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How Much Are Home Buyers Paying For Houses? |
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 How many buyers in the past year have been able to purchase a property for less than $200K? 104 buyers... or 9% of the buyers who bought in the past year. How many buyers paid more than half a million dollars for their homes? 151 buyers... or 12% of the buyers who bought in the past year. In what price range are the largest number of buyers buying? Just over 40% of home buyers paid $300K - $400K over the past year. As you prepare to sell your home you should take time to understand the size of the pool of buyers who will be potentially interested in buying your home. | |
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Despite An Increase In Home Sales In January, Contract Activity Is Down, Inventory Levels Are Up, Days On Market Is Up |
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 â¤ï¸ Happy Valentine's Day! â¤ï¸ For those of you that just *love* reading my market reports each month... consider today's report my valentine to you. 😉 That said, the real estate indicators this month aren't all hearts and candy and hugs and kisses... so TBD if you'll still consider this to be a loving Valentine's Day message by the end. But first, as a peace (love?) offering... each month I provide a giveaway, of sorts, for readers of my monthly market report. This month I'm highlighting a delightful cafe / coffee shop just outside Dayton called Harvest Table. They offer great coffee beverages, a delicious array of baked goods, and a solid (all-day) breakfast and lunch menu as well! If you haven't checked out Harvest Table -- you should -- and click here to enter your name for a chance to win a $50 gift certificate use on your next visit! Now, on to the real estate data, starting with how many home sales we saw in the first month of 2024.  If we start with how many homes are selling right now (see above) we'll be starting with some rather positive news. After over a year of steady declines in the number of homes selling in our area, we did see a bit of a turnaround in January 2024. A few things I am noticing above... [1] After only 76 home sales in January 2023 we saw 94 in January 2024. I wasn't expecting that we would see this 24% increase in the first month of 2024. I don't necessarily think that means we'll see a 24% increase in the number of homes selling throughout 2024 -- as this is just one month of data -- but it was a pleasant surprise to see more buyers able to buy homes this January than last January. [2] The third highlighted line (above) shows that over the past year we have seen a 21% decline in the number of homes that are selling in Harrisonburg and Rockingham County. This certainly stands in contrast to the 24% increase in January 2024... but if we want to broaden our view a touch we see (in the second highlighted line) that home sales have only declined by 3% when looking at the most recent three months (Nov-Jan) compared to the same three months a year prior. So... based on several bits of data... maybe (just maybe) we won't see another 20-ish percent decrease in the number of homes selling this year in our market... maybe we could actually see some stability in this metric, or a slight increase in the number of homes that are selling in 2024? Wait and see... only 11 more months to go. And how about those home prices...  Just as we can't necessarily believe that the 24% increase in home sales in January 2024 will be a lasting trend, we also shouldn't necessarily believe that the 2% increase in the median sales price in January 2024 will be a lasting trend. As shown above, when looking at three, six or twelve months of data, the median sales price in our area has been rising by 9% - 10%. When looking at just one month of data (January 2024 vs. January 2023) we only see a 2% increase in that median sales price, but I don't think we'll see that low of an increase once we get a few more months into the year. And how about how quickly homes are selling...  There are enough changes on this table (between 2023 and 2024) to give me confidence in saying that the market will almost certainly move at least a bit more slowly in 2024 than it did in 2023 (and 2022). The median "days on market" was 14 days in January 2024, which means that of the homes that sold in January, half of them took more than two weeks to go under contract. This is quite a bit slower than the median of six days last January. Also, if we zoom out a bit to look at the three month, six month and twelve month metrics, we also see higher median days on market in those timeframes as well. We started to see days on market creep up a bit in 2023 but I think we will see an even more significant increase in this "speed of sale" metric in 2024. Many homes will likely still sell very quickly in 2024, but not all homes. This next graph is a bit hard to read with only one data point for 2024, but see if you can find it... hiding on the left side, and highlighted...  That highlighted "94" is showing the number of homes that sold in January 2024... which was well above the 76 home sales we saw last January (in blue) and only barely above the four year average of 2020 through 2023. Looking and thinking ahead towards the next few months the question that remains is whether home sales in 2024 will remain stronger than in 2023, or whether the monthly sales count will drift back down towards 2023 levels. I'll hit on contract activity and pending sales a bit later to allow us to think more about what the coming months might look like. And now, a look at the overall big picture trends as it relates to how many homes are selling and the prices at which they are selling...  At this point you might be wondering why I warned you in the beginning of the report about some of the metrics not being entirely positive this month. Well, keep reading, but this graph (above) is still in the positive category. The blue line above tracks the number of annual home sales taking place in Harrisonburg and Rockingham County (per the HRAR MLS) when measured on a monthly basis. After 17 months of a declining pace of annual home sales, we saw the first increase in January 2024... from 1,204 home sales to 1,222 home sales. This change in direction in this trend is a result of strong January 2024 home sales compared to January 2023 home sales. If that continues in February 2024, we'll see this line continue to rise again. The top (green) line shows the median sales price over a year's time, measured each month. Clearly, the median sales price has been increasing for many (!!) months (years) now. This metric has flattened out a bit over the past two months, so stay tuned to see if the median sales price continues to increase in 2024 as quickly as it did in 2022 and 2023. Here's another look at that possible change in how quickly prices are rising...  At first glance, it would seem that the rapid increases in the median sales price that we saw in 2020, 2021, 2022 and 2023 might finally be coming to an end in 2024. And, that might be true. We could see a much smaller increase in the median sales price this year. But... keep in mind that the graph above is comparing 12 months of data in 2023 to only one month in 2024. Once we have a few more months of data to consider in 2024 -- a larger data set than the 94 January home sales -- we'll be able to have a better sense of whether we will see similar or smaller increases in the median sales price in 2024. Next up, contract activity, one of the indicators of what we should expect next...  I suppose I shouldn't focus too much on contract activity being slower in January 2024 than in January 2023 because it wasn't that large of a difference... a decline from 116 contracts last January to 108 contracts this January. But, after seeing a big uptick in closed sales in January 2024, I was expecting to see more contracts in January as well -- which would allow us to more confidently expect to see overall home sales activity to increase in 2024. So, with more sales in January, but fewer contracts, what will February (and March) look like in 2024? Well, here's another potential indicator... pending sales...  Pending sales is a measure (a count) of how many properties are under contract (pending) at any given moment in time. A year ago there were 234 pending sales at this time, which was in line with the four year (2020-2023) average of having 233 pending sales at this time of year. But then, January 2024. At the end of January (beginning of February) we are now seeing 270 pending sales -- much more than any time recently. So, despite fewer homes going under contract in January, the total number of homes waiting to make it to closing is much higher than we might have otherwise expected. All of this points to the possibility that we will actually see an increase in the number of homes selling in 2024 as compared to 2023. Give it a few more months to see if the data keeps reinforcing that hypothesis, but I am starting to think we'll see an increase in home sales this year as compared to last year. And perhaps more homes are selling because more are available for sale?  Not only are there many more (15% more) pending sales right now as compared to a year ago, there are also many more (67% more) homes for sale right now as compared to a year ago. That's actually a pretty significant (67%) increase in inventory levels in a year's time. One year ago a buyer would have been able to choose from 109 homes to give to their special someone on Valentine's Day. This year, they can choose from 182 homes for sale. If you've been hoping your loved one will give you a new home for Valentine's Day... you might be in luck, there are sooo many more options this year. If you don't get that new home along with some roses and a box of chocolates, don't let them blame it on the low housing inventory levels... Now, back to that median "days on market" metric...  Way back in mid-2021 the median days on market dropped all the way down to four days... and then stayed at five days for more than a year after that. We started to see the median days on market bounce around a bit more in 2023 as we went from a market where absolutely every home seemed to sell very (very) quickly to a market where many homes still sold very quickly, but not all of them did. As we look at the increase from a median of five days on the market back in August to a median of eight days on the market today, we may just be seeing a seasonal increase that we will start to see every year... or we may be seeing the beginning of a slight slowing in the market. But... keep in mind... if the median days on market increases from five to eight days, that is not a drastically different market. It's an increase, but it's not an increase to 10 or 20 or 30 days on the market. Thus, it will be important to continue to monitor this metric over the coming months to see if 2024 is and will be a more slowly moving market than last year. Finally, how about those mortgage interest rates...  One of the main causes for the decline in the number of home sales in 2023 was rising mortgage interest rates. In 2022 mortgage interest rates rose from 3.11% to 6.42%. Then as 2023 went on, they rose even further, up to a peak of 7.79%. Can you blame buyers for not wanting to buy with a mortgage interest rate above 7%... or for sellers not wanting to sell and then have to buy with an interest rate above 7%? Over the past few months we have started to see mortgage interest rates decline, back to around 6.7% by the end of January. If we continue to see declines in mortgage interest rates in 2024 that will likely encourage further buying activity, though I don't expect that they will get all the way down 6% by the end of the year. And there we have it, very much a mixed bag of market metrics this month. More home sales, fewer contracts but more pending sales, higher inventory levels, higher days on market. All of that likely adds up to 2024 being yet another interesting and not entirely predictable year in our local housing market. If you plan to buy this year - talk to a lender soon and then frequently over time to understand how changing mortgage interest rates affect your budget and monthly payment. If you plan to sell this year - prepare your home well, price it in line with recent similar home sales, and know that your home might be on the market for more than a few days. If you own a home and do not plan to sell it - this will likely be another good year for you with your home increasing in value and another year of paying down a mortgage that likely has a very low interest rate. And to each of you -- if I can be of any help to you with real estate or otherwise, don't hesitate to reach out. You can contact me most easily at 540-578-0102 (call/text) or by email here. I hope you have a wonderful Valentine's Day! XOXO -Scott | |
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Will We See A Fast Moving Real Estate Market In Spring 2024 In Harrisonburg And Rockingham County? |
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 Many or most resale homes have been going under contract very quickly when they have been listed for sale over the past four years in Harrisonburg and Rockingham County -- largely because demand for these homes has exceeded supply. I don't expect that we will see supply exceeding demand this coming spring, but I also don't know that most sellers should expect to have their homes under contract within just a few days as has often been the case for the past few years. Looking at resale homes that have closed in Harrisonburg and Rockingham County over the past 60 days...
Will we see a fast moving real estate market in Spring 2024 in Harrisonburg and Rockingham County? Likely so. Will most home sellers be able to count on their homes being under contract within a few days? Maybe not. | |
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2023 Recap On Our Local Housing Market Shows 23% Fewer Home Sales At 10% Higher Prices |
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 Happy New Year, Friends! I hope your 2023 wrapped up nicely and that you had some time with family and friends over the holidays! I had a wonderful time over the past few weeks making tons of great memories with family (including my brother and his family visiting from out of state and so many others), eating lots and lots of delicious food (including plenty of Christmas cookies), relaxing, sleeping in, and I closed out the year by running in (and badly spraining my ankle in) the New Years Eve Glow Run. My ankle buckled after about 2.5 miles (I think when I landed on some uneven ground?) and I managed to cut up my knee as I rolled off the path... so I had to fake my way to the finish line with a bloody knee...  As a result, I have found myself limping and hobbling my way into the New Year -- but beyond this temporary mobility setback, I couldn't be more excited for the year ahead. ;-) Below I have outlined a variety of trends we are currently seeing in the local real estate market, but before we get started with the numbers and charts and graphs... each month I provide a giveaway, of sorts, for readers of my monthly market report. This month I'm highlighting one of my favorite sandwich spots downtown... Lola's Delicatessen. They create some amazing sandwiches and are a great spot to stop for lunch in downtown Harrisonburg. If you haven't checked out Lola's -- you should -- and click here to enter your name for a chance to win a $50 gift certificate to Lola's Delicatessen! Now, let's take a look at some data on our local housing market...  First up, the big picture of where we ended up after a full year of real estate data in Harrisonburg and Rockingham County in 2023... We continue to see fewer homes selling in Harrisonburg and Rockingham County. After a 6% decline in the number of homes selling between 2021 and 2022... we saw a much larger, 23%, decline in the number of homes selling in our market in 2023. As we'll see on a later graph, this is the lowest number of homes selling in quite a few years. The prices of those homes that are selling continue to rise, quickly. After an 11% increase in the median sales price in 2022, we saw a very similar, 10%, increase in the median sales price in 2023. As we'll see on a later graph, this is the highest median price we have seen in this area, ever. Let's now use that 23% drop in the number of homes selling and that 10% increase in median homes prices as a benchmark against which to understand other similar but slightly different trends in 2023...  The chart above analyzes the sale of only homes located in the City of Harrisonburg. Compared to the market-wide 23% drop in number of homes selling and 10% increase in median sales prices... [1] The number of homes selling in the City of Harrisonburg declined even further (31%) than the market-wide (23%) change in home sales. [2] The median sales prices of homes selling in the City of Harrisonburg increased even more (+12%) than all homes in the market (+10%). Now, beyond location, let's break things down briefly by property type...  The chart above evaluates only detached homes (single family homes) in the City of Harrisonburg and Rockingham County. Compared to the market-wide 23% drop in number of homes selling and 10% increase in median sales prices... [1] The number of detached homes selling didn't decline quite as far (-20%) as the market overall (-23%) in 2023. [2] The median price of detached homes only increased 7% over the past year, as compared to the market-wide increase of 10%. This a good example of why every homeowner in Harrisonburg and Rockingham County shouldn't necessarily assume that their home's value increased by 10% over the past year. If you own a detached home that change may very well have only been 7%. And how about those attached homes?  The chart above evaluates only attached homes (duplexes, townhomes, condos) in the City of Harrisonburg and Rockingham County. Compared to the market-wide 23% drop in number of homes selling and 10% increase in median sales prices... [1] We saw a somewhat larger decline (-31%) in the number of attached homes selling in 2023 compared to the overall market (-23%). [2] We saw a much (!!) larger increase in the median sales price of these attached homes (+20%) as compared to the overall market (+10%). But... before you assume that your attached home increased in value by 20% over the past year... remember that plenty of these attached homes were new homes, thus selling at higher prices, thus helping elevate this median sales price. Speaking of new homes, let's look at how things trended for just the existing homes in our market...  When looking at only existing home sales (not sales of new homes) we find... [1] The decline in existing home sales is exactly in line (-23%) with the overall market. [2] The median sales price of existing homes only rose 7% over the past year, compared to the market-wide increase of 10%. If you love the data and want to dig into these charts and related charts even further, you can do so here. :-) Now, let's see if some pictures (graphs) can help us further understand the current state of our local housing market and where we might be heading next...  The graph above tracks the number of home sales that took place each month in 2023 (red line), 2022 (blue line) and the average number taking place per month over four years (2019-2022). As you can see from the shaded yellow area, all through the summer and through most of the fall we were seeing monthly home sales at levels quite a bit below last year's levels. But... then came November and December. In those final two months of the year we started to see the most recent year of home sales (2023) almost catching back up to the same month of home sales in 2022. To put things into an even longer / broader perspective...  The current annual trend of home sales in the City and County has been falling (blue line) for the past year and a half. This annual sales pace peaked at 1,727 home sales in a year back in June 2022... but has been falling ever since. The current pace of 1,202 home sales a year is the lowest in many years! The current annualized median sales price in the City and County has been rising for just about a decade now, and at $330,000 it is at the highest point point it has ever been in our local area. To be clear, we've been setting new annual records for the median sales price for each of the past five (+) years -- so the "highest ever" isn't a new phenomenon -- it has been happening year after year since 2018. If you own a home, look at the next graph. If you don't... maybe don't look at the next graph? :-/  As shown above, it has been a LOVELY time to have owned a home over the past five years. Home prices have been blazing their way upward between 2018 and 2023 with a total of a 56% increase in the median sales price during that timeframe! What happens next, you might ask? I think it is highly unlikely that we will see another 56% increase in the median sales price over the next five years... but home values do seem poised to continue to increase in our local area over the next few years, even if not as quickly. And now to help you visualize the faster than the overall market increases in the median sales price of attached homes...  Indeed, as shown above, the median sales price of attached homes (townhouses, duplexes, condos) is increasing QUICKLY! Between 2021 and 2022 we saw a 9% increase in the median sales price of attached homes in Harrisonburg and Rockingham County. In 2023, we saw a 22% increase in this median sales price! Again, at least a portion of this is the influence of higher prices of new attached homes -- but regardless of how you slice and dice the data, the price of attached homes is rising, quickly. This next graph looks at new (vs. existing) home sales -- in two ways...  First, we should note that the number of both existing homes (blue bars) and new homes (green bars) declined between 2022 and 2023. We saw fewer sellers selling and buyers buying -- both existing homes and new homes. But... five years ago new home comprised 11% of the total number of home sales in 2018... and this past year new home sales made up a much larger 26% share of overall home sales. I expect that we will continue to see a significant share of total home sales being new home sales... especially since so many existing homeowners (would be sellers) have very low fixed mortgage interest rates and won't be all that excited to sell their homes while interest rates are still at/above 6%. Now, looking at some of the most recent market activity... contracts being signed...  The red line above shows the number of contracts signed per month compared to the same month last year in a blue line. You'll note that most of this year's (red) data points are a good bit below last year. But... not November of December. Contract activity this November snuck (barely) past last November... and contract activity this December blasted past last December with 105 contracts this December (2023) compared to only 67 the prior December (2022). And, as you might imagine, the increased pace at which contracts were signed in those two months pushed the "pending sales" numbers past where we were a year ago...  For most of 2023 we saw pending sales levels (total number of under contract properties) below where they were in the same month last year. But... that changed in October 2023 and contract activity in November and December pushed the pending sales numbers well ahead of where things were a year ago. We closed out 2022 with 189 properties under contract... compared to 246 properties under contract in December 2023! Have these contracts being signed start to make a dent in inventory levels that were otherwise rising? Good guess...  After seeing steady (rather rapid) increases in inventory levels between June 2023 and October 2023 (131 up to 230) those inventory levels started to decline again in November (to 207) and followed that trend in December (down to 185). Certainly, a higher than expected number of buyers signing contracts goes a long way towards reducing inventory levels. Was there anything else that declined, similarly, in November and December 2023? Let's see...  Indeed, if we're looking for at least one of the answers to why contract activity rose and inventory levels decline in November and December -- it's likely that we are looking at it above. Mortgage interest rates rose throughout most of 2023 from a low of 6.13% in January all the way up to a peak of 7.79% in October. But... they have been falling steadily since that time -- and in just two months they have dropped all the way back down to 6.61%. I suppose it's no surprise, then, that we saw contract activity start to tick back up in November and December -- it became (slightly, relatively, progressively) more affordable to do so in November and again in December! That, then, brings us to the end of the charts and graphs. So, let's take a look at what various people ought to be focusing on as they look ahead to the remainder of 2024. If your home is on the market now but not yet under contract... Lower mortgage interest rates seems to be bringing new buyers to the table for many properties. Let's hope that is the case for your home, but let's also examine our current pricing and determine whether an adjustment might be necessary to make your house attractive enough to buyers. If you plan to sell your home in 2024... Preparing your house well will likely be more important than ever this year so let's start developing and implementing those plans sooner rather than later. We'll also need to make sure to price your home appropriately to sell for the best possible price for you -- but also in a timeframe that works best for you. If you plan to buy a home in 2024... If it's been a few months since you talked to your lender, do so again soon. Mortgage interest rates have dropped quite a bit and your projected monthly payments will likely be lower than you had anticipated. Keep in mind that many new listings are likely to go under contract very quickly again in 2024, so be ready to go see new listings quickly and be prepared to make a speedy-ish decision about buying. If you own your home and don't plan to sell it anytime soon... Congrats to you on your (likely) ever increasing home equity. Enjoy the ride, and enjoy the likely low mortgage interest rate on your mortgage. :-) If you're me... Try really, really hard not to run for at least the next few weeks in order to follow the doc's orders and to avoid further injury to my ankle. And for ALL OF YOU reading this market report... If I can be of help to you related to real estate, or otherwise, don't hesitate to reach out. You can contact me most easily at 540-578-0102 (call/text) or by email here. I'll send you another update in about a month... now, who wants to guess how much snow we'll see between now and then? A foot? A few inches? None??? | |
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An Increasing Portion Of Home Sales Are New Home Sales |
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 Between 2015 and 2020 the portion of annual home sales that were new homes ranged from between 10% and 15% per year. But... we started to see the share of new home sales increase significantly in 2021 when the shared of new home sales jumped up to 19% of total home sales. Then, in 2022 that rose to 26% and dropped off a touch in 2023 to 25% of all home sales being new homes. A few thoughts regarding this trend... [1] New home sales are and will continue to be an important segment of our local housing market given that our local population is increasing. [2] This increase in the share of new home sales in 2021 (and continuing through 2022 and 2023) coincides with when we started seeing more regional or national home builders in our marketplace. The three main regional or national builders we are seeing develop communities in our area are Evergreen Homes, Ryan Homes and DR Horton. [3] Super low mortgage interest rates between 2019 and 2022 has resulted in a LOT of homeowners currently having very low interest rates (below 4%) on their current mortgages. This will likely result in less turnover (resale) of existing homes over the next year or two so long as current mortgage interest rates stay at or above 6%. | |
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My Predictions For The 2024 Real Estate Market In Harrisonburg, Rockingham County |
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 The real estate market has been anything but predictable over the past few years, but read on for my predictions for what we'll see in the Harrisonburg and Rockingham County real estate market this year... 4% Increase In Number of Home Sales As shown above, I am predicting that we will see a 4% increase in the number of homes selling in Harrisonburg and Rockingham County in 2024 -- an increase from 1,202 home sales last year up to 1,250 home sales this year. If we do indeed see 1,250 home sales in 2024 this will be the second slowest year of home sales since 2015. I think we'll see (4%) more home sales this year than last because we are starting to see mortgage interest rates decline after they hit 20+ year highs. Over the past two-ish months the average 30 year fixed mortgage interest rate has dropped from 7.8% to 6.6%. I suspect that lower mortgage interest rates this year than last will lead to slightly more (4%) home sales this year than last. I am not, however, envisioning a 10% or 20% increase in home sales as interest rates above 6% will still likely keep many homeowners in their homes (not selling) if they have an interest rate below 4% -- and most homeowners with mortgages do have rates that low, so long as they have not bought in the past two years. So, I'm predicting we'll see slightly more (4%) home sales this year (1,250) than last, but certainly not much of a rebound towards the 1,400+ home sales we saw in 2020 (1,495 sales), 2021 (1,668 sales) and 2022 (1,564 sales). And how about those sales prices...  We have seen steady gains in the median sales price over the past several years... 2021 = +10% 2022 = +11% 2023 = +10% Despite three years in a row of double digit increases in the median sales price, you'll note that I am only predicting a 5% increase of the median sales price in 2024. I do think that continued buyer demand in the context of limited seller supply will keep prices rising, but I don't think they will rise as much as they have for the past three years. The inflation rate was above 5% between May 2021 and March 2023, which I believe makes the above increases in the median sales price seem even larger than they were once you consider them in the context of changes in inflation and the consumer price index. The inflation rate is now back down to around 3%, but mortgage interest rates (which directly affect house payment affordability) are still above 6%. As such, I think we will continue to see home prices rise, but not quite as quickly as we saw in 2021, 2022 and 2023. But enough about my predictions -- what about your predictions? Will we see more or fewer home sales in 2024 than in 2023? Will we see higher or lower sales prices in 2024 than in 2023? Email me with your thoughts or predictions! | |
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Reviewing My Predictions From Last January For The 2023 Real Estate Market |
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 Well... my predictions for last year's local housing market weren't exactly spot on. :-) Let's take a look. Above you'll see actual versus predicted number of home sales in Harrisonburg and Rockingham County within the context of the past few years... [1] We saw a decline in home sales between 2021 and 2022 -- and I was predicting another decline in 2023. [2] I predicted a 7% decline in annual home sales. [3] We ended up seeing a 23% decline in annual home sales! So, yes, the number of homes selling in our area did indeed decline -- but much further than I had predicted. And how about sales prices...  Again, the realities of the 2023 real estate market didn't quite match my predictions... [1] We saw an 11% increase in the median sales price in 2022. [2] I predicted a smaller (5%) increase in the median sales price for 2023. [3] We ended up seeing a 10% increase in the median sales price last year. So... the market slowed down more than I thought it would... and median sales prices rose much more than I thought they would. But don't worry... soon I'll put my prediction failures behind me and will make some new predictions for 2024. :-) | |
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The Median Sales Price Of Detached Homes Has Been Rising Faster Than Attached Homes In The City Of Harrisonburg |
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 The median sales price both detached and attached homes has been rising rapidly in the City of Harrisonburg over the past eight years -- but the median sales price of detached homes has been rising somewhat faster than that of attached homes. Over the past four years we have seen:
Over the past eight years we have seen:
Looking ahead, I suspect we will continue to see both of these metrics rise... but we will likely still see detached home prices increasing faster than attached home prices. | |
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Number Of Homes Selling Per Year In Harrisonburg And Rockingham County |
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 A few more 2023 home sales might be reported in the HRAR MLS over the next week -- but the total shown above will be relatively close to the total number of home sales for Harrisonburg and Rockingham County last year. A few observations about the graph above... [1] The 1,188 home sales that took place last year was the lowest number of home sales since all the way back in 2015. [2] Interestingly, annual home sales peaked in 2005 at 1,669 home sales -- and then again at 1,668 home sales in 2021. Will we ever get up to that 1,670 mark? ;-) [3] After the 2005 peak of 1,669 home sales, we saw declines in the number of home sales for five straight years. Since the 2021 peak of 1,668 home sales we have seen two years of declines -- will we see another in 2024? [4] The peak of 1,668 home sales in 2021 was the culmination of a long run of year after year growth in annual home sales with 10 out of the 11 previous years showing an increase (green bar) in annual home sales. Mortgage interest rates jumped to 22 year highs in 2023, which significantly impacted the number of homes that sold. Now that mortgage interest rates are coming back down, somewhat, will that result in a leveling off of the decline in the number of homes that are selling? I think it is too early to predict whether we'll see more 2024 home sales than in 2023 -- but I'll go ahead and make predictions anyhow in the coming days. :-) | |
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Median Sales Price In A Larger (Longer) Context |
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 The graph above tracks the median sales price each year for the past 20+ years in Harrisonburg and Rockingham County based on home sales recorded in the HRAR MLS. You'll note that... [1] Home prices increased rapidly (more than 10% per year) between 2004 and 2006. [2] Home prices then stayed relatively level for just over a decade, 2006 through 2016) with a few years of declines and a few years of increases. [3] Home prices started to climb again, though at a pace of less than 10% per year between 2015 and 2020. [4] Home prices have increased by 10% per year or more for each of the past three years, between 2021 and 2023. What are your predictions for what we will see over the next few years? | |
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Home Buyers Are Signing More Contracts This December Than Last |
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 Perhaps it is a result of mortgage interesting rates starting to decline. Perhaps it is a result of what homes happen to be offered for sale right now. Perhaps it is a result of growing confidence that the economy is not headed towards a recession. Whatever the reason... ...contract activity is quite a bit higher (74 contracts) this December as compared to last December (50 contracts) when looking at contracts being signed in the first 20 days of the month. | |
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Despite Fewer Home Sales, We Are Seeing Higher Prices, And Recently, More Contracts And Lower Inventory Levels |
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 Happy Friday afternoon, Friends! I hope that your week has gone well and that you are looking forward to the next few weeks - presumably with some holiday celebrations, rest, relaxation and time with family and friends! Whether you are staying here or traveling afar, I hope it is a fulfilling and meaningful time for you and that you are able to spend some time with your loved ones! Before I dive into the housing data, I'd like to invite you to join me at a fun concert in January. The Steel Wheels are putting on an album release show with special guest Lindsay Lou on Saturday, January 20th at 7:00 PM in JMU's Wilson Hall. You can buy tickets online from JMU here, or... click here to enter to win the pair of free tickets I'm giving away! Regardless of whether you win the pair of free tickets, or buy your own tickets, I hope to see you in Wilson Hall in January to hear The Steel Wheels and Lindsay Lou! And now, on to the housing data and trends in our local market, starting with a few key indicators for our overall market...  A few observations related to the data above... [1] Looking just at November sales data, we see a striking year over decline from 2021 through 2022 to 2023 when examining the number of homes that are selling each November. Two years ago there were 138 November home sales... last year only 93... and this year just 69 home sales in November. While it's only one month of sales data, that is a 50% decline over the past two years. It was a particularly slow November. :-) [2] When looking at the first eleven months of the year (the year is almost over!?) we see that there have been 25% fewer home sales this year (1,117 in 2023) as compared to last year (1,482 in 2022) in Harrisonburg and Rockingham County. It was markedly slower year this year than last. [3] Despite fewer home sales taking place this year, home prices keep on rising. The median sales price of all homes sold in the first eleven months of last year was $299,900... and this year it was 10% higher at $330,000. So, fewer home sales, but higher prices. Next up, one particular segment of our local market that has seen a particularly striking change... the City of Harrisonburg...  I suppose I should have highlighted one other bit of data on data table above -- the first row. Pretend it is highlighted too... [1] With only 13 home sales in the City of Harrisonburg this November, we have seen a 52% decline compared to last year and a 72% decline as compared to two Novembers ago. Again, this is just one month, but still. If you want to buy a home in the City of Harrisonburg, it has been a tough time to try to do so. Very few homes are selling in the City. [2] A few lines down in the data table you'll see I have highlighted the data for the past six months. Over the past six months of this year we have seen 145 home sales in the City... compared to 296 in the same six months two years ago. Again, a rather striking decline... of 52% over two years. As I alluded to above, this is mainly a supply issue... there aren't enough sellers willing to sell this year to allow the same number of City home sales to take place. [3] In that same two year period I have referenced above, the median sales price of a home sold in the City has increased from $230,000 to $295,500! That is a 28% increase in the price of homes selling in the City... over a span of just two years. Now, let's look at existing home sales only (excluding new home sales) to contextualize the 10% increase in home sales prices in the overall market that I referenced earlier...  All the way at the bottom of the data table above you'll note that when we look at the median sales price of existing homes only, it has risen by only 6% over the past year, not 10%. What does this mean? [1] The value of existing homes has not necessarily risen 10% over the past year in Harrisonburg and Rockingham County as was suggested when looking at the entire market of existing and new home sales. Existing homes (resale homes) prices have only actually increased by 6% over the past year. [2] The increases in new home sales prices over the past year, and the number of new versus existing home sales, have combined to drive the overall median sales price of all homes (new and existing) up 10% over the past year. Let's simplify things... for all you homeowners out there... [1] Don't assume that your home has increased in value by 10% over the past year, because the existing home median sales price has only increased by 6% over the past year. [2] Don't assume that your home has increased in value by 6% over the past year. It might have. Or, that increase might be somewhat larger, or somewhat smaller. The change in the median sales price is a general indicator of changes in the overall market, not a specific indicator that each and every home in a market area has shared that same change in value. Now, let's reflect on a moment on what a slooooooowwww November it was as far as the number of homes selling in Harrisonburg and Rockingham County...  There were fewer home sales in Harrisonburg and Rockingham County in November 2023 than in any other month in 2023... and fewer than in any month in 2022... and fewer than in any month in 2021. But, keep on reading for some signs that perhaps we are seeing a slight reversal of this slow down. First, here's that downward ski slope (blue) of the number of homes are selling in a year's time in Harrisonburg and Rockingham County...  The annual pace of home sales in the City + County has now declined to 1,205 home sales... which is the slowest annual rate of home sales in over five years! But yet, as we have seen for quite some time now... fewer home sales is not causing home prices to also start declining... in fact, the further home sales have declined, the higher sales prices have increased! These two trends are an indicator that while there are certainly fewer buyers buying, it is likely at least partly a result of fewer sellers being willing to sell. If we were seeing a decline in buyer interest and we were seeing the same number of sellers wanting to sell, then we could more reasonably think home prices might start to decline -- but that's not where we are right now in the local housing market. Let's say you sold your house in 2019 and left town and decided to move back just four years later in 2023. Oof. Here's what you'd find...  When you (the imaginary you) left town in 2019 the median sales price of homes in Harrisonburg and Rockingham County was only $223,000. Now... just four years later, that median sales price has shot upwards to $330,000. That is a $107K increase in just four years. This is yet another view into some tricky timing aspects of when folks bought or didn't buy a home in this area... [1] If you bought your home in 2020 or prior, and still own it, you're in great shape. You likely paid much less for your home than it is worth now and you likely have a very low mortgage interest rate. [2] If you bought your home in 2021 or 2022, you're likely still in great shape as to how much your home value has increased, and you might have a great mortgage interest rate or not quite as great. [3] If you didn't buy a home and are working on buying one now, you are buying at the highest prices we have seen lately (until 2024 prices) and at higher mortgage interest rates than we've seen in over a decade. If you are thinking about buying a home right now, does #3 above make you want to pause and think twice before buying? If you don't buy in 2023 (yes, I know there are only 16 days left) you'll likely be paying an ever higher price in 2024 or 2025. This is not to say that everyone should buy a home right away, but many buyers who have been waiting to buy for the past few years because prices were increasing (and they hoped they would decline) likely wish they had gone ahead and bought last year, earlier this year, etc. One of the other metrics I follow is how many new versus existing homes are selling, and we have seen a bit of a shift in this break down in 2023...  Last year, in 2022, we saw a decline in existing home sales compared to 2021... but new home sales kept on rising. Not so in 2023. When comparing this year (2023) to last year (2022) we see that existing home sales have declined... and new home sales have declined as well. We have also seen *the highest* mortgage interest rates in many (many!) years in 2023, which is likely a major contributor to this slow down in both existing and new home sales. But... what follows are a few slight changes in direction in our local market as of the past month...  Monthly contract activity in 2023 (red line above) has been below 2022 (blue line) more often than not over the past six months, but in November... contract activity rose above where it was last November. Hmmm... why could that be... I wonder if mortgage interest rates started to decline from their 20+ year peak? And how about the number of homes that are under contract in total...  As shown above, we saw a big jump in the number of pending (under contract) homes through the month of November. There are 262 homes under contract right now, compared to only 201 a year ago. This is a significant improvement from last month when we were even with the prior year, and an even more significant improvement from the prior six (plus) months when pending home sales were lagging significantly behind last year. Hmmm... why could that be... I wonder if mortgage interest rates started to decline from their 20+ year peak? Next up (before we get to mortgage interest rates) let's look at inventory levels...  After four months of big increases in inventory levels in Harrisonburg and Rockingham County -- from 131 homes for sale up to 230 homes for sale -- we have now seen inventory levels start to decline again. Perhaps this is a result of more contract activity (causing inventory levels to drop as homes go under contract) or perhaps it is fewer sellers putting their home on the market during the holidays -- but regardless, November showed at least a temporary reversal in the trend of increasing inventory levels. Now, then, how about those mortgage interest rates...  Indeed, mortgage interest rates are dropping. At this point it seems rates peaked at 7.79% at the end of October. Since that time, as shown, they dropped to 7.22%. Since the end of November, not shown, they have dropped even further... to 6.95%. Certainly, the three years or so when rates stayed below 4% were *not* normal times... and rates below 4% were *not* normal -- but it's been tough for many would be home buyers to afford a home (or to rationalize paying the requisite mortgage payment) over the past year with mortgage interest rates above 6%, and for quite a few months over 7%. The pace of sales slowed the most in Harrisonburg and Rockingham County over the past few months with mortgage interest rates over 7%. The news that they have now broken back down through that barrier to six-point-something is welcome news for home buyers as we head towards 2024. I'll wrap things up there for now, though if you want even more charts and graphs you can review them all here. At this point in our local housing market, we're mostly looking ahead towards 2024, so here are a few thoughts for a variety of positions you might find yourself in... If your home is on the market now but not under contract... You may very well find renewed interest from buyers after the first of the year, especially with slightly lower mortgage interest rates -- but you should make sure your home is priced appropriately. If a price reduction is in order, it might make sense to wait until just after January 1 to make that change since there will be less buyer activity than normal over the next few weeks. If you plan to sell your home in 2024... Let's chat sooner rather than later about pricing, preparation and timing. It's not enough any longer to simply whisper "I'm selling" out your front door to bring on the throngs of eager buyers with 3% mortgage interest rates. We'll want to make sure to price your home appropriately, prepare it well to show best to buyers and market it thoroughly from day one but knowing that the marketing may need to continue on for a few weeks or more. If you plan to buy a home in 2024... It seems very likely that you'll be financing your purchase with a lower mortgage interest rate than would have been available to you over the past few months, which is good news. That said, with home prices continuing to climb, your projected monthly payment might still be higher than you prefer. It's important to talk to a lender early in the process to understand how much you could spend and to consider how much you want to spend on your next home. If you own a home and don't plan to sell it anytime soon... Enjoy your likely increasing home value and your likely low mortgage interest rate. It's been a great few years to own a home... a much better than average, much better than normal, few years! And for any and all of you... if I can be of help to you related to real estate, or otherwise, don't hesitate to reach out. You can contact me most easily at 540-578-0102 (call/text) or by email here. I hope you and your family have a wonderful holiday season and I look forward to connecting with you in 2024! | |
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OK, False Alarm, Most Homes Are Still Selling Very Quickly |
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 Yesterday I took a look at a very small data set (homes going under contract the week prior) and noticed that new homes were selling very quickly and resale homes were not... Median Days On Market For Listings Going Under Contract In The Past Week: All (44) Homes = median of 6 days (22) New Homes = median of 0 days As a result, I decided to dig deeper into the data to see if the (somewhat artificially) low days on market for new homes was obscuring a more significant upward shift in median days on market for resale homes. And... as shown above... the new home data doesn't seem to be obscuring much. Blue Line = All Homes (new and resale) Orange Line = Resale Homes As you can see, these two trends tend to track pretty closely together over time. As such... disregard any hasty conclusions you or I drew yesterday about resale homes selling much more slowly than new homes. Yes... there are some resale homes that are taking quite a while to sell... but for the most part, resale homes continue to sell very quickly. | |
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How Quickly Are Homes Selling These Days? |
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 First disclaimer -- the graph above is based on a very small sample size -- I'm just looking at the homes that have gone under contract in the past week. Second disclaimer -- the graph above only looks at contracts signed on resale homes, not new homes. What does this graph show? Of the 22 resales homes that went under contract in Harrisonburg and Rockingham County over the past week... over half took more than a month to go under contract. Only 3 (of the 22) went under contract within a week. But wait, I thought homes were going under contract much more quickly than that!? Yes, indeed, I did think that. Here's what I have discovered looking just at this one week of data, which I'll explore a bit more broadly in the near future... Median Days On Market For Listings Going Under Contract In The Past Week: All (44) Homes = median of 6 days (22) New Homes = median of 0 days (22) Resale Homes = median of 38 days Wait.... what!!? Indeed, for a while now I have been observing a median days on market of six days in our market. But... [1] We are seeing an increasing number of new home sales in our market. [2] Many or most of those new homes are being built by Ryan Homes. [3] Ryan Homes appears to be waiting to list many homes in the MLS until they are already under contract, resulting in a "days on market" of zero for those homes intended to be built. And thus, the long standing 6 (or so) day median of how quickly homes were going under contract may have been a data set significantly skewed by how one new home builder is managing their listing data. I'll start working my way backwards here soon to evaluate median days on market ONLY of resale homes to try to provide a clearer picture of what the data actually shows about the pace of sales in our local market. Stay tuned. | |
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Home Buying Activity Will Slow But Not Stop Over The Winter |
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 Generally speaking, folks don't use their outdoor hose spigots in the winter. I suppose you might use it from time to time, but it's just not as fun to wash your car in the driveway on most December days. Oh, and if you did use your hose spigot, and left the hose attached, you'd potentially have serious problems when the water in the hose freezes, backs up into the spigot, maybe into the pipe, and something splits, cracks or bursts. As such... Once we get into Winter, most folks are turning off their hose spigots for the last time until Spring. But... Not so with the local housing marketing. Looking back over the past five years... Between March and August (Spring and Summer, as we'll call it) an average of 140 buyers signed contracts to buy houses each month. A pretty rapid pace of buyer activity. So, this winter, what should we expect? Will that supply of buyers be turned off like a hose spigot, and will the buyers slowly drip out at a rate of (for example) 10 - 15 buyers per month? Nope! Looking at last Winter (December, January, February) there were an average of... 95 buyers signing contracts per month! Yes, you read that correctly, we only saw a 32% decline in buyer activity during the Winter months -- as compared to the Spring and Summer months. So, unlike your hose spigot, which will likely be barely used during the Winter -- the local housing market doesn't slow down, or cool down, or shut down, nearly as much. | |
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Update On City Of Harrisonburg Townhouse Market |
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 The median sales price of city townhouses has increased from $220,000 last year to $235,000 this year. The graph above shows the median sales price in several of Harrisonburg's townhouse communities.
What’s Next For The Harrisonburg Townhouse Market? CONTINUED LOW SALES LEVELS - After 163 city townhouse sales in 2022 we have only seen 90 sales thus far in 2023. If we add on the seven under contract townhouses, we might get to 97 city townhouse sales in 2023 which would be a 40% decline in the number of townhouses sold in 2023. I expect we will see a similar number of city townhouse sales in 2024 unless we see a builder breaking ground on a new townhouse community in the city. HIGHER PRICES THAN LAST YEAR - The median sales price of city townhouses has risen 7% over the past year, despite much higher mortgage interest rates. I expect that we will continue to see increases in the median sales price of city townhouses - but those price increases might slow in 2024. WILL YOU SELL YOUR TOWNHOUSE THIS YEAR? - If you are thinking about selling your townhouse we should start by looking a bit more closely at the specific townhouse sales in your neighborhood - and then we should evaluate any improvements you might make to your townhouse before selling it. TOUCH BASE ANYTIME - If I can be of any help - with selling your townhouse, answering questions about the market, etc. - feel free to reach out anytime. | |
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It Does Not Seem That Home Prices Are Declining, Overall, But Some Sellers May Elect To Sell At Lower Than Expected Prices |
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 The median sales price in Harrisonburg and Rockingham County has risen 10% over the past year. That's an increase from $292,000 to $322,750. As such, it really does not seem that home prices are declining, overall. But... some (but likely not many or most) sellers may elect to sell at lower than expected prices. Here's why... Let's say you're selling a home priced at $322,750 that you purchased five years ago. That $322,750 is the median sales price... so let's just walk it backwards to imagine what your home might have been worth 1, 2, 3, 4 and 5 years ago. Today = $322,750 1 Year Ago = $291,950 2 Years Ago = $265,700 3 Years Ago = $238,400 4 Years Ago = $215,250 5 Years Ago = $212,000 So... you bought your home for $212,000. Last year you estimated it was worth $291,950... a $79,950 gain in four years. Today you estimate it to be worth $322,750... a $110,750 gain in five years. So, if you are selling your house today, and you price it at $322,750... and it doesn't go under contract within the first few weeks... or not within the first month or two... will you keep it priced at $322,750 indefinitely? Likely not. You -- and some other sellers -- would likely be happy to sell for somewhere between $291,950 and $322,750. Selling (this fictional house) for $291,950 is certainly quite a bit below where we believe the value to be today, but it is also a $79,950 gain in five years. All this is to say, that if you are serious about selling, and you have your house on the market, and it hasn't gone under contract... we shouldn't get too stuck on what your house should be worth today, and what it is worth today... we should evaluate the price at which it makes sense for you to sell... and how we might price it to have it go ahead and go under contract... even if that is at a lower price than we might otherwise expect. Put more simply... home sellers from three or more years ago potentially have a LOT of equity to play with when pricing their home to sell... and can likely tweak the pricing to motivate a buyer to go ahead and commit to buying. | |
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Why Has The Median Sales Price Of Attached Homes Increased 20% In A Year? |
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 Spoiler alert - I have no concrete answers to the question above. :-) The median sales price of attached homes (duplexes, townhomes, condos) was $247,565 in 2022. Thus far in 2023, the median sales price is $296,990. This marks a 20% increase in the median sales price of attached homes over the past year. How could this be? The overall median sales price in our market (detached homes and attached homes) has risen 10% in that same timeframe -- so why has the median sales price of attached homes risen 20% rather than 10%? My theory - which I have now proven to be wrong - was that the median sales price was rising because we were seeing more new attached homes selling in 2023 at higher prices, causing the median sales price to rise. Certainly, if 20% of attached homes were new homes in 2022 and 40% were new homes in 2023 then it would not be surprising to see the median sales price rise since the prices of new homes are almost always higher than the prices of resale homes. But, here's what the data actually shows...  So, again, comparing attached home sales in 2022 and 2023... 2022 - median sales price of $247,565 with 40% being new homes 2023 - median sales price of $296,990 with 34% being new homes So, it seems we can't necessarily attribute the unexpectedly high (20%) increase in the median sales price of attached homes in 2023 to a larger portion of those home sales being new homes. Darn. Theory #1 has been refuted. Anyone have any other theories? | |
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The Annual Pace Of Home Sales Has Fallen 27% Since June 2022 |
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 In June 2022 the annual pace of home sales activity in Harrisonburg and Rockingham County peaked at 1,727 home sales in the previous 12 months. Now, as of the end of September, the annual pace of home sales has dropped back down to 1,256 home sales in the past 12 months. That decline from 1,727 annual sales down to 1,256 annual home sales marks a 27% decline in the number of homes are selling in a year's time in Harrisonburg and Rockingham County. But... it may just be a retreat from a historically odd time. Prior to the onset of the COVID-19 pandemic, we had been seeing between 1,200 and 1,400 home sales per year for about four years... from 2016 through 2020. Those years are marked by the wide swath of green bars on the graph above. Prior to 2016 we were seeing fewer than 1,200 home sales a year, as shown by the blue bars on the graph above. But then, in 2020... [1] COVID-19 happened, and overnight everyone was asking their home to serve more purposes than ever. Students were learning from home. Adults were working from home. [2] Mortgage interest rates dropped below 3% and mostly stayed there for a year and a half. The two factors above (among others) fueled our local housing market (and many others) to rise to new heights -- as shown by the orange and red portions of the graph above. But by mid 2022, mortgage interest rates were rising, and then rising again, and then rising some more... all while home prices were continuing to rise to unprecedented new heights. So, perhaps it is rather unsurprising that we have seen a 27% decline in the annual pace of home sales as of the end of September. Two notes... [1] Being in the 1,200 to 1,400 range we are in what was a normal range for home sales for 2016 - 2020. [2] It is likely that the annual pace of home sales will fall further, possibly below 1,200. This will put us back in the normal range for home sales for 2014 - 2016. | |
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Fewer Home Sales, Rising Inventory Levels And Possible Slowing In Sales Price Gains |
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 Happy October, Friends! October is one of my favorite months of the year... for quite a few reasons... 1. Cool mornings, warm afternoons and then cool evenings again. 2. Beautiful changing colors of fall leaves. 3. Pumpkin pie! 4. My birthday. ;-) 5. Coaching middle school volleyball. 6. Apple cider. 7. Watching JMU football games. Goodness, there have been some stressful ones this season, though not this past weekend!  Is October a favorite month for you as well? What would be on your list? While you're building your own list of all the reasons why October is amazing, let me mention my monthly giveaway, of sorts, for readers of this market report, highlighting some of my favorite places, things or events in Harrisonburg. Recent highlights have included Taste of Thai, Merge Coffee and Jimmy Madison's. This month I am giving away a $50 gift certificate to Hank's Grille, located in McGaheysville. I enjoyed a delicious meal this weekend of pork BBQ with baked beans and macaroni and cheese on the side, rounded out with some pecan pie. If you haven't been to Hank's Grille, you should go check it out... whether you win the gift certificate or not! Click here to enter to win a $50 gift certificate! And now... on to the data, and charts and graphs...  OK, my highlighting on the chart above requires a bit of explanation. Let's work our way from the bottom of the chart upwards... [1] Year to date we have seen 927 home sales, which is 25% fewer than the 1,241 home sales we saw in the first nine months of last year. [2] When we look just at the past six months (April through September) we have seen a slightly larger 28% decline in the number of homes selling in Harrisonburg and Rockingham County. [3] When we look just at September (while keeping in mind that a small data set can lead us to erroneous conclusions) we'll see a 34% decline in the number of homes that are selling. So, far fewer homes (at least 25% fewer) are selling in Harrisonburg and Rockingham County this year as compared to last. But what about the prices of those homes that are selling?  The prices, it seems, keep on rising, no matter how we slice and dice the data from a timeframe perspective. As shown above, the median sales price has increased 10% this year to date as compared to last year to date. When we look at a shorter timeframe (six months, three months, one month) we still see a double digit (10% - 11%) increase in the median sales price. All that said, later in this report I'll take a look at only detached home sales where we are starting to see a slightly different trend in median sales prices. I know... quite the build up... but don't skip ahead... keep reading. :-) These next numbers can be quite easily taken out of context...  The median time that it takes for a home to go under contract (days on market) increased 60% in September 2023! Gasp! ;-) It's actually not as much of a story as you might think. Median days on market was five days last September and is eight days this September. Yes, that is a 60% increase... but eight days is still quite low and doesn't mark too much of a shift in how quickly homes are going under contract. Most sellers are just as delighted to have their home under contract in eight days even if it isn't under contract in five days. Also, above, you'll see that year to date the median days on market has only increased from five days to six days. Another graph below will put these numbers in a larger (longer) context. More suspense, I know. Now, on to some graphs for the visual learners amongst us...  After a normal-ish January through April, we have been seeing far fewer home sales each month thereafter. May through September makes five months in a row where we saw significantly fewer home sales as compared to the same month last year (blue line) and as compared to the average of the past four years (grey line). Looking ahead, on the graph above, I think it is reasonable to assume we will continue to see slower months of home sales in October, November and December as compared to recent years. As I have pointed out in the past, this slow down in home sales seems to be a result in changes on both the supply and demand side of the housing market... SUPPLY - We are seeing fewer sellers willing to sell their homes as they don't want to give up their likely low mortgage interest rate in the 3% to 4% range. DEMAND - We are seeing fewer buyers willing or able to buy homes given the current higher mortgage interest rates in the 7% to 8% range. Now, then, for even more context... let's see how home sales have fallen...  The blue line above shows the number of home sales in a year's time. That annual rate of home sales was hovering in the 1,300's pre-Covid and then surged up to a high of 1,727 in summer 2022. Now, however, we have seen the annual rate of home sales decline all the way below 1,300 home sales a year which is the lowest annual rate in over four years! But yet -- enter the green line -- the median sales price of those homes keeps on rising! However, maybe we are starting to see a slight change in the trajectory of the median sales price? See below...  The graph above segments out only DETACHED home sales, also known as "single family homes" and excludes duplexes, townhouses and condos. Sometimes looking just at detached homes can be a more helpful or accurate view of changes in median sales prices as it removes one variable from the mix. When we're looking at market-wide changes in the median sales price the numbers can be affected by how many detached homes are selling (generally at higher prices) compared to how many attached homes are selling (usually at lower prices). Thus, I'm looking here just at the detached home sales. With all of that as context, you'll see that we saw a 12% increase in the median sales price of detached homes in Harrisonburg and Rockingham County in 2022... but thus far in 2023 we have only seen a 7% increase in the median sales price. Please note that I tried to choose my words very carefully in the latter part of my headline this month... "... Possible Slowing In Sales Price Gains" It is possible -- not certain -- that we are seeing a slowing of sales price GAINS. Sales prices are not declining, or even staying level. Prices are still rising, but they might be rising a bit more slowly now (7%) than they were last year (12%). But, yes, that's just for detached homes... because look at attached homes!?!  As shown above, the median sales price of attached homes is shooting upwards, quickly! After a 9% increase in the median sales price of attached homes in 2022, we are now seeing a 21% increase in 2023!?! My only theory here (thus far) is that this may be a result of more new construction (higher priced) attached homes selling this year, which might be driving the median sales price of attached homes up this quickly. I'll look into that further in the coming days. But yes, the median price of an attached home... is rising very quickly right now. Now, on to the contracts that were signed in September that might predict the home sales we'll see in October and/or November...  As shown above (highlighted in yellow) the rate of contracts being signed in June, July and August was a bit unpredictable. June was slower than last June. July was faster than last July. August was slower than last August. But September, it was just what we might have expected... we saw 112 contracts signed this September and 112 contracts signed last September. Now, then, the only thing I'll say looking ahead is that I expect we'll see fewer than 112 contracts signed this October and quite possibly fewer than the 94 that were signed last October. Next up, inventory levels, and as you know from the headline, they are rising...  Over the past three months we have seen inventory levels rise from almost the lowest level in the past two years (131 in June 2023) to definitely and absolutely the highest level in the past two years (206 in September 2023). A few nuances to add here, though, as highlighted above... SLIGHTLY - This increase in inventory levels does put us above where we have been for the past few years (during/after Covid) but inventory levels are still well below where they were for much of the past decade. This increase in inventory levels provides slightly more choices for buyers -- not abundantly more choices for buyers. SOME - The increased inventory levels are not equally distributed across all price ranges, property types and locations. Some segments of our local market are still quite undersupplied and some are more oversupplied than others. So, some buyers have slightly more choices... but all buyers do not have slightly more choices. Now, to add a bit longer context to the recent rise in median days on market...  We have started to see the median days on market figure bounce around a bit in 2023... but it has remained between five days and eight days for the past year. These very small increases still keep it well below where it was in 2020 and prior. Also of note here is that while the median days on market figure is staying within that five to eight day range there are plenty of homes that are selling in fewer than five days and plenty that are selling in more (or much more) than eight days. And finally, it's time to play the blame game! :-) Why are we seeing fewer home sales right now? Why are we seeing rising inventory levels? Why might price increase gains be slowing? It's all, arguably, because of those darn mortgage interest rates...  Over the past two years we have seen steadily increasing mortgage interest rates. Over the past two years we have seen steady declines in the annual rate of home sales. Coincidence? Probably not. Higher mortgage interest rates have... [1] Caused some would-be sellers to decide not to sell as they do not want to give up their low mortgage interest rate. [2] Caused some would-be buyers to decide not to buy as they can't afford (or don't want to pay) the monthly payment associated with the house they would like to buy. Where, then, will we likely see the market headed through the remainder of 2023 and into 2024? I believe we'll see... [1] Continued high mortgage interest rates, at or above 6.5%. [2] Continued declines in the annual rate of home sales, though I suspect the declines will slow. [3] Continued increases in the median sales price, though I suspect the increases will slow. [4] Sustained higher inventory levels that might continue to creep upward. So... if you plan to engage in this current real estate market as a home buyer or a home seller... BUYERS - You might see a few more choices of homes to purchase at any given time over the next few months. Your monthly housing costs will likely still be high given continued high interest rates. Waiting a year probably won't result in a lower monthly payment as rates likely won't drop considerably and prices don't seem likely to drop. SELLERS - Prices are still high, and rising, but those prices convert into an ever higher monthly housing cost for buyers. As such, you'll likely have fewer showings on your house and fewer offers. Prepare your house well, price it appropriately, market it thoroughly, and bear in mind that you might have to negotiate on price and terms with a buyer depending on your home's price range, property type, location, etc. If you're thinking about buying or thinking about selling but don't know what to think... feel free to reach out. I'm always happy to talk things through with you to try to help you clarify your goals and priorities and to figure out if now is the right time to make a move. You can reach me most easily at 540-578-0102 (call/text) or by email here. | |
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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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