Market
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Home Sales and Contracts Surge in April 2019 |
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 After a somewhat slow start to 2019, the local real estate market has now picked up speed in April! But before we start looking at the data, two quick links for you...
Now, onward!  Lots going on above...but here are the high points...
 OK - here's what I was talking about earlier. January, February and March sales were simply nothing to write home about. This February was the slowest February out of the past four years. January and March were the 3rd slowest such months from the past four years. But April -- wow! Home sales surged in April, up to 112 home sales -- the best month of April seen in the past four years!  Zooming out from the granular data, this graph looks at long term trends -- the slowly shifting 12-month trend line for the pace and price of home sales. As you can see, sales prices have been increasing despite somewhat slower sales.  It shouldn't be too much of a surprise that stable sales, rising prices, low inventory levels and low days on market are leading to very little negotiating on price. Homes are selling at a median of 99% of their list price. This means that half of homes are selling for 99% or more of their list price.  OK - this one was a bit surprising. And I squished all of the data down so far to fit a large context on the graph above that the image is not quite as crystal clear as I'd like it to be. But the message is quite clear - buyers came out in full force in April 2019 -- the 158 contracts signed last month was the second highest month of contracts seen in the past three years! That said - prepare yourself to be at least a bit disappointed next month. I think it's relatively unlikely that we'll be able to see a spike of contract activity all the way up to the showing 171 contracts that were signed last May!?  Home buyers like choices, right? Well, right now, they don't have many. In all of Harrisonburg and Rockingham County there are only 270 properties listed for sale. This number has been steadily declining over the past few years -- and the supposedly busy Spring of plenty of listings has not been able to increase these inventory levels -- probably because buyers keep snapping the new listings up as soon as they hit the market.  As some welcome news for buyers who are able to find a home to buy - they're able to finance that purchase at a relatively low interest rate! After having risen all the way up to 4.86% (it seemed like 5% was bound to be seen) mortgage interest rates have now dropped all the way back down to the low 4% range. This gives buyers the ability to lock in low monthly housing costs for the long term! OK - we'll cut it off there for now - though there is plenty more that you can scroll through in the PDF of my full market report. My guidance to local soon-to-be home buyers and sellers remains consistent... SELLERS -- even though it is a seller's market in just about every price ranges right now, you must still focus on price, condition and marketing. For further reading on buying or selling in this area, check out.... | |
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Sales Slow, Prices Plateau, Contracts Console in First Quarter 2019 |
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 Just like that - the year is already more than 25% behind us. Looking back over home sales activity during the first quarter we find a mixed bag of market indicators. Before we delve in, two quick links...
Now, on to the data...  As shown above...
 The green rows above are showing sales activity for detached ("single family") properties. The orange rows are for attached properties - which includes duplexes, townhouses and condos.
 Here (above) is a visual of the not-so-exciting way that this year has begun when we look at monthly home sales compared to the same months in recent years. February home sales were the slowest out of the past four years - and January and March were the second slowest. So - clearly - a slow start to the year - but keep on reading for some news on contract activity.  The graph above explores long term (rolling 12 month periods) trends in home sales and prices. Over the past year we have seen sales start to trend slightly downward - while prices have trended slightly upwards. Nothing drastic in either direction, really, but those are the general directions we're seeing the market move. Of note - the rising prices shown above have more to do with a change in the mix of what properties are selling (more higher priced detached homes and fewer lower priced attached homes) more than an actual increase in values. As shown a bit ago (scroll up) the median sales price of detached homes has remained flat over the past year.  Here's a slightly more depressing view of value trends for detached homes. Over the past few years the increase in sales prices has been decreasing (+7%, +5%, +2%) and with data only from the first quarter of 2019, the median sales price has actually declined. I am guessing that we'll actually end up with a net gain in median sales price once all 2019 data is in the books, but for now, prices are appearing slightly soft when just viewing first quarter data.  But if you're selling an attached (duplex, townhouse, condo) property - the state of the market is looking promising! As shown above, the prices they just keep on rising. Part of this is likely a result of constrained supply (not enough new townhouses being built) amidst increasing demand. This is keeping sales prices on the rise and that doesn't show signs of stopping in the near term.  OK - hopefully you read this far - because here is the silver lining of the first quarter of our local housing market. Despite slower sales in the first quarter, contract activity was STRONG in March 2019. In fact -- it was the second strongest month of contract activity in the past 21 months! This should lead to strong months of closed sales in April and May, and hopefully this is just the beginning of a strong Spring and Summer of contracts being signed.  For the past few years I kept saying I didn't think inventory levels could drop any further. Well, they did, they have, and somehow the market keeps on moving. As shown above, despite a monthly increase in inventory levels between the end of February and end of March, we have seen another year-over-year decline in the number of homes on the market. Unless we see a significant growth in new construction in this area, these low inventory levels are likely to remain the norm for the next few years.  And here's a bit of trivia for you -- the fastest growing price segment of our local housing market is --> the $200K - $300K price range. There has been a 19% increase in sales of homes between $200K and $300K, which is the largest increase of any of the price categories shown above.  What brought on the strong surge of contract activity in March 2019? Could it be the sudden drop in mortgage interest rates, down to an average of 4.06%? Probably not just that -- it was likely also a surge in new listings combined with anxious buyers who had seen very few options over the winter months. But the low mortgage interest rates likely helped and were an added bonus to anyone making a decision to commit to a home purchase during March 2019. Well, folks, that's a wrap. You read to the end of my overview of our local housing market. You can delve into even more details by downloading a PDF of the full report here. And as always, if you have questions about our local housing market feel free to be in touch. My guidance to local soon-to-be home buyers and sellers remains consistent... SELLERS -- even though it is a seller's market in just about every price ranges right now, you must still focus on price, condition and marketing. For further reading on buying or selling in this area, check out.... | |
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Are You Willing To Move Twice? |
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 Anecdotally, the $250K - $300K market is HOT right now. If you're looking to buy a home between $250K and $300K expect to have LOTS of competition from other buyers. Houses that are prepared well, priced well and marketed well, are going under contract quickly -- sometimes with multiple offers. Which then (eventually) leads us to the question at hand -- are you willing to move twice? If you're buying a home between $250K and $300K, there is a decent chance that you own your current home, and that you'll need to sell it in order to buy the next house. And given that there are so few options for you to buy right now, you probably haven't listed your current home for sale yet -- because you're waiting until you see something that you want to buy. But when the home you want to buy comes on the market, and you look at it on the first day and decide you are ready to make an offer - I'm going to tell you that we probably won't be successful in securing a contract to buy your new home unless you have your current house under contract. So then we'll speedily get your house on the market. But by the time it is on the market, or by the time it is under contract, the chances are that the house you wanted to buy will then be under contract to another buyer. Ugh. So -- what is someone in this situation to do? Option 1 - Do what is described above, and hope you get lucky. Wait to list your home until you see something you really want to buy. Hope that nobody else wants to buy it, somehow. List your home. Get a contract in place on your home. Make an offer on the house you want to buy. But perhaps you'll try Option 1 a few times and fail - losing the house to another buyer, which leaves you with two other options... Option 2 - Secure financing to buy a new home before having sold your current home. This way you can commit to buying the new house before having a contract on your current home. That isn't a possibility for all buyers, so you may also have to consider... Option 3 - Be willing to move twice. List your home for sale, when you get an offer, ask for a longer than normal closing timeline - perhaps 75 days instead of 45 - 60 days. Then, hope that the house of your dream comes up for sale in the subsequent 30 days so that you can contract to buy the new home and close on them simultaneously - but be ready, willing and able to move twice if you need to do so. You may, with this option, have to move out of the home that you own - because you sold it - before you have found and secured a contract on the new home you'll be buying. This might mean moving in with family, and it might mean renting before buying the next home. In the end, given how quickly the market is moving, you may have to decide if you are willing to move twice in order to make a transition to your next home. | |
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Home Buyers Were Busy In March 2019 |
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 I'll publish my full monthly market report later this week, but wow, home buyers were busy in March! After the usual slow start to the year with 84 contracts in January and 92 in February, things started to pop in March -- with a sharp uptick to 134 contracts. For some context: JANUARY: This Year = 84 contracts Last Year = 85 contracts FEBRUARY: This Year = 92 contracts Last Year = 90 contracts MARCH: This Year = 134 contracts Last Year = 128 contracts So -- thus far it seems that this may be another robust year of home sales in Harrisonburg and Rockingham County. | |
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What To Do When Recent Comparable Sales Prices, Tax Assessments, Zestimates and Competing List Prices Vary SIGNIFICANTLY |
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 Which one of the values above is the "market value" of the imaginary home in question? The answer is -- the GREEN bar -- a home's value is most often determined by how much other buyers have recently paid for similar properties. A would-be buyer might WANT the home's value to be the "tax assessed value" -- but that might be quite a bit lower than the recent sales prices -- so a home's tax assessed value is not necessarily the home's market value. A would-be seller might WANT the home's value to be the "Zestimate" from Zillow -- but that might (often, usually) vary quite a bit from a home's market value -- so a home's Zestimate is not necessarily the home's market value. A would-be seller might REALLY WANT the home's value to be the same as the list price on competing properties currently for sale -- but those listings might sit on the market forever with unreasonably high list prices -- so the list price of competing listings is not necessarily the home's market value. Now, this scenario would be much easier...  As you can see here, there isn't too much of a difference between the different values -- so it matters a bit less which of the value perspectives we use when estimating a likely sales price and planning for a potential list price. But in the case where there is quite a bit of separation in these different value perspectives -- stay focused on what other buyers have recently paid for similar properties -- this alone is your best guide as to what you can/should expect the next buyer to be willing to pay for your house. | |
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When Will We Start To See a Surge of Spring Buyers? |
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 When will we see buyers? A short answer -- now, or very, very soon! The graph above shows the average number of buyers per month over the past five years. As you can see, above, buying activity starts creeping up as soon as February, but really starts to pop in March (this month!) and then keeps on increasing in April before a typical peak in May. Read more about recent market trends in the most recent version of my monthly housing market report, found online....  | |
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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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Home Sales Slow In February But Contract Activity Increasing |
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 Happy Spring! Yesterday's warm sunny afternoon was a welcome reprieve from our recent frigid temperatures - and it looks like we'll have continued warm-ish (or at least not frozen) days this week as well. And how about that local real estate market? Is it heating up as well? Breaking out of the winter doldrums? Well, maybe not quite - though technically this report only covers real estate activity through the end of February, so maybe we'll have to wait one more month for some more exciting news. But buckle up, and let's flip through the latest local real estate news to catch up on where things have been and where we're likely headed. Oh - but two quick notes, first:
And now, here we go...  As seen above...
 OK - lots going on above - this is where I break things down between detached homes (green) and attached homes (orange) -- where "attached" homes are townhouses, duplexes and condos.
 The red line above shows the sales trajectory for 2019 -- January sales (64) were right in the middle of the pack as January goes -- but February sales (63) were much slower (lower) than last year (81) though not too far off of the prior two years (68, 69). So - where in the world do we go from here? Do we see a relatively disappointing March with only 80 home sales (lowest since prior to 2016) or do things bounce back up to 95 or 100 home sales? Time will tell - but thus far the market performance has not been overwhelming in 2019 when it comes to the number of homes that are selling.  Now, looking beyond the month-to-month trends -- this graph (above) looks at a rolling 12 month timeframe to even out some of the ebbs and flows of market activity. The top (green) line shows that median sales prices have been relatively steady for the past six months -- hovering between $210K and $213K. The bottom (orange) line shows that the annual pace of home sales has actually been slowing in recent months. If home sales keep slowing down, eventually that could have an impact on sales prices, but for now they are holding steady. It is also certainly possible that the slowdown in home sales has more to do with a lack of available inventory than it does with any decrease in buyer interest.  Here (above) is another pretty graph to show the increasing home values in Harrisonburg and Rockingham County over the past few years. Though - curb the boundless enthusiasm for a moment - the annual increase was only 2% in 2018, down from 5%, 7% and 5% the prior three years. So -- 2019 will be a telling year -- will values hold steady, or increase slightly, or decline slightly? Stay tuned -- it's early yet.  And this (above) might be the missing piece of the puzzle. Buyer activity (blue line) is somehow staying steady-ish (except dipping a bit over the past few months) despite the quickly falling inventory levels (green line) over the past three (four!) years. I've said it recently but I'll say it again - it can be a fun time to be a seller right now - but it's not so fun to be a buyer. You'll be choosing from an ever smaller number of available properties, and potentially competing with ever more buyers.  Here's one graph of optimism as it relates to the next few months -- contract activity is on the rise with 92 contracts signed in February 2019, up from 90 last February and 87 the February before that. So - we will likely see a solid month of sales activity in March, and hopefully in April if we have another strong month of contracts in March. But, just to prepare you pretty early here -- I think it is HIGHLY unlikely that we'll see a month with 171 contracts like we saw last May.  And here is a visualization of those inventory woes I was describing earlier. The number of homes for sale has been creeping ever lower, hitting yet another new low at the end of February with only 255 homes for sale. Hopefully, maybe, possibly, we'll see that start to drift upwards as we get into March, April and May??  If buyers have anything (anything!?) to be glad about -- it's that their mortgage rate will likely be lower now than it would have been a few months ago. After average rates drifted all the way up to 4.86% -- and seemed to be ready to get back to 5% -- they started floating back down to their current average of 4.35%. If buyer activity increases over the next few months, they'll be enjoying more affordable financing of their home purchase. OK - admittedly - that was a lot. Kudos to any of you who made it all the way to the bottom of this commentary. Many trends stay relatively similar from month to month but it's always good to take a fresh look to give us a context to help make informed real estate decisions moving forward. If you're thinking of buying or selling soon... SELLERS -- even though it is a seller's market in just about every price ranges right now, you must still focus on price, condition and marketing. For further reading on buying or selling in this area, check out.... | |
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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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Local Real Estate Market Holds Steady in January 2019 |
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 I hope you are finding time to enjoy this one sunny day this week - amidst clouds, rain and snow the rest of the week. Perhaps the bright news in this update on the real estate market will buoy your spirits when the clouds return tomorrow. :-) But before we dive into the data, be sure to check out the home pictured above, an immaculate brick Colonial in Highland Park, by visiting 4105LucyLongDrive.com. Oh, and as per my usual habits, you can skip right to a PDF download of the full market report here, or read on for my color commentary...  OK - starting off with an evaluation of the market as a whole, the chart above shows us that the exact same number of buyers (63) bought in January 2019 as bought in January 2018. Thus, it was the slowest month of the year - but exactly as slow as things started last year. (1) When we look at a longer timeframe (Feb 2018 - Jan 2019) we see that 1,303 buyers bought homes in Harrisonburg and Rockingham County -- which marks a 3.74% increase in buyer activity as compared to the previous year. (2) The median sales price of the homes that have sold in the past 12 months was $211,500 -- which is 5.81% higher than the median sales price during the prior year. So, perhaps prices are on the rise. Or, perhaps different homes are selling. Read on for more on this. (3) Homes are selling quickly -- QUICKLY! -- with a median "days on market" of 25 days over the past year, a 24% drop from 33 days the prior year. Now, let's break things down between detached homes and attached homes. Attached homes are townhouses, duplexes and condos...  There is a good bit to soak in here, on the chart above, as well. (1) The 942 buyers who bought detached homes over the past 12 months contributed to 5.25% more buyer activity -- for this type of property -- as compared to the previous 12 months. (2) The median sales price of those 942 detached homes was $228,000 -- a whole (not actually that exciting) 1.33% higher than the $225,000 value one year prior. (3) Talk about consistency -- 361 buyers bought attached homes (townhomes, duplexes and condos) in the past 12 months -- exactly the same number as during the previous 12 months. (4) The median sales price of those 361 attached homes was $167,811 -- a full 4.88% higher than the $160,000 value one year prior.  There it is, folks, the start of something great -- maybe? While it's true that January is the slooooowest month of the year for home sales AND this past January was the sloooooowest January seen in the past few years -- it is also true that last year was a near record breaking year of home sales, and we also started out with only 63 home sales in January 2018. So -- stay tuned -- perhaps this will be another vibrant year of sales activity for the local real estate market.  Staying steady - that's all I wish for our real estate market sometimes. The graph above shows a rolling 12 month value for the median sales price and the number of home sales taking place in our local market. You'll note that homes have been selling at a pace of around 1300-ish homes per year for the past six or so months -- and we've been hovering around the $210K-$212K mark for median sales prices. Staying steady-ish isn't too bad. I'd be happy with a 0% - 2% increase in the pace of home sales and a 2% - 3% increase in the price of home sales this year. We'll have to wait a few more months to get a better sense of if that is where we're headed.  If asked, I think home values have risen by 2% over the past year, and the graph above is why I'm sticking to that number. If you look at all home sales in the area (attached and detached) you'll come up with a higher increase in the median sales price -- but I believe the change in the median sales price of detached homes is the best indicator of trends in market value -- and there was a 2% increase in the median sales price of detached homes between 2017 and 2018. Stay tuned to see how we fare in 2019 as more data keeps coming in.  It's a great time to be a seller! As shown above, while the number of buyers in the market has stayed relatively consistent over the past (almost) two years, the number of homes on the market at any given point has continued to decline steadily. As such, this has become more and more of a seller's market. Homes are selling quickly and thus buyers must be ready to pounce on the home of their dreams when it is listed for sale. More on this at the bottom of this note.  On this graph it might be most interesting to look backwards in order to look forwards. After a predictable mid-80's month of contract activity in January, it seems likely (based on history) that we'll see around that many buyers sign contracts to buy homes in February. But after that, look out! Buyer activity usually starts in earnest in March and April, where you'll see a 45% (ish) increase in buyer activity between Jan/Feb and Mar/Apr. The big question this year would be whether we really will / could have anywhere near as stellar of a month as we had last May for contract activity. Maybe not??  It is quite possible that inventory levels have dropped just about as far as they can possibly go. Over the past year we saw a seasonal rise and fall back to a just-below-300 inventory level as we started out January and February. It seems likely we'll get back up to a 340-350 level in the summer months, but absent a large new construction development starting in the area, it seems unlikely we'll get back up to 400 homes for sale at any given point in 2019.  I said it earlier, but I'll repeat it. Homes are selling quickly! OK -- not all homes -- don't get overly distressed if your home is not under contract within 30 days of being listed for sale -- but quite a few (54%) of the homes that do sell are indeed under contract within 30 days of being listed for sale. If your home is not, let's talk about why, and what we might need to do to get it under contract within the next 30 - 60 days.  Refreshingly, after staying above 4% all year long in 2018 - and rising as high as 4.86% in October - they finally started to decline again and have continued to do so over the past few months. We're not back (barely) under 4.5% which is a nice relief for buyers in the near term. I'll pause there now, and commend any of you voracious readers of market updates who made it this far. :-) Read even more (!!) in the full PDF here, or feel free to shoot me an email with your thoughts, perspectives or questions on the market. And finally, a few quick links for you if you are thinking of buying or selling soon -- SELLERS -- even though it is a seller's market in just about every price ranges right now, you must still focus on price, condition and marketing. For further reading on buying or selling in this area, check out.... | |
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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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What Would It Take For New Construction (For Sale) Housing To Be Built, At Scale, In or Around Harrisonburg |
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 As you may have heard -- the market is hot -- sales are stead, inventory levels are declining and homes are selling more and more quickly. Perhaps, just perhaps, we need some new homes to be built to add to the supply side of the equation? So -- after all that -- what would it take for us to see more new construction (for sale) housing in and around Harrisonburg? 1. More highly motivated sellers of development land. 2. Fewer student housing, rental housing and mixed use developers. You see, there are parcels of land for sale in and around Harrisonburg right now -- or parcels of land that could be purchased where a builder could build homes and buyers could buy those homes and everyone would live happily ever after. But -- most sellers of development land aren't overly motivated to sell quickly AND they are convinced that their land should be valued as if it is being sold to a student housing, rental housing or mixed use developer. And, so long as there are student housing, rental housing or mixed use developers willing to buy land at a high price/acre AND/OR as long as owners of development land are willing to hold out for that high price/acre -- then land is not likely to be sold to developers or builders at a price/acre that would allow them to build homes for buyers to buy. I think it is important that our local housing stock increase over the next five years with more options for buyers (especially first -- or second -- time buyers) to make Harrisonburg their home. But right now, we seem to be at a bit of a stalemate -- sellers of development land don't want to sell their land at prices that would allow a builder/developer to build homes for sale -- and builders/developers don't want to pay (can't pay) overly high prices/acre and still deliver a product to the market at a price that a buyer would be able to afford. | |
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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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Home Sales Accelerating Faster In City Over Past Five Years |
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 Now, for the annual showdown between the City of Harrisonburg and Rockingham County, though first noting that:
There are any number of factors that affect whether buyers end up buying in the City or County, including what type of property they are seeking, how much land they desires, school systems, employer locations, and much more. | |
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Who Is Winning In The Local Real Estate Market? |
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 Sellers are winning - rather universally. Every market metric works in their favor. Hooray if you get to be a seller in the current market! Buyers are losing - in all but a few categories. Certainly, buyers are happy to have low mortgage interest rates (cheap money) and low unemployment (you need a job to buy a house) but otherwise, all market metrics are working against buyers. Homeowners are winning - but are indifferent to most of what is going on in the market. Homeowners are certainly happy that home prices are increasing, that folks have jobs, and that not many people are losing their homes to foreclosure. As to all of the other market shenanigans - they are rather indifferent. So, again, a great time to be a seller. And if you have to be a seller AND a buyer -- perhaps it will be a wash. You'll benefit as a seller and struggle as a buyer. Welcome to the Seller's Market of 2019! | |
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Perhaps The $225K Median Sales Price Is More Sustainable This Time |
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 The median sales price of detached homes (single family homes) cleared $225K in 2018! Oh, but wait, this happened before, didn't it? Yes, actually, we saw a median sales price of $226,800 in 2006 -- and then in the five years that followed, the median sales price slid downward to $184,000. So, are we more likely to stay north of $225K this time around? I think we are, and here's why...
Only time will tell whether these $225K+ median sales prices can stick around in Harrisonburg and Rockingham County this time around -- but the broader contextual data suggests that it is more likely this time than last. | |
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Did The Local Housing Market Slow At The End Of 2018? |
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 Oh my heavens! Take a look at the graph above! DID the local housing market slow at the end of 2018??? I am going to lean towards: sort of, maybe a bit, but not much. The graph above...
So -- if you like the high stress graph above that unintentionally uses Christmas colors, and might make you feel unsettled about the changing tide of the local home sales market -- then stick with that one and close your email/browser. If you want an alternate perspective on the same data, keep reading...  This graph (above) shows the same data as the first graph -- but by taking the Y axis all the way down to zero we get a better sense of the fact that the slight declines in the annualized pace of homes sales in the second half of 2018 were just that -- slight. So -- is the sky falling? Are home sales declining? Did we peak in mid-2018? Well, maybe, but I don't think we can conclude that definitely or with much conviction at this point. The overall downward adjustments were rather small compared to the total number of homes selling on an annual basis. Stay tuned, then, for 2019 -- eventually we'll be able to draw some more conclusions about what actually happened in 2018! :-) | |
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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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Harrisonburg Year End Housing Market Report Shows Increases in Sales and Prices |
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 Happy Cold and Snowy January - and Happy New Year! Before we look back at a summary of our local real estate market in 2018, take a few minutes to explore the featured home pictured above, a spacious four bedroom home with views on a private cul-de-sac street at 3931DixieRidgeRunRoad.com. As per the norm, you can find a PDF of my full market report here. And now, let's take a thorough look at the overall performance of our local housing market in 2018...  Overall, 2018 was a great year for the local housing market. Here are some key takeaways from December and the full year of 2018...
 The City of Harrisonburg has been a particularly interesting market over the past year, as detailed above. Home sales increased 9.29% between 2017 and 2018, accompanied by a 6.89% increase in the median sales price (up to $190K) and home sold with a median days on the market of only 13 days! Homes went under contract quickly in the City of Harrisonburg last year -- and that seems likely to continue into 2019 given continued high buyer demand and low inventory levels.  Home sales have bounced back and forth (up and down) over the past few months in Harrisonburg and Rockingham County. August, September and November were low to average as compared to the same month in previous years -- but October was a new high (120) and sales bounced back in December to a high-ish pace which helped round out an overall strong year of sales.  Just another look at the pace of home sales, above, for those (like me) who prefer pretty data visualizations. We came so (so) close to matching the 1,313 sales seen in 2016. And yes, we bounced back from the slight dip we saw in 2017. What, then, might be in store for 2019? Another 1,300+ year of home sales? I think so -- but we shall see!  OK - a few IMPORTANT things to note here. Despite the fact that the overall median sales price for residential properties increased 7% in 2018 -- I don't believe home values increased 7%. Much of the 7% increase in the overall median sales price was a result of a larger number of (higher priced) detached homes selling in 2018 (as compared to 2017) and a smaller number of (lower priced) attached homes selling. This graph (above) then becomes important, as it shows the trend for detached homes only -- which is often a better indicator of changes in market value. You'll note that we saw a 6% increase in the pace of detached home sales and a 2% increase in the median value. So -- if you own a detached home in Harrisonburg and Rockingham County, it is likely that the value of that home increased 2% over the past year. Oh -- and I should point out that last year's median sales price of $228,000 for detached homes is THE HIGHEST median sales price we have ever seen on an annual basis in this market.  As shown above, we have seen a steady stream of buyers in the market over the past two years -- fluctuating from 620-ish to 660-ish in a six month period. Unfortunately for those buyers, however, they have had an smaller and smaller number of homes from which to choose. The number of sellers in the market -- as measured by inventory levels on a monthly basis -- has steadily decreased over the past two years. These two trends have combined to create an increasingly strong seller's market in Harrisonburg and Rockinhgham County.  OK - this one is interesting - and I believe it is a sign of a healthy-ish real estate market. As shown via variety of graphs above, home sales are up, inventory is down, days on market is down -- and yet, the median sales price seems to have only increased by 2%. So - the strong seller's market has not (thank goodness!) resulted in irrational, unreasonable, unsustainable increases in sales prices. That said, sellers are negotiating less and less (as shown directly above) from their last list price. I say "last" list price because some sellers don't start with the best list price out of the gate, and have to reduce their list price. But in the end, sellers are negotiating less (around 1%) than they have in any recent year.  For the purposes of at least a small sneak peak ahead -- we saw only a small number of contracts (62) in December -- which is to be expected in this first month of Winter. We're likely to see a small number of contracts in January and February as well, if past years are any indicator, before home sales (contracts) start to pop again in March.  And there (above) are those low inventory levels I was referencing. In fact, the 269 properties currently listed for sale in Harrisonburg and Rockingham County is THE LOWEST inventory level we have ever seen in this area. So -- perhaps the small-ish (4%) year-over-year decline is an indication that we're getting about as low as we possibly can/could/will in this market.  As one might expected, different price ranges are performing differently in our local market. The pace of home sales in the "under $200K" market continues to decline -- likely a result of properties appreciating out of this price range. We saw a sizable increase (+16%, +14%) in the middle market segments of $200K-$300K and $300K-$400K, and the largest increase in the $400K+ price range where home sales have increased 33% over the past year.  Another sign of health in our local real estate market is the ever declining number of foreclosures taking place. As shown above, there were only 85 foreclosures in Harrisonburg and Rockingham County last year -- a 37% year-over-year decline.  One last note -- we have seen a decline over the past few months in the average mortgage rate, which is exciting for buyers currently signing contracts to buy homes. We spent all of 2018 above 4% and we seemed to be quickly climbing towards 5% between August and October -- but the last few months of the year we saw things turn around and we are back closer to (or even below in some cases) 4.5%. OK - that wraps up my year-end overview of the state of our local housing market. I went into a bit more detail than usual this month -- though there is still PLENTY more in my full market report. You can download a PDF of the entire report here. And finally, a few quick links for you if you are thinking of buying or selling soon -- SELLERS -- even though it is a seller's market in just about every price ranges right now, you must still focus on price, condition and marketing. For further reading on buying or selling in this area, check out.... | |
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When Will Home Buying Activity Ramp Up in 2019? |
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 It should be no surprise that buying activity (contracts being signed) slows down over the Winter. As shown above -- an average of 75 buyers sign contracts in January, which then increases a bit, to 87, in February, and then makes an even larger jump in March to an average of 134/month. So, we're going to say the March is when we first seem a big jump in buyer activity. For that reason, many sellers wait until March (or even April) to put their homes on the market -- though the Spring market brings more competition from other sellers in addition to meaning that we'll start to see more buyers. Of note -- so far there have been 19 contracts signed in 2019 -- so still a ways to go to get to that average of 75 in January. | |
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
Licensed in the
Commonwealth of Virginia
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