Inventory
| Newer Posts | Older Posts |
 |
 |
January Housing Inventory Levels Sink To New Lows |
|
 We like somethings to be low - like mortgage interest rates. But inventory levels - it really isn't ideal for them to be this low - except for sellers, I suppose. For each of the past five years, home buyers in our local market have found themselves worse off as far as having options for houses to buy in Harrisonburg and Rockingham County. Today, buyers are choosing from 117 homes for sale in the entire City and County. Ouch! Just a year ago, that was 195 homes, two years ago 269 homes, oh -- and can you imagine having 500+ homes to choose from such as back in 2016!? Here's hoping for a flurry of homes coming on the market in February and March to help meet the apparently never ending surge of buyer demand! | |
 |
 |
|
|
Largest Inventory Declines In Lowest Price Ranges |
|
 As will come as absolutely no surprise to anyone looking to buy a home under $200K, or even under $300K, there are far fewer options of houses on the market now as compared to two years ago. The graph above compares "beginning of the year" inventory levels today (blue bars) to two years ago (purple bars) to see how the market has shifted. As noted in gold, the lowest price ranges (under $200K, $200K - $300K) have seen over 60% declines in the number of homes on the market. It is a lot tougher to find a house to buy these days if you are hoping to buy for less than $200K, or even less than $300K. If you are planning to buy in that price range, get pre-approved, plan to see new listings the first day they come on the market, plan to make an offer immediately if it is of interest, and consider including an escalation clause to compete on price! | |
|
|
|
|
Increasing Home Sales Despite Declining Inventory Levels |
|
 Fewer homes on the market means that fewer homes are selling, right? Nope, not necessarily. As you can see above, there have been an average of 38% fewer homes on the market (at any given time) this year as compared to two years ago. But there have been 7% more home sales this year than two years ago. So what gives? Basically, these metrics can and often do change independently of each other. Number of homes for sale (inventory) is not the same as number of homes listed for sale. If 100 homes are listed for sale at the start of a month and 5,000 homes are listed for sale during that month, and all 5,000 of them go under contract by the end of that month, then there are still only 100 homes for sale -- but there were 5,000 contracts signed that month! So, if buyers are buying faster than sellers are deciding to put their homes on the market, then this dynamic (sales up, inventory down) can take place. Just because you see that inventory levels are dropping - don't assume that home sales are also declining -- home sales (and prices) are actually on the rise, despite fewer and fewer homes being on the market at any given time. | |
|
|
|
|
Harrisonburg vs Rockingham County Inventory Levels |
|
 Perhaps the City inventory levels were just so low that they didn't have far to fall? Multiple things to note here (above) regarding City vs. County inventory levels...
In theory, inventory levels might (???) start to climb a *bit* this fall, but my general sense is that there is still pent up buyer demand and inventory levels could stay this low all through the fall and winter. Sorry, buyers! :-/ | |
|
|
|
|
When It Comes to The Local Housing Market, The Early Bird Truly Does Get The Worm |
|
 I suppose we have all heard of the proverb "the early bird gets the worm" which has a pretty helpful definition on Wikipedia...
That is, indeed, where we find ourselves in the local real estate market for many properties at many price ranges. If a newly listed house in a local and price range with plenty of buyer interest is well prepared, reasonably priced and thoroughly marketed...
So, figure out how you're going to track new listings and let's make sure to go see new listings of interest as quickly as possible when the hit the market - hopefully within hours or a day, instead of within days of a week. | |
|
|
|
|
So You Are Saying You Are Having A Hard Time Finding A Home To Buy? |
|
 So - there are only 186 homes for sale in all of Harrisonburg and Rockingham County. Which, as you can see above, is much lower than the number of homes for sale for most of the past 12 years. Breaking it down a bit further by location...
...and by property type...
...and by price...
Regardless of how you break it down, there are fewer options for buyers today than there have ever been at any other point in the past 12 (plus) years. One important caveat is that the lack of inventory at any given point does not mean that there aren't as many houses selling. There have been 1300-ish home sales per year for the past few years, despite continually declining inventory levels. So, basically, homes are coming on the market - but they are going under contract VERY QUICKLY - so inventory levels have been staying low or getting lower! What does this mean for buyers?
It's not necessarily a totally fun time to buy a home right now because of these low (low!!!) inventory levels -- but it is possible to buy a home. Let me know if you'd like to chat about inventory levels in your particular segment of the local housing market. | |
|
|
|
|
Housing Inventory Levels May Have Peaked For The Year |
|
 The number of options that you have today as a buyer (hint = not many) may be the most options you'll have at any given point between now and the end of the year. As shown above, inventory levels (the number of active listings in the MLS at the end-ish of each month) climbed through the first four months of the year, but seemed to peak in April and have been declining since that time. Surprisingly, the inventory level at the end of July was lower (!!??) than in January and February! Now, certainly, there will be some new listings over the next five months of this year -- so there will be some new inventory options -- but the total inventory available at any given point is not likely to increase again until next Spring. | |
|
|
|
|
Having Difficulty Finding Homes Under $200K? Here Is Why! |
|
 The blue line shown above is showing you the change in the number of homes for sale under $200K in Harrisonburg and Rockingham County. As you can see, this segment of our housing market has offered fewer and fewer choices at any given time over the past few years. Some further explanation and caveats...
So, if you are having difficulty finding a home to buy under $200K, maybe now you can see why you are having this experience! Be ready to pounce on any new listing of interest and you better already have a pre-approval letter in hand from your lender! | |
|
|
|
|
Inventory Changes Can Reveal Reasons For Fewer Home Sales |
|
 Contract activity is slowing, a bit, and that will likely eventually lead to fewer sales -- that is to say fewer sales in 2020-YTD than in 2019-YTD. So, if we get to that point, perhaps in July 2020, what shall we conclude about the state of our local housing market if we're seeing fewer home sales this year than last? After all, we have been seeing relatively steady increases in the number of homes sales for almost 10 years now! I think inventory trends (at such a future date) will help reveal the reason for fewer home sales. If fewer home sales are accompanied by rising inventory levels... that will indicate that more sellers want to sell their homes than there are buyers who want to buy homes. That will mean that the market is softening and it will become less of a seller's market than in the past. If fewer home sales are accompanied by steady or declining inventory levels... that will indicate that fewer sellers want to sell their homes and the buyers are still there wanting to buy homes. That will mean that the market is staying strong with sustained buyer interest despite an interruption in the flow of sellers willing to sell. So -- fewer home sales could mean two very different things -- and thus far, it's seeming that it's the second scenario -- fewer sellers willing to sell despite a consistent pool of buyers ready to buy. | |
|
|
|
|
Will Inventory Levels Be Even Lower Than Low This Spring? |
|
 If you haven't heard, inventory levels have been LOW lately -- with very few homes for sale at any given time -- which can be frustrating for buyers. And it is even more frustrating and challenging for seller/buyers -- folks who need to both sell and buy at the same time. If you have to sell your home, but you aren't sure whether you can find something to buy, you'll likely wait to list your home for sale until your dream home comes on the market. This phenomenon (seller/buyers waiting to list until they find something to buy) further reduces inventory levels because the seller/buyer's homes are not listed for sale. And now, with COVID-19 causing some sellers to wait a few weeks or months to list their homes, it seems possible that we'll see even lower inventory levels than we would expect to see at this time of year. The upside for sellers who are willing to list their homes right now is that they might have less competition from other sellers who might choose to wait to list their homes for sale. The downside for buyers is that they might have to wait even longer for the "right" home to come on the market for sale. | |
|
|
|
|
Lower Priced Market Segments See Largest Swings In Housing Inventory |
|
 Not all price ranges are created equally, it seems. The hardest hit price range, perhaps unsurprisingly, is the under $200K price range -- where we have seen a 57% decline in the number of homes for sale over the past two years. Of note -- part of the problem here is increasing home values -- which prices some homes out of the "under $200K" price range. Regardless, though, buyers looking to stay under $200K for their home purchase are having an ever more difficult time doing so. The $200K - $300K market also had a sizable (26%) decline in the number of homes actively listed for sale as compared to two years ago. Both the $300K - $400K and the $400K+ price ranges only saw slight (-5%, -7%) declines in inventory levels - so not a marked difference from where inventory levels were two years ago.. | |
|
|
|
|
It Might Be Hard To Find A Home To Buy In The City of Harrisonburg |
|
 The number of homes for sale in the City of Harrisonburg keeps dropping. That's not to say that homes aren't selling -- a total of 390 homes have sold in the City of Harrisonburg during the first 353 days of the year -- putting us at a pace of around 34 home sales per month. But the number of homes available to buyers continues to decline -- now down to only 42 homes for sale! Here's a bit longer of a context....
And now -- only 42 homes for sale! If you're looking to buy a home in the City of Harrisonburg it might be difficult to find a home that is a perfect fit or you given a very limited supply of homes for sale. And when a home does come on the market that works for you, it is likely to sell quickly. | |
|
|
|
|
Will You Take Your House Off The Market Over The Winter? |
|
 In some ways, NO, you should NOT take your house off the market -- because housing inventory levels have plummeted in December. And yet, still, some folks will take their homes off the market for the winter. Our local MLS requires a house to be off the market for 90 days before the "Cumulative Days on Market" statistic resets. So, if you take your house off the market today, you could put it back on the market right around March 5, 2020 and have that statistic reset. During these 90-ish days of being off the market, we will want to talk about price, condition and marketing....
| |
|
|
|
|
Housing Inventory Levels Plummet in December |
|
 First - a note - each data point above is for the end of the given month. Thus, the 235 homes for sale in November are at the end of November -- or, as the case may be, the very beginning of December. Now, there are a few disclaimers I could make about the above data...
Regardless of the reason or explanation, though, the current inventory levels are SUPER low! Which is terribly frustrating for buyers -- and a great opportunity for any home owner who does need to sell right now. You are not likely to have much competition from other sellers! Stay tuned later in the month when I compile my full monthly report and we'll see if inventory levels perked back up as we made our way further into December. | |
|
|
|
|
I Would Like To Sell But Cannot Find Anything To Buy |
|
 Something I am hearing with increasing frequency goes something like this...
A few thoughts and notes as it relates to this increasing common occurrence...
It can be a tough time to be a buyer -- and even more so to be a seller and buyer. I recognize that plenty of folks who want to move may just need to stay in their current home -- but let's take some time to explore that together to see if that is the only path forward. | |
|
|
|
|
Detached Homes in the City of Harrisonburg Under $200K Are Harder To Find |
|
 It's harder and harder to find a (detached) home in the City of Harrisonburg under $200K. As shown above, there have been fewer and fewer such home sales over the past few years. As a side note -- the 48 such homes that sold thus far in 2019 have had a median days on market of 5 days. So, when these under $200K homes do come on the market they usually go under contract quickly! As of today, there are 11 such properties on the market - but 7 of them are under contract. Explore all 11 of them here. | |
|
|
|
|
Home Buyers In The City of Harrisonburg Have Fewer and Fewer and Fewer Choices |
|
 As shown above, inventory levels keep on dropping in the City of Harrisonburg!?! Today, you'd have only 50 options for a home in Harrisonburg, compared to...
And, to make matters worse, the 50 houses on the market today are not likely all houses of interest to you, as they include...
And even beyond price, these homes are not all the same...
Anyhow -- the moral of the story is that you may need to be prepared to be patient as a home buyer in the City of Harrisonburg. There aren't many options of houses for sale at any given time -- and when compelling houses do come on the market, they often go under contract QUICKLY! | |
|
|
|
|
Inventory Levels Seem Unable To Drop Below 250 |
|
 It's been the story for quite a few years now (at least 10 years, it seems) that inventory levels are dropping -- buyers have fewer and fewer homes from which to choose when they are looking to buy in Harrisonburg and Rockingham County. Here are how many homes have been on the market in October for the past 10 years...
So, it's certainly a more challenging time to be a buyer than anytime in the past 10 years -- but inventory levels seem to now be bottoming out around 275. Here's what the past six months have looked like...
So, over the next year, I wouldn't be surprised if we never dipped lower than 250 and we never rose above 300. Given these limited inventory levels, it is more important than ever that buyers in today's market are ready to be patient and then to ACT QUICKLY! :-) Buyers can make it a bit easier on themselves by knowing the market, knowing the process, knowing your buying power, and closely monitoring new listings! | |
|
|
|
|
Home Buyers Have Had Fewer Choices Nearly All Year |
|
 The blue line above shows the number of homes for sale at the end of the month for the first six months of last year, 2018. The orange line shows the same (homes for sale at the end of the month) for the first six months of 2019. Last year, inventory levels rose 24% between the end of January and the end of June. This year, inventory levels actually dropped negligibly (by one listing) between the end of January and the end of June. So - for all you would-be home buyers out there feeling like you don't have many options, or that the ones you do are going under contract quickly after having had multiple offers, the data backs up the pain you are feeling. What's next? How do we get out of this trend of fewer and fewer homes for sale? New construction is the likely anecdote, but there doesn't seem to be a whole lot on the horizon right now. | |
|
|
|
|
Thoughts and Questions on Short Term Rentals in the City of Harrisonburg |
|
 More great reporting over at The Citizen about short term rentals...
And a few prior articles...
And to follow that recap, some thoughts and questions... Does approving a Short Term Rental remove a property from the local housing stock? Not really - or not most of the time? Most of the Short Term Rental applications have been from owners who live in their home and want to offer a portion of their home as a short term rental option. So - those properties aren't being removed from the local housing stock - the owners still live there. Further, the approval of a non owner occupied property as a Short Term Rental wouldn't remove a property from the "purchasable housing stock" since the owner is presumably currently renting it to a long term tenant. Technically, a property owner could decide to stop renting a house to long term tenants and start renting it only to short term tenants -- thus making it such that most occupants of the house would not be local residents, but just those passing through. In that situation it would, in some ways, be moving the property from the local housing stock to the "local hotel stock" - if that were a thing. This (converting a home from being occupied by the owner or a long term tenant to being occupied only by short term tenants) doesn't seem to be the majority of what is being proposed or considered - and my general sense (not scientific or data driven, I know) is that there is only so much of a market of would-be tenants for short term rental properties. If one hundred local property owners moved out of their homes, were approved to use them as short term rentals, and listed them on AirBNB, I don't think that all, or most or would be pleased with the rental demand from short term tenants. If one Short Term Rental is approved on a street or in a neighborhood will lots of other property owners follow suit and apply to become short rentals? Not really - or not most of the time? I think most folks who own and live in their homes in Harrisonburg enjoy living in their homes, probably by themselves. I don't think that the ability of one home out of 50 (in a hypothetical neighborhood) is going to cause more and more property owners to either take in short tenants to live with them, or to move out of their homes and start renting them to short term tenants. Will investors start buying up properties in Harrisonburg as short term rentals? Probably not, or not in large numbers? I don't think there is an untapped demand by short term tenants that would reward those investors with frequently rented short term rental properties. Yes, it is technically true that renting a property to 100 tenants for short terms instead of one tenant for the entire year is almost certainly going to be more profitable - but I just don't think there is that much demand by short term tenants. As a side note - there are plenty of localities where ordinances limiting short term rentals do not exist. I tend to think that investors would be more likely to invest in a property where short term rentals are not regulated before they'd invest in a community where there are somewhat restrictive regulations in place. Will the City's new Short Term Rental policy increase or decrease the number of City properties that are being used as short term rentals? To me, this is one of the more interesting questions. Property owners in the City have been operating short term rentals in the City for quite some time now (5+ years?) without actually having the legal ability to do so. Most of the concerns above seem to be regarding the hypothetical possibility that more and more and more properties will be come short term rentals. I tend to think that we won't see a large shift in the number of properties being used as short term rentals when comparing (for example) 2018 and 2020. Of the folks using their homes as short term rentals prior to these regulations:
Those four (non-exact, non-numerical) changes above would seem likely to result in a net decline in the number of short term rentals -- and moving forward, property owners would seem to be less likely to want to use their property as a short-term rental as there is now a higher barrier to entry in the form of an application fee and several months of processes and meetings. Should most Short Term Rental applications be approved? Not necessarily? City Staff, Planning Commission and City Council are looking at each application through many lenses to understand how each property being used as a short term rental would affect surrounding property owners, the neighborhood, etc. I think all of those property-specific perspectives are valuable and I am glad to see the thoughtful process being used for deciding whether to approve short term rentals. The broader thoughts of "maybe we shouldn't approve any or many short term rentals because of how it could have a large impact on our local housing market and housing stock" (my summary, not a quote) are a bit more difficult for me to agree with - at least given my understanding of the short term rental market as of today. Am I completely wrong to not be overly concerned about unintended consequences of approving many or most applications for short term rentals? Quite possibly! If lots of property owners decide they want to pursue using their property as a short term rental AND the City approves many or most or all of them AND there is an unexpectedly high demand from short term tenants -- then it is possible that there would be widespread negative unintended consequences. I'm not thinking this is likely - but I could be wrong. What are your thoughts? | |
|
|
| 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
