Analysis
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Why is the median price of townhomes holding steady? |
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It's rather puzzling. Despite fewer (and fewer) townhome buyers, prices are holding relatively steady....  One of my clients hypothesized that perhaps prices are holding steady because the townhomes that buyers are actually buying these days (2010/2011) are new townhomes, and are thus worth more. To test this theory (which I definitely agreed with) I examined the median age of the townhomes that sold for each year between 2006 and 2010....  Based on the information above, it doesn't seem that townhomes are holding steady in price because buyers are just buying new townhomes these days. In fact, the reverse is true, more of the townhomes purchased 4 and 5 years ago were new than of those purchased in 2010/2011. Examining the data from another perspective, I thought I'd check the percentage of the townhome market that is made up of sales of new townhomes....  Again, the data shows that fewer and fewer (proportionally) of the townhomes being purchased are new townhomes --- thus the theory that prices are holding because newer townhomes are what is actually selling does not seem to hold true. So, what could it be? Any other theories that I can test? Why are townhome values so resilient in Harrisonburg and Rockingham County? | |
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How Far Have Home Prices Retreated? |
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Thank goodness we experienced huge gains in home values between 2000 and 2006, because values have been steadily retreating since that time. Harrisonburg and Rockingham County are not in a unique situation in seeing a decline in home values (as measured by median sales prices) over the past five years (2006-2011). In fact, many areas of the state and our nation saw much more significant declines in home prices during the past five years. How far, though, did we retreat into the past with this decline of home values?  When examining single family homes and townhomes together (above), you'll note that the current median sales price (2011 year-to-date) of $166,000 marks a retreat back to 2004/2005 home values.  Single family home values (median price 2011 year-to-date = $175,006) have also retreated back to 2004/2005 levels.  Despite drastically low sales thus far in 2011, townhomes have fared better than the detached home market. Median sales prices of townhomes (2011 year-to-date = $158,000) have only retreated back to 2005/2006 levels. What does the future hold? I have long held to the prediction that we will not see an increase in median home values until the pace of home sales stabilizes and starts to increases again. Last year there was only a 1% decline in the number of single family homes in Harrisonburg and Rockingham County, so I am hopeful that 2011 may be the year that we see a stabilization in the pace of home sales, even if it is not until 2012 that value start to stabilize. | |
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Home Sales Down, Prices Down, Is There A Silver Lining? |
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Despite many negative indicators in our local housing market, there may be hope for better news in the coming months. Click here to view a PDF of my most recent market report on the Harrisonburg and Rockingham County Real Estate Market, or read on for several excerpts....  As can be seen above, sales have dropped significantly as compared to a year ago -- both in February alone (28% decline) and in year-to-date figures (21% decline). Furthermore, we continue to see declines in both median sales prices (3% decline) and average sales prices (2%). As would be expected, this has lead to an increase (21%) in the time it takes to sell a house.  Above you will note that January home sales (39) were roughly equivalent to previous years' January sales. February 2011 home sales however (38) were significantly lower than February sales in 2008, 2009 and 2010. Thus far, the trend line for 2011 home sales is headed in the wrong direction -- if you're one of those people who likes to see positive improvement.!  The pace of home sales has declined steadily for three years (orange line above), as has the median sales price in this area (green line above). Of note, the median sales price has actually stabilized and increased somewhat over the past six months.  Above (in red and blue, instead of silver) is the silver lining of this month's housing market report. Buyers were out in full force in February 2011 --- with a full 69 properties going under contract. This marks a 44% increase over February 2010, which should lead to strong sales figures in March and April.  There's plenty more news in my monthly housing market report -- click on the image above (or here) to download and view the full 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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Home Buyers Show Up in Force in February 2011 |
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 69 properties went under contract in Harrisonburg and Rockingham County last month (February 2011) --- showing a 53% increase over last February. Moving beyond this startling good news, the question becomes (for many of my clients) what was it that actually sold in February!? Contracts by Price Range:
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Harrisonburg and Rockingham County Population Grows 15.77% from 2000 to 2010. What does it mean for the housing market? |
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 The housing market in Harrisonburg and Rockingham County was relatively normal in 2000 (as best as I understand -- since I started selling real estate in 2003). Given that the population in Harrisonburg and Rockingham County grew 15.77% between 2000 and 2010, what would have happened if real estate sales had tracked on that same path?  The red bars above show the actual pace of sales between 2000 and 2010. The blue line shows a straight line increase in sales assuming an overall sales increase of 15.77% between 2000 and 2010 to mirror the population growth. As you can see, if we assumed that the same portion of the 2000 population would buy homes in 2010, then the actual home sales last year were lower than they "should have been." My conclusion? Time will tell whether 2011 will show an equivalent (or higher) number of sales to 2010, but I believe in one to three years we will see higher total home sales in this area than we experienced last year. I don't believe the 758 home sales in 2010 should be considered the new norm. Per the 15.77% growth between 2000 and 2010, we should see, or could see, or might see, a pace of new normal home sales pace in the next few years around 960 home sales per year. | |
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Sales Growth and Decline Vary Significantly By Area |
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Over the past year our local real estate market has been relatively stable (only a 1% decline in single family home sales) but it turns out that the changes in market activity have varied quite significantly by location.  As you can see above, despite overall stability several areas saw continued decline in sales:
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Where have all the listings gone? Long time passing... |
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As referenced a few days ago, the inventory of listed homes in Harrisonburg and Rockingham County has dropped significantly (by 23%) over the past six months. But as Pete Seeger might ask... where have all the listings gone?  It turns out the listings expired. Take a look at the huge chunk of listings that expired during each of the past four months (Oct, Nov, Dec, Jan) -- each is a red bar with a star in it. As long as those late-2010 expired listings don't turn into early-2011 new listings, the market might stand a chance of heading towards more stability. Stay tuned! For the analytical minds amongst us, a few notes about the data:
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Mixed Signals From January Housing Market Activity in Harrisonburg and Rockingham County |
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My most recent market report (excerpts below, full report here) shows a variety of mixed market indicators when examining market data through January 31, 2011:
 Home sales in January 2011 (39 sales) were down compared to the 45 sales in January 2010 -- but up compared to the 37 sales in January 2009. This is a relatively even start for 2011, and if the past three years are any indicator, we'll have around 50 home sales in February.  This graph shows a rolling 12 months of home sales -- and you can see that the annual pace of home sales has been declining for several years other than the temporary respite offered by the home buyer tax credit last year. The last several months, however, seem to be offering some leveling out of this indicator.  Buyers were out in full force in January 2011 -- 62 properties went under contract. This is an increase over January 2010 (59 contracts), an increase over January 2009 (43 contracts) and an increase over last month (40 contracts). This could be a strong spring market.  Perhaps due to a small sample size, the median sales price continues to decline in January 2011.  We are currently seeing the lowest inventory levels that we have seen over the past two years. This can help the market to stabilize, unless the market is flooded with listings in March and April.  Click the image above (or here) to read the full 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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What are your predictions for the local real estate market in 2011? |
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What do you think? Will the real estate market be getting better in Harrisonburg and Rockingham County during 2011? Could it get any worse? One of my predictions can be found here. One (of many) indicators that I monitor is how many people are using our company web site and agent web sites.  The meaning of this data is not immediately clear to me --- because there is a near constant increase in web site usage over the past twelve months. I expected to see much more seasonal variation in this metric. Web traffic did dip down slightly in October 2010, which would make sense if more people were looking for properties during the summer months. The big shock, however, is that buyers seem to be out (online at these web sites) in large numbers right now. Even if these interested buyers aren't all turning into active buyers, it is exciting to see that there has been so much activity in December and January. So.....what are your predictions for the local housing market in 2011? | |
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Home buyers are probably getting GREAT deals these days, right? |
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In a lot of ways, they are --- but it's not as extreme as you might think. After observing several houses go under contract at fantastic prices I was pondering aloud that it seemed that finding the right price would make buyers appear . . . because you'd be offering them a great deal. That prompted someone to ask me about current price per square foot prices for houses --- and whether buyers were getting great deals these days. Thinking about one of the houses that had recently gone under contract, I commented that yes, houses are DEFINITELY selling at GREAT price per square foot rates. That will teach me to make a broad statement based on one or two data points. This evening I dove into the data to take a closer look --- and to confirm what I was quite sure to be true. To get the best possible sense of the deals buyers are getting these days on a price per square foot basis, I decided to narrow down the sold properties I was examining. If I examined all properties of a variety of sizes and ages, there would be so many variables at play that it would be hard to draw any conclusions. Here's how I limited my two sample sets of data:
My second data set examined homes matching the same criteria that sold during 2010 -- there were 35 such homes, and they sold at an average of $111/sf. Hmmmmm......$4/sf better than a year ago.....is that a great deal for a buyer? That provides a $8,000 savings on a 2,000 square foot house. Instead of buying the house for $230k (in 2009) you'd have paid $222k (in 2010). That doesn't seem like an extraordinary cost savings to buyers --- so perhaps in the aggregate buyers aren't getting amazing deals now (compared to a year ago), even though they are getting slightly better deals. Examined one other way, 26% of these houses sold for less than $100/sf in 2009......and in 2010, 29% sold for less than $100/sf. So, it seems that while there are some isolated AMAZING DEALS in the current real estate market, you probably won't be able to get a FANTASTIC DEAL on EVERY house that's out there. But, of course, every seller trying to sell their house right now would like me to remind you that:
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Has the real estate market (finally) hit bottom in Harrisonburg and Rockingham County? |
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I say yes --- but do bear in mind, I've thought this a few times before. I recently realized that the overall trend I examine in my market report each month (total number of residential sales) might not be the best indicator of what is taking place in our residential real estate market. That overall trend, you see, not only includes single family (detached) homes, but also includes townhomes and condos. At least some number of townhomes and condos are investment properties, and thus that segment of the market can look better or worse than the more traditional "I'm buying a house to live in it" segment of the residential market. For that reason, I believe that we will likely get a better sense of the health of the residential (I'm buying a house to live in it) market by examining only single family home sales. And with that preface aside, here's what we find.....  As you can see, there were steady declines in the single family home market from 2005 through 2009 (-11%, -12%, -18%, -14%). That steady decline, however, slowed down significantly between 2009 and 2010 (-1%). That is a wonderful sign that the residential real estate market may truly be stabilizing. So, what are my predictions for 2011? I don't think we will see any more than a 2% decline in single family (detached) home sales --- as shown (approximately) with the red line. I also, however, don't think we will see any more than a 2% increase in single family (detached) home sales --- as shown (approximately) with the green line. After five years of a declining residential real estate market in Harrisonburg and Rockingham County, I think we might finally be poised to see an increase in sales activity. | |
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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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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
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