Market
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Home Sales Rise Around 12 Percent In 2020! |
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 All home sales have not yet been reported but it is seems that we will see around a 12% increase in the pace of home sales in Harrisonburg and Rockingham County between 2019 and 2020! There have been 1,481 home sales recorded in the MLS thus far for last year and we may see that figure rise a bit more over the next few days, but not by much. This 12% increase is a SIGNIFICANTLY larger increase than we have seen in the last few years...
Stay tuned for my full market report in the next week or two, as well as predictions for the 2021 housing market. Oh, and HAPPY NEW YEAR! | |
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Did Home Value Rise 20 Percent In Highland Park in 2020? |
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 This post could also be called "The Dangers of Micro Market Analysis" as you'll discover... The graph above shows that the median sales price of homes in Highland Park has increased 20% over the past year from $534K to $639K! How could this be!? I know home values are going up (10% in 2020) but are homes in Highland Park really increasing in value at a rate of 20% per year? I believe this 20% increase in the median sales price is more related to which homes sold in each of the two years more than it is related to the value of homes in that neighborhood going up by 20% in a single year. As you can imagine, if larger, more recently built, more upgraded or more updated homes sell in a given year compared to another - then the median sales price of homes that year will be higher. And thus, this is the danger of analyzing a micro market -- a small amount of data points might lead you to incorrect conclusions. So when you look at home value trends in a specific neighborhood, make sure to check out both the sample size (how many homes sold in a given time period) as well as which homes actually sold in each time period. | |
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Market Balance (Months of Supply) By Price Range |
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 Most housing market analysts consider six months of inventory (active listings) to be an indicator of a balanced market (between buyers and sellers). We have been out of balance for quite a few years now in most price ranges. Under $200K Even four years ago there were only 4.2 months of supply available in this price range, and now that is down to a shockingly low 0.8 months of supply. $200K - $300K We saw a balance four years ago with 5.9 months of supply available, but that has dropped to only 1.3 months of supply as of last month. $300K - $400K There was an oversupply of homes in this price range four years ago, with 7.5 months of supply on the market - but today this price range is significantly undersupplied with only 2.3 months of inventory on the market. Over $400K This price range was drastically oversupplied four years ago with 12 months of supply available, and now is "at a balance" with 5.8 months of supply available. | |
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Do Detached Or Attached Homes Appreciate More Over Time? |
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 Over the past five years, detached homes have increased slightly more in price (on average, per year) than attached homes (townhouses, duplexes, condos). Detached homes have increased at an average of 6.1% per year from $200K to $269K while attached homes have increased at an average of 5.2% per year from $150K to $193K. This (detached homes increasing in value more quickly over time) wouldn't necessarily always be the case if we looked back over the past 20 years -- we could likely find time periods when this were not true -- but we have seen some larger than normal swings in home values during some of those past 20 years. | |
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Median Sales Price In A Larger (Longer) Context |
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 The median sales price has never been higher in Harrisonburg and Rockingham County! Thus far in 2020, the median sales price of all homes sold has been $244,000 as of the end of November. This is the highest median sales price we have ever seen in this area on an annualized basis. A few other observations...
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Annual Home Sales In A Larger (Longer) Context |
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 The graph above shows how many home sales took place each year for the past 20 years. The only incomplete data point is 2020 which only includes January through November home sales. When December home sales are in the books, we're likely to have seen 1400+ home sales this year. A few observations...
As for next year -- I'll hold off on my predictions for a bit longer... | |
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Increasing Home Sales Despite Declining Inventory Levels |
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 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. | |
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Homes Usually Go Under Contract More Slowly In The Winter, But Maybe Not This Year? |
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 Usually, things slow down in the winter. Winter of 2017/18...
Winter of 2018/19...
Winter of 2019/20...
As you can see, things usually slow down during the winter in the sense that the days on market (how long it takes for a new listing to go under contract) is higher in those winter months. This year, however, I suspect we're going to see something quite different. I think we will see houses to continue to go under contract quickly as we move through November and December. So, if you are hoping to sell in the next six months -- right now might not be as bad of a time to do so as you might think based on historical norms. Two side notes...
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It Is Hard For Home Buyers To Compete If They Have A Small Downpayment Or If They Need Closing Cost Assistance |
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 A few short years ago...
These days...
A few short years ago...
These days...
So, it's not that you can't buy a home with a small down payment or if you need a closing cost credit -- but it will be a lot harder to do so these days, largely because of other competing buyers who have a larger down payment and/or who do not need a closing cost credit. | |
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Local Home Sales, Prices Hit Record Highs In October 2020 |
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 Happy Veterans Day and an enormous thanks to all who have served our country! Also, Happy November and Happy Thanksgiving! Speaking of thankfulness, we have a lot to be thankful for when it comes to the residential real estate market in Harrisonburg and Rockingham County! Despite all of the twists and turns and ups and downs that 2020 has brought to our lives, the local housing market has remained stable and has even grown stronger over the past ten months. Unfortunately, as with many things in life, this has meant that there have been winners and losers. Home owners and home sellers have done well and have appreciated this strength of and growth in our local housing market. Folks who do not own a home, or who have been unsuccessful in trying to buy a home, and even those who have been successful in buying a home this year are likely a bit less excited about how strong and vibrant our local housing market has been in 2020. All that said, I believe this is the second best type of housing market trend to be seeing locally. Here's how I rank them as far as what is best for us locally...
So, as stated, we're in category two above, which I prefer to three and four if we can't be in category one. :-) Now, after that rather long intro, let's get on to some data, but first, be sure to check out the home featured above, an upscale four bedroom Preston Lake townhouse on the Village Green by visiting 3297BatteryParkPlace.com. OK, finally, unless you're skipping right to PDF of my full monthly report, let's dig into the data...  Quite a few things to note on the market snapshot above...
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...  Earlier this year, I thought we were certainly going to see a decline in annual home sales after several years of increases. Not so much. We seem poised to easily surpass last year's pace of 1,324 home sales -- and it seems possible we could even make it to 1,400 home sales this year in Harrisonburg and Rockingham County. Who would have thought!? Here's where I'm getting that "maybe 1400" number...  A few things going on above. First, the orange line, which is showing us the annual pace of home sales, evaluated on a monthly basis. After having risen from 1300-ish to 1350-ish, we fell back down to 1300-ish due to COVID, but the annual pace of home sales has rocketed back upward and is now approaching 1400 sales per year. The green line shows that home values didn't falter a bit despite a temporary slow down in home sales. We have seen steady increases in the annualized median sales price over the last year which has steadily (and quickly) risen from $217K to $240K. That seems like quite a large increase in the median sales price, right?  It is a large increase. Over the past five years the median sales price has increased at an average of 4.6% per year. This year, thus far, we have seen the median sales price increase 8.8% -- almost twice as much as these other recent years. This has been almost entirely fueled by increasing demand for homes, declining inventory levels and declining mortgage interest rates. These changes have made it more and more of a seller's market...  A few things to not and think about, above...
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...
I'll close out with a few key recommendations for buyers and sellers in this crazy-ish market... BUYERS
SELLERS
OK. That's all folks. I hope you have plenty to be thankful for in your world. As always, if I can be of any help to you or your family, please let me know! Reach out anytime by calling/texting me at 540-578-0102 or by dropping me an email at scott@hhtdy.com. | |
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November 19 Meeting To Discuss Harrisonburg Comprehensive Housing Assessment and Market Study |
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 Mark your calendars for Thursday, November 19th at 6:00 PM to tune in to hear a presentation of the findings of the initial draft of the City's Comprehensive Housing Assessment and Market Study! From the press release from the City...
Here's how to tune in to this meeting... Watching on a computer or mobile device via GoToWebinar. Register in advance here - Webinar ID: 281-556-371. Calling in to listen by phone at +1 (951) 384-3421, Access Code 484-931-436. Watching the meeting live on Public Education Government Channel 3 | |
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November 2020 Temperatures Assisting Outdoor Gatherings, Local Housing Market |
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 It has been a fantastic week of near 70 degree weather and it looks like those temperatures will hold over the weekend and at least into early next week! There are plenty of upsides to these temperatures... 1. We can keep spending time outdoors in groups instead of indoors, reducing the likelihood of spreading germs. 2. Home sellers can keep getting good work done on the outside of their home to prepare their house for the market. 3. Home buyers can fully explore houses and the lot or land upon which they sit without feeling like they are going to freeze as is often the case in November. Have a terrific weekend! | |
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If You Are Not Getting Offers On Your House, Will You Wait, Or Lower Your Price? |
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 If you are selling your home and it is prepared well and marketed well, you will likely have a decision to make related to time and price... TIME - Are you willing to continue to wait for the right buyer to come along, eventually, hopefully - that will come to a different conclusion about your house than previous buyers who did not make an on your house? PRICE - Are you willing to adjust the list price of your house to try to make it more attractive to potential buyers and to expand the pool of potential buyers who can afford to buy your house? If your home has been on the market for 60 days without an offer -- or if it has been 60 days since your last price reduction -- you should reflect on whether you choose to value time or money more over the forthcoming 60 days. You can always continue to wait for new buyers to enter the market that hopefully will find your house to be just the right fit for them - or you can adjust the price to try to make your house more attractive to buyers who have and who have not yet seen your house. What will you choose if 60 days have passed without an offer on your house? | |
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Buyers Kept Showing Up In October 2020 |
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 Who cares about normative seasonal changes in home buying activity... ...this is 2020! :-) Usually, buyer activity (contracts being signed) starts to slow down in October. We usually see around 110 contracts signed during the month of October. But not in October 2020. This year, there were 147 contracts signed! I'll take a full look at market activity in October in the next week or so, but until then, rest assured that buyers keep on buying, even as the weather gets colder and the leaves fall off the trees! | |
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Million Dollar Home Sales In Rockingham County, Virginia |
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 If you're planning to sell a property in Rockingham County for more than a million dollars, it's important to realize how small this pool of potential buyers has been over the past ten years. As shown above, there has been average of one such sale every 20 months over the past decade. Curious about the details of those six million(+) dollar sales? You'll find them here. Do you have a million(+) dollars burning a hole in your pocket? Here are the nine current properties for sale for $1MM+ in Harrisonburg and Rockingham County. | |
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Seasonality Might Matter A Bit Less For Sellers Given Low Inventory Levels |
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 If you had asked me a year or two ago whether it was a good idea for a homeowner to list a home in November (if they would be fine waiting until Spring) I would have said it wasn't necessarily a bad thing -- but it certainly also wasn't a surefire path towards success. In reflecting on this with a homeowner last week, though, we came to a different conclusion -- because inventory levels are SOOOO low! So, here's my revised November advice to would be home sellers... If you would rather sell now/soon instead of six months from now - and if you are in a segment of the market that is under supplied - then let's go ahead and get your house on the market! Looking at historical inventory levels...
Today... there are 162 homes on the market for sale! So, if you want to sell in the next six months, maybe we should be talking now about getting your house on the market in early November! | |
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Harrisonburg Area Home Sales Over $500K Continue To Soar In 2020 |
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 Only 5% of local home buyers spend $500K or more on their home purchase (per sales data over the past year) but this segment of the local housing market has been strong over the past few years. As shown above, there were 47 home sales over $500K last year - which was more than any time in the past decade. This year we have already exceeded that pace of $500K+ home sales even with just the first 9.5 months of the year. There have been 54 home sales over $500K up through October 19, 2020 and there is still time for a few more before the end of the year. Reigning in our enthusiasm a bit, though, this is a relatively small number of buyers. If you are selling a home over $500K, you need to keep in mind that only about 50 buyers per year (just over 4 per month) spend that much money on a home in ALL of Harrisonburg and Rockingham County!  Last year was an extraordinarily strong year for home sales over $600K - with 27 such sales - well more than in any other year in the past decade. This year -- we're seeing even more $600K+ home sales, with 29 thus far and still two and a half months to go! And one more look at an even higher price point...  Above, you'll see that most years there are only 5 or fewer home sales over $700K. But back in 2015 there were 11 (which was more than double the norm) and last year there were 14 such sales. This year seems to also be a very strong year for these $700K+ home sales, with 12 thus far. So -- overall, the high end home sales market is doing well -- comparatively, but that is not to say that selling a home over $500K is an easy task - it's not. Home sellers over $500K are aiming for a tiny pool of potential buyers -- even if that pool of buyers might be stronger this year (and last year) than in most other recent years. | |
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Contract Activity Continues Full Steam Ahead In October 2020 |
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 Home sales usually start slowing down in October - but not this year. In the first two weeks of October we usually see forty-something contract signed by buyers and sellers in Harrisonburg and Rockingham County. This year -- 65 contracts were signed during that timeframe! I assume at some point things will start to slow down, somewhat, but it isn't happening as quick as you might think it would given the time of the year. So, if you're thinking of selling your home but are wondering whether you should wait until the spring market - you might not need to wait after all! | |
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Harrisonburg Area Home Sales and Prices Soar In September 2020! |
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 Happy Monday Morning! What a wild year this has been - and it is now, already, more than three quarters of the way to the end. Many things have been turned upside down in our daily lives, but as this year has continued to progress, one thing that has not been affected as much as you might expect has been our local real estate market. We're seeing more home sales this year than last, at higher prices, taking place at record speeds. Before we dig into the data, be sure to check out Founders Way, a condo development currently under construction just minutes from downtown Harrisonburg. Find out more about these new two bedroom condos starting in the $170K's by visiting FoundersWay.com. Now, feel free to download a PDF of my entire monthly report, or read on for some juicy tidbits to start your week off right...  First, from a big picture perspective, referencing the chart above...
So, again, repeating the story from above - COVID has created plenty of train wrecks, but our local housing market has been able to keep on moving right along, full steam ahead. Now, looking for a moment at detached homes compared to attached homes...  The green portions of the chart above show the trajectory of detached homes, and you might note that there have been slightly fewer (735 vs. 737) of these sales in 2020 when compared to 2019. Despite that ever-so-slight slow down, however, the median sales price of those homes has increased 9%! If detached home sales have slowed down, slightly, attached home sales have been running in the opposite direction, quickly. We have seen an 11% increase in the number of attached home sales in 2020 as compared to 2019 - and again - a 9% increase in the median sales price of these attached homes. Now, for the visual learners, let's take a look at September again...  As shown above, September was a wild month for home sales. The (150) home sales seen in September 2020 make it the second highest month of home sales for the year - which is quite atypical for September! I assume that home sales will slow down quite a bit in October, and then much further in November and December -- but this year has been anything but predictable, so who knows!?! Oh, and did I mention that 2020 finally caught up with 2019?  Back in March and April, I noted that 2020 was off to a STRONG start -- with more home sales in the first quarter of this year than in any recent year. But then, COVID. Many fewer sellers put their homes on the market in March, April and May, which resulted in fewer buyers being able to buy houses, which slowed down the annual pace of home sales quite a bit as we progressed through late spring and then through the summer. But then, September! The high sailing month of home sales in September caused our year to date trajectory to pop above all recent years again. So, 2020 is a great year - or at least for home sales in Harrisonburg and Rockingham County! Want another visual of the impact of COVID?  The weird dip in the orange line on the graph above is the impact of COVID. Our annual pace of home sales started dropping about five months ago, and we can only now confidently say that we're back on track to see the expected overall increase in that trajectory of home sales in this area. But that green line!?! Despite a slow down in home sales, we continued to see the median price rise, rise and rise some more. Maybe because COVID caused inventory levels to dip even lower, causing buyers to be willing to pay even more for a house? Maybe because the super low mortgage interest rates allow a buyer to be more flexible on price? Nobody knows for sure, but those prices, they keep on rising! Speaking of prices rising...  Over the past five years we have seen an average annual increase in the median sales price of 5% per year. This year, it is looking like it will be a 9% increase. This is not totally surprising -- more buyer interest, lower inventory levels, low interest rates, etc. -- but prices can't rise at 9% per year forever, so 2021 and 2022 will be interesting to watch to see how much further prices can or will increase. And now, looking back a bit to look forward...  A few things to note here, on the graph above. First, it was a summer FULL of contracts. There were 34% more contracts signed this summer than last, and 32% more signed this September than last. Thus, it seems relatively likely that the strong home sales we have seen thus far in 2020 will continue on through at least October and likely into November. How many times have I said "low inventory levels now"?  There it is, visualized, above -- the agony of buyers in our current local housing market. Inventory levels are at historic low levels. Never have there been fewer homes on the market, for sale, at a single point in time in Harrisonburg and Rockingham County. We have seen a 46% decline in active inventory over the past year. Now - keep in mind, we have seen a 2% - 3% increase in home sales, so these low inventory levels just mean that as quickly as new listings come on the market they are being scooped up by a buyer, preventing them from contributing to the "number of homes for sale" metric which we call "inventory". Unfortunately, I don't anticipate that these inventory levels will shift upwards anytime soon unless it is due to new construction at a large scale. Finally, a few times above I have noted that prices are rising - and this is perhaps one of the reasons why buyers can pay higher prices without blinking...  As shown above, the average mortgage interest rate keeps on falling. A year ago it was 3.64% and now it's down to 2.9%. These super low interest rates create a great opportunity for today's home buyers to lock in ridiculously low interest rates -- and they soften the impact of rising home prices. Alright, I'll pause here for now. If you've made it this far, thanks for taking the time to seek to better understand our local housing market. For more such joy, feel free to check out my blog or shoot me an email (scott@hhtdy.com) with any questions you have about our local housing market or about your house. Some key take aways... BUYERS
SELLERS
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Is October (Right Now) Too Late In The Year To List Your Home For Sale? |
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 I believe this question is best answered by evaluating when buyers make an actual buying decision -- which is when they sign a contract. The data above shows when buyers sign contracts -- calculated by averaging data from the three most recent years. As can be seen, the busiest buying season is March through August when an average of 136 buyers per month make a buying decision. The remaining six months of the year (September through February) show anywhere between 46% and 79% as many buyers as the average of 136 per month seen in the busiest six months of the year. So -- listing your home in October is not at all a bad idea based on this data! As shown above, it's likely the highest month of buyer activity that we'll see between now and next March. Even late October can work, as we're likely to see 60% as many buyers signing contracts in November as compared to the average busy month. That said, in the following month (December) we're likely to only see about half as many buyers as compared to the average month. | |
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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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