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More Buyers Signed Contracts in May 2018 Than In Any Other Month, Ever |
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![]() To say that May 2018 was a busy month for contract signing seems to be an understatement. I have data all the way back to April 2007 -- and the number of contracts signed last month (171) seems to be the highest month of contract activity we have ever seen in Harrisonburg and Rockingham County. It's hard to say how those contracts will show up as closings -- they will likely spread out between June and July -- so we might not have the highest month of home sales ever in June 2018. But, then again, we might. :-) Read more about our local housing market in the most recent edition of my monthly market report... | |
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Home Sales Slow, Prices Pop, Contracts Climb |
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![]() Find out about this beautiful home at Preston Lake: 3168PrestonLakeBoulevard.com. I just published my most recent monthly market report, and as usual, you can read on for an overview, download the full report as a PDF, read the entire report with commentary online, or tune in to my monthly video overview of our local housing market... OK -- now, let's take a look at some of the basic market indicators this month... ![]() Plenty of statistics of interest above, including...
![]() So, as seen above, May sales were slower than (I) expected. After the best February, March and April in recent memory -- home sales in May 2018 fell below both May 2017 and May 2016. What gives? Well, perhaps, it is just some month-to-month variation between years. Keep reading to find out why all is not lost when it comes to late-Spring and early-Summer home sales. :-) ![]() Looking at a slightly longer timeframe, the pace of home sales in the first five months of this year is only lagging slightly behind where we were last year -- and thus putting us in second place for the pace of home sales in Harrisonburg and Rockingham County. ![]() Have you heard it's a seller's market? There are fewer and fewer sellers (keep reading for details) and this has buyers fighting over properties in some price ranges (and locations) -- which has resulted in sellers needing to negotiate a bit less on their price than in years past. The median ratio between the sales price and list price is now 99%, as compared to 97% - 98% over the past five years. ![]() Yep -- this is the crazy one! Last May we saw 133 homes go under contract -- this May there were 171!?! I'll have to check my historical archives to be sure, but I think this may be the MOST contracts we have EVER seen in a single month EVER. Wow. So -- even if we were despairing that home sales were slowing in May -- perhaps we can excitedly look forward to June (and July) when these May contracts start turning into closed sales. Again -- wow! ![]() And yes, as mentioned above, inventory levels are falling -- fewer and fewer homes are on the market available to a buyer on any given day. We have seen a 42% decline in inventory levels over the past two years -- and a 12% decline in the past 12 months. The decline is slowing -- which might mean this inventory level can only go so low -- but this is what is causing so much frustration for buyers -- and oftentimes, so much delight for sellers! :-) ![]() Faster and faster and faster, oh my! Indeed, homes are selling even more quickly now than they were a year ago. Half of the homes that sold in the past year were under contract within 30 days of hitting the market. If you are a buyer -- be ready to act FAST! ![]() And finally, interest rates are on the rise. :-/ It costs more to finance a home purchase now than it did a year ago. I commented to a client today that today's interest rates are still ridiculously low compared to any longer-term historical perspective, but he was quick (and wise) to point out that this fact doesn't necessarily matter much for today's buyers. Why are they going to appreciate that today's interest rates are lower than they have been for most of the past 20 years -- all they care about is that they are going to be paying more to finance their home purchase now than if they had bought six months of a year ago. OK -- I'll stop there for now. Again, you can download the full report as a PDF, read the entire report with commentary online, or keep reading my blog in the coming days for further commentary. One last note for anyone thinking of buying or selling soon -- SELLERS -- even though it is a seller's market in many price ranges right now, you must still focus on price, condition and marketing. For further reading on buying or selling in this area, check out.... | |
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Can All Homes In Harrisonburg Be Rented To Groups of JMU Students? |
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![]() With great regularity, potential buyers (either investors or parents of JMU students) will ask if a single family home can be purchased and rented to a group of JMU students -- often an intended group of four or more students.
I let them know that it will be no problem at all -- the adjoining property owners in the quaint neighborhood probably won't mind as long as the students aren't too bothersome -- and the City doesn't mind at all if their zoning ordinances are violated, so long as it's just "nice college kids".... WAIT! NOT REALLY! READ ON!!!! It seems that some buyers are really getting that feedback of "sure, it will be fine" -- though I'm not sure if they're getting it from their Realtor, or from someone else advising them in the transaction, or if they just aren't thinking about whether their planned use of a property is allowable. The REAL answer, and the feedback that I ACTUALLY provide to my clients is.... 1. We need to check to see how this property is zoned, and whether that zoning classification allows for that number of unrelated people to live in the property. 2. We need to check to see if there are recorded restrictive covenants for this neighborhood that restrict the number of unrelated people who live in the property. A few notes.... 1. Most single family homes in the City of Harrisonburg are zoned R-1 or R-2 and do NOT allow for three or more unrelated people (students or otherwise) to live in the property. 2. If a property has been used in a non-conforming manner (for example, four students living in it) since before the zoning ordinance was put in place, without a 24 month gap in the non-confirming us, it MIGHT be possible to continue to use the property in that non-conforming manner. And, if #2 above is starting to get confusing, then we arrive at my main reason for writing today.... CALL COMMUNITY DEVELOPMENT TO UNDERSTAND ALLOWED USE OF A PROPERTY! Yes, in fact, there are very helpful City staff in the Community Development department -- who can very quickly help you understand whether a property can be legally used as you intend to use it. And it is imperative that you make this call BEFORE you buy the property, and even BEFORE you make an offer on the property! | |
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Mortgage Interest Rates Edge Back Down, A Bit |
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![]() Mortgage interest rates have steadily climbed over the past nine months -- from 3.78% last September to 4.66% about two weeks ago. Now, however, they have drifted back down a bit to 4.56%. Will this be a trend? Are we headed back below 4.5%? Not necessarily. But -- it might be an indication that we're not going to keep on rolling all the way up to 5% anytime soon. If you are buying a home and are under contract to buyer a particular property and have not yet locked in your mortgage interest rate, this week would seem to be a particularly good time to do so. Explore historical interest rates here. | |
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Showing Feedback Unrelated To Price Might Really Be Related To Price |
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![]() My house has an unbelievably steep driveway, but all of the potential buyers (who did not make an offer on my house) didn't complain about price, they complained about the steep driveway. My house is next to the railroad tracks, but all of the potential buyers (who did not make an offer on my house) didn't complain about price, they complained about the railroad tracks. My house is needs many cosmetic updates, but all of the potential buyers (who did not make an offer on my house) didn't complain about price, they complained about the need for cosmetic updates. Guess what --- unless you're going to flatten the driveway, move the railroad tracks (or the house), or make all of the cosmetic updates -- it really is an issue of price! If you're getting consistent feedback about your house that is unrelated to price, in almost all cases, you need to adjust the price to accommodate for that specific issue. If the price is lower then buyers might actually buy despite the specific issue that they were complaining about. | |
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Are You Thinking About Purchasing A Modular Home? |
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![]() According to Wikipedia, a stick-built structure is "one constructed entirely or largely on-site," as opposed to a modular home that is "divided into multiple modules or sections which are manufactured in a remote facility and then delivered to their intended site of use." My experience in chatting with buyers over the past 15 years has been that there are mixed opinions on modular homes. For example, some would suggest that . . .
Overall, my experience indicates that modular homes sell at slightly lower prices as compared to stick built homes -- and some of that is solely as a result of some buyers being hesitant to purchase a modular home. | |
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Dealing With Water Damage In Your House |
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![]() It has been a wet few days in the Valley. My house has remained dry, but I have been perfecting my water removal skills via shop vac, squeegee and more at our church. Below are some helpful recommendations from Spotless if you are dealing with water in your house...
The final stage is drying and monitoring should be done by a professional to prevent secondary damage (I.e mold and mildew). Unfortunately companies only have so much drying equipment.
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FOMO (Fear Of Missing Out) in Real Estate is Real and Reasonable |
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![]() OK -- I'll bend the definition of FOMO a bit to make a point. The "real" definition -- "anxiety that an exciting or interesting event may currently be happening elsewhere, often aroused by posts seen on a social media website" But then, for real estate... Sometimes a property can be on the market for a few weeks (or even a few months) without an offer -- and then when an offer comes in, all of a sudden a 2nd or 3rd buyer is also then ready to make an offer. So, what's happening here? Is it random timing? Likely not -- I think it is FOMO -- Fear Of Missing Out...
So, as a seller -- if you have had a good number of showings, but no offers -- don't be surprised if a second offer quickly materializes after the first offer comes in. And as a buyer -- if you are still potentially interested in a house, but have not made a decision about making an offer -- make sure the seller's Realtor knows of your continued interest, so that they can alert you or your agent if an offer does show up. The seller will want to make sure you have the opportunity to make an offer as well. | |
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This House Is Sold AS IS, Inspection For Informational Purposes Only |
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![]() Sometimes a seller is stating this as soon as they list a property: All inspections are for informational purposes only. or This house is being sold in "as is" condition. And, sometimes a seller will introduce this amidst negotiations. This can certainly trigger some warning signals for a buyer......but should it?
Here are the top three innocent reasons why a seller would want a home inspection to be for informational purposes only....
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Your 1200 SF In Your Basement Is Not The Same As My 1200 SF Above Grade |
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![]() So -- your neighbor's 2400 SF, circa 2000, 4 BR, 2 BA home just sold for $300K. It's probably reasonable to think that your 2400 SF, circa 2000, 4 BR, 2 BA home will also sell for $300K, right? After all, you have made the same updates (systems and cosmetic) over time -- and you're on the same street!
Well, maybe -- but maybe not! Consider the possibility that....
These two homes will not be seen as having an equivalent value -- not by potential purchasers and not by an appraiser. Above grade square footage has a higher value attached to it -- both specifically by appraisers, and generally by purchasers. Even if all of the other factors (condition, age, location, bedrooms, bathrooms) are the same between two houses, if one has a significant portion of the square footage in the basement then it will be seen as less valuable than the home that has all of its square footage above grade. | |
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Focusing Only On One Comparable Sale Can Lead Us Astray |
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![]() It's easy to want to do this -- as either a buyer or a seller. Let's think about it using the mostly fictional illustration below...
THE BUYER'S STATED PERSPECTIVE I know that your house is listed for $400K, but this one other home a few streets over sold for $350K last month, and it was a larger, so I'm not paying any more than $350K for your home. THE LARGER CONTEXT Just a few items...
Furthermore, aside from all of these differences in the two houses --- the other ($350K) house is not available any longer --- and there aren't three other houses just like it that the buyer can decide to buy. In this case, by focusing on this one not-actually-that-similar sale, the buyer has put themselves in a situation where they might miss out on purchasing a great home because of how they are viewing the market based on one comparable sale. THE SELLER'S STATED PERSPECTIVE I am confident that I can sell my house for $350K. After all, my friend owned a very similar house and he just sold it in a week, with multiple offers, for $360K! THE LARGER CONTEXT Just a few items...
Again, by focusing on this one not-actually-that-similar sale, the seller has put themselves in a situation where they might miss out on selling their home because of how they are viewing the market based on one comparable sale. So -- as a buyer or as a seller -- don't focus on just one comparable sale when deciding on a reasonable price to pay or to ask -- look for the larger context! | |
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In The Real Estate World, It Is Almost Time For Kids To Go Back To School |
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![]() Yes, I know, I know, the school year hasn't even ended yet. So why am I already thinking about when school aged kids are going to be going BACK to school in the Fall!?! Well, because buying a home is not an overnight process. Neither is moving into a home. If you are planning to sell your home in the next six months -- and you think some of the buyers who might have interest in your home would have school aged kids -- consider this... June 1, 2018 - we put your house on the market July 1, 2018 - we have the house under contract (could be faster, could be slower) August 15, 2018 - closing on your house (typically around 45 days) So, as you can see, if a buyer is going to buy your home -- and move in before the next school year starts -- they need your house to be on the market soon or NOW! So -- let's start chatting sooner rather than later about price, condition and marketing and getting your house ready to go on the market! | |
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Buyers Buying Faster This May Than Last |
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![]() In the past 12 months there have been 1274 home sales -- compared to 1324 in the 12 months prior -- so, technically, the pace of home sales in our market has slowed by 4% over the past year. But -- home sales are POPPING so far this year... Closed sales last January through April = 332 Closed sales this January through April = 345 (4% increase) And -- as shown above, we've seen 120 buyers (and sellers, of course) sign contracts in the first 22 days of May -- as compared to only 101 last year. Hold onto your hat (?) everybody -- this could be a rather active year, yet again, in our local housing market. | |
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Fewer and Fewer Foreclosure Sales in Harrisonburg, Rockingham County |
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![]() In good news for area homeowners, fewer and fewer homes are being foreclosed upon in Harrisonburg and Rockingham County. The graph above shows the number of foreclosures that took place in the first four months of each of the past five years. As can be seen, the number of foreclosures in 2018 is less than half of how many were seen in the same time period during each of the past four years. Fewer foreclosures is a sign of a healthy local economy and housing market. Read more about our local housing market in my most recent monthly market report. | |
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Home Prices Edge Upward As Demand Exceeds Supply |
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![]() Find out about this newly listed custom home: 2550RamblewoodRoad.com. I just published my most recent monthly market report, and as usual, you can read on for an overview, download the full report as a PDF, read the entire report with commentary online, or tune in to my monthly video overview of our local housing market... Now, let's dive into some of the latest data from our local real estate market.... ![]() As shown above, it's been an interesting start to the year...
![]() Shining a spotlight, briefly, on the City of Harrisonburg alone (not the County) we find...
![]() January 2018 was a tad slow -- but then February, March and April easily outpaced the same months last year. Wow! So -- where will we go in May? Could we really see a 50% increase (from April to May) as we saw last April (100) to May (149) or will the increase be a bit more tame? ![]() Lest we get toooo overjoyed about the fantastical pace of home sales in the first four months of this year -- I will point out that the last four months of last year also looked QUITE promising, before sales slowed down during the rest of the year to actually show a net decline in the number of home sales in 2017 as compared to 2016. So -- get excited -- slowly? Cautiously? ![]() Sellers seem to be able to hold firm on their price a bit more this year than -- oh, I don't know -- any of the past 10 years!? Yes, that is true. Sellers negotiated anywhere between 2% and 4% off of their last list price over the past 10 years -- but so far in 2018, they have only negotiated 1% off of their last list price! ![]() What comes next, you might ask? Well -- we generally look at the pace of contracts to have an idea of what home sales might look like in the coming month or two. So -- what do we see now? Well, curiously, this January through April 431 properties went under contract -- and -- last January through April 431 properties went under contract. So -- yes -- it seems possible that the HOT months of home sales in May and June might be seen again this year. ![]() One of the reasons why there has been an overall decline in home sales (when looking at the past 12 moths compared to the previous 12 months) is because of declining inventory levels. There are currently 21% fewer homes on the market as compared to one year ago -- EVEN THOUGH we have seen a mini Spring surge in listings over the past few months. ![]() And finally -- those interest rates. They seem to be on the rise, woah, quite a bit! We have seen interest rates rise three quarters of one percent over the past nine-ish months. What's next? Will we push past 4.61% and start approaching 5%? Some say so. I don't think we will, but I have been wrong plenty of times over the past 5+ years about trends in mortgage interest rates. OK -- I'll stop there for now. Again, you can download the full report as a PDF, read the entire report with commentary online, or keep reading my blog in the coming days for further commentary. AND -- if you're thinking of buying or selling soon --- SELLERS -- even though it is a seller's market in many price ranges right now, you must still focus on price, condition and marketing. For further reading on buying or selling in this area, check out.... | |
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Where Will Recent JMU Graduates, Staying In Harrisonburg, Buy Houses? |
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![]() It's a numbers games, folks.... Some percentage of each graduating class at JMU (and EMU, and Bridgewater College) will decide they want to stay in Harrisonburg and make it their home. These three institutions seem to graduate around 6,000 students each year. How many might decide to stay in Harrisonburg? In chatting with several folks about this yesterday, I pondered aloud whether enough new "for sale" housing is being built for recent grads to buy, once they decide they want to stick around and buy a home. Or, more broadly, is our housing stock growing as fast as our population. I suspect that it is not -- based on how quickly homes are selling and how low our inventory levels remain month after month. So, what are these recent (within the past few years) JMU grads to do? Perhaps make several offers on several properties, missing out on most because of multiple offer situations, and then eventually securing a contract to buy a home. Or, perhaps they just rent because there is so little to buy. But if many or most of them do rent, it is -- at least in the short term -- a net loss for our community. If they buy a home, they will be putting down roots, committing to stay in the area, investing even further in our local economy, etc. If they are renting, not so much on any of those fronts. Not so long ago (ok -- fine -- 16 years ago) I was a recent JMU graduate -- having just finished up my master's degree -- and my wife (fiancé at the time) and I decided we wanted to stay in this area. We were able to find a townhouse to buy, and were excited to make this our home. The landscape now, at least for recent graduates buying homes, is a bit different. | |
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Is $250K The Sweet Spot of our Local Housing Market? |
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![]() As Hannah observed out this morning (thanks Hannah!) the $250K price point seems to be the sweet spot for our market. As a random aside, while I use the expression "sweet spot" with some regularity, I had forgotten its primary meaning, which Google informs me is... "the point or area on a bat, club, or racket at which it makes most effective contact with the ball" As a further aside, I have no idea if the tennis player pictured above is about to hit the tennis ball at the sweet spot of the racket!? But I digress. The second definition of "sweet spot" per Google is... "an optimum point or combination of factors or qualities" And that, I believe, sums up Hannah's point about the $250K price point... 1. There are LOTS of buyers who would like to buy $250K-ish homes. 2. Inventory is extremely low around the $250K-ish price point. 3. Builders aren't really hitting that $250K price point with many new homes being built. So - if you own one of these homes already - congrats, and know that you could likely sell it if you need to do so. And if you want to buy one of these homes, consider my usual advise for buyers in this fast paced market -- know the market, know the process, know your buying power, and closely monitor new listings! | |
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Sometimes The Home You Want Will Dictate Where You Will Buy |
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![]() Wouldn't it be nice if you could buy a restored early 1900's home in five different areas in Harrisonburg, east of the City, west of the City, etc.? Wouldn't it be nice if you could buy a mid-range $225K single family home in any school district you'd like in Harrisonburg and Rockingham County? Wouldn't it be nice if you could buy a four bedroom home built in the past 10 years in downtown Harrisonburg, or on a variety of one acre lots in many different parts of the County? Yeah -- it would be nice. But, this is a rather small area. Sometimes, the home you want to buy will dictate where you will live. This is the most surprising to buyers moving here from larger metro areas -- where any different type of home (style, price range, age, etc.) is available in countless areas in and around the ___ metro area. Not so much in Harrisonburg and Rockingham County. So -- we can talk about what you want to buy -- and where you want to buy. But then we'll have to pause to make sure the what and the where appropriately overlap to give you a chance of finding that home. If not, we'll either have to adjust the what, or the where! | |
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Why Is Shopping Around For Mortgage Interest Rates Important? |
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![]() As mortgage interest rates rise, we are likely to see a bit more variation in interest rates between lenders. As such, it is important to check with at least two lenders to make sure you are getting the best possible interest rate on your new mortgage. As shown above, a half of a percentage point shift in the interest rate can make a big difference in the monthly payment. Oh, and if we stretch out that difference over 10 years, assuming you stay in your home that long, here's how much extra you would pay with that higher mortgage interest rate....
Feel free to email me (scott@HarrisonburgHousingToday.com) if you would like recommendations of lenders in this area. | |
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What homes are NOT being built? |
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![]() The graph above is not based on any actual data -- it's based on my experience of our local market, and conversations with a variety of buyers over the past few years. It seems that most of what has been built as new housing stock in this area over the past 15 years has either been townhouses -- or high end homes. This has left quite a gap in the middle of the market, where there is a LOT of buyer demand, but where there is NOT a lot of new housing stock to help meet this demand. How and when will this change? What will these buyers buy if they can't buy a home in that middle of the market price range? | |
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
Licensed in the
Commonwealth of Virginia
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