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Home Sales Slow In November 2022, But Prices Keep On Rising |
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![]() Happy Tuesday morning, friends! Winter is upon us. The holidays are upon us. I hope you have been enjoying the variety of Christmas light displays in and around Harrisonburg. Shaena and I, with several other family members, greatly enjoyed visiting the "Winter Wander" light display at the Boar's Head Resort in Charlottesville a few nights ago. Next time maybe we'll have to dine there or stay over as it was quite lovely! Check out the lights at Winter Wander yourself between now and January 7th... ![]() Before we move onto the real estate data we're all waiting for, each month I offer a giveaway, of sorts, for readers of this market report, highlighting some of my favorite places (or things) in Harrisonburg. Recent highlights have included Walkabout Outfitter, Bella Gelato and the JMU Forbes Center. This month, I encourage you to go check out Grilled Cheese Mania on Main Street in Harrisonburg. If you find me at GCM, you'll likely find me enjoying the Triple Lindy with a side of Miss Tess' Tomato Mac. :-) Click here to enter to win a $50 gift certificate to Grilled Cheese Mania! Finally, take a few minutes to check out this month's featured home... a spacious, remodeled farmhouse on an acre in the Turner Ashby district with some excellent outdoor amenities located at 3667 Dry Hollow Road! Now, let's take a look at the latest data in our local real estate market... ![]() Let's drive right into a few of the main metrics of our local housing market outlined above... [1] Home sales slowed considerably this November compared to last November... declining 35% from 138 sales to 90 sales. You'll see a clearer (and more startling) visual of that shortly. [2] This significant decline in the number of home sales in November 2022 resulted in an overall 3.5% decline in 2022 home sales as compared to 2021 home sales when viewing the first 11 months of the year. [3] But yet... the median sales price in our area keeps on rising, up 11.3% from a year ago to $299,900 when looking at the first 11 months of 2022. [4] Furthermore, homes are (as a whole) still selling just as quickly... with a consistent median of five days on the market thus far in 2022, which matches the speed of home sales a year ago. Now, that startling visual of the November 2022 dip in home sales... ![]() Lots to note regarding the graph above... [1] We saw slower (fewer) home sales in each of the four months leading up to November. This was not altogether surprising, as mortgage interest rates have been steadily rising throughout 2022. [2] Home sales really (!!!) slowed down in November 2022... dipping down to 90 home sales as compared to 138 in the same month last year. [3] The 90 home sales this November is not actually that different than the 93 seen back in November 2019. [4] The past two years (2020 and 2021) may very well be anomalies given that they were during the Covid induced overheating of the local real estate market. If we look at the five Novembers prior to 2020 (thus, 2015-2019) we'll find an average of 94 home sales in November. So... home sales dropped significantly in November 2022. That's somewhat surprising, as it finishes off a long, multi-year, run of a super exuberant local housing market. It's also not that surprising, given rising mortgage interest rates, and given what usually happens in November if we're not in Covid times. As we'll see below, the temporary (crazy) boom in home sales brought on by Covid and super low mortgage interest rates may be coming to an end... ![]() Prior to Covid (2020-2021) we had been seeing a relatively consistent 1300-ish home sales per year. Then, the market went crazy during 2020 and 2021 and home sales approached 1500 sales in a year, and then almost reached 1700 sales in a year. That string of two record breaking years in a row... won't continue in 2022. All the way up through September 2022, it was seeming that we'd have yet another record breaking year this year. But 2022 fell slightly behind in October, and even further behind in November. Looking ahead, it seems likely that 2022 will end up being the second strongest year of home sales ever in Harrisonburg and Rockingham County... just behind 2021. Looking at things from a slightly longer term perspective, we can see yet again how the local real estate market is slowing a bit after having peaked in 2021/2022... ![]() A year and a half ago (ish) we were seeing home sales at an annual pace of 1,617 sales per year... back in July 2021... which included sales from August 2020 through July 2021. Now, we're seeing home sales at an annual pace of 1,620 sales per year... which includes sales from December 2021 through November 2022. So, the market has retreated a bit... with fewer sales per year now than we've seen for the past year and a half-ish. This was highly predictable given rather dramatic increases in mortgage interest rates. It is somewhat surprising, however, that the decline in annual sales has been as small as it has been given how much mortgage interest rates have increased. The pace of annual sales peaked at 1,726 sales... and we have only seen a 6% decline from that peak... to 1,620 sales per year. Now, then, given that home sales are slowing, we're almost certainly seeing inventory levels rising, right? ![]() I'll make this point a few more times as we continue through these graphs, but here's your first visual showing that even if the market is starting to transition a bit, it's not doing it very rapidly. Yes, home sales are slowing. The graph above shows how many buyers are buying in a six month timeframe. We have seen a decline over the past year from 833 buyers buying every six months down to 810 buyers buying. So, yes, the pace of buyers committing to buy is certainly slowing. But... we're not seeing as much of an increase in sellers selling (inventory levels) as we might otherwise expect. We've seen an increase over the past year from 115 homes for sale up to 138 homes for sale, but that's still a notable net decline in inventory from two years ago and three years ago. So, is it a slightly less strong seller's market now? Yes. Is it still a strong seller's market now? Yes. Now, looking at contract activity for a moment, to predict where things might be headed from here... ![]() As becomes evident with my handwritten note on the graph above... contract activity this October and November was MUCH slower than last October and November! After a combined total of 297 contracts being signed during that two month period last year... we have seen only 166 contracts signed this October and November, which is a 44% decline! Again, first, not a total surprise. Buyers are a bit less excited to sign contracts to buy homes with interest rates of 6% to 7% (this Oct/Nov) as compared to when interest rates are 2.5% to 3.5% (last Oct/Nov). Second, these lower contract numbers have started to result in lower sales numbers and that is likely to roll into December sales and January sales. Finally, it's important to remember that past two winters (2020, 2021) were a bit abnormal given Covid (lots of buyers wanting to buy a house) and super low interest rates (lots of buyers qualifying to buy a house) and this winter we seem to be returning to what was previously a typical seasonal trend of fewer contracts and sales during winter months. Now, then, back to inventory... certainly it must be rising, given fewer closed sales and fewer contracts being signed, right? ![]() And... nope! Inventory levels rose through much of 2022... but have now been declining for the past four months... as is relatively normal for the fall into winter timeframe. Furthermore, inventory levels are still lower now than they were two years ago. This coming spring will be interesting, depending on how mortgage interest rates look at that time. It's typical to see lower inventory levels in the winter, and that makes the lower contract numbers less consequential. Lots of folks choose to sell in the spring and summer, and if we have lower contract numbers at that time, then we could see inventory levels starting to measurably increase. Driving this point home one more time... ![]() The graph above shows inventory levels by property type. Inventory levels of attached homes (townhomes, duplexes, condos) have stayed relatively consistently between 25 and 40 over the past year and a half. Inventory levels of detached homes were rising between June 2021 and June 2022... but then have declined for the past four months. So, as my notes point out... higher mortgage interest rates did indeed lead to slower sales... but slower sales are not necessarily leading to higher inventory levels. Come spring, we may have new insights as to a potential new trajectory of the market if more sellers want to sell and this lower number of buyers are willing to buy. This next graph has become a bit more complex since I last referenced it... ![]() First, conceptually, the timeframe in which homes are going under contract (days on market) is often an excellent indicator of the tone of the local market. As such, for some time I have been tracking the "median days on market" for homes that are selling in Harrisonburg and Rockingham County. The annual median days on market (blue line above) fell to five days (!) back in July 2021 and has remained at that level ever since. As the market has started to feel like it might be transitioning, or as we have though that maybe the market would have to be transitioning, several of you insightful and intelligent readers have asked if this "median days on market" trend looks different if we weren't looking at an entire year of data at a time. Basically asking the question... well, if the median days on market is five days over the past year... certainly it must be (might be?) higher if we looked only at the last few months, right? The new lines on this graph above address this inquiry. The gold/yellow line evaluates median days on market in a six month timeframe... and the red line shows this same metric in a three month timeframe. All that to say... even if we narrow our scope all the way down to the past three months... the median days on market has only risen to... six days instead of five. Half (or more) of the homes that have sold in the past three months were under contract within six days of being listed for sale. If (when?) the market transitions further, we will likely start to see this metric (median days on market) start to trend higher... but we're not seeing it yet. One of the main market impacting factors that I mentioned multiple times throughout this report is the change in mortgage interest rates over the past year... ![]() A year ago buyers enjoyed mortgage interest rates right around 3%. Today... rates are twice as high... with an average rate of 6.58% for a 30 year fixed mortgage interest rate as of the end of November. Rates have actually trended down a bit further since that time... with a current average of 6.33% that is not yet shown on the graph above. Will significantly higher mortgage interest rates cause some buyers to not be able to buy? Yes. Will significantly higher mortgage interest rates cause some buyers to not want to buy? Yes. Will significantly higher mortgage interest rates cause a significant (10% or more?) decline in the number of buyers buying homes in our local housing market? Thus far, it seems not. And there you have it... the latest trends in our local housing market as we roll into the last two(ish) weeks of 2022. [1] We're starting to see fewer home sales... though the "fewer" is compared to a "higher" time that we might later conclude was well outside the norm for our local market. [2] We're still seeing higher and higher sales prices in our local market despite (non-cash) buyers financing their home purchase at some of the highest mortgage interest rates we've seen in over 10 years. [3] Despite slightly less buyer activity, inventory levels are remaining stable and may be starting to return to historical seasonal trends of fewer homes on the market in the winter and inventory levels rising again in the spring and summer. As we near the end of 2022, some of you may be considering the sale of your home (or the purchase of a new one) in 2023. If so, we should start chatting sooner rather than later about how all of these market trends potentially impact your plans and the timing of those plans. Feel free to reach out to start that conversation by emailing me or texting or calling me at 540-578-0102. I'll provide another update after the first of the year. Until then, I hope you enjoy the remainder of what is one of my favorite months of the year. December includes Shaena's and my anniversary, Shaena's birthday, and Christmas! Celebrations all month long. ;-) I hope you have an enjoyable, peaceful, fulfilling remainder of 2022 -- and that you find opportunities to spend time with the people you love during this holiday season! | |
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Comparison Shopping (For Homes) Is Difficult In A Low Inventory Market |
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![]() If you were going to buy a ____, it would probably be nice to look at multiple options, compare them, and then decide which one to buy, right? That is often possible with buying a home, whenever we have a balanced market (or a buyer's market) when buyers can find multiple houses on the market at any given time that might work for them. A buyer would then go view multiple houses, compare them, and decide if they want to make an offer on one of the available homes. These days (and for the past few years) we have been in a strong sellers market, with very low inventory levels. The same number of houses have typically been available for a buyer to consider... but they are often evaluating them one at a time, every few weeks... instead of all at once. Sorta like this...
Basically, home buyers have had to make a decision about whether to buy a house... one house a time... without the ability to compare multiple options that are available at the same time. That may eventually change, in some or most price ranges, if we start to see inventory levels increase over time. Until then, it can be a challenge to be a thoughtful and intentional comparison shopper when trying to buy a home! | |
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So You Think Home Prices Will Decline? We Would Likely Need To See Much Higher Inventory Levels First! |
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![]() It's all about supply and demand. Over the past few years there have been plenty of home sellers... but WAY more home buyers. This resulted in buyers fighting over each new listing, competing to offer the most compelling terms, often being willing to pay a higher and higher price. Basically... [ Plenty Of Sellers ] + [ Way More Buyers ] = [ Rising Prices ] Some think that given higher mortgage interest rates and seemingly fewer buyers in the market, that we are certainly going to see home prices start to decline in this area. I suspect that will only happen if we see significantly higher inventory levels (of homes available for sale) such that sellers find themselves fighting over each new buyer, competing to be willing to offer buyers the most compelling terms, often being willing to accept a lower and lower price. (I'm exaggerating a bit here, but I just flipped the language above to show you what I mean.) That type of a market would look like this... [ Lots Of Sellers ] + [ Not Many Buyers ] = [ Falling Prices ] Until and unless we actually see measurable, significant increases in inventory levels, what I think we'll actually see is... [ Plenty Of Sellers ] + [ Fewer But Plenty Of Buyers ] = [ Stable Or Rising Prices ] Feel free to offer up your counterpoints or contrary perspectives. I'd love to hear them! | |
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53 Townhomes Proposed Near Intersection Of East Market Street, Stone Spring Road |
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![]() A 53 unit townhome development is being proposed directly on East Market Street, just prior to the 7-11 gas station at the corner of East Market Street and Stone Spring Road when heading east. This residential development would be built on 4.43 acres that is currently zoned A-2 (general agriculture) and a rezoning is being proposed to allow for the residential development. Here's the proposed layout... ![]() Rockingham County staff has some reservations about this proposed layout of this development because the development utilizes private streets (instead of public roads) and thus would not allow for connectivity between existing public roads and potential future public roads to be built on adjacent parcels. More specifically, from the County... "Privately maintained streets are an unreliable means of serving the long-term, publicly accessed street network that will be needed to serve all the land south and west of this site." Furthermore, the proposed layout (T turnaround) does not meet the requirements of the Rockingham County Fire Prevention Code. The Rockingham County Planning Commission considered this request on Tuesday, December 6th and tabled the proposal. Download the full rezoning application packet here. | |
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There Are Still Plenty Of Buyers For Many Houses In Many Price Ranges |
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![]() Some segments of the local real estate market are slowing down... New listings that would have had 20 showings in the first week a year ago are now only having two or three showings in the first week. But... that slowing down is not affecting all properties equally. Plenty of homes coming on the market are still experiencing a flurry of showings (10+ in week one) and sometimes multiple offers. Perhaps it's the great unleveling? Before the COVID induced real estate boom of 2020 and 2021, there was plenty of variability between properties. Some new listings would have lots of showings immediately after hitting the market... and some new listings wouldn't have any at all. But then, in 2020 and 2021, it seemed that almost every listing out there (any location, any price, any property type, any condition) would have lots of showings... right away. It didn't matter if you had a steep driveway... or a small yard... or if your home needed cosmetic updates. During the home buying frenzy of 2020 and 2021, nearly every home would have lots of early interest. But now, the great unleveling... Now, some properties (in some locations and some price ranges) will have plenty of showings... and some will not. As a seller, it's nothing to fear or obsess over... but you do need to recognize this changing market dynamic as you are developing a pricing and marketing strategy for your home. | |
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If You Bought A Home In 2020 Or 2021 You Should Be Retroactively Thrilled About Your Mortgage Interest Rate |
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![]() Did you buy a home in 2020 or 2021? If so, you likely locked in a mortgage interest rate that was the lowest we've seen in the past 10 years... and actually... the lowest we've seen... ever! So, for all of the buyers from the past two years, please look back and be thrilled that you were able to take advantage of that unique opportunity to lock in a very low interest rate on what is likely to be one of the largest purchases of your lifetime. Hopefully your home will work for you for many years to come and you will continue to enjoy the benefits of that super low interest rate. And... for would-be home buyers of 2022... yes, current mortgage interest rates are the highest we have seen in the past 10 years. In fact, we have to go all the way back to 2000 to find an interest rate above 7%. But... mortgage interest rates are starting to trend back down over the past month. They have dropped from about 7% to about 6.5%... and I have seen some recent prequalification letters much closer to 6%. Just as those record low mortgage interest rates didn't stick around forever, it seems unlikely that these record high mortgage interest rates will stick around forever... and they might pass more quickly than we realize. | |
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High Buyer Demand Keeps Prices Rising Despite High Interest Rates, But What If... |
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![]() Between 2019 and 2021 we saw very high levels of buyer demand... and very low mortgage interest rates... which lead to higher and higher sales prices. In 2022 we saw continued high levels of buyer demand... combined with much higher mortgage interest rates... and yet, prices kept rising. Perhaps we'll never need to know the answer to my "what if" above... since buy demand might remain quite high in the Harrisonburg and Rockingham County area for years to come... But what if.... buyer demand declined... and mortgage interest rates remained high... would prices remain high? Or would prices level out? Or would prices start to decline? Again, so long as buyer demand remains high, we may never need to know the answer to this hypothetical question... but feel free to let me know what your guess is as to how our local market would respond... | |
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What Home Improvements Should You Make (or not make) Prior To Selling Your Home? |
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![]() I don't have a master list of what improvements you should, and should not, make before you sell your home... but most improvements you might consider are probably worth discussing before you spend time and money making the improvements. Some of the questions we will be asking ourselves about each improvement will be... [1] What does this improvement cost and how much will it potentially increase the sales price of your home? [2] Will nearly every buyer want to make this improvement and who much will they estimate it would cost compared to the actual cost of the improvement? [3] Will making this improvement elevate your home into a different price bracket? [4] Does every other home comparable to your home already have this improvement completed? [5] Does the lack of making this improvement significantly affect the overall impression a buyer will have of your home? Again... there isn't a universal list of "do this" and "don't do this" -- but before you start making a LOT of improvements and/or before you decide to make ZERO improvements, let's walk through your house together and discuss the best strategy for how to improve your home before selling it. | |
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The Conundrum Of What Price To Offer On A Slightly Overpriced New Listing |
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![]() Oh, silly sellers, why did you have to make this so difficult!? ;-) There's a fantastic new listing on the market... very likely worth $415K. But... the sellers listed it for sale with a price of $430K. Ugh. You want to make an offer on this house... you want to buy the house... but what do you offer? If the house had been priced at $415K, you would immediately make an offer of $415K. If the house had been priced at $420K, you may very well have made an offer of $420K. But the house is priced at $430K. So do you... [1] Offer $430K, the list price, ignoring the fact that you think this is too much to pay for the house? [2] Offer $415K, the likely value of the house, but $15K lower than the list price? If you offer $430K you are likely paying more for the house than it is worth in the current market. If you offer $415K the seller is almost certainly going to stall in responding to your offer, hoping for another offer that is higher... and is going to alert other interested buyers that they have an offer... which might result in other offers coming in as well. There is no easy answer to this question... it's situational in some ways... and your course of action should be guided by your level of interest in the house and the amount of other early interest in the house. But darn those sellers, pricing the house a bit of market value. ;-) | |
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Are Things Slower Now In The Local Real Estate Market? |
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![]() This is the number one question I am asked these days when I am chatting with non-buyers and non-sellers around town. In other words, folks who are not currently buying or selling or trying to buy or trying to sell. Are things slower now? The answer is, as perhaps you might expect... yes and no. Yes, things are slower...
No, things are not slower...
So, things definitely feel slower - the hectic, crazed, frantic pace of 2020-2022 has cooled off. But in many ways (number of sales, price of homes sold) the market is just as strong, brisk, vibrant, as ever... it's just not over the top, unbridled exuberance as it has been for the past few years. | |
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Some, But Not All, New Listings Will Still Have Multiple Offers Within Days! |
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![]() Some new listings are now remaining on the market for a week or two -- instead of a day or two -- before going under contract. That being the case, there are still plenty of homes going under contract in a matter of days, often with multiple offers. For example... in the past 60 days 175 properties have gone under contract... and of those, 62 of them were under contract within four days. So, yes, you may be able to pause for a day before making an offer, but keep in mind that plenty of properties are still going under contract quickly and they might require faster action. My advice... Go see a new listing of interest as quickly as possible, start working your way through your decision making process as quickly as possible, and ask to be notified if any offers have been received. | |
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Many Home Buyers Now Find They Can Actually Think For A Minute Before Making An Offer |
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![]() For a few years now, many home buyers in Harrisonburg and Rockingham Countuy have felt the PRESSURE to make a decision QUICKLY after viewing a new listing. Monday, 8:00 AM - new listing hits the market Monday, 1:00 PM - go see the house Monday, 4:00 PM - make an offer Much of this mad rush, however, was due to an EXTREME number of home buyers pursuing every new listing. It was not uncommon to have 20+ showings on a new listing within 24 or 48 hours of the property being listed for sale. Higher mortgage interest rates have reduced overall levels of buyer activity and enthusiasm, resulting in many new listings having a more normal-ish three (or so) showings a day for the first few days that the house is on the market. As a potential buyer, when you are competing with other potential buyers -- instead of 19+ other buyers -- you have a bit more time to make a decision about whether you want to make an offer on a new listing. This change -- in my opinion -- is good, normal and healthy for our local housing market. It doesn't mean that houses aren't selling... or that they are taking ages to sell... or that they are selling for lower prices... it just means that sellers might have to wait a few days longer to have an exciting offer to review... and that buyers can actually take a minute to decide whether they want to make an offer on the exciting new listing. So, buyers... yes, let's go see houses quickly when they hit the market, but you might not need to make a decision about an offer within a matter of a few hours now... maybe you can sleep on the decision and let me know in the morning! | |
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Current Housing Market Trends In Four Lines, Two Curves |
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![]() I sent out a long and detailed market report yesterday with lots of data, charts and graphs. You can find it here. But maybe you don't want to read something that long. ;-) For those that don't, enjoy a comprehensive(ish) understanding of the market described above with four lines and two curves. SALES - we have started to see fewer sales over the past four months PRICES - the median sales price keeps on rising INVENTORY - after starting to see some increases we are now seeing what is likely a seasonal decline in the number of homes for sale CONTRACTS - we have seen multiple months of declining contract activity DAYS ON MARKET - homes are still selling fast... very fast RATES - mortgage interest rates keep on rising Sure, this leaves out some of the nuance in yesterday's report, but it should give you a good enough primer to understand the basic market dynamics at play right now in the Harrisonburg and Rockingham County real estate market. Questions? Thoughts? Observations? Email me: scott@hhtdy.com | |
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Slightly Fewer Homes Are Selling At Ever Higher Prices |
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![]() Happy Monday morning, friends! What a delightfully warm fall we had this year! I hope you have taken advantage of the beautiful weather and explored some of the many outdoor adventures the Shenandoah Valley offers us. Late last month, Shaena and I, with several other family members, enjoyed a 30 mile bike ride on the Greenbrier River Trail in West Virginia and took in many beautiful sights along the way. I highly recommend it as a day trip! ![]() Before we get to latest happenings in our local real estate market, each month I offer a giveaway, of sorts, for readers of this market report, highlighting some of my favorite places (or things) in Harrisonburg. Recent highlights have included Bella Gelato, the JMU Forbes Center and the Harrisonburg Half Marathon. This month, I encourage you to go check out Walkabout Outfitter in downtown Harrisonburg where you will find plenty of awesome gear and apparel for your next outdoor adventure! As a bonus, click here to enter to win a $50 gift certificate to Walkabout Outfitter! Also, take a few minutes to check out this month's featured home... a spacious, five bedroom home in Highland Park located at 3658 Traveler Road! Now, then, let's dig into the data. I'll preface it by saying that the trends you might read regarding significant changes in housing markets across the country don't necessarily seem to be showing up in our local housing market at this time. Read on to see what that means from the latest available data... ![]() A few things stand out to me as I look at the latest overall numbers in our local housing market above... [1] We saw fewer home sales in October of this year (147) compared to last year (166) which marked an 11% decline in monthly sales activity. [2] This decline in October sales piles onto January through September sales to show a tiny decline in home sales (-0.43%) when looking at the first ten months of this year compared to the first ten months of last year. [3] Homes are still selling for quite a bit more now than they were last year. The median sales price of homes sold thus far in 2022 has been $299,900 -- up 11.5% from last year when the median sales price was $269,000. [4] Homes are still selling (as a whole) just as fast now as they were last year. The current median days on market is five days... just as it was a year ago at this time. This means that half (or more) of homes that sell are under contract within five days of being listed for sale. So... a slower than expected October, but otherwise still quite a strong year of home sales activity. That theme will continue as we work our way through the rest of the data, with only a few exceptions. It is interesting to note the slight difference in performance of detached single family homes compared to attached homes, which includes duplexes, townhouses and condos... ![]() [1&2] Detached single family home sales are shown in the first two green tables above and you'll note that there were just about the same number of sales this year (939) as last year (937) and that the median sales price has increased 13% over the past year. [3&4] In contrast, we have seen a slightly decline (-2%) in attached home sales over the past year and the increase in the median sales price (+8%) is slightly lower than that of single family homes. So, the "detached" portion of our local housing market has outperformed the "attached" portion of the market, but not significantly. Looking at the last few months graphically, it seems the lower month of home sales in October was actually... the fourth month in a row of fewer sales... ![]() During each of the past four months (Jul, Aug, Sep, Oct) we have seen fewer home sales this year than during the same month last year. Looking ahead, it seems very likely that we will see fewer home sales in November and December as well, especially once we consider the number of contracts signed (or not signed) in October. Read on for more on that... Here, then, for the first month in quite a few years, I am reporting that the pace of home sales (the number selling) is declining... ever so slightly... ![]() Don't get me wrong, it's been exciting to report each and every month for the past few years that there have been more, and more, and more home sales. But perhaps this rapid increase in the number of homes selling could not go on forever. This year and last are now relatively even when looking at the first ten months of the year, but 2022 is falling slightly behind. At this point, I am predicting that we'll see 2022 fall a bit further behind as we finish out the year. But despite fewer sales, prices are... ![]() Yes, indeed, home prices are still rising. The orange line above shows the number of homes selling in a year's time. The last four months of declines in the annual pace of sales is a result of those four months of fewer sales shown in the previous graph. We have now seen a decline from a peak of 1,726 sales per year down to 1,667 sales per year. But despite fewer sales... home prices keep on climbing! The median sales price of homes sold in Harrisonburg and Rockingham County over the past year has now risen to $295,000. As one of my past clients once pointed out... most homeowners don't care how many homes are selling... they care about the prices of those homes that are selling. So, from an overall market perspective, things are still looking rather bright in the local housing market as prices seem to still be on the rise, even if we are seeing slightly fewer home sales. Another trend that is interwoven into this equation is housing inventory... how many homes are on the market for sale at any given point... ![]() Over the past several years we have seen extremely low inventory levels at any given point in time. Plenty of homes have been listed for sale, but they have gone under contract very quickly given very strong buyer demand in almost all price ranges and locations. During much of 2022 we started to see an increase in the number of homes listed for sale...rising to 163 homes for sale in July... compared to only 129 the previous July. So, yes, the market seems to be transitioning a bit... perhaps we won't see super low inventory levels forever. But despite signs of a slowly transitioning market during the spring and summer of 2022, we are now seeing a normal seasonal decline in inventory levels as we work our way into the fall. The place where the rubber meets the road is when we combine buyer activity (demand) and housing inventory (supply) to see what balance does or does not exist in the market... ![]() As shown above, we may be starting to see a slight, modest, tiny transition in the balance of the market. We are starting to see buying activity slow... slightly. We are also starting to see inventory levels rise... slightly. Do keep in mind, though, that this is likely a transition from an extremely strong seller's market to a very strong seller's market. There is still very strong demand in the market for most properties at most price points and in most locations. To get anywhere close to being a balanced market we would need to see much more significant declines in buyers who want to buy homes and much more significant increases in sellers who want to sell homes. I'm realizing now that my preceding paragraph might now seem like it was leading up to this next graph. Digest the next graph... don't fall off of your chair... and then keep reading below... ![]() Somewhat surprising, right? There was a significant, large, drastic, huge decline in contracts being signed this October as compared to last October. Why? What happened? Does this mean the market is turning on a dime? Is buyer demand dropping off a cliff overnight? I'd point out a few things... [1] Mortgage interest rates did jump up again, significantly, in September and October - which likely played at least some role in slowing down buyer enthusiasm. Which, side note, was the intended effect -- or at least an understood side effect -- of the interest rate hikes. [2] If we're surprised by the low number of contracts signed this October we should probably be equally (or even more) surprised by the ridiculously high number of contracts signed last October. Last October was the peak of contract signing in all of 2021, which is odd -- that doesn't usually happen in October. All that is to say, the number of contracts signed in October (94) leads me to believe that we will see slightly slower months of home sales in November and December, but it does not cause me to conclude that the market changed drastically sometime in October. Clearly, though, only time will prove me right, wrong, mostly right or mostly wrong. ;-) So... with this big (but perhaps temporary) decline in contracts being signed... and with the slight decline in homes selling... it's probably safe to say that homes are not going under contract as quickly, right? ![]() Ummmmm... nope! The "median days on market" metric continues to hover at five days on the market. Homes are still going under contract very quickly. To be clear, this data point above is looking at home sales over the past 12 months to arrive at this "five days" metric. You might then wonder if we would start to see higher "days on market" results if we looked only at the past six months, or three months or one month. Let's take a look... Median Days On Market Past 12 Months = 5 days Past 6 Months = 5 days Past 3 Months = 6 days Past Month = 6 days So, yes, it's taking... one extra day for homes to go under contract. ;-) Now, for our monthly opportunity to point the finger of blame... ![]() Why oh why are home sales slowing down? Why is contract activity slowing down? What in the world could be causing these changes? ;-) Well, could it be higher mortgage interest rates? We started the year with interest rates below 4% and then proceeded to fly past 4%, 5%, 6% and now 7%. Home buyers will keep on buying as prices rise 10% (or more) per year when mortgage interest rates are between 2% and 4%... but when mortgage interest rates get to 6% or 7% that can start to impact buyer decision making... either because they can no longer afford the monthly mortgage payment... or because they don't want the higher monthly mortgage payment associated with current mortgage interest rates. Just as a bit of context (that is sure to make me sound old) back when Shaena and I bought our first home (a townhouse in Beacon Hill in 2003) our mortgage interest rate was... 6.25%. So, these mortgage interest rates of 6% or 7% aren't absolutely crazy from a long-term context, but after experiencing abnormally low mortgage interest rates for years, and years, and years... a 6% or 7% rate certainly sounds and feels high! Now then, where does all of this leave us? Lots of homes are still selling... rather quickly... at higher prices than ever before... but buyer activity is slowing a bit... at least partially related to high mortgage interest rates. Thus, my advice is as follows, depending on where you fit into our local market... SELLERS - Consider selling sooner rather than later in case mortgage interest rates keep climbing, or in case prices start to level out. BUYERS - Consult with an experienced lender to understand your best mortgage options to make sure you are buying at a reasonable and comfortable price point. HOMEOWNERS - Enjoy your (likely) low mortgage interest rate, and your still-increasing home value. If you're considering buying or selling yet this year... or in early 2023... let's chat sooner rather than later to formulate a game plan. The first step? Email me or text/call me at 540-578-0102. I'll provide another market update next month, but between now and then I hope you have a wonderful Thanksgiving and that you are able to let those dear to you know how thankful you are that they are a part of your life. Happy Thanksgiving! | |
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60 Townhouses And 34 Apartments Proposed For Corner(ish) Of North Main Street And Mount Clinton Pike |
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A property owner has proposed the rezoning of a total of 12 separate real estate parcels near the intersection of North Main Street and Mount Clinton Pike to allow for the development of 60 townhouses and up to 34 apartments as shown on the conceptual plat above. In summary, City staff does not recommend that this proposal be approved Per the report, City staff does not think this project should be approved in this location at this time because they are concerned with: [1] the project not maximizing the site’s potential density; [2] the scale, design, and residential unit types clashing with the adjacent forthcoming commercial and planned mixed use spaces as well as the potential out of place context, detachment, or isolation of the residential neighborhood from the surrounding area; and [3] the overall precedent this development could establish for how the rest of the North Main Street and Mt. Clinton Pike corridors could develop. So, City staff basically thinks the property should be developed with greater density to include more housing units based on its location and surrounding present and potential future land uses. Update: Planning Commission split (3-3) on proposal. City Council to consider on December 13, 2022. | |
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Upscale Townhouses And A Playground (!!) Under Construction At Congers Creek |
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![]() If you've drive by Congers Creek lately, on Boyers Road across from Sentara RMH Medical Center, you may have noticed lots of townhouses under construction. But if you drive a bit further back into this new townhome community, you'll find a playground under construction! This playground is the latest amenity at Congers Creek, beyond those in Phase One including a pavilion, basketball court, grills and a fire pit. Below is an updated aerial photo of the townhomes being built in Phase Two, as well as a rendering of the design for the playground that is currently being built. ![]() ![]() Find out more about currently available townhouses at Congers Creek here. | |
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10% Of A Big Number Is... A Big Number! |
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![]() Between 2020 and 2021, the median sales price of a detached home in Harrisonburg and Rockingham County increased by over ten percent! Between 2021 and 2022, the median sales price of a detached home in Harrisonburg and Rockingham County increased by over ten percent! I've told you about these back to back years of double digit increases enough times that you might not be surprised when you read the statements above. But, sometimes when we translate it into actual numbers, it can be surprising. Let's say a property was worth $460K two years ago. Based on the changes (+10%) in the overall market, that property may very well have been worth $506K last year. Based on the changes (10%) in the overall market, that property may very well be worth $556K today. Gasp! A house that was worth $460K two years ago is now potentially worth almost $560K today? An increase of nearly $100,000 in just two years!?! Indeed, these double digit increases in value can end up being very large increases in dollars when we start at a very high price point. | |
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Fewer Than 10% Of Buyers Spend Less Than $200K On Single Family Homes In Harrisonburg, Rockingham County |
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![]() If you're hoping to buy a single family home for less than $200,000 in Harrisonburg or Rockingham County, you might find it challenging to do so. Only 8% of the single family homes sold in the past 12 months have sold for less than $200,000. Getting straight to the numbers... Total Detached Home Sales = 1,123 Detached Home Sales Under $200K = 86 | |
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The Buyer Pool For Starter Townhouses May Be Smaller For Now |
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![]() Starter townhouses (think two story, 15 - 25 year old) in the City of Harrisonburg used to sell for $150K-ish but have increased in price over the past five years to a range of somewhere between $200K and $240K. Why have prices escalated so quickly? Similar to much of the market, it's largely related to low interest rates... [1] With mortgage interest rates of 3% to 4%, the pool of potential home buyers expanded considerably... lots and lots of potential first time buyers were delighted to find that they qualified to purchase a townhouse. [2] Real estate investors were also happy to scoop up these types of townhouses as they were able to finance those purchases with exceptionally low mortgage interest rates as well. Certainly, the interest rate would be higher for an investment purchase than for an owner occupant, but an interest rate that is higher than "very very low" is perhaps "very low" so plenty of investors were purchasing these properties as well. But now, mortgage interest rates are a bit higher... OK... twice as high. The current average 30 year fixed mortgage interest rate is 6.95%. As such, and as shown on the "not at all based on real numbers or data" graph above... [1] Would be home buyers who could only qualify to buy with a mortgage interest rate of 3% - 4% clearly do not quality any longer and thus are not buying. [2] Investor buyers who were delighted to buy when interest rates were quite low are also likely not buying right now. That just leaves owner occupant home buyers who still qualify with 6.5% to 7.5% mortgage interest rates. What does this actually mean for this segment of our local housing market? [1] There will likely be fewer buyers coming to see your townhouse if you are selling a starter townhouse in the City of Harrisonburg. [2] There will likely be fewer offers on said townhouse, and less competition from other buyers if you are trying to buy such a townhouse. [3] We might see these townhouses take a bit longer to sell. Maybe? [4] Maybe the price of these townhouses won't climb quite as quickly over the next year or two. Maybe? These are my observations about this segment of our local housing market, very unscientifically graphed above. Let me know if you have other observations, thoughts or questions about the market for this type of property moving forward into 2023. | |
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Where Do Home Prices Go From Here? |
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![]() This is a question very much on the mind of potential home buyers and potential home sellers in the local real estate market in late 2022... Where DO home prices go from here? As per the illustration above, do we see... 1. Home prices keep in rising, perhaps another 10% in 2023. 2. Home prices plateau in 2023, with similar prices as in 2022. 3. Home prices correct, drop, droop, decline by 10% in 2023. It's hard to imagine won't keep increasing (scenario one) given that they have through the first nine months of 2022 even in the context of quickly rising mortgage interest rates. But yet at the same time, it's hard to imagine that prices won't level out or decline some given those quickly rising mortgage interest rates. I can be convinced by those that I talk to (buyers, sellers, agents, bankers, appraisers) that prices will keep on rising in Harrisonburg and Rockingham County... and I can be convinced by those same folks (or a different set of them) that home prices will flatten out or decline slightly in 2023. So, I have absolutely zero answers as to what we should expect in 2023, but interestingly, even if home prices dropped by 10% in 2023... that would take us ALLLLL the way back to 2021 sales prices. ;-) | |
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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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