Analysis
| Newer Posts | Older Posts |
 |
 |
The bigger they are (houses), the harder they fall (sales)? |
|
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! | |
 |
 |
|
|
Single Family Homes Under $200,000 in Harrisonburg and Rockingham County |
|
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. | |
|
|
|
|
It is really hard (impossible?) to compete with bank owned properties |
|
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?
| |
|
|
|
|
Does anyone really decide to buy a house between mid-December and mid-January? |
|
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:
| |
|
|
|
|
Per CNNMoney.com, "Buying a home now is a no-brainer" |
|
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....
| |
|
|
|
|
Everything is worth what its purchaser will pay for it |
|
 Stretch back to the 1st century BC, we find the following familiar quotes from Publilius Syrus, a Latin writer of mimes (thanks for the tip, Dave!):
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?? | |
|
|
|
|
Understanding Home Values -- When Analysis Fails Us |
|
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! | |
|
|
|
|
How much should I be able to negotiate on price? |
|
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:
| |
|
|
|
|
Housing Market Report: Sales Increase, Prices Increase, Contracts Increase in Harrisonburg, Rockingham County |
|
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. | |
|
|
|
|
City Homes Outperform County Homes |
|
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. | |
|
|
|
|
City of Harrisonburg Reassessment Shows Slight Decline in Home Values |
|
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. | |
|
|
|
|
Assessments of $300k+ Rockingham County Homes |
|
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:
| |
|
|
|
|
Despite Slow Sales, Home Values Remain Relatively Stable in Harrisonburg and Rockingham County |
|
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. |
|
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 |
|
 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:
| |
|
|
|
|
The Split Foyer vs. The Ranch |
|
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? |
|
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 |
|
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? |
|
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! |
|
 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. | |
|
|
| Newer Posts | Older Posts |
Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
Licensed in the
Commonwealth of Virginia
Home Search
Housing Market Report
Harrisonburg Townhouses
Walk Through This Home
Investment Properties
Harrisonburg Foreclosures
Property Transfers
New Listings
