Inventory
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City Home Buyers Have Fewer and Fewer Choices (at any given time) |
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 If you are a home buyers (or would-be home buyer) in the City of Harrisonburg, it can be a frustrating time to try to find that "right home" given the extremely low inventory levels. With only 53 homes currently on the market (and only 33 of those being detached homes) you might be waiting longer than you'd like to find a home that can work for you. This is a recent phenomenon, however, as the current inventory levels are 38% lower than a year ago and 63% lower than three years ago. Sadly, I don't think we're likely to see a significant increase in City housing inventory levels unless we (unexpectedly) see new homes starting to be built in the City. So, as a City home buyer -- be prepared to be patient, and then act quickly when the right house comes on the market! Read more about our local housing market in my monthly market report. | |
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Will All 264 Currently Listed Homes Be Appealing To You? |
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 If you are entering the market to buy a home, the number of homes you will have to choose from will vary widely based on what you are looking for in a new home. Some buyers have a very narrow scope and find themselves on a prolonged hunt for what seems to be an elusive or mythical home. Some buyers find plenty of options, evaluate quite a few, make a decision and move forward with an offer. However -- keep in mind that as you consider the 264-ish homes currently on the market for sale, that some of them have been on the market for 3 months, 6 months, 9 months or even longer. The freshest of fresh listings are those that have come on in the past 30 days -- which (this time of year) is less than 100 of the 264-ish homes currently listed for sale. Depending on your time frame for buying, and the narrowness of your scope, sometimes it makes sense to quickly evaluate the current options -- and then to wait and see what new and exciting listings will be coming on the market in coming days and weeks. Steps to get started include talking to a lender to get a sense of your target price range, and then chatting with me (in person, by email, by phone) so that I can also be keeping an eye out for suitable properties for you. Learn more about the home buying process at...  Keep up with new listings at ...  | |
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I Know You Know This, But These are RECORD Low Inventory Levels |
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 I looked back further, and further, and further, and could not find ANY time in the past 10 years when there have been fewer houses listed for sale than there are RIGHT NOW! And yet, despite the fact that we keep starting off each year with FEWER homes for sale...  ...somehow buyers are able to buy pretty much the same number of homes for each of the past three years:
What does this mean? How can it be? Stop making my/your head hurt!? Well, basically, the inventory level DOES and DOESN'T matter. If 1,000 homes are listed for sale each month in 2019 and 1,000 go under contract and 1,000 sell -- we would have an absolutely outlandish year of sales (12,000 home sales) but inventory would have started and finished at 269 homes for sale. So -- buyers certainly have fewer choices at any given moment, but as more and more listings come on the market this Spring, they are likely to have more and more choices, though they will be competing against lots of other buyers and the properties are likely to go under contract quickly. | |
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Are Home Sellers Waiting For Warmer Weather? |
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 OK, I know it's not Spring yet, but it's March! We're supposed to start seeing many more new listings coming on the market - finally - for all of the buyers who have been patiently waiting for more inventory from which to choose. But, it's just not happening yet this year. Or at least not at scale. Maybe it's the snow (despite a lack of accumulation) or maybe the frigid temperatures (looks like a cold week ahead) but whatever the cause, we're seeing much lower early March inventory levels as compared to the past few years. So, maybe mid-March? Maybe April? When will we finally see an increase in listing inventory? It hasn't happened yet! Sellers who are thinking of selling in April - maybe March is your month? Get ahead of the game -- avoid the competition! | |
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Will Single Family Home Sales Ever Return to 2016 Peak? |
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 I actually asked the same question last year. Thus far, the answer is still -- NO -- detached homes might not (??) ever (??) return to their 2016 peak. Actually, I don't completely hold to that conclusion, but read on for a moment. After three years straight (2013, 2014, 2015) of seeing a *very *consistent number of detached homes in the City and County (813-819) there was a 20% increase in 2016 to 978 home sales! But then, in 2017 -- sales of detached homes fell 10% to 884 sales. This could have partially been an inventory issue -- with fewer and fewer homes available for buyers to purchase -- but I have recently concluded that home sales can remain stable even with declining inventory levels. So -- getting back to it -- will we return to that 2016 peak of 978 detached home sales? Or will we beat it and hit 1,000 detached home sales at some point soon? We did see a few years of those sales levels in 2004 (1024 sales) and 2005 (1025) but that was amidst the real estate BOOM. I'm going to say that YES we can expect to get back up to those 2016 levels -- and even beyond that -- but it might take another year or two AND we probably need some new detached homes to be built. If that is even possible. As always, let me know what you think! Are you more optimistic (or pessimistic) than I am about detached home sales? | |
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Changes in Housing Inventory Levels By Price Range |
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 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 52% 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 (28%) decline in the number of homes actively listed for sale as compared to two years ago. The $300K - $400K inventory levels stayed relatively level and the "over $400K" market saw a decline in the number of homes for sale, though this would certainly impact a much smaller number of buyers. Depending on the price range (and location, property type, condition, size, age) you are shopping in, you are bound to find something slightly different as to the current inventory levels and recent trends in those levels. | |
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Do Lower Housing Inventory Levels Matter In Our Local Market? |
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Inventory levels have fallen rather consistently over the past several years:
And yet -- somehow -- buyers were able to buy pretty much the same number of homes for each of the past three years:
So -- what gives? How does this work? Does it matter that inventory levels are much lower now than they have been over the past few years? Let's ignore, for the moment, any homes that come on the market and never sell and are taken back of the market. If we do so, then the information above might mean: 2016 = 1166 New Listings? Starting the year with 560 homes for sale, and selling 1313 during the year, and ending the year with 413 homes on the market would mean that around 1166 owners listed their homes for sale in 2016. (560 + 1166 - 1313 = 413) 2017 = 1128 New Listings? Starting the year with 413 homes for sale, and selling 1261 during the year, and ending the year with 280 homes on the market would mean that around 1128 owners listed their homes for sale in 2017. (413 + 1128 - 1261 = 280) 2018 = 1291 New Listings? Starting the year with 280 homes for sale, and selling 1302 during the year, and ending the year with 269 homes on the market would mean that around 1291 owners listed their homes for sale in 2018. (280 + x - 1302 = 269) So -- after all that -- Lower inventory levels at the beginning of the year (560 to 413 to 280) and during the year did not seem to affect the number of buyers who were able to find homes to buy. Sales stayed consistent-ish over the past three years despite these declining inventory levels. But -- Lower inventory levels make it less fun to be a buyer. Buyers have fewer choices at any given time and they will often have competition from other buyers when the home of their dream comes on the market. Lower inventory levels make the market move faster. With fewer options to choose from, buyers must be ready to act quickly. We saw this with a reduction in the median days on market over the past several years from 52 days to 33 days to 25 days. So, yes, lower housing inventory levels do matter -- mostly to buyers. Sellers are, usually, quite delighted to have lower inventory levels when they are ready to sell. Sellers will have less competition, and more likely to sell more quickly and negotiate less. | |
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Would Be City Townhouse Buyers Finding Few Options |
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 Some time ago, I created a website (HarrisonburgTownhouses.com) for exploring townhouse communities in and around Harrisonburg, Virginia. This allows you to explore sales trends, value trends, see recent sales, current listings, etc. So -- feel free to explore the website -- but don't expect to find many townhouses listed for sale. If you were a buyer looking to buy a townhouse, built in the past 10 years, you'd have some difficulty. Current inventory (as of 1/8/2019) includes:
So - as excited as a first time buyer might be to purchase a townhouse in the City of Harrisonburg - they will find that they have very (!!) limited options right now. | |
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Very Few Homes For Sale in the City of Harrisonburg |
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 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 423 homes have sold in the City of Harrisonburg during the first 11 months of the year -- putting us at a pace of 38 home sales per month. But the number of homes available to buyers continues to decline -- now down to 70 homes for sale. Here's a bit longer of a context....
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. | |
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Should Your House Be Off The Market Over the Winter Months? |
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 In some ways, NO, you should NOT take your house off the market -- because inventory is lower than it has been for years and is not showing any signs of improving.
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 on March 4, 2018 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....
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Will housing inventory levels improve next year? |
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 If you have been looking for a new home to buy all Spring and Summer and Fall of this year -- and didn't find one, which you blame on having very few homes from which to choose -- are you likely to have better luck next year? I'm guessing not. The graph above shows that inventory levels have dropped significantly over the past two years based on how many homes are on the market at the start of the main buying season, which I'm defining as April in the graph above. So -- after seeing a 20% decline in inventory levels between April 2017 and April 2018 -- are we likely to see inventory levels start increasing again in 2019? Again, I don't think so, and here's why.... To reverse this trends of declining inventory we would need one or more of the following to happen in our local market....
Again -- none of the changes above seem likely to happen at a scale that would allow inventory levels to see much, if any, of an increase next year. As such, I am expecting we'll see relatively similar inventory levels next Spring and Summer. | |
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City Housing Inventory Levels Stabilizing, At Extraordinarily Low Levels |
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 Perhaps inventory levels (number of houses for sale) can only go so low in the City of Harrisonburg. As shown above, inventory levels are "stabilizing" around 100 homes for sale. This is still a significant decline from where we have been over the past six years, but at least the trajectory is not still declining. What would it take for this inventory level to start rising again?
There is no easy way to turn this trend around -- and to have more options for City home buyers -- and until this does change, it can be quite challenging for buyers to find a home they want to purchase in the City. So, if you are looking to buy a home in the City, be ready to patiently wait for the right opportunity to come along, and then be ready to act quickly! Stalk homes for sale @ NewListingsInHarrisonburg.com. | |
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Housing Inventory Levels Likely To Fall Even Further |
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 If last year is any indication, get ready to see inventory levels falling over the next few months as the weather gets colder. Inventory levels have fallen 18% over the past year -- and 39% over the past two years -- and we're about to head into the time of year (Fall to Winter) when inventory levels drop to their lowest levels. As shown above, inventory levels fell 32% last year between the end of August and the end of January. As such -- look at the meager supply of homes currently on the market -- and then eliminate 1 out of every 3 of those homes. That's likely where we're headed over the next few months. But here's the good news (sorta, kinda, with limitations) -- if you are thinking of selling your home in the next few months, you may have quite a few buyers angling to purchase it if it aligns well with what they are looking for in a home. The sorta/kinda part is that you'll only be good shape if you don't have to buy as well. After all, if we quickly sell your home (because of low inventory levels), but can't find something for you to buy (because of low inventory levels), then we still have problems. Who is the indisputable winner in today's local housing market? The home seller who does not have to buy a home as well. :-) | |
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Fewer and Fewer Homes For Sale in the City of Harrisonburg |
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 Home buyers looking to purchase in the City of Harrisonburg are finding fewer, and fewer, and fewer options at any given time. As shown above, inventory levels have been steadily dropping over the past six years -- from over 200 homes for sale to less than 100 homes for sale. Now, of note, this is not an indication that fewer homes are selling in the City -- but rather, that with as fast as homes are selling in the City, there are a smaller number available for sale at any given time. Buyers in the City, thus, are finding themselves in competitive offer situations more often, or are having to make decisions much more quickly when a house of interest is listed for sale. Learn more about our local housing market in my most recent monthly market report -- click on the image below to read it.  | |
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Housing Inventory Levels May Have Peaked For The Year |
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 The number of options that you have today, as a buyer, 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 six months of the year, but seemed to peak in May/June and now would appear to be starting to decline again. Now, certainly, there will be 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. | |
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What homes are NOT being built? |
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 The graph above is not based on any actual data -- it's based on my experience of our local market, and conversations with a variety of buyers over the past few years. It seems that most of what has been built as new housing stock in this area over the past 15 years has either been townhouses -- or high end homes. This has left quite a gap in the middle of the market, where there is a LOT of buyer demand, but where there is NOT a lot of new housing stock to help meet this demand. How and when will this change? What will these buyers buy if they can't buy a home in that middle of the market price range? | |
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Approaching March, A Different Look For Our Local Housing Market |
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 This is a bit of a different look for our local housing market. Ignoring last year, there have always been between 500 and 900 homes for sale in Harrisonburg and Rockingham County when entering into March -- the very early edge of the Spring real estate market. Last year -- that number felt low -- only 402 homes on the market in early March. This year -- low doesn't even describe it -- there are only 279 homes on the market right now. There is bound to be a surge of buyers hoping to contract on homes this March, April, May and June. What will they find as they enter into our local housing market? Very few houses for sale. And lots of competition from other buyers!!! | |
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Will Single Family Home Sales Ever Return to 2016 Peak? |
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 Apparently, 2016 was a special year for single family home sales in Harrisonburg and Rockingham County. After three years straight (2013, 2014, 2015) of seeing a very consistent number of single family homes in the City and County (813-819) there was a 20% increase in 2016 to 978 home sales! Then, in 2017 -- sales of single family homes fell 10% to 884 sales. Hmmm..... This was likely at least partially an inventory issue....
And inventory levels got even worse during 2017....
All that is to say that I would be shocked if we saw more than 978 home sales in 2018. I think we may have peaked in 2016 -- and we might not return to that peak for some time. Perhaps some home builders need to start creating new single family home supply in this area?? | |
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January Inventory vs. Past Year of Home Sales |
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 In 2014, 2015 and 2016 we started off the year with enough homes actively listed for sale to last us for right around six months -- or a bit longer. This balance (a six month supply of housing inventory) is considered by many analysts to be an indicator of a balanced housing market. Last year (2017) was quite different. Inventory dropped 26% from 2016 to 2017 and sales rose 17%. As you would, thus, expect - we started off last year (Jan 2017) in a slightly different spot, as shown above. Which is, arguably, why we ended up seeing slightly FEWER home sales last year -- sales declined 4% in 2017 from 1309 to 1254. So, now, starting of 2018 -- are things any better? No. There are even FEWER homes for sale now than there were a year ago. Inventory levels dropped another 32% between January 2017 and January 2018 -- and the current inventory of active listings (280 homes) will / would only last us 2.7 months -- as compared to that balance point of six months. So, what then will this lead to in 2018? I am predicting slightly fewer sales than last year -- and likely faster sales -- and at slightly higher prices. Stay tuned! | |
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The Two Phases of Looking For a Home |
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 Looking and waiting. Exciting and frustrating. Fun and boring. Whatever we call them, there are usually two phases of looking for a home to purchase once you have (decisively or tentatively) made a decision that you are going to buy a new home. First -- we'll take a look at all of the homes currently on the market that might fit your ends. Second -- we'll wait for new listings to hit the market that might fit your needs. These days -- with very low inventory levels in many price ranges and market segments -- the first part of the process (looking at current listings) is often a brief exercise. Most of the homes of interest that have been listed in the past 90 days may very well have already been snatched up with another buyer. As such, don't be surprised if it doesn't take long to go see the houses currently on the market that are a good potential match for you. We're then stuck in that second phase -- waiting. How exciting. There will (likely) be new listings hitting the market in coming weeks or months that will be a potential match for what you're seeking in a new home, but we'll have to wait around for a homeowner to be ready to list their home for sale. When a local housing market experiences low levels of housing inventory, more of our "looking for a home" time is typically spent waiting rather than looking. What an exciting opportunity to practice patience! ;-) | |
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Scott Rogers
Funkhouser Real
Estate Group
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scott@funkhousergroup.com
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