Market
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Demand Is HIGH For Income Generating Properties |
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 Everybody wants to buy a rental property. OK, well, not everybody... but seemingly, lots of people do! Two quads (four unit apartment buildings) in the vicinity of Eastern Mennonite University recently came on the market for $450K each. Both were under contract within a week with multiple offers, some with escalation clauses. One such recent multi-family listing had nine offers... the second had ten offers! So, yes, there seem to be plenty of investors seeking out income generating properties in the Harrisonburg area. Let me know if you are interested in considering the purchase of a rental property in the Harrisonburg area. As should be evident, you'll have LOTS of competition, but I'm happy to help you explore the opportunities if you are interested. | |
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More Homes Are Selling, Faster, At Ever Higher Prices |
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 Happy, Chilly November morning, Friends! This month's market report is brought to you by... turkey, stuffing, cranberry sauce, sweet potato casserole, carrot souffle, corn casserole, mashed potatoes and gravy...  Thanksgiving is my favorite meal of the year because of all of the delicious foods offered all at once. This year, my family humored me... and spoiled me... by making me a full Thanksgiving meal for my birthday at the end of October! :-) So, for everyone who hasn't had a full Thanksgiving meal for 11.5 months now, I can tell you from personal, recent, experience, you're in for a treat... nine days and counting! ;-) Speaking of Thanksgiving, there is much in my life for which I am immensely grateful -- my family, friends, health, a job I enjoy, my clients, and much more -- and I hope you are finding much in your life for which you are also thankful this year. I also hope you are able to spend some time this Thanksgiving with family and friends and enjoy a bit of downtime amidst what has been a hectic and stressful year for many. But, enough talking turkey, back to the main course -- the local housing market. ;-) The photo on the cover of my market report is a lovely, updated house on Garbers Church Road, which you can check out here, and you can download a PDF of all of the charts and graphs from my market report here. Now, let's start stuffing our faces with some of the latest stats...  OK, quite a few highlighted items here... [1] We have seen 1,384 home sales thus far in 2021 which is almost 14% more than we saw last year during the same timeframe. The market continues to be red hot with lots of homes selling -- more than any recent year! [2] The median sales price has risen 11.25% in the past year. One year ago, the median sales price (for 2020) was $242,000. Now, that median sales price is $269,225. That is an increase of more than $25,000 in a single year! [3] The time it takes for homes to sell has been cut in half in the past year. A year ago the median days on market was 10 days, and this year it is only five days. That is to say that half of homes are going under contract in five or fewer days! Let's break it down, now, between detached homes and attached homes. Attached homes are duplexes, townhomes and condos...  The green charts, above, are detached homes and the orange charts are attached homes, and here's what I'm noticing... [1] We have seen 10% more detached home sales this year -- an increase from 846 sales up to 933 sales. [2] The median sales price of these detached homes has risen 9.5%, from $264,900 up to $290,000. We are now pretty close to a $300,000 median sales price for detached homes in our area. Wow! [3] We have seen even more of an increase in the pace of sales of attached homes, with a 22% increase in those sales from 369 sales last year to 451 sales this year. [4] The median sales price of attached homes has risen even more than detached homes, with a 17% increase from $192,900 up to $225,000. So, many more sales this year than last, and higher prices! It's been a busy year for buyers and sellers in the local housing market. Breaking it down month by month, here's what we're finding...  It's been a bit of a roller coaster ride in the second half of this year... JUN: highest month of sales in many years JUL: slower sales than last year AUG: highest month of sales, by far, in many years SEP: slower sales than last year But, the market is back in full force in October, with the... highest month of sales in many years. :-) We are likely to see a slow decline in monthly home sales in November and December as is typical most years -- but then again, maybe I'll be surprised yet again! If we do stay on track with a relatively solid November and December, here's what that might look like...  As you can see, with only ten months of sales thus far in 2021 we have already eclipsed the total number of sales in 2017, 2018 and 2019. We may very well rise above 2020 just with the addition of November sales, and when 2021 is completely in the books, perhaps we'll get all the way up to 1,600 home sales! Here's an another visualization of how we made our way to this pace of home sales...  Yeah, that orange line. The orange line is showing the annual pace of home sales in Harrisonburg and Rockingham County. The annual pace of sales slowed in mid 2020 due to Covid -- that's the multi month dip on the left side of the graph. But when Fall 2020 came into view, the pace of buying activity took off like a rocket and has not slowed down much since. The annualized pace of home sales has actually been over 1,600 for five months in a row now, which is a relatively good indicator that we'll see a total of 1,600 home sales in 2021. Will the pace of home buying activity slow in 2022? I don't think that it will. I believe there is a good bit of unmet buyer demand that has built up in our local market over the past five years. I think there are plenty of would be home buyers that are just waiting on resale homes, or newly constructed homes, to be available so that they can buy a home. Assuming we continue to see growth in new construction options, and assuming mortgage interest rates don't rise dramatically, I think we are likely to continue to see an annualized pace of 1,600+ home sales as we work our way into and through 2022. And what about home prices...  Between 2011 and 2019 the average increase in the median sales price of detached homes was 3.4% per year. Over the past two years (2020, 2021) the average annual increase in the median sales price of detached homes was... 10%. So, clearly, home values are increasing much faster now than they were for most of the past decade. Looking ahead, what will we see next. I believe we will soon (2022) or eventually (2023) see that annual increase return to that longer term norm of three to four percent. I am not thinking, at this point, that we will see sales prices drop -- but I don't think we will continue to see those prices increase as fast as they have for the past two years. Looking ahead at what closed sales might be in the next two months requires looking backwards at what we've seen in the way of contract activity over the past few months...  As noted by the red and green arrows above the last five months above... [1] In June, July, August and September of 2021 we saw fewer contracts being signed than in the same month in 2022. [2] In October 2021 we saw more contracts being signed than in October 2021. [3] In the total of those five months there were 762 contracts in 2020 and only 688 contracts in 2021. So, contract activity might be (?) slowing a bit, which means home sales activity might (?) slow a bit as we finish out 2021 and roll into 2022. Stay tuned as I continue to track this over time. Here's a bit of a confusing graph, at first glance...  This graph, above, shows the number of homes on the market at any given time, measured monthly. Inventory levels have been dropping for many years now -- but home sales have been increasing during that same timeframe. Confusing, right? Here's the skinny... [1] More homes have been listed over the past year than the previous year. [2] Homes have sold much more quickly this year than last. [3] As a result, the number of homes on the market at any given time has dropped over the past year. Maybe that's clear, maybe not. As with all of this data and these graphs, just ask if you have a question! As per #2 above, homes are selling rather quickly...  A few things we can pick up from the graph above... [1] As scribbled on the chart, four out of five homes are going under contract within 30 days. [2] Narrowing the focus a bit, we can note at the bottom that per the median of five days, at least half of the homes that have sold in the past year have been under contract within five days of being listed for sale. Here's an even more interesting visualization of how quickly homes are going under contract in Harrisonburg and Rockingham County these days...  This graph takes a look at the median days on market of all residential sales in Harrisonburg and Rockingham County in a year's time. This shows the speed of home sales in our marketplace and that speed has been steadily increasing over the past 18+ months. Alright, that brings my monthly overview of our local real estate market to a close for now. As noted throughout... more homes are selling, more quickly, at ever higher prices. It is not clear when these trends will slow down, stop or reverse themselves, but for now, the local market keeps on moving steadily ahead. If you made it through reading the entire overview of my market report, kudos to you, and you can consider yourself to be well informed on the latest local market trends. You are now dismissed from class to go daydream about your favorite foods you will devour on Thanksgiving day. As we continue through November, I hope your Thanksgiving season is one full of plenty of relaxation, delicious food, and enjoyable time with family and friends. Looking ahead, if you hope to buy a home or sell a home yet this year, or in early 2022, let's chat sooner rather than later to prepare you for entering into this fast pace local housing market. You can reach me via phone/text at 540-578-0102 or by email here. Happy Thanksgiving! :-) | |
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Only The Top 5% Of Home Buyers In Our Market Pay Over $550,000 |
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 If you are selling a home over $550,000 -- you are only appealing to about 5% of the buying public as per the price distribution of the 1,654 home sales that were recorded in the HRAR MLS in Harrisonburg and Rockingham County over the past year. Looking to sell something over $460,000? That will appeal to about 10% of the buying public. You can slice and dice the data above however you'd like...
I think you get the point. :-) If you have ever wondered where your home falls into the overall distribution of home sales prices in this area -- now you know! Thanks, Tom, for the question that lead to this analysis! :-) | |
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Home Sales Up 15%, Prices Up 12% In 2021 Despite Slightly Slower September Sales |
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 Happy Tuesday Morning, Friends! I hope October is treating you well and that you are enjoying the cooler temperatures as much as I am. Earlier this month I had a great time picking apples at Showalter's Orchard in Timberville for the very first time. I brought home plenty of apples and some of their delicious apple cider. I had high hopes of baking some of those apples into a crisp... probably to be enjoyed with some vanilla ice cream and caramel sauce... Delicious! Alas, thus far those delicious, crisp, apples have only been enjoyed with a side of peanut butter -- but maybe I'll break out the apple crisp recipe yet this week. I hope you are enjoying some delicious flavors of fall yourself, and perhaps you'll consider a visit to Showalter's Orchard...  But moving past delicious, freshly grown, hand picked apples... and the desserts they might produce... let's explore the latest numbers from our local housing market for a bit. As always, you download a PDF of all of the charts and graphs here or, if you are intrigued by the beautiful house in Fairway Hills that graces the cover of my market report this month, check it out here. Now, let's break down the stats...  From a big picture perspective, here's what jumps out to me above... [1] Home sales were a bit slower this September (143) than last September (159). [2] Despite a slightly slower September, we've seen 15% more home sales thus far in 2021 than during the same time period in 2020! [3] When looking at a full year (12 months) of data there has been a 21% increase in the number of homes selling, annually, in Harrisonburg and Rockingham County. That is a significant surge! [4] The median sales price thus far in 2021 is $269,675 which is 12% higher than it was a year ago when it was only $241,000. This is a large increase in median sales prices in just a year. [5] Homes were selling fast a year ago. They are selling faster now. Median days on market has dropped 55% from 11 days to five days over the past year. When we break things down between detached homes and attached homes we can learn a bit more about what is happening in our local market. An attached home is a duplex, townhouse or condo...  The green sections above are tracking the sales of detached homes where we find... [1] There have been 17% more detached home sales (1,124) in the past 12 months as compared to the prior 12 months (957). [2] The median sales price of detached homes has increased 12% over the past year, from $257,500 to $288,775. That is an increase of more than $30,000 in a single year. The orange sections above are tracking the sales of attached homes where we find... [3] There was a much larger, 29%, increase in the sales of detached homes over the past year. The annual pace of these detached home sales increased from 409/year up to 526/year. [4] The median sales price of these detached homes has increased 15%, from $189,900 up to $217,650. I mentioned earlier that home sales slowed down in September -- but maybe partially because August was bonkers?  As shown above, September 2021 fell short (143 sales) of September 2020... but... [1] Don't forget about August! There were an astonishingly high number of home sales (184) in August 2021, and if we combine August and September we find that there were 292 home sales during those two months last year, compared to 327 this year. [2] The last four months of 2020 were abnormally active because many home sales that would have likely taken place in the first half of 2020 were pushed into the second half of 2020 because of Covid. As such, looking towards the remainder of the year, I would not be surprised if 2021 continues to under perform as compared to 2020. Now, let's stack all of those months up to see how 2021 compares to past years...  Remarkably, the home sales in the first nine months of 2021 was more than in the first ten months of 2020 and more than the first eleven months of 2018 and 2019! So, we can take a month off, right? We could have no home sales in October and we'd still be outperforming last year! Alas, it doesn't seem like home sales will be taking a break in October. But as for predicting future sales activity, the best bet is to look at recent contract activity...  The most recent four months of contract activity (Jun-Sep) have definitely been slower than the contract activity we saw a year ago. There have been a total of 534 contracts signed between June 1 and September 30 this year -- as compared to 617 contracts signed during the same timeframe last year. This likely means we'll see somewhat fewer home sales over the next few months. This next graph won't surprise you as you've likely heard about the extremely low inventory of available homes in this area...  As I have mentioned before, this graph can be a bit misleading. Some might understand it to mean that there are fewer and fewer homes for sale and thus fewer and fewer homes are selling. But, in fact, we have seen 21% more home sales in the past 12 months as compared to the prior 12 months -- so what's the story? The second half of my comment above "at any given time" is the key to unlocking this mystery. Homes are selling (going under contract) quickly, and thus the number of homes on the market at any given time is continuing to stay low. That doesn't mean that there aren't homes on the market to buy -- there are, or were -- but most will go under contract and not be available for any more than a few days. So, as a buyer, be prepared to act quickly, likely compete with other buyers, and possibly have to wait a bit to find the right opportunity. Interestingly, the changes in inventory levels haven't affected all property types in the same way...  The blue line above is showing changes in the number of detached homes on the market at any given time. You'll note that these inventory levels have dropped quite a bit over the past two years. The red line, showing attached homes) has been very low and remained very low for quite some time now. Neither property type is likely to meaningfully increase until and unless we see a significant amount of new construction to help offset high buyer demand.  This graph is a new one, but I think an important one for keeping an eye on the mood of the market. Days on market, as shown above, measures how quickly homes are going under contract. Independent of how many homes are selling and the prices at which they are selling -- if they are going under contract quickly then the market is strong and power is tipped towards sellers -- and if homes are taking a longer time to go under contract the market is not quite as strong and power is starting to balance out between sellers and buyers. Over the past three years we have seen a steady decline in how long it takes homes to go under contract, with a current median of five days on the market. I'll continue to monitor this "days on the market" metric over time to see if things are cooling off at all in our local market. That doesn't seem to be happening yet. :-) You might have heard that mortgage interest rates are increasing, but...  I have read quite a few headlines lately about how rising interest rates are certain to dampen home buyer enthusiasm. If I had a dollar for every time someone told me (or I told you) that interest rates were going to rise over the past seven (+) years... Mortgage interest rates were around 3.5% a year and a half ago, and around 3% a year ago, and are around 3% now. So, are interest rates rising? Sure, a bit, depending on when you pick as the "then" to compare to the "now" but they are still very (very!) low. Alrighty then! That brings my monthly deep dive into our housing market statistics to a close, for now. As usual... If you are thinking of selling your house this fall or winter, let's talk sooner rather than later about timing, pricing, preparations and more. If you're thinking of buying this fall or winter, start looking now, because there aren't many houses on the market, so we'll likely need to patiently wait for the right opportunity to come along and then jump on it, quickly! Have a great remainder of the week, and if you visit Showalter's Orchard and subsequently make apple crisp, text me a photo to make me jealous... or invite me over to sample it... I'll bring the ice cream and caramel sauce! ;-) | |
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Harrisonburg Area High End Home Sales Booming In 2021 |
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 Only 7% of local home buyers spend $500K or more on their home purchase (per sales data over the past 12 months) but this segment of the local housing market has been strong over the past few years. As shown above, there were 76 home sales over $500K last year - which was wellmore than any time in the past decade. This year we have already exceeded that pace of $500K+ home sales even with just the first ninemonths of the year. There have already been 85 home sales over $500K up through October 4, 2020 and there is still time for a more before the end of the year.  We also saw a big jump in the number of home sales over $600K last year Last year was an extraordinarily strong year for home sales over $600K - with 38 such sales - well more than in any other year in the past decade. This year -- we're seeing even more $600K+ home sales, with 43 thus far and still three months to go! Let's keep narrowing our focus, now to sales over $700K...  The number of $700K home sales a year was averaging four sales per year between 2016 and 2018 and then more than tripled in 2019 to 14 sales, followed by another 15 sales in 2020. But this year -- wow! The number of home sales over $700K looks like it will likely double this year as we have already seen 26 such home sales in the first nine months of 2021! And... one more time... let's look at even more expensive homes...  This one surprised me. Well, most of the graphs did, but this one particularly. Before 2019 we were seeing around two sales a year over $800K. In 2019 and 2020 that jumped up to 7 (2019) and 5 (2020) -- but this year -- we have already seen 16 buyers pay over $800K for homes in Harrisonburg and Rockingham County! So -- overall, the high end home sales market is doing extremely well as compared to performance in past years! If you are thinking of selling your high end home (over $500K, $600K, $700K or even $800K) this might be the time to do so! | |
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Basically, All Remodeling Projects Will Cost More Than They Will Add To Your Home Value |
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 Are you looking to renovate your living room, kitchen or bathroom... or replace your siding, roof, windows or deck? Are you curious about how each of these projects will affect your home value? Will spending the money on these major home renovations increase your home value by more than the cost of the renovations? Almost certainly, no. In almost all cases, you will spend more on these major home renovations than you will see in an increase in the value of your home after the renovations. According to the Remodeling 2020 Cost vs. Value Report the amount of your cost that will be recouped through an increase in value ranges from 50% to 70% for almost all of the home improvement projects they analyzed. So...
This lower than 100% return on investment on major home improvement projects often ends up being acceptable to many homeowners who are completing these home improvement projects -- because the balance of the return of the investment is their enjoyment of the utility or feel of the space that they have improved. Check out the actual numbers on each home improvement project by visiting CostVsValue.com. | |
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The Speed Of Home Sales (Days On Market) Is Likely The Best Indication Of The Mood Of The Market |
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 The number of homes that sell in a given timeframe is somewhat indicative of the strength of the local housing market - but not necessarily. The number of homes selling in a given timeframe is affected not only by how many buyers want to buy -- but also how many sellers are willing to sell. The median price of homes that sell in a given timeframe is a somewhat better indication of the strength of the local housing market - but it is somewhat slow to respond to changes in the market. Even if (when?) the market starts cooling off, we're not likely to see an immediate impact in the sales price of homes. But days on market -- how quickly homes are going under contract -- that can be an excellent indication of the mood of the local housing market. Independent of how many homes are selling and the prices at which they are selling -- if they are going under contract QUICKLY the market is strong and power is tipped towards sellers -- and if homes are taking a longer time to go under contract the market is not quite as strong and power is starting to balance out between sellers and buyers. The graph above shows the median days on market (the number of days it takes for a home to go under contract once it hits the market) measured each month by looking at the 12 months leading up to and including that month. So, for example...
Looking at the graph, we can notice a few things...
Some cynics might say -- but Scott, this is looking at a year's worth of data, so it will take months and months to see any changes that are actually happening in the here and now. This is a fair point -- if things are slowing down over the course of a month or two, it might take several more months after that for us to start to see this trend line change. I do, however, intentionally look at this data with a 12 month timeframe. Looking at it with a shorter timeframe makes the data jump up and down a bit more and makes it harder to recognize any trends that are likely to actually be sustained over time. But, for those who are curious about the most recent of recent data -- when I look at sales from the past two and a half months (7/1/2021-9/20/201) I find that the median days on market is... still five days. :-) So -- the market is strong, and buyers are moving quickly on new listings, and we're not really seeing that change yet -- but as you'd expect, I'll continue to monitor this trend over time. | |
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Be Amazed By Your Home Value And Be Content To Stay |
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 It is so darn exciting for homeowners to see how much their home has increased in value over the past few years! As noted earlier this week in my monthly market report... Home prices have been rising very steadily over the past few years, but we have seen a 10% or higher increase in the median sales price in both 2020 and thus far in 2021. Of note, here are the annual increases in the median sales price per year for the past four years, including 2021...
So, if you have owned a median priced home for the past four years you may have very well seen a $70,000 increase in your home's value in the past four years! Wow! Having $70,000 more equity in your home based on increases in market values over the past four years is amazing! But, as the conversation has gone with soooo many folks lately.... "If I sold for that price, what would I buy!?" So, in the end, many homeowners find themselves wishing that they could do something about their newfound wealth via increased equity in their home - but not finding a home that they'd like to purchase - and not really wanting to move just to move. So, my encouragement to them (maybe to you?) is to... Be Amazed By Your Home Value And Be Content To Stay | |
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Putting The Pace of August 2021 Home Sales In Context |
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 I knew August 2021 was a busy month of home sales in our local market -- Harrisonburg and Rockingham County. I didn't know HOW busy when put in the context of past years. Looking back a bit -- 10 years -- it seems that the 176 home sales that took place in August 2021 was the highest number of home sales seen in any month over the past 10 years! Runner Up = June 2021 with 174 home sales (yes, two months ago) Third Place = June 2018 with 174 home sales What, oh what, shall September... and October... bring in our local housing market!? | |
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Harrisonburg Area Home Sales Spike Again In August 2021 |
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 Happy Tuesday Morning, Friends! I hope you had a fun and relaxing weekend. My Sunday included an adventure with my daughter, about 24 of her classmates, and several other dads... hiking to Saint Mary's Falls... with many of them then jumping off a 15 foot high ledge down into a pool of water below!?! A bit nerve-wracking at first, but we didn't have any injuries, so we'll call it success. :-) You should definitely check out Saint Mary's Falls if you haven't been -- it's a 4.3 mile out and back hike only about 45 minutes from Harrisonburg!  But back to the business at hand - the very active Harrisonburg and Rockingham County real estate market! August 2021 was a busy month, and there is plenty to unpack in the latest data. Download a PDF of all of the charts and graphs here, check out this beautiful home on East Wolfe Street on the cover of this month's report, or keep reading for some insights into the latest news from our local housing market...  OK - so much to jump into (I guess I'm still thinking about the waterfall!?) right from the start... Referencing the data table above... [1] There were 176 home sales in August. 176! That's 32% more than last August. Admittedly, things slowed a bit in July -- but then sales spiked again in August! [2] We've now seen 1,065 home sales in 2021 which is 18% more than we saw last year during the same timeframe. It has been an active year! [3] Over the past 12 months we've seen 1,658 home sales recorded in Harrisonburg and Rockingham County via the MLS and that is 26% more than the prior 12 months! [4] The median sales price thus far in 2021 -- $268,580 -- is 12% higher than it was a year ago. That is a much larger than normal increase in the median sales price. [5] Homes are selling quite a bit faster this year (median of 5 days on the market) than last year (median of 11 days on the market).  Above you can take a closer look at the month by month trajectory of home sales this year. We saw 174 home sales in June -- which was well above 2020 (134) and tied with June 2018... but then home sales in July 2021 slowed to 146 sales, a small decline from the 153 sales seen in July 2020. But then, August!?! After only seeing 133 home sales last August, there were 176 this August! Where do we go from here? It's anyone's guess. September and October were extremely active for home sales last year -- could we match that pace this year? All these active months of home sales in 2021 have been piling up...  We're now more than a full month ahead of the pace of home sales last year. We've had more home sales (1,065) in the first eight months of 2021 than the number of sales (1,060) seen in the first nine months of 2020! Given the current trajectory, we are very likely to see more than 1,500 home sales in 2021 -- and it seems possible that we could get all the way up to 1,600 home sales! Here's the best "why" I can come up with at this point...  We saw a temporary decline in the pace of home sales when Covid started showing up in our lives -- in March/April of 2020. Then -- many of us started to work from home, learn from home, stay at home -- basically spending more and more time in our homes. This seems to have caused many folks to realize it was more important to have a home that worked well for them -- related to amount of space, types of spaces, etc. Home sales took off starting in late August 2020 and have been on a tear ever since. But it's not just the pace of home sales that has been increasing...  Home prices have been rising very steadily over the past few years, but we have seen a 10% or higher increase in the median sales price in both 2020 and thus far in 2021. Of note, here are the annual increases in the median sales price per year for the past four years, including 2021...
So, if you have owned a median priced home for the past four years you may have very well seen a $70,000 increase in your home's value in the past four years! What comes next?  Well, technically, things might eventually start slowing down? Last summer (June / July / August) there were 495 contracts signed for homes in Harrisonburg and Rockingham County -- compared to only 414 this summer. So, maybe we start to see a decline in closed sales in September and October? It's hard to say at this point. Clearly, the robust month of home sales in August is not an indication that things are slowing down or cooling off. :-) We are also seeing a marginal increase in available inventory...  The number of homes for sale at any given time has been declining for years -- but over the past few months the number of homes on the market at any given moment in time has increased slightly from "barely any" to "still very, very few" in Harrisonburg and Rockingham County. Keep in mind -- when 1,658 homes are selling in a year, an increase from 96 homes on the market to 129 homes on the market is not overly encouraging for new buyers. That means there is still less than a month of inventory on the market right now! Given than there aren't many homes on the market for sale -- some buyers are considering the purchase of a building lot to build a home...  Indeed, even at a time when the price of building materials is still quite high, we are seeing a lot of building lots selling. There were 108 lot sales (of less than an acre) all of last year -- and we've seen 107 such sales in the first eight months of 2021. It's not clear whether all of those buyers will really build -- or be able to build -- but low housing inventory has certainly contributed to more buyers considering building lots. And here's a big part of what has kept all of this home buying activity chugging along... cheap money...  The 30-year fixed mortgage interest rate has been below 3% for almost all of the past year. This has kept housing payments for buyers very low -- even amidst rising home prices. I've been saying for years that mortgage interest rates will certainly start rising soon. I think I have given up on that mantra now, after having been wrong year after year. Certainly, if or when rates do start to rise, that will affect monthly housing costs and housing affordability -- but higher interest rates don't necessarily seem to be on the horizon anytime soon. And now... we're already half way through September!?! We might be seeing high temperatures again this week, but hopefully it will start feeling like fall by the time we get to the first official day of fall, next week, on September 22nd. Meanwhile... If you are thinking of selling your house this fall, let's talk sooner rather than later about timing, pricing, preparations and more. If you're thinking of buying this fall, start looking now, because there aren't many houses on the market, so we'll likely need to patiently wait for the right opportunity to come along and then jump on it, quickly! If you have a question about the market, or your home, or your overall real estate plans -- don't hesitate to ask. Email me or call/text me at 540-578-0102. If you made it to the end, thanks for reading along. I hope you learned something -- and I hope you'll plan something exciting for this coming weekend -- as exciting as jumping off a 15 foot ledge into a pool of water! | |
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A Slightly Longer Look At August Contract Activity |
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 Per a question and suggestion from a reader -- I have taken a slightly longer look at August contract activity. As shown above, there was a decline in contract activity when comparing August 2020 contracts to August 2021 contracts... ...but... The number of contracts signed in August 2021 (all 142 of them) was the strongest month of August contract activity we have ever seen in any other years as far back (2007) as I can pull contract activity from the MLS. So, moving forward I will likely think of August 2020 as a Covid anomaly - and will consider August 2021 as the new high water mark against which future months of August will be compared. If you have a question about this data -- or other data I publish -- let me know. I'm always happy to dig a bit deeper to gather a slightly broader context. | |
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Home Prices May Very Well Still Increase If The Market Slows |
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 I work out at OrangeTheory, which involves high intensity group fitness classes. Sometimes when running on the treadmills the workout will involve continually increasing the incline - from 1% to 2% to 5% to 10%, sometimes all the way up to 15%, climbing an increasingly steep hill. Oh joy!?! Then, as we start lowering that incline -- from 15% to 12% to 10% to 5% and so on -- we start coming back down that hill... ...but wait. Really? No! We're not coming down a hill when we're running at a 5% or 10% incline!? We're still running up a hill! The hill might not be as steep of an incline as when it was 12% or 15% -- but it is still a hill. Just ask my fatigued legs if they feel like they are running downhill at that point!? That is also what we may very well see in our local housing market in coming months or years. We are currently seeing a 10% year over year increase in the median sales price. Will that last forever? Likely not. But if the market slows down -- will we see prices decline? Likely not. The market "slowing" will likely mean that the increases will be less steep -- just like on the treadmill. We may see a 3% to 5% increase in the median sales price, instead of a 10% increase. So, if you are waiting to buy a home until the "market slows down" you might keep in mind that a slower market won't necessarily mean lower home prices. | |
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An Early Look At Home Buying Activity In August 2021 |
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 The most up-to-date way to think about the pace of market activity is how many buyers (and thus, sellers) are signing contracts in any given month. I'll release my full market report within the next week or so, but the graph above provides an early look at the amount of contract activity that took place (contracts signed) during August 2021 within the context of the past few years. Two main thoughts...
I expect that summer/fall of 2021 will be a bit slower this year as compared to last year -- but mostly because of the odd timing of market activity in 2020. Stay tuned for my full market report later this month. | |
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I Think Harrisonburg Has Created More Homeowners and Would Be Homeowners Over The Past Decade Than Builders Have Created New Houses For Purchase |
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 This won't deal with numbers or data -- just concepts and ideas, but here's the theory... I Think Harrisonburg Has Created More Homeowners and Would Be Homeowners Over The Past Decade Than Builders Have Created New Houses For Purchase Harrisonburg, Virginia is a popular place to live.
All in all, I think Harrisonburg has had sustained population growth over the past ten or so years -- many of whom bought homes or wanted to buy homes but couldn't find anything to buy. We could dig into the census and try to pin a number on that growth it but it would be imprecise at best. Let's just call them Net New H'burg Residents. Also over the past decade, builders have built some, but not a lot of new houses for purchase...
We could dig into building permit data and try to figure out what type of properties have been built, how many have been for homeowners (not renters), etc., but this would be imprecise at best. Let's just call them New Homes For Homebuyers. Having summarized these dynamics, I think you see where I'm going. I think... Net New H'burg Residents > New Homes For Homebuyers I actually don't even think those two numbers are close. I think the number of net new Harrisonburg residents far exceeds the new homes that have been built for homebuyers. If you bought into my theory, what, then, would this mean for the future?
So, that's what I think. What do you think? Does this seem like a reasonable understanding of some of the current dynamics in the Harrisonburg housing market? | |
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Are Increasing Home Prices In 2021 A Sign Of A Housing Bubble? |
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 There's a great article over at NPR / Planet Money related to whether current high home prices are an indication of a housing bubble. Thanks, Andy, for sending me this article! Home Prices Are Now Higher Than The Peak Of The 2000s Housing Bubble. What Gives? You should read it. All of it. It addresses...
Read the whole article here... Do you think we are in a bubble? Translated: Do you think home prices will decline sometime in the next 1 to 5 years? Email me and let me know what you think. | |
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Harrisonburg and Rockingham County Home Prices Have Risen 10% In The Past Year |
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 Happy Wet Wednesday morning to you! It looks like this will be the fourth (?) day in a row of rain in the valley, which is a welcome trend for many given the previous few weeks of very, very dry weather in the Harrisonburg area. I hope at least some portions (or most!?) of your summer have been enjoyable and relaxing amidst all that is going on in the world right now. I escaped dry Harrisonburg to visit even drier Utah with my family in early August -- and was impressed by both the lack of humidity :-) and the beautiful landscapes of Arches National Park.  I'm back now, though, and Luke (11th grade) and Emily (8th grade) are transitioning into a new school year. If you have little (or big) ones starting school now or soon, I hope that transition goes well for you and them. Now, then, let's chat for a bit about our local housing market. Or, rather, I'll chat -- while you read -- and if you want to chat back, shoot me an email me with what's on your mind or let me know if you'd like to grab a coffee and we can chat in person. But one last note -- you'll find a PDF of all of the charts and graphs in my market report here and you can learn more about the amazing Highland Park home pictured above here. Now, to the data...  This first data table (above) gives you a quick overview of the basic market dynamics we're seeing right now in the Harrisonburg and Rockingham County area -- and most of it is probably what you would have guessed that you would see... [1] This first one might be a bit of a surprise. There were 8% fewer home sales this July compared to last July. But... you need to keep last July (and last June) in context remembering that they were extraordinary busy months for home sales after the usually strong spring real estate market was delayed by a few months by Covid, resulting in slower spring 2020 home sales and much stronger summer 2020 home sales. Thus, while there were fewer home sales this July compared to last -- that's mostly a story about how crazy things were last July. [2] Here you'll note that the year-to-date pace of home sales (880 sales) is 14% higher than it was last year (768 sales) when evaluating only the first seven months of the year. So, yes, despite extraordinary low inventory levels -- at any given time -- 14% more homes are selling this year than last! [3] Those home prices keep on rising. You might have noted the headline of this update was related to the increase in sales prices. After receiving one of my market reports that lauded a strong pace of home sales, one of my past clients once commented that he could care less how many homes sold -- he just wanted to know what prices were doing -- going up or down. So, in that spirit, I lead this month's update with the fact that the median sales price has increased 10% between last year ($239,900) and this year ($264,900) when looking only at the first seven months of the year. [4] Finally, sales are still happening very (very) quickly in our local market. The median "days on market" for homes that sold in the first seven months of this year was... four days. That is to say that half of the homes that sold went under contract in four days or less! Wow! Now, then, a slightly (just slightly) deeper dive into the basic sales data...  The data table above provides a slightly more nuanced analysis of detached homes in green as compared to attached homes in orange. An attached home is a duplex, townhouse or condo. Splitting out the data in this way calls attention to the fact that while we've seen 9% more detached home sales thus far in 2021, we have seen a much larger, 26%, increase in the number of attached homes that have sold in 2021. Lots of duplexes, townhouses and condos are selling -- though mostly townhouses, and many of them are new townhouses. Looking at sales prices between these two data sets we find that the median sales price of detached homes has increased 12% to $288,000 -- while the median sales price of attached homes has increased 16% to $220,950. So -- at least some portion of the overall increase in home sales in this area is a big increase in the number of attached homes that are selling. Now, to the monthly sales trends...  There is a lot going on in this graph, above, but focus on the bright red line for the current year and the dark blue line for last year. By doing so, you'll note that April, May and June home sales were extremely strong in 2021 compared to 2020 -- though that was mostly because home sales were sloooooowwww during those months last year as a result of Covid pushing last year's home sales later in the year. When we then look at June and July home sales in 2021 they look slow compared to 2020 -- but again, this is largely a result of Covid pushing last year's home sales later in the year. So, what then should we expect for August and thereafter in 2021? As illustrated above, I think we are likely to see more home sales than in the same month of 2018 and 2019, but likely fewer home sales than seen in the same month in 2020. The second half of last year was absolutely bonkers as far as the number of homes that sold per month and as strong of a year as 2021 has been, I just don't think it can keep pace with last year. But... in the end, I do think we'll see more home sales this year than last...  This graph (above) piles each month of home sales on top of the previous months that year, and you'll see that 2021 has established a serious lead over 2020. We are now 112 home sales ahead of the pace of last year's local housing market. So -- even if home sales are a bit slower in the last five months of 2021 than they were in 2020, I still think we'll see more home sales in all of 2021 than we did in all of 2020. Looking back, then, at home sales prices -- some folks have asked if home prices are going up too much or too quickly...  As shown above, there was a 10% increase in the median sales price in 2020, and depending on how you crunch the numbers an 8% of 10% increase in 2021. So, will home prices keep going up? Will they come down? As I mentioned on my blog earlier this week, I don't think home prices are going to decline in the next year, because... [1] I believe housing (for purchase) has been under built for many years in this area. I believe there are more homeowners or would-be homeowners in the market than there are homes to be owned. [2] Even if lots and lots of homes are being built or being planned, it takes a long time (relatively speaking) for those homes to be planned and built. [3] There are a flurry of showings and often multiple offers on most new listings. So, home prices are rising (10-ish percent in the past year) and I don't see that changing significantly in the near future. Now, technically closed home sales are old news -- it's the contract activity that gives us the freshest data, so let's take a look...  As shown above, contract activity in June and July has been dreadfully slow compared to last June and July. ;-) While technically true, this doesn't tell the whole story, in my opinion. During early 2020, Covid caused a major slow down in the number of homes coming on the market and thus the number of buyers contracting to purchase homes. The spring months are usually some of the busiest months for contract activity and that didn't happen in 2020. As a result, contract activity spiked to record or near record highs in June, July and August. Last year's incredibly and unusually strong months of contract activity during those summer months does make this summer's contract activity look a bit pitiful, but again, it's only because of the crazy highs last summer. Now, how about those inventory levels? Are we getting any relief?  Maybe? Possibly? A little? Inventory levels crept up a bit in June and July of 2021 from terribly, dreadfully low all the way up to... yeah, still terribly and dreadfully low. Inventory levels in early August over the past few years have been 345 homes for sale in August 2018, 270 homes for sale in August 2019 and 189 homes for sale in August 2020. So, before you get too excited about inventory levels increasing from 96 homes *all the way* up to 129 homes, keep in mind that this is still far fewer homes on the market at any given time than we have seen... ever. And finally, a happy recap of recent trends in mortgage interest rates...  Interest rates were around 3.5% a year and a half ago, fell to 3%, then all the way down to 2.67% back in December before rising again until they were above 3% again. But, no longer. The average mortgage interest rate (on a 30 year fixed rate mortgage) has declined for a few months now and is right around 2.8% -- a welcome sign for home buyers. OK -- I'll wrap it up there for now. All in all... [1] Lots of homes are selling in 2021 -- well more than in 2020. [2] Home prices are much higher this year than last. [3] Buyers need to be prepared to see new listings as soon as they hit the market and to make a quick decision about making an offer. [4] Sellers are likely to continue to see favorable market conditions for at least the next six to twelve months. You'll still need to price your home appropriately, prepare it to show well and market it thoroughly -- but you'll likely enjoy the price for which you sell your home. If you made it this far, thanks for reading. Drop me a line to let me know if you have any questions about our local housing market -- or even more interestingly, to tell me about about your favorite adventure of summer 2021! I'd love to hear from you!
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No, I Do Not Think Home Prices Will Decline In The Next Year |
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 As stated above, I do not think home prices will decline in the next year. That said, I am completely willing to be wrong. A common question that would be sellers ask me is whether I think home prices will decline in the next year. "I can't believe how much my house would sell for right now -- maybe I should go ahead and sell now -- because home prices might start coming back down soon, right!?" It is hard for me to justify selling your home right now simply because of a concern (or fear) that home prices are going to come back down soon. Yes, it is possible that home prices will decline in the next year, but I think that is unlikely, because...
So, are things going to slow down soon? It sure doesn't seem like it! I think prices will hold (likely rise) for at least another year -- and quite possibly well beyond that as well! But enough about my opinions -- what do you think? Email me and let me know. | |
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Contract Activity In 2020 Is Somewhat Useless For Understanding 2021 Market Activity |
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 If we just compared this year's contract activity (yellow bars) to last year's contract activity (gray bars) for the past three months we might conclude the following about this year...
The conclusion above are likely pretty far off base as a result of what was actually going on (Covid related) last May, June and July -- and thus last year's contract activity is mostly useless in helping us understand this year's contract activity. MAY: Contract activity was higher this May than last, but that was actually lower than in 2018 and 2019. May was essentially the last month of Covid suppressed contract activity last year. The entire market slowed down in March, April and most of May as everyone tried to figure out whether Covid would affect the real estate market. As such, while this May's contract activity was stronger than last May, it was actually a bit slower than we'd normally expect in May since last May was not normal. JUNE: Once June (and July) rolled around last year, contract activity started to spike to abnormally higher levels -- likely as a backlog of buyers who would have bought in the spring found themselves scrambling to find something to buy in the summer. Thus, while this June's contract numbers are significantly lower than last June -- they are on par with, and slightly above, the pace of signed contracts in June 2018 and 2019. JULY: While there were quite a few less contracts signed this July than last -- this July's numbers were quite a bit higher than July of 2018 and 2019. Again, this seems to be a weird month of July last year that makes this July look off (slow) when in fact it is the opposite. In the end, we all know that the local housing market has been booming for the past year (plus) and more particularly this year and even more particularly, this spring and summer. Thus, if a quick glance at a data set at first leads you to a conclusion (contract activity is falling) that seems contrary to a general understanding of current market dynamics, it is often helpful to zoom out a bit and try to see a clearer picture on a larger data set. | |
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Special Saturday Edition: Home Sales, Prices Flying High In Harrisonburg Area |
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 Happy Saturday morning to you! I hope you had a wonderful week. I am still unwinding a bit from a great time at the Red Wing Roots music festival last weekend. I enjoyed seeing many of you there, and if you missed it this year, you should consider attending next year!  Back to the here and now, though -- I'm not sure what your weekend looks like -- but thus far mine has involved sipping coffee while my daughter and I have been drawing on our iPads. Admittedly, Emily is creating art, and I'm doodling on graphs and charts as included below - but fun times nonetheless. :-) Regardless of whether your weekend will include relaxing at home, traveling out of state to see family, heading to the beach for a week, or working in the yard -- I hope it is a weekend that includes at least some moments of fun and relaxation. When you get to a few free moments in your weekend, take a look through the remainder of this market update to learn more about what is happening in our quickly moving local real estate market. First, the full PDF of my market report can be found here, second, the featured home shown above is located at 261 5th Street in Broadway and you find details of it here, and now, let's dive in...  Quickly glancing through the numbers above, you might find your eyes opening wider than normal and your eyebrows rising higher than normal. There are some rather surprising things going on in our local housing market. Anyone who is selling their home, or trying to buy their home, knows about these dynamics -- but it's good to put some numbers to it... [1] There were 171 home sales in June 2021, which was 28% more than last June! [2] Thus far this year (we're halfway through it) there have been 736 home sales, which is 19% more than the first half of last year! [3] The median sales price in the first half of this year was $260,000 (!!) which is 11% higher the median sales price during the first half of last year which was only $235,000. [4] Over the past 12 months it has taken a median of six days for houses (that sold) to go under contract -- compared to a median of 15 days during the 12 months before that. So, yeah, lots of homes are selling, at much higher prices than a year ago, and much more quickly! Breaking it down between detached homes and attached (duplexes, townhouses, condos) homes reveals a few other details...  Above you might notice that... [1&3] There have been a 19% increase in the number of detached homes that have sold in Harrisonburg and Rockingham County over the past year -- but a much higher 37% increase in the number of attached homes that have sold! [2&4] The median sales price of detached homes ($285,000) has risen a bit more (14%) over the past year than the median sales price of attached homes ($200,000) which has only (haha) risen 11% over the past year. Those (above) are the long term trends. When we dial in a bit and look at things on a monthly we find that this strong increase in the number of home sales thus far in 2021 has been a month after month after month occurrence...  I have highlighted each of the first six months of 2021 in yellow above, and the corresponding month last year in gray. Now, it certainly bears noting that home sales during some of the months in the first half of last year were likely a bit lower than they would have been otherwise because of Covid, but regardless -- each month of home sales in 2021 has been head and shoulders above the corresponding month of 2020. And now, let's see how this first half of the year stacks up against the first half of the past few years... look for the dark blue bars...  As you can see, with over 700 home sales (736) in the first half of 2021 this year is well ahead of the pace of home sales in the first half of each of the past three years. Looking ahead, it currently seems quite reasonable to think that we would see 1500+ home sales in 2021, with one significant exception. Home sales were tilted towards the second half of the year last year due to Covid, so while we are seeing stronger sales in the first half of 2021 (compared to 2020) things might level out a bit when we get to comparing the second half of 2021 to an abnormally strong second half of 2020. The next visualization is still shocking to me each time I update it with another month of data...  A year ago, 1300-ish buyers were buying homes a year -- now that has risen to 1600+ buyers per year!?! Indeed, it feels like EVERYBODY wants to buy a home... because, keep in mind, this 1600+ per year figure does not include all of the would-be buyers who made offers on houses in the past year but were not successful in securing a contract to buy a house!?! Imagine if there had been enough houses on the market for all of those buyers to have bought as well... The price change (orange line above) over the past year is also somewhat of an eyebrow raiser. The median price has risen $25,000 in the past year. Thus, if you own a home, the value of that property may have very well increased $25,000 over the past year! Admittedly, this varies based on property type, location, price range, etc., -- but suffice it to say -- home values have increased quite a bit in the past year!! Now, just to keep you levelheaded this morning, the next two graphs might make you (and me) say "hmmm..." and "well, let's see what comes next"...  Above, it would appear that the pace of buyers signing contracts has dropped off considerably in June 2021!?!?! ;-) But don't worry too much -- I don't think!? The pace of contract signing in any typical March / April / May is usually quite (!!) active. Last year, buyer activity was significantly suppressed during those normally active months because of Covid -- we didn't know what was happening, what was going to happen, whether the housing market was going to slow down, etc. Then, buyer activity exploded in June of last year and remained quite strong throughout most of the remainder of the year. So, as you look at the decline in June 2021 as compared to June 2020, keep in mind that it was a very unusual June 2020. So, wait and see -- but I don't think June contract numbers mean that our local housing market is slowing down. And now, the second graph to make you say hmmm.....  Inventory levels have risen over the past month -- to the highest level in almost six months! This is somewhat interesting and surprising -- but I do also wonder whether it is temporary. I should also point out that this increase in inventory levels only takes us from super-super-super-super low inventory levels up to super-super-super low inventory levels. In the end, most buyers in most price ranges will still find very few choices of homes on the market at any given time. So, I think this is a wait and see -- as to whether we'll start seeing inventory levels rising again, or if this is a one month blip. Lastly, just to remind everyone of at least one of the reasons why so many buyers would LOVE to buy a house right now -- mortgage interest rates are phenomenally low right now...  Interest rates have been up and down over the past year, falling as low as 2.67% and rising as high as 3.17%. Clearly, though, anything under 4% still has to be described as absurdly low from any sort of a long term perspective. The cost of financing your home purchase will be very, very low if you are fortunate enough to secure a contract to buy a home in 2021. OK, that's all of the charts and graphs I have for you this morning. A few short takeaways from a big picture perspective... BUYERS: Get prequalified now, see new listings quickly, and carefully consider each contract term of your offer to make it as strong as possible. SELLERS: Prepare your home well, price it reasonably, enjoy a short period of time when you have to put up with showings, and enjoy likely being able to select from multiple offers with favorable terms. HOMEOWNERS: Enjoy knowing that your home value is increasing. :-) If you have questions about buying, or selling, or just want to tell me about the exciting plans you have for the weekend ahead -- drop me a line via email or call/text me at 540-578-0102. Otherwise, enjoy the weekend! | |
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All The Cool Kids Are Offering To Pay Over Appraised Value These Days |
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 Escalation clauses are so YESTERDAY!?! ;-) Not really -- many/most buyers are still using them -- but they don't matter much if an appraisal is going to rein a sales price back in... Consider these three offers on a fictional home listed for $300K...
Hooray, the house sells for $355K to buyer #3, right? Well, probably... though if it then appraises for $300K, then none of the offer prices over the list price or the escalation clauses really amounted to anything. Thus, these days, many buyers are not only asking themselves how high they are willing to go with an escalation clause -- they are also asking themselves how much above the appraised value they are willing to pay for a house. Consider, then, the following three offers on the same house listed for $300K...
Clearly, a seller would toss out the first offer. Some sellers would then immediately jump to the third offer, since it is $10K higher than the second offer -- but -- that depends on your best guess as to the appraised value of your house. If you listed your home for $300K, presumably you think it should sell for around $300K and thus might appraise for $300K. If that is the case, then the second offer above is likely a better choice for you. That offer would stay at $325K even if the appraisal came in at $300K, whereas the third offer would start off higher at $335K but would then drop to $310K if the appraised value were $300K. So, as a buyer -- consider how much above the appraised value you are willing to pay for a house when you are competing with multiple other offers -- and as a seller, consider how an appraisal will impact each offer that you might accept. | |
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
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Commonwealth of Virginia
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