1. December home sales were much stronger than expected, with 138 closed sales compared to last year's 100 closed sales.  This marked a 38% increase in December home sales.
    
2. Now looking at all of the 2020 home sales (1,493) and comparing them to all of the 2019 home sales (1,324) we find that there was a staggering 13% increase in the volume of home sales in 2020!
    
3. Not only did more homes sell -- they sold at higher prices.  The median sales price increased from $222,750 in 2019 up 10% to $244,900 in 2020. 
    
   
4. Homes sold 50% faster in 2020 (median of 9 days on the market) as compared to in 2019 (median of 18 days on the market). 
   

1. We saw 9% more sales of detached homes in 2020 as the pace of sales increased from 954/year to 1,041/year.
    
2. The median sales price of those detached homes rose 12% in 2020 up to its current level of $269,000 in all of Harrisonburg and Rockingham County.
    
3. Here's where we really see a jump -- there was a 22% increase in the number of attached homes sold in 2020 in Harrisonburg and Rockingham County.  After only seeing 370 such sales in 2019, there were 452 of them last year.
    
4. The median sales price of attached homes also jumped considerably, up 10% to $193,000.

1. Pre-COVID, most of us likely spent the minority of our waking hours in our homes.  We would be at work much of the time.  Post-COVID, many folks found themselves spending 90% or more of their waking hours in their homes.  For many folks made them quickly realize that their home was no longer working for their needs or those of their family.  If you're working from home and your kids are learning from home, you suddenly have higher expectations for the space and spaces that your home offers.  I suspect this "being at home much more than usual" dynamic caused more people to decide to sell their home and buy a new home during 2020.
    
2. Mortgage interest rates have been dropping throughout most of 2020, making it more (and more and more) compelling to buy a home, and more affordable to do so from a monthly mortgage payment perspective.  These lower rates likely made it pretty easy for the "my home doesn't work during COVID" buyers to consider upgrading to a new home.
    
3. There is an extraordinary amount of pent up buyer demand in our area.  Perhaps more sellers than usual listed their homes in the second half of the year, most of which were scarfed right up by eager buyers, thus leading to higher than normal home sales.  This also seems to have lead to higher sales prices!
    
4. What do they say?  The whole is greater than the sum of its parts?  More buyers who want to upgrade to a new home, plus super low interest rates, plus pent up buyer demand, plus quickly rising home prices = a red hot real estate market in 2020!
   
   
5. As one other aside, it is also possible that we may have seen more second home purchases in 2020 than in other comparable years.  More and more people found they could work from home, or from out of town, and this likely drove at least some number of new buyers of second homes into our market place.
   

1. This was the first time in the past 10 (+) years that we have seen a double digit percentage increase in the median sales price in Harrisonburg and Rockingham County.  During the first nine years of the past decade we saw an average increase in the median sales price of 3% per year.  In 2020, it was a 10% increase!
    
2. The 13% increase in the number of home sales in a year is not unprecedented.  We saw a similar (larger) bump in 2013 and 2016. 
   

1. First, a happy thought, for some.  It has certainly been a great time to be a homeowner.  If you have owned a home for the past five years the value of that home has likely increased quite a bit.  That value certainly isn't guaranteed to always go up -- and it definitely won't usually go up this quickly -- but this has been a good five years during which to own a home.
    
2. The monthly payment (principal and interest) for financing 80% of that median priced home has only increased by 13% during that same timeframe - due to mortgage rates declining from 3.96% (in 2015) to 2.67% (now).  So if you didn't buy five (or four, or three, or two, or one) years ago your mortgage payment today will not be 32% higher than five years ago even if the price is 32% higher.
    
3. If you have been thinking about buying a home for the past few years, but have not done so, these increases in prices are likely quite depressing.  The lower rates and thus lower monthly payments are somewhat of a consolation - but it still is not that fun to see that you have to pay a higher and higher price for the same home year after year.  But, that's the market these days.
    
4. If you fall into the category above (thought about buying but haven't) and you're feeling rotten about how much you'd have to pay for a house today - you have an interest choice in 2021.  Do you just go ahead and buy a house even though you can't believe how much you have to pay for it?  Do you keep waiting, wondering if prices will come back down in the future?
    
5. While lower mortgage interest rates have kept housing payments for new buyers more affordable despite rising home prices, that could all change if interest rates start to increase significantly.  That is not currently predicted for 2021, but it seems that eventually rates will have to start going up?

• MARKET FUNDAMENTALS -- Assuming a similar number of sellers sell in 2021, and that we continue to have strong buyer demand, it follows logically that we would see another increase in the median sales price in this area in 2021.
   
• PRICING OUT BUYERS -- I'm predicting a 4% increase in median sales price in 2021 instead of another 10% increase because I don't think that multiple years of double digit increases in the median sales price is sustainable, especially if mortgage interest rates were to increase.  At some point, buyers will start to be priced out of the market for the homes they wish to buy, meaning they just won't buy. 
   
• LOW RATES -- Most economists believe mortgage interest rates will stay at or near where they are now for much of 2021.  This will continue to keep plenty of buyers in the market to buy homes -- and will make them comfortable paying at or above what last year's buyers paid, since their monthly mortgage payment will be so low.
   
• DISCLAIMERS -- Could we see another 10% increase in the median sales price?  Yes, we could.  I don't think it is likely, but if inventory continues to stay super low, buyer demand super higher and interest rates super low, we couldn't be totally shocked to see a repeat of last year's 10% increase in the median sales price.  Could we see prices decline?  This is very hard to imagine.  I think we would need to see a major shift upward in supply and downward in demand, or a major shift upward in mortgage interest rates.  None of those are expected to happen in 2021.

1. CHEAP MONEY -- Interest rates (including mortgage interest rates) steadily declined throughout the year, in part to help prop up a potentially faltering economy.  This resulted in mortgage money to be less and less expensive, which made it a compelling time to consider a home purchase.
    
2. MORE TIME AT HOME -- People were spending more and more time at home, and many were working from home or had kids learning from home.  Your home might have worked for you and your family when you were only spending half of your waking hours in it -- but all of a sudden a lot of us were spending 90% of our waking hours at home.  I think this caused plenty of homeowners to decide it was time to upgrade to a new space given the new demands they were putting on their homes.
    
3. FINANCIAL SHAKE UP -- First, it's important to note that many (though certainly not all) of the folks locally who saw their jobs or income interrupted in 2020 were folks who were renting and not looking to buy a home.  Thus, economic disruptions did not impact the pipeline of home buyer activity as much as might have been expected.  Secondly, a lot of people saw their discretionary spending decline (less travel, fewer vacations, not eating out as much, lower gas costs without a daily commute) and this likely freed up further funds to use for a downpayment or on monthly housing costs.

1. LOTS OF BUYER INTEREST -- See above.  Many more buyers wanted to buy in 2020 as compared to 2019.  Whenever you see an increase in demand you almost always see a corresponding increase in prices.
    
   
2. LOW INVENTORY -- Throughout the year, buyers were struggling to find homes to buy amidst lots of competition from other buyers.  This dynamic resulted in quite a few bidding wars, and buyers being willing to pay prices they likely would not have had to pay a year prior.
    
3. LOW INTEREST RATES -- The ever declining mortgage interest rates came into play here as well.  As mortgage interest rates fall, buyers can afford to buy a more expensive home and have the same mortgage payment.  Thus, even though home buyers paid 10% higher prices in 2020, they saw no change (or nearly no change) in their monthly payments because of lower interest rates.
   

• 2015 = 3% increase over 2014
• 2016 = 17% increase over 2015
• 2017 = 4% decline compared to 2016
• 2018 = 3% increase over 2017
• 2019 = 1% increase over 2018
• 2020 = 12% increase over 2019
  

Stay tuned for my full market report in the next week or two, as well as predictions for the 2021 housing market.

• Over the past 20 years, the median sales price has been mostly increasing -- other than in 2008, 2009, 2010 and 2011.
   
• This year is the 9th year in a row where we have seen an increase in the median sales price.
   
• This year (2020) marks the largest increase in the median sales price that we have seen in the past nine years.
   
• The median sales price has doubled ($122K to $244K) over the past 19 years!

• The likely 1400+ home sales in 2020 will be higher than any other year in the past 20 years other than 2004, 2005 and 2006.
   
• If we get to 1439 home sales, we will have beat every year except 2004 and 2005.
   
• Home sales increased year over year between 2000 and 2005, declined year over year between 2005 and 2010 and have been almost entirely increasing year over year ever since 2011!
  

1. Home sales were 52% higher this November than last -- rocketing up from 93 home sales up to 141 home sales! 
    
2. The year-to-date pace of home sales has increase 10.47% this year over last.  Despite COVID, we've seen 1,351 home sales in the first 11 months of this year compared to only 1,223 home sales last year.
    
3. The median sales price has also been rising quickly, to the tune of a 10.91% YTD increase.  Last year we were looking at a $220,000 median sales price and this year that figure has risen to $244,000!
    
4. Homes are taking half as long to sell this year as they did last year.  The median "days on market" was 18 days during the first 11 months of last year -- but only 9 days during that timeframe this year!

• November through February = average of 44 days on market
  
• Two Months Before/After = average of 25 days on market
  

• November through December = average of 37 days on market
• Two Months Before/After = average of 16 days on market
  

• The graph above is showing the median days on market in each given month.  The narrative I have included above then averages those median values.  Sort of confusing, but ask if you have questions.
  
• It is interesting that the "winter" from a real estate perspective keeps getting shorter!
  

1. Steady, predictable, sustainable growth in home values - perhaps +3% per year.
    
2. Faster than normal growth in home values.
    
3. Stagnant home home values - which are really a net negative due to inflation.
    
4. Declining home values.

1. October 2020 was crazy!  There were 149 home sales in Harrisonburg and Rockingham County last month, which is 34% more than the prior October.  This is likely much stronger than anyone was predicting.
    
2. That strong month of October sales has pushed 2020 YTD home sales even further ahead of 2019.  We have now seen 6.55% more home sales this year than last when looking at the first ten months of the year.
    
3. The median sales price in our area has risen a staggering 10.27% over the past year -- from $220,000 to $242,600.
    
4. Homes were selling fast last year, with a median of 17 days on the market, but 2020 wasn't going to be outdone as they are selling even faster this year, with a median of 10 days on the market!

Interestingly, things do branch out a bit when we look at the City vs. the County...

As shown above, there has been a decline in home sales in the City (-5.58%) while we have seen an increase in the County (+11.63%).  Not shown is that the median sales price has increased in both areas -- up 11% in the City and up 9.76% in the County.  The decline in City home sales is not for home buyers not trying -- there are plenty of folks who want to buy in the City but there seems to be a shortage of sellers willing to sell.

So - did I mention that September and October were a bit surprising?

Take a few seconds to take in what the graph above is showing us.  September 2020 home sales (156) were 47% higher than the average of the past three months of September.  October 2020 home sales (149) were 35% higher than the average of the past three months of October.  So, if the local housing market was unusually slow this Spring due to COVID, this September and October have more than made up for that given these shockingly high months of home sales!

Which invites the question of how the year will finish out...

1. The number of buyers buying in a given year (or in a given six month period in this graph) has remained relatively consistent over the past few years.
    
2. The number of homes from which those buyers are choosing on a monthly basis has steadily fallen, from 400-ish homes for sale three years ago to 200-ish today.  This makes it harder for buyers to find a house to buy and they are often competing with multiple other buyers.
    
3. Sometimes folks think that lower inventory levels mean that fewer sellers are selling.  It's not quite that.  If 1400 buyers buy in a year, then 1400 sellers have sold.  So, the steady pace of buyer activity means there is a steady pace of seller activity -- but buyers are contracting so quickly on (most but not all) homes that there are never very many homes on the market at any given point.

So, given this strong sellers market, are sellers negotiating much?

Nope.  The median ratio between the list price and sales price for all homes sold in 2020 has been 100%.  What!?  Yes, that means that half of homes sold for the list price or more!  This has been the least that sellers have negotiated in many, many years - maybe ever.

Circling back to those inventory levels one more time...

You'll see that we are seeing some amount of seasonable fluctuation in inventory levels as we did see a slight rise in homes for sale (and not under contract) during the spring months, but we have seen an overall 39% decline in inventory levels over the past year.  Inventory levels ticked upward in October 2020, but I doubt that will be a lasting trend.  We are likely to see relatively low inventory levels (under 200) even through the remainder of the fall and into and through the winter.

Oh, and did I mention that mortgage interest rates are relatively low?

Perhaps absurdly, ridiculously, unexpectedly, historically low would be a better way to describe it.  We just finished the fourth month of average 30 year mortgage interest rates being below 3%!  This has created some very favorable monthly payment scenarios for buyers this year -- and thus far I'm not getting any sense that we'll see these interest rates rise much in the near future.

OK, back to a few (real estate related) areas of thankfulness...

1. I'm thankful that you read this entire synopsis of our local housing market.  Who made it this far?  Reply to say hello!  ;-)
    
2. I'm thankful that home owners and home sellers in this area have not seen home values fall amidst the many other unexpected changes that 2020 brought into our lives.
    
3. I'm thankful to be able to do what I do - help buyers and sellers make thoughtful, informed and intentional decisions when buying and selling homes - because I love my work and the people (buyers and sellers) with whom I get to work.
   

I'll close out with a few key recommendations for buyers and sellers in this crazy-ish market...

BUYERS

• Get pre-qualified for a mortgage ASAP.
   
  
• Look at houses the day they are listed.
   
  
• Be prepared to make an offer on Day 1.
   
  
• Know that you might be competing with other buyers.
   
  
• Learn about escalation clauses and how to use them.
   
  

SELLERS

• Pricing your home appropriately, preparing it well for the market, and marketing it rapidly, thoroughly and professionally are still the secret sauce to securing a buyer.
   
  
• If your home has been on the market for 60+ days and still has not sold, you will likely have to start thinking about whether to make a price reduction in order to secure a buyer.  If buyers are not responding (with an offer) at your current pricing, consider making an adjustment sooner rather than later.