included both the good news and the bad news -- my hope is that my analysis will empower you to make the best real estate decisions possible. If you have questions about the report, or if I can be of assistance to you with real estate that you own, or that you'd like to own, please be in touch. You can reach me most easily at 540-578-0102 or scott@HarrisonburgHousingToday.com. | |
New study finds correlation between local real estate market and weather conditions! |
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OK, so admittedly it is a bit cooler this week --- but last week was HOT, with temperatures soaring up to (and over) 100 degrees! Likewise, the local real estate market has been HOT this month.... Yes, that is a 50% increase in home sales between last July and this July! Contracts are also up, 29% as compared to last July! My hope is that the weather cools off, but the real estate market continues to heat up! | |
The costs of bread, gas and cars have increased, but not homeownership! |
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The price of bread has increased 272% over the past 22 years. Likewise, the price of gas has increased dramatically (299%) -- and even the cost of cars has increased 85%. But the cost of owning a home has not increased at all --- when it comes to monthly payment. The table above shows how each item has increased in cost over time. The mere 0.5% increase in the cost of owning a home is derived using the median home price (nationally) and the average interest rate at the time. Perhaps if bread, gas and cars didn't cost so much, more people would be able to afford homes? ;) | |
Virginia home values recovering more quickly than U.S. |
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The Virginia Association of Realtors has released their 2nd Quarter report providing a great overview of the housing market in Virginia, including (amongst lots of other analysis) the following good news.... While median home prices have declined in both Virginia and the United States over the past two years (comparing 2010 to 2008), it seems that home values may be recovering in Virginia more quickly than in the United States as a whole. The United States median sales price stayed relatively level between 2009 and 2010 (less than 1% change) while the median sales price in Virginia increased by 3% during the same time period. Click here to read the press release from VAR, or click the image below to download the PDF of the 2011-Q2 Virginia Quarterly Home Sales Report. | |
Historical Building Permit Trends in Harrisonburg and Rockingham County |
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A 20 year history of single family home building permits in Harrisonburg and Rockingham County (shown above) reveals that much of the new home construction is market driven. The past twenty years can be summarized in four main stages:
Data Source: Weldon Cooper Center | |
How did the first half of 2011 compare to previous years? |
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Last year (2010) was assisted by the federal home buyer tax credit. Thus, even though 2011 shows a decline compared to 2010, it's important to note the (slight) increase as compared to 2009. The second half of the year, however, will be key. Last year's 3rd and 4th quarter were rather slow, as many (many!) buyers were enticed towards the first half of the year before the tax credit expired. Thus, this year still has plenty of opportunity to outperform last year since we don't have a tax credit affecting the timing of the market. Stay tuned! | |
Real Estate: the best buying opportunity of a lifetime? |
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Local foreclosures slow in 2011 |
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Great news -- the local foreclosure rate is on the decline! There were 270 recorded trustee deeds in Harrisonburg and Rockingham County during 2010. In the first half of 2011 there were only 105 recorded trustee deeds. Yet there are some interesting foreclosure sales currently scheduled:
Learn more about short sales, trustee sales and bank owned properties. | |
July 2011 Harrisonburg and Rockingham County Real Estate Market Update |
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I just completed my monthly analysis of the Harrisonburg and Rockingham County real estate market. Click here for a PDF of the 25-page report or read on for some highlights. While the local housing market hasn't fully recovered yet, there is plenty to be excited about from the most recent market data below.... While year to date home sales (364) are a good bit below last year (418), we're on track with a 2009 sales pace. The thing to remember about 2010 is that many home sales were pushed into the first half of the year because of the expiration of the federal home buyer tax credit. Thus, as we continue through 2011, we stand a good chance of catching up with (or surpassing??) the pace of 2010 home sales. Median sales prices are still declining, but if the sales pace stabilizes and starts to increase, it will lead to a stabilization of sales prices and home values. June 2011 was a FANTASTIC month of contracts -- the second month this year with over 100 contracts signed. This is a strong indicator that we will see strong home sales in July and August. The graph above explores the number of cumulative month-by-month home sales --- you ought to note that last July, August, September and October were quite slow after the expiration of the home buyer tax credit. I believe we're poised to see some strong performance in the local real estate market over the next three to six months --- and hopefully well beyond that time! You'll find even more exciting news in my full market report (click here for the PDF) --- and some not so exciting news to keep you well balanced. As always, if you have questions about this report, or if I can be of assistance with real estate that you own, or that you'd like to own, please be in touch. You can reach me most easily at 540-578-0102 or scott@HarrisonburgHousingToday.com. | |
The Wall Street Journal seems to suggest that the Harrisonburg and Rockingham County housing market may be headed towards a recovery! |
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The Wall Street Journal ran a very insightful article a week ago entitled "How to Tell if Your Housing Market Has Hit Bottom" which points out that there are some communities around the country that are actually doing OK right now in terms of their housing market. The Wall Street Journal (with the help of Zillow) identified 25 communities whose current home values are no more than 10% lower than their home value peaks. Looking at these communities may give us some perspective on how to tell when our own (Harrisonburg/Rockingham) real estate market is ready to start improving. There are three main factors that are identified, and if any or all of these are present in a real estate market, things may be ready to start improving again..... #1 - EMPLOYMENT If employment is stable or on the rise, a real estate market actually has a shot at improving. Many of the improving communities are college towns, as universities provide excellent employment stability for a community. Harrisonburg and Rockingham County continue to see very low unemployment rates -- much lower than the national average, so we're doing pretty well based on factor 1 of 3. #2 - RENTS The ratio between rental rates and home prices is an important indicator of the health of a market. If home prices soar out of control well beyond the comparable cost of renting, then fewer and fewer people will buy, as renting will be more affordable. Many rent vs. buy calculators use a factor of 15 to determine whether a market is balanced. "...if prices are more than 15 times annual rents, then a market favors renters; under 15 times, buyers." As a quick example, a two-story city townhouse might rent for $900/month and sell for $150,000. This shows that our market is (in some sectors) currently favoring buyers instead of rents. Another factor (2 of 3) in our favor. #3 - FORECLOSURES Our community (and any community) needs to see a decline in foreclosure rates before the housing market can really recover. We seem to be poised to see our first decline in the foreclosure rate this year (2011) after several years of increasing rates. This would appear to be factor 3 of 3 in our favor. The article is definitely worth reading in full (here) --- and it is some interesting food for thought that suggests that our local real estate market might see brighter days in the near future. | |
The current decline in median sales price is (partially) due to more frequent sales of bank owned properties |
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The median sales price in Harrisonburg and Rockingham County has declined by 11% over the past year from $180K to $160K. That's a rather significant decline. But looking closer, it seems that one reason why it has declined as much as it has is because there are more bank owned properties selling this year as compared to last year. As you can see above, last year (YTD) REO sales only accounted for 8% of all home sales in Harrisonburg and Rockingham County. This year, however, REO sales account for 14% of all home sales. The median sales price of the non-REO properties this year is $170,056, whereas the median sales price of REO properties this year is only $129,250. There are certainly other factors that are causing a decline in median sales price, but the proportional increase in bank owned (REO) sales is certainly contributing to the situation. | |
Virginia home sales perk up in May to highest level since the tax credit |
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Per the monthly report published by the Virginia Association of Realtors this past week, home sales across Virginia were the highest in 10 months in May -- thus the highest since the federal home buyer tax credit. Sales vary in different areas of Virginia, but it is encouraging to know that Virginia's housing market seems to be performing relatively well of late. Read more: | |
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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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