Analysis
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April 2010: A Reason To Hope, A Reason To Laugh |
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![]() Over the last several years, we have seen fewer and fewer (and fewer) homes sell each year in Harrisonburg and Rockingham County:
In the first 115 days of 2010 (Jan 1 - Apr 25) we have seen:
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Everything Will Sell, At A Price |
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This is a story of quickly rising, and quickly falling real estate values. In Harrisonburg. Despite a relatively stable overall housing market. ![]() Some parents of JMU students buy an investment property for their son or daughter to use a a residence while at JMU, and many of these parents have historically bought condos and townhomes at Hunters Ridge. Let's take a look at sales trends for each over the past several years: ![]() As you can see here, prices of Hunters Ridge condos and townhomes had steadily (sometimes rapidly) increased for many years before arriving in 2009. Last year, Hunters Ridge sales slowed down to a snails pace --- with only one condo sale in the entire year, and only 3 townhome sales. Good news --- townhomes and condos are starting to go under contract again. Bad news --- it's because the prices have dropped very low! At the moment there are 5 condos on the market at the $60,000 price point, which is well below any recent sales price. There are also townhomes on the market for only $70,000. Some conclusions:
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Harrisonburg vs. Charlottesville, Comparing Home Values |
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Let's take a quick look at 1st Quarter Median Sales Prices over the past few years --- comparing Harrisonburg to the Greater Charlottesville Area. Take a look here for the CAAR report where I derived these figures: ![]() Take a look at the differences in these two markets:
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Home Sales Slow, Prices Remain (Somewhat) Steady In Harrisonburg, Rockingham County |
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Click here or on the image below to view the full April 2010 Harrisonburg & Rockingham County Real Estate Market Report (PDF). Read on below for a few highlights. ![]() Mixed indicators this month . . .
![]() ![]() ![]() Don't delay -- get all of the exciting (and not as exciting) details and beautiful charts by downloading the full April 2010 Harrisonburg & Rockingham County Real Estate Market Report (PDF). If you find the information in this report to be helpful....
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The Buyers Are Back! |
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Greetings, blog readers. My sporadic content creation of late has been a result of being busy working with buyers and sellers. I'll soon be releasing my monthly market report, but in the meantime, I thought I'd see if my own recent increase in sales activity was an indicator of a wider market trend. Indeed, it seems that buyers are re-entering the market. We saw just as many buyers signing contracts in March 2010 as in March 2008, after a big dip in March 2009. (see below) ![]() Then, looking at the first three months of each of the past several years, we see this same shift in buyer activity. (see below) ![]() It will likely be at least a month before this translates into an increase in closings, but it almost certainly will given these large increases in buyers deciding to buy. Of course, this could be related to the deadline of April 30th for buyers to commit to a property in order to be eligible for a tax credit. | |
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Big Homes Are Selling Fast |
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Despite high inventory levels in the upper end price ranges in Harrisonburg and Rockngham County, large homes (3,000+ square feet) are currently selling faster than they have since at least 2006. ![]() The graph above examines first quarter sales (Jan 1 - Mar 31) of homes larger than 3,000 square feet in Harrisonburg and Rockingham County per the HRAR MLS. As you can see, the seventeen sales in first quarter 2010 has surpassed the number of homes sold in any other year back to 2006. During this time, median prices have shifted up quite a bit ($78k between 2006 and 2008) and then back down quite a bit ($93k between 2008 and 2010). Yet, all you sellers of large homes out there, please bear in mind that although sales in first quarter 2010 are brisk (compared to the recent past), that does not change the fact that there are 102 such homes currently for sale. At the current pace of sales (17 in 2010-Q1), it would take 6 quarters (18 months) to sell through all existing inventory. | |
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Conflicting Real Estate Market Indicators |
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Explain this.... ![]() The number of properties viewed online (on our company site and all of our company's agent sites) has increased dramatically over the past year. Thus, it seems that more buyers are hunting for homes. But when we compare the number of closings in the first 28 days of last March and this March, we see a rather significant decline. What is going on here?
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Real Estate Market Predictions For Harrisonburg and Rockingham County |
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![]() In talking to a Daily News Record reporter last week I made a BOLD PREDICTION, that the local housing market would probably NOT improve this year. I felt somewhat bad about making such a prediction --- being so pessimistic! But wait --- the BOLD part was predicting that it wouldn't get any worse! Since 2006, the pace of home sales has been declining:
Check out the data:
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Standing Firm: The Harrisonburg and Rockingham County Real Estate Market Holds Steady In February 2010 |
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Click here or on the image below to view the full March 2010 Harrisonburg & Rockingham County Real Estate Market Report (PDF). Read on below for a few highlights. ![]() Some high level February 2009 to February 2010 observations include:
![]() Don't delay -- get all of the exciting (and not as exciting) details and beautiful charts by downloading the full March 2010 Harrisonburg & Rockingham County Real Estate Market Report (PDF). If you find the information in this report to be helpful....
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If At First You Do Not Sell, Reduce The Price! |
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When considering all residential properties In Harrisonburg and Rockingham County:
To put this in a bit of a historical context, when I checked the same data nearly two years ago, 40% of homes for sale had experienced a price change. OF NOTE: Our MLS simply searches for price changes, therefor some of the 368 price changes could be price increases, though it seems doubtful. | |
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The Buyers Rushed In, But Have Now Rushed Out (Or Have Been Pushed Out) |
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Harrisonburg has steadily grown over the past ten years, and thus I would expect that we would see a gradual, steady increase of home purchases. The recent history of home sales has not followed the slow and steady theory for the last ten years. Below I have charted a gradually increasing rate of home sales (the red line) as I might expect them to be occurring. ![]() As you can see above, if there were approximately 900 home sales in 2000, I'd expect that we might be around 1100 home sales per year here in 2010. Let's examine why sales history strayed so far from this path.... ![]() While I didn't think to ask this at the time, I now think it would have been reasonable to ask between 2001 and 2007 why there were so many people buying houses. The blue sections of the yellow bars show the unexpectedly high home sales levels (per my rough calculations). Here are my theories on why so many people were buying at that time:
![]() But now, as seen above, there are (if my red trend line is correct) fewer buyers in the market that could be or should be expected. If we flip around the three factors listed above, we'll understand why:
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Harrisonburg City Assessments Compared To Home Sales Prices |
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The new 2010 real estate assessments are out and I thought it might be of interest to compare these new assessed values to the prices for which properties are actually selling. Below are the 12 properties in the City of Harrisonburg shown as sold in the HRAR MLS between January 1, 2010 and February 14, 2010.
As you can see, some properties sold above AND some sold below assessed value. On average, these 12 properties sold for 90% of assessment, and the median ratio was 87%. If we assume that assessed values are a VERY GOOD INDICATOR of market value, this analysis could mean that:
If I didn't walk in too many circles there, tell me what you think! | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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So Far, So Good In January -- Lots Of Buyers Are Looking For Homes Online! |
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With nearly 2 million page views on our company and agent web sites over the past year, we pay careful attention to trends in the number of people looking for properties for sale on our web sites. ![]() As you can see above, more properties were viewed in January 2010 than in any month over the past 13 months. February being a short month, we may see a slight dip this month, but this trend likely indicates that our real estate market is headed in a more positive direction! Join the crowd: Search for property now by clicking here! | |
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Understanding The Sales Market Via The Rental Market |
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![]() I was forwarded an article from CNN Money that offers an interesting perspective on understanding how home values may perform in the coming year(s).... "In normal times, people won't pay much less to lease a house than to own it. After all, if you're paying rent instead of a mortgage and taxes, you still get to enjoy the same rec room, chef's kitchen, and casita for visiting grandparents. So the surest sign of a frenzy appears when owning becomes far more expensive than renting. That's precisely what happened during the last bubble." This make sense to me. If it costs the same amount to buy as it does to rent, then someone would almost certainly buy instead of renting. "On average, DB [Deutsche Bank] found that families across America were spending about87% as much to rent as to own in 1999. Hence, they were traditionallywilling to pay a premium as homeowners, though not a big one." As one rough estimate, let's consider that new two-story Harrisonburg townhomes were selling for around $100k in 2000 (monthly cost of $720 with 100% financing at 6.75% fixed), and were leasing for around $725/month. Thus, per my rough estimates, the leasing and buying costs were quite similar. "But by mid-2006, with the craze in full swing, the figure fell below60%. At that point, Americans were spending an incredible 66% more toown than to rent." In 2006, these same townhomes were selling for $150k (monthly cost of $980 with 100% financing at 5.75% fixed), and were leasing for around $900/month. Thus, Harrisonburg also saw a shift in renting being much more affordable, but not nearly as significantly as in some areas. "So how did that happen? During the bubble, rents -- the real enginethat drives values -- were inching along at more or less their usualpace. From 1999 to 2007, apartment rents increased only 32%. But homeprices jumped more than three times as fast, around 105%." Per my numbers above, rents increased 24% in Harrisonburg (compared to 32% in the national study), and home prices jumped 50% (compared to 105% in the national study). "At the end of the third quarter of 2009, the overall number stood at83%, meaning renting was just a tad more attractive than owning." Interesting -- these townhomes are now selling at roughly $155k (monthly cost of $940 with 100% financing at 5% fixed), and are leasing for around $900/month. Still virtually equivant. "Given that analysis, it's likely that prices will fall another 5% or sonationwide. The drop could even be slightly greater. One reason: Rents,the force that govern housing prices, are still falling." Nationally, rental rates seem to be falling, though that is not largely the case in Harrisonburg. If prices had increased more drastically here, then prices would probably be falling more drastically here, and rental rates would also be falling more drastically. Yet again, the Harrisonburg and Rockingham County housing market seems to have performed, and be performing in a more healthy manner than much of the balance of the nation. | |
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Get Ready: Lots Of Homes Will Be Coming On The Market Soon, Soon, Soon |
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Or will they?? It's interesting, because most people assume that a LOT of sellers will be putting their homes on the market as we move into the spring and summer months. That is to some extent true --- look at the last two years of inventory levels (below) and you'll note that there are certainly more homes on the market between April and September than any other time of the year. ![]() But wait --- the variation isn't actually very significant. The low inventory level has hovered around 800 for the past year, and the high around 940. While the spring/summer inventory levels are 17.5% higher than the fall/winter levels, here's how it translates into a buyer's perspective:
Furthermore, sellers ought not be overly concerned that they'll have dramatically more competition in the spring/summer months because of sky high inventory levels. | |
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January 2010 Shows Positive Momentum In The Harrisonburg and Rockingham Real Estate Market |
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Click here or on the image below to view the full February 2010 Harrisonburg & Rockingham County Real Estate Market Report (PDF). Read on below for a few highlights. ![]() As can be seen below, January 2010 sales (45) topped January 2009 sales (38). Furthermore, each of the preceding three months (Oct '09, Nov '09 and Dec '09) showed equal or greater home sales than the same month in 2008. Could it be that the pace of our local real estate market is finally picking up again? ![]() As a further indicator, the graph below shows a running 12 months of home sales since 2004. The most recent data point shows Feb '09 through Jan '10, the data point prior shows Jan '09 through Dec '09, etc. Each data point includes every month of the year, allowing for a normalized look at the activity in our local housing market. As can be seen, this metric has been falling since 2006, but over the past several months seems to have stabilized and started to increase again. ![]() Read more about our local housing market by downloading the full February 2010 Harrisonburg & Rockingham County Real Estate Market Report (PDF). If you find the information in this report to be helpful....
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Our Local Real Estate Market vs. All Of Virginia |
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A few days ago I compared the Harrisonburg and Rockingham County real estate market to our neighbors north, south and east of us. Now, let's see how we stack up to the state as a whole. The following data comes from the Virginia Association of Realtors 2009 year end market report. ![]() As you can see above, home sales in Virginia (overall), have started picking back up again --- with a 2% increase between 2008 and 2009. Harrisonburg and Rockingham County witnessed another 13% drop in the number of home sales between 2008 and 2009. ![]() This graph is rather interesting -- Virginia and Harrisonburg and Rockingham County both witnessed roughly a 5% decline between 2008 and 2009. Harrisonburg and Rockingham County, however, have seen rather level prices for the past several years while the Virginia median price has actually had a decent increase during that time frame. | |
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2000-2009: Population Up, Home Sales Down |
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Over at hburgnews I noticed a link to a new study from the Weldon Cooper Center indicating that the Harrisonburg / Rockingham County MSA has grown roughly 13% between 2000 and 2009. [ read more at hburgnews ] Knowing that home sales have decreased during the same time period, I thought I'd see how the two data sets lined up. First, though, please note that:
![]() This graph shows something (somewhat) similar --- a higher percentage (1.43%) of our population bought a home in 2005 than the percentage in 2000 (0.77%) and 2009 (0.66%). As I ponder this data, I wonder what will be "normal" over the next 20 years as to what percentage of our population will buy a home in any given year. Is 0.77% the magic number (shown in 2000 and 2008)? If so, home sales were depressed in 2009 (how surprising). Or perhaps we should expect about 1% of our population to buy a home each year. The most pressing question in my mind is when we will start to see an increase again in home sales --- both as a raw number, and as a percentage of the population. I thought we'd see in 2008 (we did not). I thought we'd see it in 2009 (we did not). I think the third time might be the charm, and we'll see home sales (quantity, not sales prices) increase in 2010. What do you think? Also, another interesting way to look at the data above is as follows:
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Is the Harrisonburg and Rockingham County Real Estate Market Keeping Up With The Joneses? |
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First, let's take a look at how we compared to our neighboring markets as to the number of home sales this past year (2009) compared to the prior year (2008). ![]() As you can see, the sum total of Virginia showed a 2% increase in the number of home sales. In comparison, Harrisonburg and Rockingham County aren't doing so well --- with a 13% decline in home sales. In fact, the markets north, south and east of our market have all shown a stronger performance as measured by the number of home sales. But what about home values, or median sales prices, you might ask . . . . ![]() This is the area where Harrisonburg and Rockingham County has done well --- hmmmmm --- or at least we haven't done as poorly as our neighboring markets, and the state as a whole. Our market saw a 4% decline in median sales price, in comparison to 9% for the state as a whole, a whopping 17% decline north of our market, and a 5% decline to the east. This data is consistent with what I have been observing for the past several years --- home values are holding steadier in our market than in most areas, but home sales have been quite slow as a result. Now, what shall we predict for 2010 and 2011?? | |
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Federal Tax Credit Boosts Home Sales (Daily News Record) |
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The Daily News Record's take on our local housing market . . . . Federal Tax Credit Boosts Home Sales (Jan 30, 2010) Harrisonburg And Rockingham See Overall Buying Decline For The Year ![]() HARRISONBURG - The looming expiration of a federal tax credit for first-time homebuyers in November is being credited for a doubling of Harrisonburg and Rockingham County home sales when compared to November 2008. But while the news was good for those looking to sell before the original Nov. 30 deadline for buyers to qualify for an $8,000 tax credit, December was a return to more typical winter sales. In the city and county, home sales increased from 42 in November 2008 to 83 in November 2009, according to the Virginia Association of Realtors. But the numbers dropped into the mid-60s for December. The association also is crediting the buying incentive for boosting sales by 5.4 percent for the year in the Shenandoah Valley in 2009. The Valley reporting region comprises Frederick, Clarke, Warren, Page, Shenandoah and Rockingham counties and the cities of Winchester and Harrisonburg. The tax credit, which Congress has since extended, led to November being the third-highest sales month of 2009 for Harrisonburg and Rockingham County, said Scott Rogers, associate broker for Coldwell Banker Funkhouser Realtors of Harrisonburg. Typically, November is a slow month for home sales, Rogers said. Along with the tax credit, he said, some buyers have been encouraged about the overall home-buying climate because the amount of bad economic news has seemingly diminished. Decline While the number of sales received a boost for November, the increase was not enough to change an overall decline in sales and median prices for the city and county in 2009, according to Rogers, who also operates the Web site HarrisonburgHousingtoday.com. Rogers' analysis of the city and county real estate market showed the sale of 561 single-family homes in 2009, which was a 14 percent decline when compared to 654 homes in 2008. The median sales price of a home declined from $215,000 in 2008 to $204,900, for a nearly 5 percent drop. The latest figures were significantly below 2004 and 2005, when the number of single-family homes sold hovered at 1,025 before dropping off to 909 in 2006, according to the Web site. The median sales price of a single-family home jumped from $170,000 in 2004 to $210,000 in 2005, for a 24 percent increase, according to the Web site. Townhomes Many of the first-time homebuyers in November who took advantage of the federal tax credit bought relatively less expensive townhouses in Harrisonburg, Rogers said. Still, the overall sales and price of townhomes declined from 2008 to 2009, according to Rogers. The 282 townhomes sold in 2008 dropped to 252 in 2009. The median sales price went down from $167,250 to $161,888 last year. The numbers contrast sharply with 2005, the peak sales year of the decade. That year, 644 townhomes were sold but the median price was $134,950. Statewide, fourth-quarter home sales for 2009 increased by 18 percent from 2008, according to an association statement Monday. "There's no question that [the number of] first-time homebuyers had a significant increase," said Lisa Noon, Virginia Association of Realtors vice president Lisa Noon. The tax credit deadline has been extended to the end of June, Rogers said. To qualify, a homebuyer must have a home under contract by the end of April and close by the end of June, he said. Nationally, the Commerce Department reported Wednesday that sales of new homes fell unexpectedly in December. According to The Associated Press, last month's results were the weakest since March and were only 4 percent above the bottom last January. Many in the industry, however, expect sales to pick up as the April 30 deadline for the federal tax credit nears. Contact Jeff Mellott at 574-6290 or jmellott@dnronline.com | |
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
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