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Harrisonburg Considers An Additional Increase In The Real Estate Tax Rate |
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It's that time of year again... the City of Harrisonburg must decide how much money it can, will or must spend... and where that money will come from. City Council met last week and began to discuss a draft budget for Fiscal Year 2023-2024 presented by City staff. You can read more about the meeting and discussion here. You can view the draft budget here. In summary... the City is planning on a budget of around $362M in FY24, which is about a $27M increase from FY23. Where does all of that money come from? A variety of sources, including these top four funding sources... 34% from real estate taxes 11% from personal property taxes 11% from sales taxes 11% from restaurant food taxes The amount of real estate taxes collected (to fund the budget) depends on... [1] the value of real estate in the City [2] the real estate tax rate The planned budget includes (as shown on the graph above) a $0.03 increase in the real estate tax rate, from $0.93 to $0.96. What impact will this 3% increase in the real estate rate have on owners of real estate in the City of Harrisonburg? The median sales price of homes sold in the City of Harrisonburg over the past year was $255,000. Real estate taxes with a tax rate of $0.93 on this $255K home would cost a homeowner $2,371.50 per year. Real estate taxes with a tax rate of $0.96 on this $255K home would cost a homeowner $2,448.00 per year. So... a $76.50 increase per year... or about $6.38 per month. Two important notes related to these calculations... [1] The $255K figure of the median sales price is not necessarily perfectly aligned with the median tax assessed value of all residential properties in the City. The $255K figure is based on their sales prices... not the assessed values... and just of the homes that have sold... not all homes that exist. [2] The median sales price has increased 12% in the City of Harrisonburg over the past 12 months. This may mean that assessed values will rise when properties are next assessed by the City, which would result in a further actual increase in real estate taxes based on new assessed values. Finally, two other general notes... [1] For anyone wondering what the City spends $362M on in a year, the "Budget in Brief" document found on this page is a very helpful summary of the City budget. [2] From the article on The Citizen linked above (and here)... "This tax increase is a continuation of the city’s plan to raise that tax by 10 cents over three years to pay for the new Rocktown High School, which is expected to cost about $100 million." | |
Will We See Thousands Of New Rental Properties In The Harrisonburg Area Over The Next Few Years? |
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Here's a summary of potential upcoming rental developments in or near Harrisonburg... Altitude Apartments, Phase 2 (102) Bluestone Town Center (~600) Apartments at Peach Grove (460, Peach Grove Avenue) Lingerfelt Development Apartments (376, also on Peach Grove Avenue) Apartments at Regal Cinemas (274) The Wentworth (271, in StonePort) Epoch (265, near the Wellness Center) Valley View Village (420, on Reservoir Street) The Edge (156, on East Market Street) Two41 (142, on East Market Street) Mixed Use on Reservoir Street (100) Wilson Avenue (34, North Main Street) Boyers Crossing (48) Stoney Ridge (72, South Main Street) Chicago Avenue Apartments (48) Thus, there are approximately 3,368 rental units under construction, approved, planned, proposed, etc. This does not include the ~280 unit rental neighborhood that will soon be proposed on the far end of Boyers Road backing up to Mystic Woods Lane. This also does not include the multiple recently completed rental developments such as Preston Lake Apartments, Congers Creek Apartments, Locust Grove Village, etc. If you're looking to rent in or near Harrisonburg, you might have LOTS of options in the coming years. | |
Home Prices Still On The Rise Despite Fewer Home Sales In 2023 |
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Happy Thursday afternoon, friends! The spring real estate market is upon us -- though it looks and feels a bit different than it did over the past few years. Read on for stories of fewer home sales, rising prices and stubbornly low inventory levels. Speaking of spring... if you're looking for a home with landscaping that really pops each March, check out this beautiful, four bedroom, brick home over on Meadowlark Drive that came on the market earlier this week... On a personal note, can you spot any proud parents of a soon-to-be high school graduate in the photo below? :-) Wow, the past 18-ish years have flown by quickly. Luke will be graduating in early June and Shaena and I couldn't be more proud of this guy! << Insert Here: Quick transition to some other topic so I can stop thinking about how old I must be if my son is about to be a high school graduate!?! >> OK, then... Each month I offer a 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 India, A Bowl of Good and a Steel Wheels concert. This month... I'm giving away a $50 gift card to one of my favorite lunch (or dinner) spots downtown... Cuban Burger! I almost always order the Cuban Chop Chop with Chicken, but everything on their menu seems likely to be delicious! Click here to enter for a chance to win the $50 gift card! And now... let's move on along to the most recent data on our local real estate market. First, let's see what "fewer home sales" looks like right now... A few observations related to the chart above... [1] While the number of home sales taking place this March was 11% lower than a year ago -- that's not quite as much of a drop as we see when we look at the past three months (-21%) or the past six months (-25%). So, maybe things are picking back up -- a bit -- here in March? Maybe? [2] There have been 1,501 home sales over the past year in Harrisonburg and Rockingham County which is a 9% drop from the previous 12 months when there were 1,658 home sales. This drop of 157 home sales for the year seems almost certainly to be a one-sided supply side issue -- not enough sellers selling. You'll note later on in this report that inventory levels haven't risen by 157 homes (due to buyers not wanting to buy) so the constraint on the number of home sales is almost certainly directly tied to how many sellers want to or are willing to sell. But despite fewer homes selling, home prices keep on rising... Yes, we could pick on the one red number on the chart above -- showing a 1% decline in the median sales price between March 2022 and March 2023 -- but the small sample size (of one month of data) means that this is not necessarily a meaningful indicator of an actual downward trend. This is made even more evident by the 10% - 11% increases in the median sales price when looking at three, six and 12 months of data in the chart above. Perhaps more importantly, yes, we're still seeing double digit annual increases in the median sales price in Harrisonburg and Rockingham County. One year ago the median sales price was $276,200. It has risen 10% over the past year, cleared $300K, and is now at $304,900. Just to refresh one's memory on what "median" signifies -- it means that half of the homes that are selling are priced at or above $304,900 and half are at or below $304,900. Prices just keep on rising! Buyers who are frustrated that they can't wait even just a day to make a decision about an offer on a hot new listing might be encouraged by these next stats... There has been an ever so slight (ok, technically 20%) increase in the median days on market stat over the past year. A year ago homes were going under contract after a median of five days... and now that has risen to... six days. Yes, I know, that one day might not seem that significant -- but if we look at just the past three months we'll note that the median days on market has jumped up to eight days! So, some new listings are lasting an extra day (or three) on the market before they're going under contract. So, the market is slowing down... barely. It will be interesting to see if this metric continues to rise, falls again, or stays at about the same level as we move into and through the spring market. Now, as to what is actually selling, there are some interesting trends to be noted between existing homes and new homes. I have highlighted the numbers below that I think deserve attention. Here's the existing home sales data... ...and here's the new home sales data... So, while the overall market has seen a 9% decline in home sales over the past year... [1] There has been a 15% decline in existing home sales. [2] There has been a 12% increase in new home sales. If you want to buy a home that is of the property type, size, price and location of one of our area's new home communities -- these trends work in your favor. If you want to buy an existing home (not a new home) in an established neighborhood -- these trends aren't all that exciting. There haven't been 9% fewer homes to buy over the past year -- there have been 15% fewer homes to buy!?! Now, circling back to the monthly data... March was... not as slow as January and February!?! ;-) We saw significantly fewer home sales this past January and February as compared to the same month last year. January sales were 27% below the prior year. February sales were 24% below the prior year. March sales were only... 10% below the prior year! So, I suppose that's a bit encouraging... we're starting to see a slight increase in monthly home sales... though yes, we're definitely still well behind 2022. And for anyone who likes a good participation trophy... ... First Quarter Home Sales In 2023 came in at... 4th Place... oh, out of five contestants! Indeed, the 249 home sales we have seen in the first quarter of 2023 was fewer than we saw in 2020, 2021 and 2022. We are slightly ahead of the first quarter of 2019, though, so there's that... Looking at the big picture of our market over the past few years, in visual form... There are two main things to note in the graph above... [1] Home prices have been increasing at a much faster pace than is historically normal. We're in the third year in a row of double digit (per year) increases in the median sales price in our area. [2] After a two year boom in the number of homes selling (due to Covid and super low interest rates) we are now almost a year into a steady decline in annual home sales (from 1,727 per year to 1,502 per year) mostly related to rising mortgage interest rates. Now, let's look ahead by looking behind... Home sales this month are most directly influenced by contracts last month. So, how did things go in the March market? Lots of sellers listing their homes for sale? Lots of buyers contracting to buy homes? Well... not really. [1] Contract activity declined 26% in February 2023 compared to February 2022. [2] Contract activity declined 37% in March 2023 compared to March 2023. So, yeah, the spring market (sooo many listings, sooo many contracts) doesn't quite seem to be showing up this year like it did last year. Maybe the buyers (and much more importantly, the sellers) will start showing up in April? Unsurprisingly, several slow months of signed contracts brings on a lower than ever number of pending sales in Harrisonburg and Rockingham County... There are 256 homes currently under contract in Harrisonburg and Rockingham County. One year ago there were 398 (!!!) homes under contract. Over the past four years we've seen an average of 293 homes under contract at this time of year. So, yeah, based on the low number of pending sales right now, we are likely to see at least another month or two (or more!?) of slow(er) months of home sales. Why have there been so few homes going under contract? Are the listings pouring onto the market and buyers are just deciding not to buy? If that were the case, we'd see inventory levels starting to climb, so, let's take a look... In fact, no, inventory levels are not rising. They are staying stubbornly low. There are 116 homes on the market right now (for sale, not under contract) in Harrisonburg and Rockingham County. This is compared to 135 being on the market a year ago at this time... and an average of 185 being on the market over the past four years at this time of year. So, buyers seem to not be buying because... there's nothing to buy. Or, at least, there's less to buy. Plenty of homes (-9% year over year) are still selling, but this decline in sales activity seems to still be entirely related to sellers not selling, and not related to buyers not buying. And yet, despite inventory levels staying super low, we are actually seeing a slightly change in how quickly homes are going under contract... Over the past six months the "median days on market" has been eight days in Harrisonburg and Rockingham County. That means that half of the homes that have sold were under contract within eight days of hitting the market and half were under contract in eight or greater days. The change here is a slight increase from five days up to eight days over the past few months. We were seeing a median days on market of six days or less for almost two straight years (April 2021 - January 2023) but that is starting to drift upwards a bit. So, (some) listings are lasting an extra day or two (or three) on the market right now -- though these days on the market levels are still well below long term historical norms. Maybe it's taking buyers an extra day or two to make an offer because they have to keep checking in with their lender because rates are constantly jumping up and down from week to week and month to month? Rates dropped in March, after rising in February, after dropping in January -- you get the picture. We're currently seeing mortgage interest rates that are definitely and absolutely not the best we've seen in the past year -- but that also are a good bit below the worst that we've seen in the past year. Where mortgage interest rates go from here is anyone's guess -- but I'm thinking they will continue to fluctuate on a weekly and monthly basis for much of 2023. OK! That was a lot of data, and charts and graphs, oh my! If you made it all the way to the end, thanks for reading and I hope you are feeling more informed than ever as to the latest trends in our local housing market. If you're thinking about selling your home this spring or summer -- all of the would-be buyers of Harrisonburg and Rockingham County would REALLY like you to decide to do so. ;-) Let me know if you'd like to set up a time to walk through your home together to talk about preparations, pricing, timing, etc. If you're hoping to buy a home this spring or summer -- I'd be delighted to be in your corner helping you navigate this rapidly moving, competitive market. Let's chat about what you're hoping to buy, get you connected to a local lender to become pre-approved, and then let's try not to develop a twitch as we keep checking for new listings again, again, again and again. That's all for today, folks. I hope the balance of your month of April goes well and that you aren't struggling too much with the seasonal allergies that seem to affect so many of us at this time of year. I think the beauty of the blooming flowers and trees generally outweigh the not-so-exciting allergy symptoms that I'm currently working through. Be in touch anytime if I can be of help to you -- with real estate or otherwise. You can reach me most easily at 540-578-0102 (call/text) or by email here. P.S. If you want even more charts and graphs than I have included above, you'll find them here. | |
Make The Offer You Are Comfortable Making Even If You Suspect It Will Not Succeed |
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As a would-be buyer in a competitive seller's market you might find yourself thinking that you need to... [1] offer over asking price [2] include an escalation clause [3] waive an inspection contingency [4] waive an appraisal contingency Indeed, for some properties (in some price ranges in some locations) the only way to secure a contract to buy the home of your dreams is to do some or all of the above. But yet, I do encourage you to only make the an offer you are comfortable with... even if you suspect that offer will not succeed. If a hot new listing is priced at $400,000 and that seems like a reasonable price for the house... YES -- it is OK to offer $400,000 without an escalation clause, with an inspection contingency and with an appraisal contingency. Will that offer succeed? Quite possibly not -- especially if there are multiple offers. But... if that is the strongest offer you are comfortable making then that is the offer you should make. It won't necessarily lead to you securing a contract on the house -- but it might -- and if it does, you'll be under contract to buy with contract terms you are comfortable with. | |
The Amount You Are Comfortable Paying For Your Next Home Might Be Different Than The Amount Your Lender Would Let You Spend |
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So, you took my advice and talked to a mortgage lender to get a sense of what you are qualified to spend and to get a feel for potential mortgage payments. Great! You had been hoping to spend up to $350K on a house. But your lender said you could spend up to $475K on a house! But... when you look at the monthly mortgage payment associated with a $450K home purchase... WOW!!! How does your lender expect you to pay this much per month, and still have money for other life expenses, travel, emergency savings, etc.?!? This is not an uncommon place to be. Plenty of well qualified buyers discover that their lender will qualify them for a home purchase price that would involve a monthly mortgage payment much higher than is comfortable. So... start with a conversation with your lender about how high you *could* go on price... but be prepared to possibly need to do a bit more work with your lender to dial back that potential purchase price until you get to a monthly mortgage payment that is comfortable for you! | |
Homes Are Selling Quickly, Often At Or Above The Asking Price, But... |
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Homes are selling quickly... often at or above the asking price... but... ...that doesn't mean you can put any price on your home and successfully sell quickly and at or above the list price. -- Let's say you own a townhouse and you are getting ready to sell it. Three other townhouses on your street sold for $250K in the past two months. If you list your home for $250K or $255K (or possibly even $259K) you'll likely find early success in securing a buyer for your home at or above the list price. If you list your home for $275K you are much less likely to quickly secure a contract with a buyer at or above your list price. If you list your home for $299K you are very (very) unlikely to quickly secure a contract with a buyer at or above your list price. -- If you own a home that you think might be worth $450K and we discover that other recent buyers have paid $460K and $470K for similar homes... great! A list price of $459K or $465K or $470K will likely result in an early, strong offer. A list price of $489K is much less likely to result in an early, strong offer. A list price of $510K probably won't get you very far at all. -- So, yes, many or even most buyers are paying very close to the list price -- the list price -- or above the list price -- BUT that's because most home sellers price their homes appropriately for the market. | |
How Patient Are You Willing To Be To Get Into THAT Neighborhood? |
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There are some neighborhoods in the City of Harrisonburg and Rockingham County where it seems like homes NEVER come on the market. They are often GREAT neighborhoods for reasons related to the fact that there is very little turnover... homeowners stay in their homes for a long time, and wonderful relationships are built between neighbors over many years of living next door or down the street. So, if you decide you're interested in buying a home in THAT neighborhood.. where it seems like homes NEVER sell... you will likely have to decide how patient you are willing to be to get into that neighborhood. It may very well be worth the wait, but it might mean staying in your current home longer than you'd like (if you're local) or renting for longer than you'd like (if you're moving into the area). | |
Consider How Soon You Will Need To Replace These Items When Purchasing A Home |
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Many aspects of any home that you might purchase will likely never need to be replaced, for example... [1] the foundation [2] the wall framing [3] the plumbing Some items may need to be replaced at some point but when you choose to do so will be more elective than necessary... [1] flooring [2] interior paint [3] light fixtures But... some items will definitely need to be replaced at some point in your home's lifetime (or multiple times in your home's lifetime) and as such you should consider how soon they will need to be replaced when contemplating a home purchase. These "definitely will need to be replaced at some point" items are... [1] roof [2] heating and/or cooling system(s) [3] water heater [4] kitchen appliances If you're considering the purchase of a home that has recently had all four of those items replaced... great! Alternatively, if all of them are 30+ years old... not so great! Ask about the age of the main systems of the house you are purchasing... preferably before you are already under contract to buy it! | |
First Look At Contract Activity In March 2023 |
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In the next week or so I'll provide a much fuller analysis of what March (and the first quarter of 2023) looked like here in the Harrisonburg and Rockingham County real estate market. Until then, here's a first look at buyer activity last month. A total of 119 home buyers signed contracts to buy homes in March 2023... which is... [1] Much lower than the second and third March of Covid -- 2021 and 2022 -- when mortgage interest rates were super low and buyers were stumbling over themselves to buy. [2] Slightly higher than the first March of Covid -- 2020 -- when we were all still trying to figure out what Covid was and how it would impact the economy and housing market. [3] A good bit lower than the three years just before Covid -- 2017, 2018 and 2019. Housing inventory levels still aren't rising, so I think the lower contract numbers are related to a limited number of sellers being willing to sell -- not related to a limited number of buyers being interested in buying. | |
Start Monitoring Listings And Sales In Your Market Segment A Few Months Before Selling Your Home |
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Will you be selling a home in the ___ neighborhood later this spring or summer? Will you be selling your home in the low $_00's later this spring or summer? If you plan to sell soon (but not quite yet) it can serve you well to start monitoring listings and sales in your market segment now. Watch for the next few listings in your neighborhood, or price range, to hit the market for sale... 1. What does the list price tell you about the value of your home? 2. How quickly does the new listing go under contract? Then, watch for closed home sales in your neighborhood, or price range... 3. What does the sales price tell you about the value of your home? If you'll be selling soon, starting to tune in and watch the most recent happenings in your segment of the market can help you make even better decisions about pricing and selling your home when the time comes. | |
Home Sellers Often Sell Homes Perfect For First Time Buyers... To Investors |
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Over the past few years, townhouses in or near the City of Harrisonburg between $175K and $250K have been a hot commodity! This type of property is perfect for first time home buyers... ...but... ...this type of property has also been quite attractive to investors. And, what is a seller to do when receiving the following three offers on their townhouse... [1] An offer from an intended owner occupant contingent on the buyer financing 95% of the purchase price. [2] An offer from an investor contingent on the buyer financing 75% of the purchase price. [3] A cash offer from an investor. If all other terms (price, contingencies) were equal, most sellers would find the third offer to be most preferable, followed by the second offer. The first offer would be the least favorable to most sellers. For many or most sellers, the amount of a buyer's downpayment (5%, 25%, 100%, etc.) is often a proxy for certainty of successfully making it to closing. If a buyer already has the cash to buy the property - wonderful! If a buyer has 25% of the purchase price as a downpayment - still pretty good! If a buyer only has 5% of the purchase price as a downpayment - not as ideal. And as you can imagine from the information outlined above, so long as there are investors making offers on properties that would be perfect for first time buyers.... the investors will probably be the ones securing the contract to buy said property. So what? For Sellers - This is not a problem at all. Having a variety of offers from which to choose is... ideal! For Investor Buyers - This is great. It's nice having a leg up over some of the other competing buyers. For First Time Buyers - This stinks. I'm renting a townhouse now... and you're telling me I can't manage to buy a townhouse because I'm competing against investor buyers who are going to buy townhouses and then rent them out to people such as myself? Ugh. How do we break the cycle? Indeed... if there were a desire to make this dynamic / situation "work better" for first time buyers... how would it be done? [1] Individual sellers could certainly opt to sell their townhouse to first time buyers with less favorable (less certain) financing. [2] Investors could (maybe?) eventually decide to stop buying as many properties as rental properties if prices (or interest rates) are or become too high to make that type of an investment feasible. [3] The City could provide a financial incentive to sellers of properties under $250K (for example) if they sold them to first time buyers. ;-) It's hard to imagine this one happening but it could be an interesting strategy for the City to utilize to attempt to increase home buying opportunities for first time buyers. | |
Why Are Housing Inventory Levels So Low In Harrisonburg And Rockingham County? |
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First, Harrisonburg is a popular place to live. Beyond everyone who is living here now, we continue to see new folks planning to make Harrisonburg their home, including but not limited to...
So, lots of people want to make Harrisonburg their home. Second, I think that more people are moving to Harrisonburg than new housing units are being built. If over a five year period, 5000 new people decided to make Harrisonburg their home, we wouldn't see a change in availability of housing if we also saw 5000 new housing units built. I think that the amount of new moving to (or attempting to move to) Harriosnburg over the past 5 to 10 years has exceeded the number of new housing units built during that same timeframe. Third, I think there is an imperfect match between what home buyers want to buy and new housing units that are being built. First of all, plenty of the new housing units that have been built over the past ten years have been rentals - apartments or otherwise - which hasn't helped provide housing for would be home buyers at all. Furthermore, the "for sale" housing that is being built in this area certainly meets the needs of some buyers, but probably not most or all buyers. If you're hoping to buy a home that is within the location, size parameters and price parameters of one of our area's new home communities -- great, you'll be in good shape! If what you are hoping to buy is not the type / size / price of new homes being built in our area, then the new housing units being built don't help you out at all. As such... the popularity of Harrisonburg and the rate at which new housing units are being built, and the type of housing units being built all contribute to a shortage of housing inventory for many price ranges and property types. | |
Higher Mortgage Interest Rates Might Be Resulting In More Buyer Competition In Moderate Price Ranges |
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Clearly, the Harrisonburg and Rockingham housing market is still quite competitive right now, especially for homes under $400K. One reason for this might be related to current mortgage interest rates! Higher mortgage interest rates result in higher monthly costs. If some home buyers were looking in the $400K - $500K range when mortgage interest rates were around 3%, they may very well now be looking in the $300K - $400K range now that mortgage interest rates are above 6%. After all, if you're financing 80%... $450K purchase at 3.25% mortgage interest rate = $2,011 per month $350K purchase at 6.25% mortgage interest rate = $2,070 per month Yikes! So, if $300K - $400K purchasers were previously only competing with eachother, they might now find themselves competing with buyers who were previously planning to spend up to $500K! That said, it is of course also true that some $300K - $400K purchasers might also have had to reduce the target price for their home purchase as well. | |
64 Townhouses Coming (Soon?) To Crossroads Farm |
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Since Crossroads Farm was first proposed in 1999, there has been a section of the neighborhood where townhouses were intended to be built, as shown above. Thus, this new rezoning request is simply regarding some details of those townhouses... and is not related to whether townhouses are allowed in this area. The rezoning request is to allow for taller townhouses. The applicant would like 16 (of the 64) townhouses to be able to be up to 42 feet tall to allow for a garage on the main level and two living levels above that. The two buildings labeled "TH-3" above are intended to be three stories... on the front of the building... though when viewed from the back they would appear to be two stories as the first level would be below grade at the back of the townhouse. This more detailed rezoning request may mean that these 64 townhouses will be built sooner rather than later. Click here to view more details in the rezoning application packet. | |
One Of The Best Market Indicators Right Now Is How Quickly Houses Similar To Your Home Are Going Under Contract |
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Are you getting ready to list your home for sale this spring? Are you trying to figure out how to price your home? Step one - as usual - is to look backwards, at past sales, to see how much buyers have paid for houses similar to your home over the past six (or more) months. But another market indicator that we shouldn't overlook is... ...how quickly houses similar to your home are going under contract. FOR EXAMPLE... If we look around at past sales and we find that buyers have recently paid $410K, $415K and $420K for houses similar to your home... ...we might plan to list your home for $415K or $419K or $425K. Let's say we're super optimistic and we're planning to list your home for $425K. But, then, if you're not putting your home on the market for a few weeks, we should carefully monitor similar houses coming on the market for sale. If we see... [1] Three similar houses come on the market for $420K, $425K and $429K, each of which go under contract in a matter of days... then we should be encouraged to stick with our plan of pricing your home at $425K. [2] Three similar houses come on the market for $410K, $412K and $415K, all each of which are still available for sale after being on the market for two weeks... then we might want to consider a list price of $415K or $419K instead of $425K. So, with pricing these days, we need to look backwards at past sales, but we also need to see how quickly buyers are contracting to buy houses similar to your home. Let me know if you're ready to start thinking through potential pricing (and timing) for selling your home this spring. | |
Buyers Should Choose Their Words Carefully When Talking About A House While Walking Through It |
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As a buyer, when you are walking through a home, keep in mind that the seller might be listening. These days, there are plenty of ways that a seller could be monitoring their home, with a security camera, or other recording device that could allow them to hear every word you are saying while you are in their house. So..... [1] Don't insult their house. It won't help during negotiations. [2] Don't discuss negotiations. You might be revealing your strategy. By the way, sellers, you'll need to disclose if there is a recording device in your home. There is a field in our local MLS specifically for this disclosure. | |
Nationwide Median Sales Price Declines For First Time In More Than 10 Years... But, What About Locally? |
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I saw the headline over at CNN yesterday... home prices are falling (nationwide, barely) for the first time in over a decade. The median sales price of a home in the United States was $363,000 in February 2023... ...marking a (tiny) 0.2% decline from a year ago. How do those numbers compare to Harrisonburg and Rockingham County? February 2022 - February 2023
February 2023
So, as usual, we're just doing our own thing over here in Harrisonburg and Rockingham County. Will we see home prices decline in Harrisonburg and Rockingham County? Before that happen, we'd need to see them level out (stop going up) which isn't happening at this point. So, read the national news (if you must) but as usual, it's much more important to keep tabs on the local trends. | |
Buyer Demand Exceeds Supply In Varying Degrees By Price Range |
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As one might expect, there are more buyers able to and interested in buying a home for $200K than for $300K... and more buyers able to and interested in buying a home for $300K than for $400K. You get the picture. As such, we currently find buyer demand exceeding supply in varying degrees by price range. These numbers are completely made up, but are likely not too far off base given recent listings or transactions I have been a party to or have heard about in our local market... SHOWINGS IN WEEK ONE, BY PRICE RANGE:
If you're seeing more showings than outlined above, your house may be slightly more popular than the average house based on its location and condition - or you might have priced it "just right" for the current market. If you're seeing fewer showings than outlined above, your house maybe slightly less popular than the average house based on it's location and condition - or you might have priced it "a bit too high" for the current market. Again, the data above is completely fictional (not based on actual showing data) but is included to paint a general picture of the differing amounts of buyer demand in different price ranges in the current market. | |
Pending Home Sales Data Points To Slower Months Of Home Sales Ahead |
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Pending home sales is the most timely indicator of what we should expect in the very near future for closed home sales. A pending home sale is a house that is under contract. Two springs ago (2021) the number of pending sales peaked at 373. Last spring (2022) the number of pending sales peaked at 416. There are currently only 261 pending home sales. As such, it seems likely that we'll see fewer closed home sales over the next few months. But, interestingly, this lower level of pending home sales does not necessarily seem to be a result of an insufficient number of buyers wanting to buy -- but rather, an insufficient number of sellers willing to sell. This seems to be a supply side issue inventory levels (the number of homes on the market for sale) remain stubbornly low. If we were seeing fewer pending home sales, and inventory levels climbing, this would be an indication that buyer demand is declining. That is not what we're seeing. So long as fewer sellers are willing to sell, we are likely going to continue to see lower numbers of pending home sales, and lower numbers of closed home sales unless new construction options increase to provide additional housing options for home buyers. | |
Detached Resale Home Sales Decline 39% In Two Years, Down To... Pre Covid Norm |
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First, a definition... Detached Resale Home Sales = not townhouses, not duplexes, not condos, not new homes Now, then, an observation... Detached Resale Home Sales have declined 39% over the past two years when looking at first 2.5 (ish) months of the year. Oops, wait, another observation... Detached Resale Home Sales have dropped all the way down to... pre covid norms. In the three years leading up to Covid (2017, 2018, 2019) we saw home sales between January 1 and March 13 totaling 99, 101 and 103 home sales for each of the above referenced years. But then, the three most recent years showed a very different pace of sales... Jan 1 - Mar 13 of 2020 = 136 sales! Jan 1 - Mar 13 of 2021 = 164 sales! Jan 1 - Mar 13 of 2022 = 136 sales! But, then, back to what seems to have been the pre-Covid norm... Jan 1 - Mar 13 of 2023 = wait for it... 100 sales So, two things seem to be true right now... There are significantly (!!!) fewer detached, resale homes selling right now compared to how many we saw during the same timeframe over the past three years. But, yet, the number of detached, resale homes selling right now is quite normal per the historical trends before Covid started messing with the housing market. Prospective home buyers in 2023 should thus realize that... [1] There will likely be a historically normal number of homes that you could buy this year... if we ignore the three most recent years. [2] There will be far fewer options of homes to buy this year compared to last year and the year before. [3] There may very well be more competition from other buyers for that smaller number of homes that will be available for purchase. As you can see through all of this -- the decline in home sales is very much due to a restrained supply (only so many sellers willing to sell) rather than a restrained demand (only so many buyers wanting to buy). | |
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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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