Analysis
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Assessments of $300k+ Rockingham County Homes |
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Property assessments are used to determine the amount of taxes that each property owner will pay. Can these assessed values also be used to estimate the value of a home? In theory, yes --- after all, the assessed value is intended to be the true market value of the home --- but it doesn't always seem to work. Case in point....one of my clients is considering two homes (among others) that have very similar assessed values, but have asking prices over $50k apart. Is the owner of the higher priced home just being unrealistic? Or are the assessments less than accurate? One way to examine this is to compare recent sales prices to assessed values. I'm going to focus on homes over $300k, as I sense that there might be more disparity in assessments with higher priced homes. In the past three months, there have been 10 sales of homes in Rockingham County with sale prices over $300k, with Harrisonburg mailing addresses. As you can see, there is an enormous swing in the ratio between sales prices and assessed values. These ten buyers paid, on average, 16% more than assessed value for their homes. A few inconclusive conclusions:
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Despite Slow Sales, Home Values Remain Relatively Stable in Harrisonburg and Rockingham County |
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Read on for several highlights of the November 2010 Harrisonburg and Rockingham County Real Estate Market Report. Or click here to view the PDF. Despite early gains in 2010 (particularly in April and June) home sales have stagnated over the past several months. July, August, September and October of 2010 have been the slowest such months during the past five years. Despite these low sales figures, however, year-to-date sales are only 4% below last year's sales. Late 2009 through mid 2010 showed some promise. After several years of declining home sales (pace, not values) it seemed that our local market had finally turned around. Now looking back, that increase in sales pace may have been largely related to the home buyer tax credit, as the pace of sales is now on the decline yet again. What surprises lie in store for us in 2011? As demand falls, prices should fall --- isn't that what I learned back in my economics class at JMU? Not so in the Harrisonburg and Rockingham housing market!?! Fewer and fewer buyers have been present in the market over the past six years (demand fell) but prices have not fallen in the way that that shift in demand would suggest. Calling all economists....how can we explain this? Click the image above (or here) to review the entire November 2010 Harrisonburg and Rockingham County Real Estate Market Report, complete with an all new Executive Summary this month. 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. | |
If you are trying to sell your home, you might want to check out your competition. |
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I continue to find it quite amazing that one-third of the homes that sell these days do so within 90 days of when they come on the market. However, even with that startling statistic, many (most?) homes languish on the market. There are, after all, 632 single family homes on the market right now in Harrisonburg and Rockingham County, and last month only 32 such homes went under contract. That gives each home a 1 in 20 chance of being purchased in any given month. Ouch! So, with so many homes for sale, it is very important to make sure that you stack up well against the competition. By competition, I mean the homes that buyers will also view when they come to view your home. Sometimes these homes are in your neighborhood, sometimes they are just in the same price range but in a different area. Put yourself in the mind of a buyer that might be considering a purchase of your home and then search online for homes that would meet their needs (including your home). Sometimes....beyond just viewing these homes online, it can be helpful to walk through the competing homes. As you are viewing each competing home you should consider whether you (as a buyer) would buy your home (given your list price) or the competing home (given that list price). This context can help you to better understand whether you have priced your home competitively in the market. One word of warning --- competing active listings could lead you astray! You could have your home listed at $200k, go through five competing homes that are priced around $210k and be reassured that your list price of $200k is right on target. However, you also need to check recently sold properties that would have also been competing with your home. If all of the recently properties that recently sold were at prices around $180k, then even though active listings confirm your $200k list price, you still may be overpriced. Pricing, positioning and marketing are tricky right now, with fewer home sales, and lots of inventory --- but they are more important than ever. I enjoy working with people who like to dig into the numbers and get a good feel for an appropriate list price for their home. If you're ready to start the research, analysis and discussion process, let me know. | |
The Value Of Your House Will Only Increase, Always, Forever, For Sure |
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Here's an interesting report from NPR telling the story of an employee of Freddie Mac who manages an online calculator that has (intentionally or unintentionally) been telling web users that home values will only go up! Read more from NPR: Housing Guy Apologizes For Housing Bubble It is interesting --- I do wish home values would only go up --- and during most years values do increase. The last few years, however, have not held that promised increase. That said, it depends on the time horizon that you consider. First, the year to year bad news -- home values decreased for 4 out of the past 10 years. That is to say that the first six years of the decade showed an increase ('01, '02, '03, '04, '05, '06) but the most recent four years have shown a decrease ('07, '08, '09, '10). But here's an interesting cumulative look at the value of a $200,000 home purchased in 2000:
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The Split Foyer vs. The Ranch |
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We've had a turbulent real estate market over the past several years, and one of my clients was wondering if all property types had weathered the storm similarly. More specifically, the question was raised of whether split foyers or ranches typically held their value better. Let's take a look.... As you'll see above, both split foyers and ranches have seen a decline in sales over the past (almost) five years.
The median sales price of both home styles have declined since 2006.
Finally, examining the time it takes to sell each type of home (average days on market) we find that there used to be a difference in how long it took to see each type of home, but there is not any longer.
Finally, let's examine the supply of each type of home.
Buyers, please remember.... This information can be wisely understood to mean both that you should and that you should not buy a split foyer (or a ranch).
Please Note: The 2010 figures above are based on sales from 1/1/2010 - 10/20/2010. Additionally, the "split foyer" data includes split foyers, split 3-level homes and split 4-level homes. | |
How much housing supply exists in Harrisonburg and Rockingham County? |
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It really depends on how you measure housing supply. Here's the graph I include in my monthly market report.... This graph (above) shows the number of months of supply in four price ranges. This value is calculated by comparing the number of homes for sale in a particular price range with average number of home sales in that price range over the past 12 months. Thus, if over the past year there were 120 home sales in one of these price ranges, that would be 10 sales per month; if 130 homes are for sale, that would be 13 months of supply. This means it would take 13 months to sell all of the active listings if buyers kept buying at the same pace as had occurred over the past 12 months. But let's examine the market overall using this same calculation.... Removing the price ranges from the equation, you can see that the number of months it would take for all listings to sell has shifted upwards from 11 months to 15 months. It is interesting to see (in the graph above) how supply trended down approaching November 30, 2009 (anticipated deadline for home buyer tax break) and then again approaching June 30, 2010 (actual deadline for home buyer tax break). This would suggest that the tax credits helped our market, even if for a short while. You'll note (especially compared the graph below) that the graph above shows a relatively smooth trend line -- without significant increases or decreases. This is a result of comparing each month's inventory of homes for sale to the average number of homes sold per month over a 12 month period. If we compared active listings each month to the number of homes sold in that one particular month, we'd get different results.... This graph (above) compares active inventory to one month of home sales. Thus, the number of months of supply can change dramatically from month to month and season to season. Spikes in home sales will result in low months-of-supply figures --- this phenomenon can be seen in November 2009 and June 2010. So, help me determine which graph I'll use going forward. Leave a comment below, or e-mail me at scott@HarrisonburgHousingToday.com and let me know which graph(s) above are the most helpful for you. | |
Harrisonburg Home Sales Decrease, Contracts Increase, in September 2010 |
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Below are several highlights from the October 2010 Harrisonburg & Rockingham County Real Estate Market Report. Read on, or click here to download a PDF of the entire report. As you'll note above, there were very few home sales in September 2010. In fact, there were very few home sales in in July, August and September! That was, however, after very high home sales in April and June. Thus, it would seem that the home buyer tax credit certainly rearranged the timing of 2010 home sales, regardless of whether it brought new buyers into the market nor not. The question now, of course, is how many of the October, November and December closings were borrowed by the first half of 2010. After multiple years of a declining sales pace, the graph above shows that we were finally seeing a reversal for the first six months of this year. However, the past three months of slow sales has turned us back around into a declining market again. The fourth quarter of 2010 will be quite indicative as to a reasonable 2011 forecast. Please note, above, the silver lining. Despite a lower than normal number of closings in September 2010 -- the buyers were out yet again, contracting to buy real estate. In fact, with 74 properties going under contract, buyers in our market outpaced the past two Septembers. This should be a good indicator for the coming months. Above you'll see a decade-long comparison of two imprecise measures. The blue bars show the number of home sales recorded in the HRAR MLS -- this does not include private sales (sans Realtor), and some new home sales. The yellow bars show the number of Trustee Deeds recorded during each of the past 10+ years. Some of these foreclosed properties (203 in 2010) then show up in the blue bar when they are listed and then sold as bank owned properties. It would seem that foreclosures have increased nearly four-fold over the past ten years, and now make up somewhere between 15% and 26% of all home sales. My full market report (click above -- or here -- for a 20 page PDF) includes LOTS more analysis to help you make informed real estate decisions. Read through it and let me know if you have any questions, or if any additional information would be helpful to you. You can contact me (nearly) anytime at 540-578-0102 or scott@HarrisonburgHousingToday.com. | |
Will Home Values Fall in Harrisonburg and Rockingham County? |
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An Associate Press story printed in the Daily News Record a few days ago.... The beginning of the article references an increase in prices in July as shown by the Case Schiller index. So, will home values fall here in Harrisonburg and Rockingham County as is suggested in the article might happen in many markets? Let's take a look at the support for their theory that values will fall.....
Stay tuned! | |
Oh September 2010, How You Confuse Me! |
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In all of last September (2009) there were 72 residential sales in Harrisonburg and Rockingham County. Thus far, in the first 23 days of September 2010, there have only been 27 residential sales in Harrisonburg and Rockingham County. The sky is falling! The sky is falling! But wait.....is it?? In all of last September (2009) we saw buyers sign contracts to purchase 52 residential properties in Harrisonburg and Rockingham County. Thus far, in the first 23 days of September 2010, we have seen buyers sign contracts to purchase 59 residential properties in Harrisonburg and Rockingham County. What, oh what, can we conclude? Perhaps only that we're still on the roller coaster ride of a not-yet-stabilized real estate market. | |
What Home Sales Could Have Been in Harrisonburg and Rockingham County |
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In an interesting e-mail dialogue about the current real estate market, I was offered this terrific insight... "It seems to me that houses bought and sold in a "normal" market should have some average per capita value ... the factors which affect whether people buy or sell houses should be relatively similar from year to year (people moving in for new jobs, divorces, retirements, etc.) in non bubble years." I couldn't agree more --- so let's run with that theory for a moment and see what we can learn. The graph above shows the population for Harrisonburg and Rockingham County (source) compared to home sales per the HRAR MLS. You can see that while population has steadily increased over the past decade, home sales rose dramatically, and then fell dramatically. So....what if we took the per capita theory, and extrapolated from the year 2000.... This graph supposes that the number of home sales in 2000 compared to the total population in 2000 (0.77%) was the norm -- and then suggests what home sales would have been for each subsequent year -- still assuming they would be 0.77% of the population. You can see that home sales would have slowly increased just as the population did. The graph above shows actual home sales (blue) compared to the theoretical 0.77% home sales --- what a difference in the peak years of 2004 through 2006! Per this theory, we're "behind" as of 2009 --- there should have been more home sales, given the population figure, and assuming that home sales will usually be 0.77% of the population. To push the envelope a bit further, let's assume home sales should be 0.87% of the population. You see, in 2000 the per capita figure was 0.77%, but in 2001 it was 0.97%. If we split the difference, we have the graph above -- showing that last year the home sales were significantly below the norm. What does this mean for the future? If we buy into the per capita theory, then last year's home sales are not the pattern the future. We won't always have about 800-ish home sales per year, and see a steady increase from that number. Instead, we are likely going to see a return (over the next year or two) to a sales level closer to around 1,000 home sales per year, which will then steadily increase as the population grows. That is, of course, unless we see another market boom at some point in the future! | |
Online Property Views and Residential Property Sales Appear To Be Heading Up! |
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A lot of you might view properties online today --- only a few of you might close on a home sale today. That said, there often seems to be a correlation between the number of people viewing properties online, and the number of people closing on properties. It makes sense --- if more people are going to buy a home, there will likely be more people looking at said homes online. Take a look at the interesting two year trends below. Not only do they mimic each other, but they are both headed up! Now, I don't wear the rose colored glasses 24x7 --- I know we're not out of the woods yet. We still have super-high inventory levels, we haven't decidedly seen a turn of the tide in sales volume, and it will probably be another year or more before we see prices starting to stabilize. However, there are more and more indicators of late that we may be seeing a gradual change towards more positive times in the Harrisonburg and Rockingham County housing market. | |
The Yo-Yo Effect of Harrisonburg Townhome Sales |
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The one thing I try to tell all of my seller clients is that the market is very unpredictable. It's impossible to know if a given house will sell in three months, six months, a year, or even longer. Most of this uncertainty is related to the vast number of homes for sale relative to the number of buyers in the market. It's hard to predict which houses buyers will actually choose. But here is another unpredictable and turbulent market trend --- the sale of new-ish (circa 2000-2010) townhomes in the City of Harrisonburg. What a roller coaster this year has been! Only a single sale in January and March, and only two in July!?!?! The dip in July is likely because of the original June 30th tax credit expiration --- but why were January and March so terribly low, with a strong February between them? Maybe there is always this much turbulence in the townhouse market? Let's take a look at last year.... Here you see some variation, but not the extreme ups and downs that the townhome market has experienced this year. If you own a townhome and are trying to sell it, I suppose this coming month could be wonderful, or it could be terrible. Townhome buyers are coming in small bursts these days, and then disappearing again. | |
Could September be showing signs of an improved real estate market in Harrisonburg and Rockingham County? |
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Last year, 816 homes sold in Harrisonburg and Rockingham County. Per my most recent market report, it seems probably that we'll be at the same pace in home sales for 2010. But follow me for a minute....
One last exciting statistic for your Monday --- last September, only 52 homes went under contract in the entire month. In the first half (less than half, really) of this September, 36 homes have already gone under contract! Thanks Kemper, for pointing out last week's astounding buying pace! | |
Remember 2003? "With home values increasing so much, let's buy as big of a house as we can!" |
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As home values escalated between 2003 and 2006 in Harrisonburg and Rockingham County, buyers bought larger and larger homes! The graph above shows the average size of single family homes sales per the Harrisonburg Rockingham Assocation of Realtors MLS. As can be seen, the average size of a single family home increased quite steadily between 2002 (1,698 square feet) through 2007 (2,162 square feet). That is a 27% increase in the average sized home! Over the past few years, however, the size of the average home has decreased, all back down to 1,971 square feet thus far in 2010. This is not a trend only taking place in the Shenandoah Valley. Read about it nationally at MSN: At annual builders' show, small is in. | |
Local Home Sales Slow in August, Still Strong YTD |
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Below are several highlights from the September 2010 Harrisonburg & Rockingham County Real Estate Market Report. Read on, or click here to download a PDF of the entire report. Home sales in Harrisonburg and Rockingham County... Are they up? Down? Stable? In fact, they are up, down AND stable! A mix of indicators this month:
Another good indicator, as shown above, is that the local housing inventory has peaked --- at least for now. A few months ago the number of homes for sale in Harrisonburg and Rockingham County broke 1,000 for the first time -- but it has now started to decline again, as is typical for this season of the year. Lot sales (less than an acre) have been very, very slow over the past several years, falling from a peak in 2004 of 408 lot sales to only 58 lot sales last year. As shown above, lot sales might actually rebound this year! There is even more in the 19-page September 2010 Harrisonburg & Rockingham County Real Estate Market Report. Download the entire report by clicking on the image below. Thanks for reading, and if you have any questions, or if I can assist you with buying or selling real estate in Harrisonburg or Rockingham County, please contact me at 540-578-0102 or scott@HarrisonburgHousingToday.com. | |
If I haven't listed my home yet, should I wait until Spring? |
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First of all, I should point out that there are LOTS of homes on the market right now, so this blog post is not intended to broadly encourage anyone and everyone to put their house on the market. However....I have been asked several times in the past two weeks about whether it's really too late at this point to try to sell a house this fall. It seems that this assumption is based on:
On the second point, I haven't given up on 2010 yet. If the rest of the year is going to be quite slow, we should see it in the number of contracts being ratified. Here are the past four Augusts....
My full market report will be coming out in about a week after additional data is available. Stay tuned! | |
Local Home Sales Versus National Home Sales |
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You may haven noticed the depressing news in the Daily News Record today -- on the front page -- home sales dropped 27% in July! But wait -- those are national numbers, and may not have much to do with what's going on in Harrisonburg and Rockingham County. The chart to the right is from the DNR, showing the 27% decline in July. The chart below shows essentially the same data for Harrisonburg and Rockingham County. The only difference is that the national figures only include existing home sales (it excludes new homes) and the local numbers are both new and existing homes. Here is the local data: Despite a 27% decline nationally, local home sales only showed a 5% annualized decline! | |
Is My House Overpriced? |
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This is a question that many home sellers are wondering these days in and around Harrisonburg -- and perhaps all across the nation. Let's see why.... A real estate market is considered to be balanced (between buyers and sellers) if there are six months of supply available. Depending on the price range, there is quite a bit of excess supply in the Harrisonburg and Rockingham County housing market:
It was said by some, at one point, that if your house hadn't sold in 60 days, lower the price, and repeat. Thus, if you started at $300k, and you hadn't sold it within 60 days, you might lower it to $290k, and wait another 60 days and lower it again, etc. Eventually, you'd reach the point where the market (buyers) would respond to your price, and you'd sell the house. That logic might work in a balanced market, but when the market is so flooded with sellers, and so void of buyers, the logic doesn't work as well. Homes now sometimes sit on the market for months priced well below comparable homes, and don't sell. Will they sell if the price is lowered? Maybe, but maybe not! Time on the market is quite unpredictable at this point, and price is no longer the trump card. In many markets, if a price was lowered to a certain place, a house would definitely sell. If it appraised at $300k, and you lowered it to $280k, it would more than likely sell. Now, you could lower it to $260k, and it might sell, but it might not. You could then lower it to $240k, and it might sell, but it might not. Thus, as you can hopefully see, the answer to the aforementioned question (Is My House Overpriced?) is very difficult to answer. I suppose the answer is that if it has been properly marketed, and it hasn't sold, then it is probably overpriced, but even if the price is lowered, it still may not sell. One last illustration to explore this dilemma... Three comparable houses on your street sell for $245k, $250k and $255k. You assume your house is worth $250k, and put it on the market for $245k to be aggressive. It doesn't sell after four months, so we assume it is overpriced -- even though recent sales would not suggest that. After another four months at $235k, it still hasn't sold. Is it overpriced? I suppose the market would say yes, even though recent comparable sales still do not agree. If, after another four months at $215k it has still not sold, do we STILL say it is overpriced??? | |
What Do You Mean I Did Well? I Brought Thousands Of Dollars To Closing! |
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In these crazy times, it's possible to "beat the market" and yet still be hurting financially... The blue line above shows the trend in single family home prices over the past five years in Harrisonburg and Rockingham County. As you can see, prices have declined, though only a total of 12% over the past five years. The red line shows the purchase and sale of a single home in Harrisonburg, as experienced by some of my clients. You'll note that while the red line declines, it's not by anywhere near as much as the blue line. Thus, my client's home outperformed the market --- they beat the market, and experienced a smaller decline that perhaps they should have. How exciting, right?? But no, actually, it wasn't too exciting. The heroic act of selling the house at a higher price than the market suggested would be possible was still painful. My clients had financed most of their home purchase in 2007, so they actually had to bring thousands of dollars to closing in 2010 in order for the sale to proceed. You see, it's not as simple as the purchase price minus the sales price --- you also have to factor in the closing costs on the buying side (2007) and the closing costs on the selling side (2010). So....when the market is declining, even if it is declining slowly, it can be difficult to purchase and then sell within a short time period. Thus, buyers and sellers should note that:
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Harrisonburg and Rockingham County Home Sales Fall Dramatically In July 2010, But The Future Still Looks Bright (Really!) |
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Click here for the full August 2010 Harrisonburg & Rockingham County Real Estate Market Report. If we only looked at July 2010 home sales (and ignored several other key indicators, and the bigger picture) we might get a little worried about our local housing market. As can be seen above, there were very few home sales in July 2010. This is likely because of the original June 30th deadline for closing under the home buyer tax credit (the deadline has now been extended to September 30th). But after a very slow July, we'll probably start to see things pick back up, since contracts looked healthy in July 2010. As can be seen above, there weren't too many buyers committing to buy properties last month, but there was a return to the contract-signing-table in July 2010. This month's buyer commitments actually exceeded last July's data, showing a reversal of the downward trend of the last several years. For another reversal, read on. The yellow bars above show the number of home sales over the past ten years -- it is very likely that after four years of declining home sales, we might finally see an increase in 2010. Year to date, 2010 shows a 3% improvement over 2009 to date. The blue line above shows the change in median sales price over the past ten years. The median sales price declined by 5% between 2008 and 2009, but the decline appears to be much smaller this year. Learn even more about what's going on in the Harrisonburg and Rockingham County real estate market by reading the full report. Do you have questions about this report, or about the Harrisonburg and Rockingham County real estate market? Or about your house? Or about a house you might buy? Be in touch . . . Scott Rogers | 540-578-0102 | scott@HarrisonburgHousingToday.com | |
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Scott Rogers
Funkhouser Real
Estate Group
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scott@funkhousergroup.com
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