Inventory
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We are again starting the year with a six month supply of homes for sale, a sign of a balanced market |
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 For the second year in a row we are starting out in January with a six month supply of homes for sale, which is traditionally seen as a sign of a balanced housing market. A few years ago (2009-2011) we were consistently starting the year with enough homes on the market for every buyer that would buy in that year. That equates to 12 months of housing supply, and those were years of having a significantly oversupplied market -- which caused sales prices to decline and gave buyers the upper hand in negotiations. In 2015, we should expect that buyers and sellers will have relatively equal amounts of negotiating power, depending on the other factors affecting the sale. Important Notes: 1. The 2015 sales (1083) is an estimate of the number of sales we will see this year. Read more here. 2. The number of months of housing supply available varies by price range. See my full market report for further details. | |
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Analysis of Current Listings (Active and Under Contract) |
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Housing inventory numbers will likely fall 20% over the next few months. There are currently 844 active and under contract listings in Harrisonburg and Rockingham County. Here's a look at how those break down....  Search for New Listings in Harrisonburg and Rockingham County. Or, browse houses with recent price reductions. | |
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With 676 homes for sale, will I have 676 great properties to choose from? |
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 As shown above, many homes currently listed for sale have already been on the market for some time, picked over by all of the current buyers in the market. That said, it's possible that one of these homes is the PERFECT house for you, and that seller has been patiently waiting nine months for YOU, the perfect buyer for the house. As we start your home search, we'll first look through the homes currently for sale (realizing that they won't all be great and exciting options) and then we'll start to monitor new listings as they come on the market. | |
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Fewer Affordable Homes Available For Sale |
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 The biggest shift in homes available for sale has been in the lowest price range in our market, under $200K homes. There are now 30% fewer homes for sale in this price range as compared to three years ago. This shift in the lowest price range is the most significant shift as compared to the other three price ranges shown above. The only price range in which we are seeing increased inventory levels is in the $400K + price range. | |
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An analysis of current residential listing inventory |
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There are 888 active and under contract listings in Harrisonburg and Rockingham County. Here's a look at how those break down....  | |
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Buyers are finding more single family homes for sale, but significantly fewer townhouses, duplexes and condos |
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 Buyers are finding significantly more (+13%) single family homes to choose from these days (as compared to a year ago) but significantly fewer (-18%) townhouses, duplexes and condos. | |
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Sellers believe the local housing market is recovering |
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 The graph above examines the trend in the number of homes for sale in Harrisonburg and Rockingham over the past seven years. After three years of declining inventory levels (2011, 2012, 2013) we are now finally seeing inventory levels starting to increase again. This likely means....
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Inventory Up 17% Over the Past Two Months |
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 Finally, the weather is warming up, and homeowners are putting their houses on the market. Inventory levels are starting to increase in the typical spring surge. Good for buyers --- more options. Not quite as good for sellers --- more competition. | |
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Changes in Number of Homes For Sale, By Price Range |
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 Above you can see the changes in inventory levels over the past year in four price ranges.... Under $200K (-1%)
$200K - $300K (-15%)
$300K - $400K (+50%)
Over $400K (+13%)
Learn plenty more about our local housing market at HarrisonburgHousingMarket.com. | |
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Inventory Levels Down Year Over Year |
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 Much to some home sellers' dismay, my post yesterday was merely an April Fools Day joke. So, where do we really stand as far as current inventory levels? There are more homes (+20) on the market as compared to a month ago --- but there are fewer homes (-29) on the market as compared to a year ago. Sellers -- you will likely have the least competition (from other sellers) now --- if you're listing your home this spring, consider doing so NOW! Buyers -- be encouraged, inventory levels are starting to increase, and you should have further options of homes to buy as we continue through the next 15, 30, 60 days. | |
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January Inventory vs. Full Year Home Sales |
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 As Todd Rhea so eloquently said in a comment on my blog post yesterday.... "This inventory analysis is a big deal for the local market. In 2009-2011 the local market entered the year with more gross inventory than homes that were sold in the following 12 months. This year for every inventory unit entering the year, there will likely be 2 sales in 2014. The impacts on price from Supply and Demand have never been repealed. With lower supply (inventory) and modestly growing demand, days on the market should continue to fall, and prices should increase in 2014."I agree wholeheartedly with Todd....
** Please note: The 2014 home sales shown in the graph above are a projection, not a promise. :) | |
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Listing inventory down 48% since 2010 peak |
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 Current active listing inventory (~529 properties for sale) in Harrisonburg and Rockingham County is at the lowest point since at least 2008 when I started tracking this data. The high point was in June 2010 when there were 1,015 homes for sale. Learn more about our local real estate market at HarrisonburgHousingMarket.com. | |
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Inventory levels stabilizing? |
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 For several years now, there have been many more home sellers in the market than home buyers -- but this has been gradually changing has home sales have increased in pace, and inventory levels have declined. Now, it would seem that perhaps we are seeing inventory levels stabilize around 650 homes for sale, as we have only seen a 3% decline in inventory levels over the past year. Here is some context....
These significant declines in inventory levels have helped to restore a balance between buyers and sellers in our local real estate market. | |
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Inventory levels down but headed up |
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 Inventory levels (the number of homes for sale) are down 3% as compared to this time last year. That said, inventory levels generally declined between May and September of last year --- whereas this year they have been increasing between May and September. Could this be an indicator that homeowners are excited to see our marketing starting to recover (22% increase in homes sales and 2% increase in sales prices) and are more optimistic about selling their homes now? | |
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The Spring housing market has arrived, so inventory levels are probably popping up as fast as the daffodils, right? |
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 Inventory levels are remaining low, even though we are definitely into the start of the Spring housing market. This is great news for sellers, as you still have less competition (from other sellers) that you have seen in several years. For buyers, however, the situation is not idea. There are definitely segments of the market (based on price, property type, location) that are significantly undersupplied, leaving buyers feeling like they don't have many (if any) options. If you are considering selling your home some time this Spring or Summer, let's set up a time to talk soon --- it may be advantageous to list your house sooner rather than later. | |
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Mixed emotions about low inventory levels. |
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 As shown above, we are currently experiencing the lowest inventory levels we have seen anytime in the past six years. The results?
Let me know if you would like an analysis of competing inventory for your particular home. | |
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Housing supply suddenly nearing healthy levels! |
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 "Housing Supply" is usually a comparison of how many buyers are in the market to buy as it relates to the number of sellers in the market to sell. Consider these two, very different examples....
In the first example, there are 6 "months of supply" on the market. If buyer demand stays steady (10 buyers per month) it would take six months to sell all of the existing inventory of homes for sale. In the second example, there are 60 "months of supply" on the market. If buyer demand stays steady (10 buyers per month) it would take 60 months (five years!) to sell all of the existing inventory of homes for sale. When there are six months of housing supply available, many analysts consider a housing market to be in a balance between buyers and sellers. If there are lower supply levels (for example, only three months of housing supply available) it would be a seller's market, with sellers having the upper hand as buyers fight over a small number of available houses. If there are higher supply levels (for example, 15 months of housing supply available) it would be a buyer's market, with sellers pining over the comparatively small number of buyers in the market. With that context, take a look at the chart above, which examines the number of months of housing supply available in several price ranges of our local housing market. You'll notice that many price ranges are approaching that balanced level of six months of available supply:
While many price ranges are now much closer to a healthy balance between sellers and buyers, keep in mind that:
If you're interested in even more specific data --- supply levels based on location, a custom price range, etc. --- just drop me a line at scott@HarrisonburgHousingToday. I am happy, as always, to provide custom analysis to help you make the best real estate decisions. | |
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What Do Declining Inventory Levels Mean? |
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 Two and a half years ago (June 2010) there were an astonishing 1,015 homes on the market in Harrisonburg and Rockingham County – including single family homes, townhomes, duplexes and condominiums. As of yesterday, there were just 551 homes for sale in our local marketplace. This startling 46% decline in local housing inventory has far reaching implications for many of us in our local community. Homeowners are losing less sleep. The median price of homes in our area has declined 10% in the past six years – but what is telling is the trend in median prices over the past 18 months as inventory levels have declined. For the past year and half, median prices have hovered between $173,000 and $177,000 with very little variation. After 18 months without further declines in median sales prices, homeowners in our local area can relax a bit, knowing that their home's value is not continuing to decline. Would-Be Sellers are still waiting. As is evident from the continued declines in the number of homes for sale, we are not seeing a flood of would-be home sellers putting their houses on the market after having seen that home values have stabilized. If anything, it seems fair to say that the high inventory levels of 2006 were would-be sellers hoping to catch the tail end of the housing boom. Today, those would-be sellers that were not successful seem to be waiting to put their homes on the market until there are signs of increasing sales prices. That is certainly a very reasonable approach unless there is some specific impetus for selling – moving out of the area, a growing family, etc. Would-Be Buyers are simultaneously frustrated and elated. Many of today's home buyers are not finding very many homes that match what they are looking for in a new home. They often feel they are scraping the bottom of the barrel with the current low inventory levels. Yet at the same time, buyers realize that since we seem to be at the bottom of the market that their opportunities to buy a home at a greater price have been never been better. The added bonus for would-be buyers is the historically low interest rates – as low as 3.25% on a 30-year fixed rate mortgage. Home builders are dusting off their hammers. As home values declined over the past six years it became increasingly difficult for home builders to compete on price with homeowners who were selling their homes. As inventory levels have declined, however, buyers have had fewer options and prices have stopped declining. As a result, some home builders are starting to see renewed interest in their homes or subdivisions. While we are likely to see inventory levels start to increase again in the Spring, it is quite likely that we will continue to see historically low inventory levels over the next 12-24 months as our local housing market continues to recover. As always, not only do you need to understand the general market trends in our area, you also must dig deep to explore the specifics of the market that pertain to your particular home. For a thorough understanding of the overall local housing market, please refer to HarrisonburgHousingMarket.com. | |
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It has been years (at least 5) since we have seen inventory levels this low! |
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Today (this morning) is likely the low-water mark for the number of houses on the market in Harrisonburg and Rockingham County. But even as some houses start to come back on the market over the coming weeks and months it seems that inventory levels may stay significantly below where they have been for the past several years. These low inventory levels should help our local housing market continue to recover, especially given the low mortgage interest rates currently available to buyers. Just a reminder, those are currently hovering around 3.35%. | |
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Bigger Picture: Inventory Levels Quite Low! |
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 Not only are inventory levels down 19% in the past year, they are also quite low as compared to the past few years. | |
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
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Commonwealth of Virginia
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