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Should You Be Surprised If Your Home Sells At Or Above List Price? |
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No. You should not be surprised if your home sells at or above the list price. As shown above, 53% of homes that have sold thus far in 2020 have sold at or over their list price. It's a sign of the times, I suppose. There are LOTS of buyers fighting over very few homes for sale and this often leads to...
Just to put this in context, let's see how things looked three short years ago... Things were quite a bit different in 2017, it seems! Way back in 2017 only about a third of homes sold at or above their list price! As with many other recent market indicators, this is great news for sellers and rather unexciting news for buyers. | |
Home Buyers And Sellers Made Up For Lost Time In June, July |
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Well - hello June and July! The red line above shows the number of contracts signed for each of the past five months. The blue line shows the average number of contract signed in that same month during 2017, 2018 and 2019. Basically, comparing the monthly pace and pattern of 2020's contract activity to the three most recent years to see if this is what we should have expected. It's not what we should have expected. Typically, contract activity peaks in May and then slowly declines in June and July. But not this year. During 2020, contract activity was lower than would have been expected in March, April and May -- but then -- wow! Thinks really started to move in June and July. All in all, I think this is the impact of COVID. It slowed the local housing market down for a few months, but things are speeding right back up to likely eventually catch up to where we were last year. Stay tuned to see what happens come August... | |
Local Home Sales Slow Slightly But Prices Are Up 10% in 2020! |
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Happy Tuesday Morning! Summer is winding down, and it's been a bit of an unusual one...
As your summer comes to a close, I hope you have found some ways to relax and take a break, despite everything going on right now. Go for a run! Head out on a bike ride! Plan a day hike! In the latest adventures of the Rogers family, I took Emily zip lining and Luke water skiing this past weekend. :-) Whatever your version of fun and relaxation, I hope you can find some of it in these last weeks of summer. And now, if you have been looking for a distraction from the craziness in your everyday life, read on for some crazy news about our local housing market. :-) But first -- check out this beautiful home (shown above) in Chatham Square by visiting 2378AlstonCircle.com. Also, feel free to download a full PDF of my market report here. OK, OK, now, on to the data... Quite a bit to note above...
To pick up on a few nuances, let's break things down by detached homes (single family homes - shown in green below) as compared to attached homes (townhomes, duplexes, condos - shown in orange below)... We start to see some differences when breaking things down by property type...
Now, let's contextualize those 150 home sales we saw in July... As shown above, home sales often or usually peak in May or June with sales then slowing down as we roll into July. But not this year! Home sales seem to be accelerating month by month as we have seen steady increases between April, May, June and July. In fact, the 150 home sales see in July was the third strongest month of home sales we have seen since at least 2017! This next graph might be a bit confusing, but let's see if we can make sense of it... OK - starting with the orange line at the bottom of the graph... The annual pace of home sales had risen all the way up to 1,374 home sales per year by the end of March 2020. This was a slow and steady increase over several years -- but that all started to shift downward once we started incorporating April and May data into the mix. Home sales did decidedly slow down for several months, causing the annual pace of home sales to slide. It seems we may now be seeing that trend line stabilize in July as the annual pace of sales is no longer declining. But yet -- as noted next to the green line -- home prices have continued to go up, up, up. Back in March and April I wondered whether we'd see a slow down in sales and whether we would see a slight downward shift in home prices. It seems I was half right. Sales slowed, but prices have continued to rise! These two contradictory trends may best be understood by realizing that sellers drive trends during a seller's market. Fewer sellers wanted to list their homes for sale during the "time of COVID" and thus fewer sales happened in April and May (if the houses aren't listed for sale, they surely won't sell) but there were seemingly just as many (or more) buyers ready to buy. An unusual (and temporary) decline in sellers combined with just as many (or more) buyers caused home prices to continue to climb, perhaps even higher and faster than they would have otherwise! OK - thanks for sticking with me on that one. Now, let's predict the future by looking at contract activity... First, the big, red, handwritten numbers will quickly show you that the pace of contract signing this year (916 between Jan and Jul) is quite a bit higher than last year (860 between Jan and Jul), but there's more! Last year in June and July we saw 247 buyers (and sellers) sign contracts to buy and sell homes. This year there were 337 contracts signed during that same timeframe! It is almost as if buyers (and sellers) are trying to make up for lost time -- as contract activity has been ramping up for the past few months after a slower than expected spring market. OK, I told you I'd circle back to it... OK - so - about those home prices. As shown above, you'll note that the median sales price of detached homes (not townhouses, duplexes or condos) has increased 7% between 2019 and 2020. That's more than the 4.8% average over the past five years -- though we did also see a 7% increase between 2015 and 2016. So, should we be concerned about prices increasing this much? After all, didn't prices skyrocket back in 2004 and 2005 leading to eventual declines in housing prices? Why yes, you are correct - we did see significant increases in the median sales price in 2004 (+16%) and 2005 (+24%) and those increases were unsustainable -- prices eventually came back down, slowly, between 2006 and 2011. But this time, perhaps it's different? It's hard to say for sure whether the price increases we are seeing are "too fast" or "too much" to be sustainable. We'll only really know a year or two from now, looking backward. I suppose it is important to note that while a 7% increase is much higher than any long term average, it is also not as crazy as we were seeing back in 2004 and 2005. One of the things that is driving these prices up is the vast number of would-be buyers competing over an ever-shrinking number of homes for sale... Yes -- you're reading that correctly -- there are currently 30% fewer homes for sale now as compared to a year ago. Further -- the current inventory level (189 homes for sale) is actually lower than this past winter, which is rather unusual for July/August! There are many things causing so many buyers to want to buy, and buy now, which is driving down the inventory levels, but one of those motivators for buyers is... ...super low interest rates! Mortgage interest rates have been below 3% for the past few weeks -- yes, the 30 year fixed mortgage interest rate -- below 3%! I have had a few clients lock in at 2.65% and 2.75% which is rather hard to fathom. So, not to encourage you to jump on the bandwagon if you're not ready to do so, but if you're thinking about buying soon, these interest rates sure do make it compelling to try to buy sooner rather than later. OK - that wraps it up for now. A few closing notes... SELLERS - Even though it is a seller's market, it is still essential that we prepare, price and market your home well! Read more about that here and shoot me an email if you want to meet to start talking about getting your house on the market in the coming weeks or months. BUYERS - Be prepared to be patient, as you'll likely be competing with plenty of other buyers. Make sure to talk to a lender ASAP (ask me if you need a recommendation) so that we have a pre-qualification letter in hand when making an offer. HOMEOWNERS - Yes, certainly the vast majority of those who receive this market report won't be buying or selling next month. So, for the rest of you, enjoy the fact that your home's value has likely increased over the past year! If that makes you want to think about selling - let's chat. Otherwise, just enjoy knowing that your home's value has likely increased. :-) That's all for now, folks. If there is any way that I can help you or your family with real estate, or otherwise, let me know. Otherwise, enjoy the balance of August and I'll be back to crunch the numbers all over again in mid-September. | |
Will COVID Cause Local Home Prices To Decline? |
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I still get this question from time to time and my general thought, at this point, is that it is quite unlikely that COVID will cause home prices to decline locally. Home prices are typically most directly affected by supply and demand. If supply is high (lots of sellers want or need to sell) and demand is low (fewer buyers want to buy) then home prices are likely to decline. This is called a buyer's market. If supply is low (fewer sellers want or need to sell) and demand is high (more buyers want to buy) then home prices are likely to increase. This is called a seller's market. Anyone want to guess which market we're experiencing these days? We're definitely in a seller's market! Over the past five years, there have been fewer and fewer (and fewer) homes on the market for sale at any given point. During those same five years, buyer demand has increased -- not by as much as seller supply has decreased -- but buyer demand has increased nonetheless. So, back to the original question - will COVID cause local home prices to decline. I still say that it is unlikely, because that would almost certainly require both...
I'm not seeing either trend (increase in sellers, decrease of buyers) on the horizon at this point. That said, here are two important caveats...
So, for now, it does not seem at all likely that COVID will cause local home prices to decline - but stay tuned to see how new construction and employment/unemployment could play into that in the months to come. | |
Housing Inventory Levels May Have Peaked For The Year |
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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. | |
Price Per Acre of Land Sold in Rockingham County |
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As shown above, the price per acre of 5 - 10 acre tracts has mostly stayed between $13K and $14K over the past four years, with the exception of last year (2019) when it dipped down to $11K. We have seen a steady increase in the number of 5 to 10 acre land sales over the past several years. The number of 10 to 20 acre tracts selling per year has stayed much more consistent over the past four years (2016 - 2019) with 11, 12 or 13 parcels selling -- though there have already been 10 such sales in the first 7-ish months of 2020. The median price per acre has been generally trending up for this size of parcel, and seems poised to remain around $11K per acre this year. The median price per dipped down rather low ($4K/acre) in 2018 for parcels of 20+ acre but then rose quite significantly in 2019 to $7K per acre. We have seen around 15 to 20 such sales per year for the past several years but it seems we might surpass that in 2020. Finally, this (above) is a compilation of the price per acre for each parcel size. As you might expect, the larger the parcel, the lower the price per acre. | |
Cumulative Contract Activity Pulls Ahead In 2020 |
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How did COVID-19 affect our local housing market? So far, this is what we're seeing...
Now, there have been 6% more contracts signed in 2020 than in 2019! There are still plenty of ways that COVID-19 could affect our local housing market, but we're not seeing any significantly harmful impacts to date. | |
Most Homes That Sell In The First Ten Weeks On The Market... Sell In The First Week |
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We know that homes are selling quickly. 62% of homes that sold in the past year were under contract within 30 days. 75% of homes that sold in the past year were under contract within 60 days. But was market activity spread out evenly over those first 4, 8 or 10 weeks? Not at all! As shown above, when we look at homes that went under contract within the first 10 weeks of being on the market -- a lot of them (most of them!) were under contract the very first week they were listed for sale! Perhaps this is also why we're seeing more than half of homes selling for more than their list price. | |
More Than Half Of Homes Are Selling For More Than Their List Price |
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This might surprise you. It surprised me! More than half (52%) of homes that sold in the first half of 2020 sold for MORE than their list price! It is certainly true that we have seen buyers being able to negotiate less and less over the past few years as the market has become tighter in many price ranges and locations -- and this is some specific evidence that now many buyers aren't able to negotiate at all! Plenty of caveats, of course...
Anyhow, regardless of how you slice the data, the market is hot in many price ranges and buyers are often finding themselves needing to be prepared to pay the full list price or even a bit higher to secure a contract on a home! | |
Highest Monthly Pace of Contracts in Over 10 Years |
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To say June 2020 was a busy month of contract activity is a bit of an understatement. A total of 175 properties went under contract in June, which was more than any other month in the past 10 years! Some of the previous high months were...
Read more about our local real estate market in my most recent monthly market report. | |
Harrisonburg Area Home Prices Up Nearly 7% in First Half of 2020 |
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Happy Tax Day! Yes, that's right, today is the extended deadline for filing and paying income taxes. But the day is still young, so read on for an update on our local housing market before you go submit your tax filing. ;-) But first -- check out this recent listing (shown above) in Highland Park priced at $365K by visiting 4065LucyLongDrive.com. Two other notes before we get started...
OK, now, on to the data... We're now officially halfway through the year when looking at year-to-date sales figures and there is plenty of interesting trends to note above...
Now, let's take a brief look at detached homes compared to attached homes. Attached homes includes duplexes, townhomes and condos. As shown above...
So, prices have risen quite a bit between 2019 and 2020 even without much of an increase (actually a slight decrease) in the number of homes that are selling. But perhaps the trend in the pace of home sales is shifting... If you look at the four numbers I circled in gold above, you'll see that May 2020 home sales were drastically lower than May 2019 -- but the gap between June 2020 and June 2019 was not as severe. Perhaps we are starting to see home sales pick back up again? At least some of the (slight) decline in home sales in 2020 seemed to be a result of fewer would-be home sellers listing their homes for sale which gave would-be home buyers fewer options for buying. Now, looking at some longer term trends... The data above looks at a moving 12-month set of data, and we're seeing divergent trends now. The median sales price (green line) keeps on steadily rising -- while the annual pace of home sales (orange line) has been drifting downward over the past three months. As noted above, fewer sales seems likely to be a result of fewer sellers being willing to sell and not fewer buyers being willing to buy -- which would at least partially explain why prices keep on rising. All of this means that is definitely still a STRONG seller's market... As shown above, the number of buyers buying in the market has stayed rather steady over the past few years (though it has dropped off a bit over the past few months) while the number of sellers selling (inventory at any given time) continues to decline. This makes it an absolutely wonderful time to be a seller -- and probably a not very fun time at all to be a buyer. And, well, if you need to do both (sell and buy) you'll be both ecstatic and depressed! This next stat might surprise you... I did not see this one coming! I'll dive a bit deeper into this in the coming days, but it seems that the median "list price to sales price ratio" has risen to 100% in 2020! That means that half of sellers are selling below their list price and half of sellers are selling ABOVE their list price!? I knew sellers were having to negotiate less and less on price -- but this statistic is still rather shocking. Again, I'll dive deeper into the data in coming days to see what else I can uncover here. And set your coffee cup back down, because here's another surprise for you... Contract activity in the first five months of the year was lagging behind this year (-5%) as compared to last year. But when we factor in June contracts, not such much! Now there have been 3% more contracts in 2020 than in the same timeframe in 2019, mostly because of the astonishingly high 175 contracts signed in June 2020! Wow! Again, I'll break this down further over the next few days to try to better understand this spike in contract activity. And as is likely NO surprise, inventory levels keep on dropping... There are currently only 214 homes for sale in Harrisonburg and Rockingham County -- which is 20% lower than where we were a year ago. I was hopeful that we'd see inventory levels pick up a bit during the spring -- which didn't really happen. Maybe we'll see some late summer, early fall increases?? Finally, on to this super low, historically low, ridiculously low interest rates... Buyers financing their home purchases over the past few months have enjoyed some absurdly low mortgage interest rates. The current average is 3.13%, which is the lowest EVER and I've even had some buyer clients pay a point or so to get under 3% -- on a 30 year fixed rate mortgage! Wow! OK - that about wraps up my monthly run down of what is happening in our local real estate market. Stay tuned over the next few days for some deeper analysis of some of the trends as mentioned above. If you have questions about what I have discussed, or about other market trends you are observing, shoot me an email. Otherwise, until next time...
Finally... if you're thinking about buying soon, or selling soon, and are looking for a Realtor to assist you with that process - I'd be happy to connect with you at your convenience. You can reach me most easily at scott@HarrisonburgHousingToday.com or by calling/texting me at 540-578-0102. Have a great second half of the first month of the second half of the year! :-) | |
Sales Activity Was Slowing For Two Months But Has Picked Back Up Again |
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The first few months of 2020 were strong -- stronger than 2019 and seeming to indicate that 2020 was going to be a solid year of local home sales. And then, COVID-19. Contract activity started to decline in March -- and by April 18, the number of contracts signed in 2020 had fallen behind the number signed during the same timeframe in 2019. So, it seemed that COVID-19 might at least somewhat slow down our local real estate market. But, then June! During the month of June, contract activity steadily ramped up, and by June 19th the cumulative number of contracts signed in 2020 (Jan 1 - Jun 19) had pulled back ahead of the same timeframe in 2019. So, it seems that COVID-19 might not lead to a net decline in the amount of home sales activity in Harrisonburg and Rockingham County! | |
This Could Be A Good Time To Sell A Townhouse Under $200K, Built Since 2000, In The City of Harrisonburg |
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If you have a townhouse to sell in the City of Harrisonburg, built in the past 20 years, that would be priced under $200K, this may be an excellent time to sell it. Here's why... Over the past three months, there have been (15) sales of such townhouses -- so, around (5) buyers per month are buying townhouses built in the past 20 years, priced under $200K in the City of Harrisonburg. Not surprisingly, then, there are (9) such townhouses currently under contract. But wait, what!? There is only (1) single solitary townhouse for sale in the City of Harrisonburg under $200K right now that was built in the past 20 years. So -- if you own a townhome in Avalon Woods, Beacon Hill, Harmony Heights, Liberty Square, etc. -- this might be an excellent time to sell. Email me to chat about your townhouse and its value in the current market. | |
What To Expect For The Second Half Of The Year In Our Local Real Estate Market |
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I spent some time this past weekend cleaning up my crystal ball - oh wait, no, I was cleaning my garage. My crystal ball is always ready and waiting to convincingly and accurately predict the future of our local real estate market. Or something like that... But really -- here are several of my predictions for the second half of 2020... MORE HOME SALES - The pace of contract signing (the earliest indicator of market activity) lagged behind (2020 vs. 2019) for quite a few months this year but has now broken through last year's trajectory and we're seeing more cumulative contracts signed in 2020 as compared to 2019. So, it doesn't seem that COVID-19 will end up resulting in a net decline in home sales in our local area. HIGHER SALES PRICES - Even as contract activity lagged behind in 2020, the median sales prices of those homes that were selling kept on climbing. We are not seeing any indicators on the horizon at this point that would seem to cause home prices to flatten out our decline. CONTINUED LOW MORTGAGE INTEREST RATES - I certainly didn't think we'd keep hitting new low after new low for mortgage interest rates in 2020, but indeed, that has been the case. The average 30 year fixed rate mortgage interest rate is 3.07% as of the moment I am typing this. Wow! I certainly don't expect them to be any lower than this, but I think they'll likely stay below 4% for the rest of the calendar year. SPEEDY SALES - Homes are selling faster and faster and faster. The "median" days on market has declined 37% over the past year from 24 days to 15 days. So, buyers have to be ready to jump on new listings quickly. LOW INVENTORY LEVELS - There were some times over the past few months when I thought we might start seeing inventory levels creeping up -- because sellers would unexpectedly need to sell, or because buyers weren't able to or interested in buying -- but neither of those happened. I suspect we will keep seeing very low inventory levels throughout the remainder of the year. OK - in the end - my predictions don't point to anything particularly surprising or unexpected - but perhaps that is the main take away. I don't think we are going to see anything drastically unexpected or surprising in our local housing market in the 3rd and 4th quarter of this year. | |
Contracts Shoot Skyward In June, Sort Of Like Fireworks |
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After three months in a row (March, April, May) of slow contract activity (compared to last year) the pace of contracts being signed shot skyward in June to easily eclipse last June, as well as March, April and May of both years! This is a good indicator that we are not likely to see much of an impact on our local real estate market based on COVID, other than that it affected the timing of when these sales (contracts) were coming together. Contracts came together much later than usual this year. Happy Independence Day! | |
Detached Homes Under $250K In The City of Harrisonburg Are A Hot Commodity |
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If you are selling a detached home in the City of Harrisonburg, priced under $250K, you are likely to have quite a few early showings. If your home is prepared well and priced well, it would not be uncommon to have 10+ showings on the first day that it hits the market. A few tips for such home sellers...
Happy home selling if your home is priced under $250K in the City. It will likely be a whirlwind of early activity! | |
Pace of 2020 Buyer Activity Recovers During June |
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Remember where we were back at the beginning of June? Home buyer activity was lagging behind in Harrisonburg and Rockingham County -- with 2020 buyer activity (ratified contracts) down 5.44% as compared to 2019. Not any longer! As of the end of last week, there have been 1.11% more contracts signed in 2020 as compared to 2019. So - the Spring was slower and stranger than usual, but it appears that 2020 may turn out to be an even stronger year than 2019 for home buyer activity in our local area. | |
Virginia Housing Market Not As Vulnerable As Most |
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The National Association of Home Builders recently took a look at which states' housing markets were more (and less) vulnerable for a downturn brought on by the COVID-19 pandemic. The states that are the most vulnerable are those with "state economies heavily reliant on leisure, entertainment, retail and personal services". So, basically, the jobs that folks have in Virginia tend to be less vulnerable to a downturn brought on by COVID-19 than in most other states across the country. Read more about it here. | |
Boom, Just Like That, 2020 Buying Activity Is On Par With 2019 Trend |
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Buyer activity has been lagging this year -- in fact just a few weeks ago there were 5.5% fewer contracts signed in 2020 as compared to 2019. But, not any longer! As of the end of the day yesterday (June 18) the pace of buying activity in 2020 is right back on track with 2019. OK, fine, less one home. Jan 1, 2019 - Jun 18, 2019 Contracts = 695 Jan 1, 2020 - Jun 18, 2020 Contracts = 694 It seems that COVID-19 might have even less of an impact on overall market activity than I had thought. Stay tuned to see if 2020 will cross over to surpass 2019 in the coming weeks. | |
Having Difficulty Finding Homes Under $200K? Here Is Why! |
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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! | |
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
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