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Ideally, We Should Talk About Potential Contingencies Well Before Making An Offer On A House |
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![]() In a fast moving housing market, it's important to be ready to make an offer quickly after seeing a house that you like. But... making an offer includes a variety of other decisions that may require more a bit of thought and planning. FINANCING This one is perhaps the most straightforward. By the time you are going to view a house for sale you should have already talked to a lender and have a pre-qualification or pre-approval letter in hand. You don't want to be in a situation where you like a house but haven't even talked to a lender yet to be able to have a letter documenting your financial ability to purchase the house. A seller in this market (and in most markets) will not seriously entertain an offer with a financing contingency if a lender letter is not included. Ideally, you should know how high you can go on price... and have a sense of what the monthly payment will be at a few different price points. This will allow you to thoughtfully consider the price that you might want to offer when we are viewing a house. INSPECTION Many offers are made without inspection contingencies these days. Are you willing to do so? It's fine to include an inspection contingency in your offer, but you should know that doing so will make it less competitive if there are other offers on the house that may not have inspection contingencies. You should think this through (whether you are comfortable buying without a home inspection) before going to see houses... even if you plan to make the decision on whether to conduct an inspection on a property by property basis related to the agent and condition of the house. APPRAISAL Most offers used to include appraisal contingencies, allowing the buyer the opportunity to try to renegotiate the sales price if the appraisal came in below the contract price. These days that is much less common... and some buyers are specifically indicating that they can and will proceed with the purchase at the contract price regardless of the appraised value... or are stating in an offer that they are willing to proceed at the contract price so long as the appraised value is within $___ of the contract price, etc. Are you comfortable paying a bit above the appraised value in order to secure a contract on a house? Are you willing to pay a contract price regardless of the appraised value? These are, again, questions we should discuss generally even before we think about them specifically related to a house we are viewing. Furthermore, you should understand (through a conversation with your lender) how a low appraisal will or will not affect your loan terms related to the LTV (loan to value) ratio, mortgage interest rate, funds required for closing, etc. Yes, we will talk about all of these potential contingencies when we are considering an offer on a specific house... but it can be helpful to think about them generally, and talk to me about them, ahead of time so that you can give some thought to what you are and are not willing to do in the current competitive market. | |
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City Townhouse Sales Prices Increase 34% Over Four Years |
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![]() Townhouse values in the City of Harrisonburg have certainly increased rather quickly over the past few years... As shown above, we have seen a 4% to 11% increase in median sales prices for each of the past four years. There has been an overall 34% increase in the median sales price since 2018. If you happened to buy a townhouse a few years ago, you'll likely be in great shape if you're selling now or soon! Also helping this segment of our local housing market is that most new townhouses are now in the $250K+ price range. | |
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How Should The Square Footage Of Your Home Be Measured? |
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![]() So -- are you trying to figure out the square footage of your home? Here are a few methods that are not certain to give you the correct answer....
So, how do you really measure square footage? It starts outside the home! You'll need to measure the exterior dimensions of each level of your home -- and then subtract any open areas, such as the open space above a foyer. This measurement method, as odd as it may be, is what is used by nearly every appraiser, as it is how "gross living area" is defined by Fannie Mae, HUD, FHA, ERC and ANSI. As such, it is important that you're measuring the square footage of your home in the same way that nearly every appraiser and Realtor would be measuring it, so that you're comparing apples to apples when comparing the size (SF) of your home to another home that has sold or that is on the market for sale. And here's why I consider it to be an odd way to measure square footage....
While the City and County measurements for tax assessment purposes are often very accurate, it is often a good idea to double check the square footage of your home when we're putting it on the market for sale. | |
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Housing Inventory Levels Seem To Be Slowly Rising, With One Third Of Them Being New Homes |
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![]() There are almost 150 homes for sale now in Harrisonburg and Rockingham County... we're at 147 at the moment... and this would be the first time since late 2020 that there were 150 options for home buyers. But... do note that more than a third of them (53 of 147) are new homes. This isn't a bad thing... it's just that new homes in new home communities are only going to work for some buyers... they are particular property types, at particular price points in particular locations. Higher inventory levels means more choices for buyers which could mean -- if inventory levels were to keep climbing -- that there wouldn't be quite as fierce of competition for some new listings. That said, I have been a part of several "multiple offer" scenarios over the past two weeks, so the overall market isn't necessarily calming down or cooling off yet. | |
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Almost 1,700 New Homes (or home sites) Are Being Developed or Built in Harrisonburg and Rockingham County With Another 4,000 Planned or Proposed |
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![]() LOTS of new housing is currently being developed in Harrisonburg and Rockingham County... though mostly in Rockingham County. Below are most that I am aware of, with approximate unit counts, though you can find it in spreadsheet form, with some links, here. 369 Apartments
647 Townhouses & Duplexes
287 Single Family Detached Homes or Home Sites
This is not to mention the 4,314 homes that are being planned or proposed...
The important, and perhaps unanswerable, big questions are... [1] Is enough housing being built or planned to support a growing population? [2] Is too much housing being built or planned beyond what our growing population needs? [3] Is the right type, size, and price of housing being built? | |
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If You Expected The Local Housing Market To Slow Down Drastically, This Probably Is Not What You Meant |
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![]() Two years ago the "median days on market" was 15 days in Harrisonburg and Rockingham County. By a year ago, it had dropped to a median of six days on the market. Given that interest rates are rising, I thought perhaps we might be seeing this metric (how quickly homes are going under contract) start to rise in Harrisonburg and Rockingham County. And I was right! Things are SLOWING DOWN! ;-) Wink, wink, nudge, nudge. The graph above starts by looking at the median days on market over the past five months... the median was five days. Then, over just the most recent four months... still a median of five days. Next, over just the past three months, when interest rates started to rise... still a median of five days. Well what about over the past two months... still a median of five days. But, ah ha! I finally found it. The sign the market is really slowing down. The median days on market has increased 20% (!!!!) when we get to that last data point... the median days on market over the past month is... SIX days! :-) So, bottom line, did things go under contract more slowly over the past month than in previous months? Oh, yes, by one day. Is it a sign that the market is slowing? I suppose so. Barely. We'd need to see more of a change than what is described above and shown above to conclude that buyer enthusiasm is measurably declining. Stay tuned to see if that median days on market figure will scrape and claw it's way back up to SEVEN days sometime in the next few months. | |
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800 Mixed Income Housing Units Planned For Bluestone Town Center |
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800 (or more) new housing units may soon be coming to Garbers Church Road and Erickson Avenue... at Bluestone Town Center... potentially featuring...
This is a potential joint venture between the Harrisonburg Redevelopment and Housing Authority (not the City of Harrisonburg, but a "political subdivision of Virginia") and Equity Plus (a private entity seemingly out of Mississippi). This potential residential development is intended to offer...
Find out more about this potential development by visiting BluestoneTownCenter.com or by attending the informational session on June 7th (today) from 4:00 PM to 6:00 PM at the Lucy Simms Auditorium. Updated... Daily News Record, June 8, 2022
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Renting vs Buying a Townhouse at Congers Creek |
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![]() Most of the townhouses at Congers Creek are being purchased by homeowners, but some are being purchased by investors as rental properties... which means you will likely have the opportunity to buy or rent at Congers Creek in the near future. Let's see how those two options compare... RENT = $2,000 / month. The rental rates I have seen thus far at Congers Creek range between $1,950 and $2,200 per month. These rental rates are for a three level townhouse with a garage and (finished or unfinished) bonus room. BUY = $1,785 / month. With a 90% loan, buying such a townhouse apparently may cost as little/much as $1,711 per month assuming a $300K purchase price and a 5.25% interest rate... and when we add the $75/month association fee, we get to $1,785. Total Rental Payments over 5 Years = $120,000 Total Mortgage Payments over 5 Years = $107,100 Principal Reduction of Mortgage over 5 Years = $21,196 Effective Total Housing Payments over 5 Years = $85,904 Savings over 5 Years = $34,096 As you can see, this builds a somewhat compelling case for buying instead of renting if you are going to be living in this potential townhouse for the next five years. A few other factors to keep in mind....
P.S. I represent the builder at Congers Creek. | |
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Mortgage Interest Rates Have Been Trending Back Down A Bit |
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![]() After soaring from 3.2% in January 2022 to 5.3% in May 2022, mortgage interest rates have actually started to level off and even decline in recent weeks. The graph above shows the average 30-year fixed rate mortgage interest rate each week for the past year. Clearly, rates have been rising quickly for the past four to five months... but if you look at the past four weeks, you'll see a different trend. May 12 = 5.30% May 19 = 5.25% May 26 = 5.10% June 2 = 5.09% It is certainly encouraging to see mortgage interest rates leveling out a bit with the potential for sticking right around 5% in coming weeks and months. Certainly, I'd rather today's buyers were able to obtain a 3.5% or 4% mortgage interest rate if possible... but given the possibility of 5%, 5.5%, 6% or even higher, something right around 5% sounds just fine! | |
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Strong First Five Months of Contract Activity in 2022 |
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![]() Look out... before you know it, I'll be saying the year is halfway over!? As usual, the months are flying by in 2022 and we are now looking backwards at a full five months of contract (and sales) activity. The graph above illustrates how many buyers (and sellers) have signed contracts to buy (and sell) homes in the first five months of 2020, 2021 and 2022. As you can see, the pace of home buying activity increased quite a bit between 2020 and 2021... and this year, it has increased even further. Higher mortgage interest rates in 2022 might slow down overall home sales activity, but thus far we don't seem to be seeing it here locally. | |
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Comparing Tax Bills in the City of Harrisonburg and Rockingham County Over Time |
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![]() If you're buying a $300K house, will you pay more in property taxes if that house is in the City or the County? In most cases, you will pay more property taxes if you live in the City. The analysis above looks at how a monthly property tax bill has changed over the past decade for a median priced home in the City and County. To be clear, this analysis uses:
As shown above, City property taxes have increased by 155% over the past decade while County property taxes have increased by 70% during the same timeframe. | |
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Do You Own A Rental Property? Perhaps You Should Sell It? Pretty Please!? |
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![]() If you own a rental property in the City of Harrisonburg or in Rockingham County, perhaps a townhouse or duplex or small single-family home, are you potentially interested in selling it? "Please! Pretty Please!" -- said every owner occupant buyer in the market I understand, there are plenty of reasons why you would not want to do so. Your long-term strategy may be to continue to rent out that property for many years to come, and perhaps you would not want to tax liability that might arise from selling the property, but maybe you have been thinking about selling the property for the past few years.
But... if you have had any thought at all about perhaps selling such a property, now is an excellent time to do so. There is an extreme shortage of available lower-priced homes in the City and County and owner occupant buyers are pursuing such properties quickly and making very competitive offers when they do come on the market. If you would like to explore the possibility of selling a property that you have been renting out for the past few years, let’s talk about timing and logistics. You will likely be selling the property at a very favorable price with very favorable contract terms and you will be helping out the backlog of owner occupied buyers who are desperate to buy a home and settle down in the Harrisonburg area. | |
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Will Home Renovations Surge In 2022 and 2023? |
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![]() This scenario seems to be very common right now... [1] We decided a year or two ago we wanted to sell our house and move to a bigger or nicer or different house. [2] We've been looking at houses, making offers on houses, but haven't been able to secure a contract on a house. [3] Mortgage interest rates have gone up quite a bit and we are now not sure if we want to trade in our 3.75% rate on our current mortgage (with only 20 years to go) for a new 30 year mortgage at 5.25% or higher. [4] Prices of homes we'd buy have increases significantly since we started looking to buy... and when that is combined with the higher interest rates, it really starts to affect our projected monthly payment. [5] Maybe we should stay in our current house and make some renovations or modifications to allow it to work better for us or to allow us to be more excited about staying for another 10+ years!? Staying and renovating won't be the answer for all buyers who have unsuccessfully tried to buy over the past year or two, but I think it is something more would be buyers will be considering given all of the factors outlined above. | |
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Monthly Cost Of Median Priced Home Jumps Much Higher In 2022! |
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![]() Wow. The monthly cost of a median priced home has jumped quite a bit in 2022! This is related to a variety of changes between 2021 and 2022... [1] The median sales price increased from $270,000 to $296,500. [2] The average mortgage interest rate increased from 2.96% to 4.27%. [3] The City real estate tax rate increased from $0.90 to $0.93. All of these factors, combined, resulted in a rather significant increase in the monthly cost of a median priced home in our local market. | |
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Are We Seeing A Big Slow Down In Home Sales Activity Locally? |
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![]() If you read much national news you'll see plenty of headlines that say the housing market is slowing down... the housing market peaked... slower times are ahead for housing markets across the country. I'm sure that is all true, generally, nationally, and maybe in many markets. But, real estate is and has also been, local. Will the pace of home sales slow down in our local market? Maybe so. Will prices stop climbing as much as they have been in recent years? Maybe so. Are either of those things happening yet? Are we seeing a big slow down in home sales activity locally? It seems not. Properties going under contract in the past 30-ish days (April 25 - May 24) this year compared to last... Last Year = 170 contracts This Year = 162 contracts If things start changing in our local market, I'll be certain to be writing about it here... but just because you're reading it in the national news doesn't mean it is necessarily happening in Harrisonburg and Rockingham County. | |
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Sales of Not New Homes Are Increasing Too |
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![]() What do we call homes that are not new homes? Resale homes? Used homes? Existing homes? Previously owned homes? :-) Last week I pointed out that we are seeing a rapid increase in the sale of new homes in our market... a 39% increase in 2020 and a 68% increase in 2021. One might have thus wondered if ALL of the increases in our local area home sales can be attributed to new home sales. Well, the answer seems to be... no. As shown above, sales of not-new homes are increasing as well... a 10% increase in 2020 and a 5% increase in 2021. | |
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New Home Construction Is Ramping Up in Harrisonburg and Rockingham County |
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![]() New home sales are on the rise in Harrisonburg and Rockingham County! After a 39% increase in new home sales in 2020, we saw an even larger 68% increase in 2021. What does 2022 have in store when it comes to new home sales? As of 5/19/2022 there have only been 77 home sales thus far this year... but there are 220 new homes under contract! Assuming all of those sell this year, we'd be at 297 new home sales for 2022, before any others that will come on the market in the coming months. New homes being built is one of the only ways we will be able to get out of this low inventory housing market. There are more people who want to live in Harrisonburg and Rockingham County than there are homes to house them. Keep on building, builders, keep on building! ;-) | |
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Reflecting On Large, Fast Changes In Mortgage Interest Rates |
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![]() For at least the past five years, I have remained convinced that mortgage interest rates would start rising... anytime. But month after month, year after year, interest rates did not rise... instead, they fell. But 2022 has been a bit different. If you had asked me anytime in the past five or ten years what would happen if mortgage interest rates increased from 3% to 5% in the course of just four months, I likely would have told you that the market would likely immediately and significantly slow down... not to a screeching halt... but certainly to a slower pace than before that enormous increase in mortgage interest rates. But, here we are, on the other side of rapidly increasing mortgage interest rates for the past four months, and the market seems to still be, doing pretty similar things to what it was doing before mortgage interest rates started rapidly climbing. Homes are still going under contract very quickly. Buyers are still often competing with multiple offers, including escalation clauses and waiving contingencies. Prices keep climbing. So, have the rising mortgage interest rates had any impact at all on our local housing market? I'd say yes. 1. Some would-be home buyers are no longer able to afford the homes they would like to buy. 2. I think some homes might be receiving two or three offers now instead of six or eight that they might have received before. 3. Some would-be sellers might not be selling after all as they see how their buying budget will be affected by higher mortgage interest rates. So, there have been changes in our local market as a result of these rapidly rising interest rates, they the higher rates have had a much narrower impact than I would have assumed in years gone by. One other point of trivia... the last time the average mortgage interest rate was 5.25% (or higher) was... way back in August 2009... almost 13 years ago! | |
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Lake Shenandoah Stormwater Control Authority to Construct New Taylor Spring Detention Basin |
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![]() If you live in the Lake Shenandoah Drainage Area you are currently paying an additional tax alongside your real estate tax... with the new tax going to the Lake Shenandoah Stormwater Authority. The tax per property is based on $0.08 per year per square foot of rooftop area and went into effect in December 2020. Also in 2020, Rockingham County purchased a 28.878 acre property within the Lake Shenandoah Drainage Area for use as a stormwater storage area. Now, more details have emerged via an invitation to bid that closes today. Per the government documents, work is to be completed by December 1, 2022. This new stormwater facility will be located on land that is currently undeveloped between Barrington, Kentshire Estates, Lakewood, Taylor Spring and Taylor Grove subdivisions in the area outlined in pink/purple above. View engineering plans for the stormwater facility by clicking the image below... Update 5/26/2022: Rockingham County rejects single bid received | |
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It Is Totally OK To Make Fast OR Slow Home Buying Decisions |
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![]() The housing market in Harrisonburg and Rockingham County is moving very quickly right now. The median "days on market" is only five days... which means that half of homes are going under contract in five or fewer days.
This fast moving market is largely caused by a supply and demand imbalance. There are more would-be buyers who want to buy than there are would-be sellers who are willing to sell. The fast moving market is resulting in very low housing inventory in just about every price range and location in our market. Given a quickly moving market and very low inventory levels, many would-be home buyers are thus concluding that they will likely need to make a relatively speedy decision about whether to make an offer when they see a new listing of interest. Some buyers, though, might feel like these current market dynamics (low inventory, quickly moving market) are forcing them to make rushed decisions. So, should would-be home buyers feel rushed and forced into making quick decisions? No. It is totally OK for home buyers in this market to make buying (or offering) decisions with whatever speed they would like. It is OK to move quickly in making a decision about an offer - and yes, that will likely increase your odds of being able to secure a contract on a house. It is OK to move slowly in making a decision about an offer - and yes, that will likely decrease your odds of being able to secure a contract on a house. But in the end... you get to decide how quickly you will make decisions about making an offer on a house in the current market. I won’t be rushing you to make decisions more quickly than you are comfortable... and current market dynamics shouldn’t be some external and magical force that rushes you to make a decision more quickly than you are comfortable. Let’s start exploring some houses together that you might want to buy, let’s come to understand the market as we go, and then you can make the decision about how quickly to make an offer based on your comfort level and based on how well any particular house fits your needs. It can be a stressful time to try to buy a home given current market dynamics, but it is totally OK to move at your own speed... whether that is fast or slow... or even if it starts off slow and then speeds up over time. | |
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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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