Analysis
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Will Foreclosures Dominate 2011 Home Sales in Harrisonburg and Rockingham County? |
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The Associate Press (AP) story below ran a few weeks ago in the Daily News Record. AP stories often don't reflect market realities here in Harrisonburg and Rockingham County, so I must admit I didn't really believe it to be true in our local area. ![]() This headline came to mind again, however, when I was analyzing the 47 properties to go under contract in Harrisonburg and Rockingham County thus far in 2011. Each statistic below speaks to the types of properties that are actually selling these days, and the types of buyers that are actually buying. Of the 47 properties that have gone under contract thus far in 2011.... ![]() ![]() ![]() | |
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Real Estate: Finally a Good Investment? |
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![]() One of my clients forwarded me a great article from the Wall Street Journal that you might have interest in reading.... Real Estate: Finally a Good Investment? (Smart Money / The Wall Street Journal) The article has four premises for concluding that real estate might finally be a good investment, all of which seem reasonable to me:
Click here to take a quick read --- and let me know what you think. | |
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Building Lots Are Selling Slowly, So Where Are They Selling? |
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The pace of lot sales (of less than an acre) has declined significantly in Harrisonburg and Rockingham County over the past several years, from a high of 408 lot sales in 2004 down to only 58 lot sales in 2009. We did see a slight increase in 2010, up to 63 lot sales. ![]() So where were these 63 lots that sold in Harrisonburg and Rockingham County during 2010? BELMONT ESTATES: (4) lot sales between $74k and $90k view active listings in Belmont Estates BLUE STONE HILLS: (1) lot sale at $51k view active listings in Blue Stone Hills CROSSROADS FARM: (6) lot sales between $80k and $155k view active listings in Crossroads Farm GREAT OAKS: (1) lot sale at $65k view active listings in Great Oaks HARMONY HEIGHTS: (1) lot sale at $86k view active listings in Harmony Heights LAKE POINTE: (1) lot sale at $68k view active listings in Lake Pointe MAGNOLIA RIDGE: (12) lot sales between $55k and $84k view active listings in Magnolia Ridge MASSANUTTEN RESORT: (6) lot sales between $10k and $32k view active listings in Massanutten Resort MEADOWBROOK: (1) lot sale at $61k view active listings in Meadowbrook MONTE VISTA ESTATES: (1) lot sale at $80k view active listings in Monte Vista Estates OVERBROOK: (2) lot sales at $60k view active listings in Overbrook STONE SPRING MANOR: (4) lot sales between $29k and $39k view active listings in Stone Spring Manor THE CROSSINGS: (3) lot sales between $50k and $55k view active listings in The Crossings WOODBRIDGE: (2) lot sales between $37k and $50k view active listings in Woodbridge There were several other lot sales during 2010, that were not in subdivisions. Let me know if you have any questions about the building lot market in Harrisonburg and Rockingham County. | |
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If there are 10 months of housing supply available.... |
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Follow this "months of supply" logic with me....
Remember....30 houses for sale, 3 houses sell per months, so it probably looks like this.... ![]() Do you believe it? It doesn't really work that way. Here's the problem (for sellers) --- each month when three houses sell (go under contract), they will always almost be replaced by another three new listings. Thus, every month the odds are the same (roughly) --- there will again be 30 houses for buyers to choose from, and only 3 houses will be chosen. It then becomes clear that some houses will NOT be chosen, month after month. Again and again, a house will be a part of the 27 instead of a part of the 3. Thus, if 10 months of housing supply exists in a particular market segment, and a house has been on the market for 11 months, it isn't necessarily a terrible house --- it just has not been able to rise to the top 10% during any of the past 11 months. That, then, is an interesting object lesson for sellers. What do you need to do (with marketing, price, etc) to be in the top 10% of the houses for sale? Settling for being in the top 30% might not work so well for youIf the top 10% keeps selling, and new listings keep landing in the top 10% --- your "top 30% house" could sit on the market for month after month. | |
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Real Estate Showdown: Harrisonburg vs. Charlottesville |
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In a group discussion this morning about the Harrisonburg real estate market, someone wondered allowed about how the Charlottesville real estate market compared to Harrisonburg and Rockingham County over the past several years. Let's take a look, pulling from:
![]() As you can see (above) the Charlottesville Area has not had as much of a decline in market activity (-39% since 2006) as we have seen in Harrisonburg and Rockingham County (-47% since 2006). Furthermore, the market activity in the Charlottesville area is closer to leveling out (only a 1.5% drop in the last year) as compared to Harrisonburg and Rockingham County (7.1% drop in the last year). ![]() As for median prices, the Charlottesville area fell further (12% drop from the peak to the trough) compared to Harrisonburg and Rockingham County (8% drop from peak to trough) --- however, the Charlottesville area (perhaps because of a faster price drop) has already started to see an increase in median prices (1% increase since last year) while Harrisonburg and Rockingham County continue to slowly decline (3% decrease since last year). Despite the drastic differences in sales volume and median prices, the two markets have had relatively similar trends over the past five years. | |
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Harrisonburg Housing Market Steadies in 2010, Except Townhomes |
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I have just published my most recent real estate market report with lots of information about the Harrisonburg and Rockingham County real estate market to help you make more informed real estate decisions in 2011. Click here to download the PDF, or read on.... ![]() While there were even fewer home sales in 2010 than in 2009, we seem to be nearing the bottom of a gradual decline we have been experiencing since 2005. After 14%, 13%, 25% and 13% year over year declines, there was only a 7% drop in sales between 2009 and 2010. Perhaps 2011 will finally be the year when we meet or exceed the prior year's sales count. ![]() While the overall market may be recovering, the townhouse market continues to struggle to pick up any momentum. After only an 11% decline in the number of townhome sales between 2008 and 2009, we saw a full 20% drop between 2009 and 2010. And yes, this was amidst the first time buyer tax credit season! ![]() While inventory levels were higher for most months of 2010 than in the same months in 2009, we have seen a significant decline in inventory over the past six months. After a high of 1,015 homes for sale in June 2010, the market is now down to only 787 homes for sale --- the lowest in the past two years. ![]() Lot sales finally recovered -- at least in their pace, if not their price. After several very (VERY) slow years of lot sales, 2010 lot sales exceeded 2009 sales -- just barely. These sales are of lots smaller than an acre. Prices, as you can see, have dropped quite a bit over the past several years, down to the current median lot price of $55,000. ![]() Click the image above (or here) to review the entire market report. 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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758 Homes Sold Last Year --- But How Many Didn't Sell? |
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This can be a deceiving graph.... ![]() In many ways, this graph would suggest that all homes sell. Thus, if you list your home --- there is a 61% chance it will sell in the first six months of being on the market --- but if it doesn't, it will definitely sell within two years. That's not how it works. The graph above is showing the length of time it took to sell the homes that actually sold. One of my clients asked me a rather interesting question this week --- how many homes don't sell? I haven't figured out a very good way to determine that through our MLS system, but here's one look at it..... Over the past six months, in Harrisonburg and Rockingham County, 478 homes have expired out of the MLS, or have been withdrawn from the MLS. That's a pretty significant number since there are only 780 active listings on the market right now. Listing your house for sale does not guarantee that it will sell. Appropriate pricing and creative, pro-active, aggressive marketing can help -- but there is still no guarantee. And it seems that plenty of homes just aren't selling these days! | |
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Smallest, Largest, Least and Most Expensive of 2010 |
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For another interesting look at single family detached home sales in Harrisonburg and Rockingham County during 2010, let's check out the.... SMALLEST HOME SOLD IN 2010 ![]() This 574 square foot home in Hinton features 2 bedrooms and 1 bath, and sold for $74,250 in October 2010. LEAST EXPENSIVE HOME SOLD IN 2010 ![]() This 1,300 square foot home features 3 bedrooms and 1 bathroom, and only had a few vines growing through the walls and windows. This home sold for $39,000 in December 2010. LARGEST (AND MOST EXPENSIVE) HOME SOLD IN 2010 ![]() This 8,400 square foot home in Highland Park features 5 bedrooms and 5.5 bathrooms, and sold for $1,250,000 in August 2010. It was both the largest, and the most expensive home sold in Harrisonburg and Rockingham County in 2010. | |
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Listing Inventory Drops 12% In Less Than A Month |
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As I type, active listing inventory in Harrisonburg and Rockingham County stands at 745 residential listings --- which I believe is the lowest level we've seen in the past two years. This includes single family detached homes, townhomes and condos. Less a month ago, in my most recent market report, active inventory was at 846 listings. Thus, we've seen a 12% drop in less than a month. Furthermore, current listing inventory (745) is 27% below the highest inventory we've ever seen --- 1,015 active listings, just seven months ago in June 2010. We still have a largely imbalanced housing market in Harrisonburg and Rockingham County, with many more sellers in the market than buyers. Thus, a decline in listing inventory is great -- it helps to balance the market, making it a healthier market. The question, therefore, is whether this low inventory level will last.... A significant portion of the lower inventory levels are a result of listings that expired on 12/31/2010. There are 101 fewer listings now as compared to December 8th (745 vs 846) --- but 80 listings expired between 12/31/2010 and 1/1/2011. It is possible that a small (or large) portion of those 80 listings were not intended to have expired, and that they'll return to the market in the next few days. Within the next week we'll have a better idea of whether these low inventory levels will last. What do you think? And what do you hope? | |
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The bigger they are (houses), the harder they fall (sales)? |
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At the current pace of the market, it would take 21 months to sell all of the housing currently on the market in Harrisonburg and Rockingham County priced over $400,000. Wow, those expensive homes certainly are suffering, aren't they? Maybe not..... ![]() While large homes are not always expensive, and expensive homes are not always large, the trend above might be surprising given how many expensive homes are on the market. The graph above illustrates that although the pace of all home sales has fallen quite drastically over the past three years (a 38% decline), sales of large homes (3,000+ square feet) have only declined by 19%. So, it seems that the inventory statistics don't tell us the entire story. There are a relatively similar number of buyers of large homes in the marketplace as compared to three years ago......but significantly more sellers! | |
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Single Family Homes Under $200,000 in Harrisonburg and Rockingham County |
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For those looking to buy a single family home under $200,000 in Harrisonburg or Rockingham County, here's a bit of historical context for how realistic that is today. First, you'll note that there have been fewer and fewer homes purchased for less than $200,000 over the past decade, other than a slight increase this year. ![]() What is MUCH more interesting, however, is that the percentage of the single family home market that has been under $200,000 has been steadily rising for the past four years! ![]() We started out the decade with 88% of homes being purchased under $200,000. At the height of the housing boom, only 39% of single family homes in Harrisonburg and Rockingham County were being sold for under $200,000. However now, we have surpassed 50% again! And today, in fact, there are 206 single family homes under $200,000 for sale in Harrisonburg and Rockingham County! Click here to use the Power Search feature on my site to search for homes for sale. | |
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It is really hard (impossible?) to compete with bank owned properties |
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Harrisonburg and Rockingham County have seen an increasing number of trustee sales (foreclosures) over the past few years.... ![]() click the image above for a larger version of the graph The yellow bars above show the increasing number of trustee sales over the past decade, as compared to the number of sales recorded in the HRAR MLS (blue bars). I am quite thankful that we have not seen as much of a surge of foreclosures as many other areas in Virginia and across the country, but the presence of these foreclosure and then bank owned properties has had a very real impact on homeowners trying to sell in the same neighborhoods as some of these foreclosed properties. Let's take a look at an example to see the impact.... Stone Spring Village is a wonderful neighborhood of single family homes near the intersection of Port Republic Road and Peach Grove Road close to an elementary school, close to the new hospital, and close to JMU. Most homes in the neighborhood are 3 to 4 bedroom homes, most are 1,500 to 2,500 square feet, and many have basements. Until recently, home values in Stone Spring Village have been relatively stable. But three foreclosures in the past year have made the Stone Spring Village market a bit more turbulent....
Which house would you choose if the following were available?
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Does anyone really decide to buy a house between mid-December and mid-January? |
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Actually, yes.... Last year, between December 15 and January 14, buyers wrote contracts on 43 homes in Harrisonburg and Rockingham County. Compare this to the past twelve months (page 6 of my most recent market report) and you'll find that seven of the twelve months didn't show too much more contract activity than was seen between last Dec 15 and Jan 14:
Thus, in the next month (+/-) we'll probably see about 1 in 20 homes go under contract. The key question here is WHICH homes it will be that sell? Perhaps those:
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Per CNNMoney.com, "Buying a home now is a no-brainer" |
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The market is slow, prices have slowly declined for the past few years, and likely will for the next year --- could this still be a good time to buy? Ali Velshi from CNNMoney.com says yes. (Thanks for the tip, Sue!) Velshi's logic is that even if prices fall a bit more, that today's super low interest rates make it a terrific time to buy: "Buying a fairly priced home at today's rates may be the best deal you will ever get." I tend to agree with his logic. You see, if you're going to be in a house for the next five years, and are considering the purchase of a $250k home, you're better off to buy it today at 4.25% than to buy it a year from now at $240k with a 4.75% interest rate. Assuming a 20% down payment....
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Everything is worth what its purchaser will pay for it |
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While this may have been a prevailing theory at the time, modern day appraisal practice takes a bit of a different stance, more along the lines of "Everything is worth what someone else recently paid for something similar." For example.... if three fine homes have recently sold for $325k, $330k and $335k, we'd probably all agree that a fourth similar home is probably worth around $330k. But what if it a buyer and seller agree to a sales price of $345k? The appraisal is likely going to come back low, closer to $330k. But despite Past Buyers #1, #2 and #3 paying around $330k, if Current Buyer #4 wants to pay $345k, doesn't that mean that it some ways the house is indeed worth $345k?? | |
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Understanding Home Values -- When Analysis Fails Us |
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It's easy to understand and agree upon the value of some homes, but quite difficult for some others. What is the difference? It all comes down to how easy it is to find recent comparable sales. EASY: If the home we are trying to evaluate exists within a neighborhood where all homes are relatively similar in age, square footage, architectural style, etc., it's often easy to understand the value of the home. Assuming some of these quite-similar homes have sold recently, we simply need to make minor adjustments to the sales prices of the comparable homes and we can quickly get a good feel for the value of the house. HARD: When you start to throw any unique factors into the mix, it can become quite difficult to agree upon the value of a home. For example, if the house is on a busy road, or has great views, or is on several acres, or is close to town but offers privacy -- all of these factors affect value, but it is usually difficult to find recently sold comparable homes that share all or most of these unique traits. In the HARD category above, you'll find yourself with some relatively similar comparable properties (either sold, or for sale), but with no easy way to adjust those comparable properties' values to better understand the subject property's value. In such a case, we have to do some mental not-math in our heads to come to a position on value. What I mean is this..... we can't look in a book or perform some analysis to determine the value difference between a house on two acres on Indian Trail Road versus a home on four acres on Pleasant Valley Road. Not only that, but there are likely even more unique factors in each property beyond location and lot size. Thus, we're left with consuming all of the information about all of the properties and then coming to some sort of a range of understood value for a particular property. The process I am describing above is relevant both to a seller pricing a property for sale, as well as to a buyer considering making an offer on a listed property. In both cases, there is not an obvious, clear answer to the value of a particular home. Analysis and math can only take us so far in with these unique properties! | |
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How much should I be able to negotiate on price? |
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It is certainly a buyers market these days --- there are far more sellers in the market than buyers, so oftentimes buyers can negotiate quite effectively. Let's take a look at what the data shows us when examining all single family homes sold in Harrisonburg and Rockingham County in the past 12 months.... ![]() The first thing to point out is that sellers have (on average) accepted prices 4.42% below their asking prices. In fact, only 9% of sellers negotiated sold for 10% (or more) below their asking price. I thought the data might differ as we explored different price ranges, but the amount that sellers negotiated off of the list price didn't vary too much below $250k, between $250k and $400k versus over $400k. As helpful as this data can be, it does NOT account for several other factors:
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Housing Market Report: Sales Increase, Prices Increase, Contracts Increase in Harrisonburg, Rockingham County |
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Below you will find several highlights from my December 2010 Harrisonburg and Rockingham County Real Estate Market Report, available as a PDF by clicking here. Our local real estate market still has a ways to go before recovering, but there are some positive signs this month. ![]() First, you'll note (above) that home sales increased in November 2010 as compared to the previous month (October 2010). Sales in November were lower than in November 2009, but last November had the benefit of being the intended deadline for the home buyer tax credit -- thus lots of extra buyers closed in November. ![]() Median sales prices and average sales prices both increased in November (10%, 8%). This, however, is likely because the median and average sales prices were much lower than normal last November as a result of so many first time buyers closing (on properties with low purchase prices) during November. Year to date figures still show a 3% year over year decline in prices. ![]() More buyers committed to buy properties in November 2010 than we have seen in the past three Novembers! Hopefully we'll see a strong December as well. ![]() Click the image above (or here) to review the entire December 2010 Harrisonburg and Rockingham County Real Estate Market Report. 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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City Homes Outperform County Homes |
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As I reported earlier this week, the single family home market in the City of Harrisonburg is improving, both in the number of homes sold, and the median price of those sold homes. There is also some good news in Rockingham County, but it's not quite as exciting. ![]() As you'll note above, more single family homes are selling in Rockingham County this year as compared to last year. The bad news is that they are selling for less --- there has been a 7% decline in median sales prices. What does this mean if you are buying or selling a single family home in Rockingham County? SELLERS: Know they market! If prices have declined 7% over the past year, you shouldn't be basing your list price on sales prices from a year ago --- unless you are then adjusting downward. Furthermore, consider making your list price compelling today rather than potentially selling at a lower cost 6 to 12 months from now. BUYERS: Make sure that you are comfortable with what you are paying for a house --- and that you are comfortable staying in that home for several years. Median prices will likely still decline a bit further this coming year (2011) before starting to level off and increase. | |
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City of Harrisonburg Reassessment Shows Slight Decline in Home Values |
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The City of Harrisonburg just released updated assessment data for all City properties, which showed a 1% increase in overall property values. When diving down into residential properties we discover that there was a 1.4% decline in single family home values and a 0.3% decline in townhome values. These will result in small decreases in tax bills if the tax rate does not change. (see DNR article) Some, however, might suggest that these very small adjustments in value are out of line -- that their property values have adjusted much more than 1.4% or 0.3% over the past year. Indeed, our overall market area has experienced a decline in median prices of roughly 5% over the past year. But looking a bit closer, there are actually some areas where our local real estate market is performing reasonably well.... ![]() During the first 10 months of last year (Jan 2009 - Oct 2009) there were 121 sales of single family homes in the City of Harrisonburg, with a median sales price of $209,000. This year, however, during the same time period (Jan 2010 - Oct 2010) there were 128 sales of single family homes in the City of Harrisonburg, with a median sales price of $211,250. Again, this improvement runs counter to the market as a whole, where sales are still slowly declining and prices are still slowly declining. | |
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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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