Analysis
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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! | |
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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? ;) | |
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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.  | |
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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 | |
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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! | |
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Real Estate: the best buying opportunity of a lifetime? |
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What do you think? Could real estate be the best buying opportunity of your lifetime?  Click on the image above to read this article from Time. | |
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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. | |
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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. | |
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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. | |
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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. | |
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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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Housing Contracts...but is that a verb or a noun? |
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 Today's Daily News Record is correct -- in more ways that one. The housing market has indeed contracted (verb) as home sales and prices have declined in recent months. However, further analysis of the current market reveals that Housing CONTRACTS (noun) are the more exciting part of this storyline. It was Carey Keyes that made the exciting discovery today....last June 54 contracts were written during the entire month. But in the first 14 days of this June, there have already been 51 contracts! If we project out until the end of June, here's how last June and this June would compare....  OK, OK, I realize this is extrapolating from June 1 - 14 data....so for those of you who only want to deal with actual data (not projections), let's look at the total number of contracts written thus far this year (Jan 1 - June 14) as compared to last year during the same time period).....  So, it turns out that there might still be hope for 2011 to be the year that the housing market stabilized in Harrisonburg and Rockingham County. | |
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Location make a big difference in home value |
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Thanks to Tom Barnum for pointing out this interesting contrast in values....  The two houses above seem relatively similar, right?
The value difference is at least partially based on location. House #1 is located on Monument Avenue adjacent to Purcell Park in Harrisonburg. House #2 is located on Main Street in Timberville. | |
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Monthly home sales: sliced, stacked, side by side |
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 For each of the past five years, there have been fewer and fewer home sales in Harrisonburg and Rockingham County. First 1669 (2005), then 1438, then 1248, then 936, then 816, then 758 (2010). After this 55% decline in home sales, I know that we haven't seen a bottom to the local real estate market until we see the number of home buyers start to increase again. I am certainly rooting for 2011 to be the year that we see a reversal -- when we'll finally see an increase in home sales. The graph above, however, shows that we'll need to see a strong second half of 2011 in order for my prediction to come true. Of interest, you might note that:
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Home sales pace, sales price decline in Harrisonburg and Rockingham County |
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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 24-page report or read on for some highlights. While there are several indicators that Harrisonburg and Rockingham County might be starting to see a recovery in the housing market, there are still plenty of trends that are not as hopeful.  Above you will note that sales are still lower this year than in 2010, with a 6% decline in May 2011 sales (compared to May 2010) and a 6% decline in year-to-date home sales. Median prices also continue to decline, with a rather steep 10% decline in median sales price over the past year (Jan-May 2010 vs. Jan-May 2011).  Despite a downward trend in the pace of home sales and in median prices, we are still on a several-month run of lots of buyers committing to buy homes in Harrisonburg and Rockingham County. This should, in theory, help to stabilize the pace of home sales over the next few months. May 2011 contracts exceeded both May 2010 and May 2009!  The graph above (inventory) is one trendline that we're happy to see decline. There are currently 13% fewer homes on the market as compared to a year ago! This helps to balance the market, though there are still many more sellers in the market than buyers.  Over the past five years, the pace of home sales has declined almost 50% in Harrisonburg and Rockingham County. Despite this tremendous decline in the number of home buyers in our market, the median price did not start declining until 2008, and even then, only had a slight decline (8%) through the end of 2010. As 2011 finishes out, we'll get a better idea of how these two trends (pace, price) will perform. For more reading, click here to download the full Harrisonburg & Rockingham County Real Estate Market Report as a PDF. 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. | |
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Will Harrisonburg See a Double Dip In Home Values? |
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Well, it's hard to say, because we're still in the midst of the first dip....  The blue line above shows the Case-Shiller U.S. National Index Levels, which is a measure of home values across the United States. As you can see, home values declined between 2006 and 2009, but then started to increase again in 2009 and 2010 -- due largely to the federal home buyer tax credit. Alas, home values (nationally) have started to decline again, which many are calling a "double dip" in home values. For better or for worse, Harrisonburg and Rockingham County do not need to worry about a double dip in the near future --- because we're still in the midst of the first dip. As you can see above in the red line, local home values have only gradually decreased between 2008 and today. So, while median home values are still declining in Harrisonburg and Rockingham County, there is some good news on other fronts, for example despite April being a seven month low in contracts across the country, it was a twelve month high for Harrisonburg and Rockingham County! Stay tuned for more market analysis as the May data is compiled and analyzed over the next week. | |
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An analysis of current residential listing inventory |
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Click the image for an easier to read PDF....  | |
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Home values usually go up over the long term |
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The fine folks over at Visualizing Economics have assembled another visual look at the housing market over the past two decades.  As can be seen above, nearly every state in the country witnessed an increase in home values over a twenty year horizon. Virginia fared particularly well, with a 30% - 40% increase over the twenty years.  The second map (above) shows the changes in home values over the past 11 years. Quite a few states here saw a decline (purple) in home values, but Virginia still showed a 30% - 40% increase! | |
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Sales of building lots in Harrisonburg, Rockingham County appear to have stabilized |
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 Click on the image for a larger version The median sales price of building lots (less than an acre) skyrocketed in 2005 and 2006 up to a peak of $99,900. But alas, these elevated values did not stick -- they fell just as quickly back down to $58,300 just two years later in 2008. After several years now in the mid $50K's, it seems (relatively) safe to say that the value of building lots has stabilized at a median of around $55,000. Lot sales also seem to have stabilized because the decline in the annual number of lot sales has ceased. There were more lot sales in 2010 than in 2009, and we seem to be poised to have another increase in 2011. The good news (perhaps?) is that this is still an overall increase above where values were before the rapid 2005/2006 escalation. In 2004, the median sales price of such building lots was $42,000, which makes today's median value of $55,000 a reasonable place to be given long term gradual increases in values. | |
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Where (in Rockingham County) are home values increasing? |
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Each area of Rockingham County has performed a bit differently over the past year. Some areas have seen an increase in median sales price, and some have seen a decrease.  As you can see above (and below) South-East and North-West Rockingham County performed the best when comparing the median sales price from the last 12 months with the prior 12 months.  | |
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
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Commonwealth of Virginia
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