Selling
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Price Reductions In A Fast Moving Housing Market |
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 A few years ago (maybe five) a home seller would often wait a month or two before giving serious thought to adjusting the asking price of their home if it was not yet under contract. But now, with a median "days on market" of just five days... home sellers are often concluding much more quickly that their asking price might need to be tweaked to inspire a buyer to make an offer. This faster pace of price reductions makes a lot of sense unless you have a super unique house or property that is only going to appeal to a very small pocket of buyers. In the current market, if you listed your home for $450K (for example) and didn't have any offers in the first two weeks, you may very well have priced it a bit higher than the market will bear. Perhaps it should have been priced at $425K instead. So... for as long as the market continues to move as quickly as it has been for the past few years, you can gather pricing feedback rather quickly once your house is on the market, and quickly adjust your pricing if you are not generating offers... or if you are not generating enough showings to make you confident that an offer will be forthcoming soon. | |
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The Summer Housing Market Often Provides An Irregular Flow Of New Listings |
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 Starting and stopping and starting again. Home buyers hoping to buy a house in Harrisonburg or Rockingham County over the next month or two might become confused, or frustrated (or both) with the start and stop nature of the market during the summer months. There might be 300 homes listed for sale over the next two months... but there won't be five new listings per day for the next 60 days. Why, you might ask? Mostly because of seller's vacation plans. "I'm going to get the house ready to go on the market on ___. Oh, wait, we're going on vacation just before that, so let's push it back a few weeks." "I'm going to be ready to have the house photographed by ___. Oh, wait, then we leave on vacation immediately after that and I don't want to be out of town when the house is being shown." If you are a home buyer hoping to buy soon... don't get overly discouraged when there is a slow week or so of new listings... that will almost always be followed by a burst of new listings in the following few weeks. | |
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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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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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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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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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If Your Home Has Been On The Market For More Than __ Days And Is Not Under Contract, Ask Yourself Why! |
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 Five short (long!?!) years ago -- back in 2017 -- the median days on market was 33 days. That is to say that half of homes that sold were under contract within 33 days and half took longer than 33 days to go under contract. So, back in 2017, if your house was on the market for more than 33 days, you had to start wondering why. Why was it taking that long for your house to go under contract. The same logic applies today, though the timeframe is quite a bit (!!!) shorter. The median days on market is now just five days (over the past 12 months) which means that half of homes are going under contract in five or fewer days and half are going under contract in five or more days. So... if your house is still on the market, and not under contract, a week after hitting the market (gasp!) you will probably want to ask yourself why a buyer has not contracted to buy it yet. Is the price too high? Did you not prepare the house well enough and some aspects of the condition of the house are making buyers less excited about it? Is the marketing of your house selling it short? Or, is there some aspect of your house that you cannot change that will cause it to take longer to sell? For better or for worse, within a week of having your house on the market you should have some very helpful feedback on your pricing, preparations and marketing. | |
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Folks Who Bought Homes In 2020 or 2021 Might Stay In Their Homes Longer Than Expected |
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 Did you buy a home in 2020 or 2021? I'm betting you might stay in that home longer than we might otherwise expect. After all, who would want to give up that fixed mortgage interest rate that is SOOOO low! For nearly all of 2020 and 2021, the average mortgage interest rate on a 30 year fixed rate mortgage was below 3.5%. That is LOW. For some months during that two year period, the rate was lower than 3%! When home buyers from 2020 or 2021 think about selling five to seven years from now, I'm guessing a part of the though process of whether to sell will relate to whether they really want to give up that super, super, super low mortgage interest rate! Mortgage interest rates are currently hovering around 5%, and perhaps they'll stay there for much of the year, and beyond... If, seven years from now, you would potentially be selling and paying off a mortgage with a 2.75% interest rate... in order to take out a new mortgage with a 5.25% interest rate... will you really want to do it? Certainly, our needs for housing (location, size, configuration, etc.) change over time... and that might supersede a desire to hold onto that fantastically low mortgage interest rate. All that said, if you were fortunate enough to buy (or refinance) in 2020 or 2021, enjoy that super low interest rate, as it doesn't seem likely that we will see them anywhere near that low in the coming months and years. | |
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Many Home Sellers Are Enjoying Working Through Far Fewer Contract Contingencies |
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 I used to tell home sellers that they should expect to that we'll be working through three large, major, serious contingencies between the time that their house is under contract and when it makes it to closing... 1. Home Inspection 2. Financing 3. Appraisal We had to make over each of these hurdles, through each of these gauntlets to successfully make it to settlement. But, now, sellers are enjoying often only working through only two of these contingencies, or even just one of these contingencies. I recently listed a property for sale in the $300K range and we received six offers on the property within 48 hours of being on the market. None of the six buyers included a home inspection contingency. So, many sellers are finding themselves not needing to worry about making it through the home inspection process. On another recent listing six buyers did include an appraisal contingency and two buyers specifically said that they would be willing to pay $___ over the appraised value if the appraisal came in low. So, many sellers don't have to worry about an appraisal contingency at all, or not anywhere near as much as they had in the past. Thus, many sellers are finding the period of time between contract and closing to be much less stressful... and they realize that it is much more certain that they will make it successfully to closing. Buyers, on the other hand, well, yeah... you can imagine from my comments above... they are having to decide on each offer whether to include what used to be typical contingencies (inspection, appraisal) to protect their best interests. It's a bit of a crazy time right now, with a very imbalanced market, and thus far things are not seeming to be slowing down. | |
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Will Inventory Levels (of resale homes) Increase At All This Spring? |
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 Many homeowners thinking about selling their homes this spring are considering selling sooner rather than later... because of the super low inventory levels right now. There are certainly houses on the market for sale, but many are new builds, and thus if a buyer wants to go ahead and buy and be able to move into their home, they are likely trying to do so with very few houses from which to choose. The logic of listing your home sooner rather than later is something along the lines of.... List Now = zero (or very little) competition from other sellers List Later = likely more competition from other sellers I totally agree with this logic, and listing sooner rather than later makes a lot of sense, though I also am not 100% sure we'll ever get to the point this spring or summer where you will be listing your home for sale amongst much competition from other sellers. After all, if eager buyers keep snapping up each new listing as it hits the market, the collective inventory of competing listings will never grow. So, yes, my first recommendation is to list your home sooner rather than later -- though it will probably work out just fine to list a bit later as well. P.S. Buyers -- sorry there are so few options for you!!! :-/ | |
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Some Home Buyers Are Offering Sellers The Opportunity To Stay In The Home For A Few Weeks Or Months After Settlement |
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 In this VERY competitive market, would-be buyers are going to great lengths to try to be the winning buyer selected by a home seller. In many larger markets (think cities larger than Harrisonburg) where the housing market is even more competitive than it is here, many buyers are offering sellers the option of staying in the home they are selling after settlement - often for a few weeks or a few months. Wow! But... sometimes it's happening here in Harrisonburg and Rockingham County as well! I have now been a part of three transactions thus far in 2022 where this was the case -- where the buyer let the seller stay in the house after closing -- and I don't think those will be the last three this year. So how does it work? [1] Sometimes a seller will ask to be able to stay in the house after closing when they put their house on the market. This will often work for many but not all buyers. [2] Sometimes a seller won't ask to stay, but a buyer will offer it. [3] Sometimes a seller ends up staying for a few days or weeks... and sometimes several months. Every situation will be different as to what a seller desires and what works for a buyer. [4] In this market, currently, it seems that sellers are typically paying (rent) for the right to stay in the house after closing. In some other markets, buyers are offering sellers the right to stay without paying for that post-settlement occupancy. So... if you're buying (or hoping to) in 2022, perhaps we should chat about whether you would be able to work with a closing and moving timeline where the seller stayed in the home for some period of time after settlement. If you're selling a home in 2022, we shouldn't assume that many or all buyers will be willing to let you stay in the house after settlement, but there is a decent chance that it will work for some or many buyers, especially given the highly competitive current housing market. | |
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Lots Of Home Buyers Are Still Competing For New Listings |
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 For many new listings, the competition is still quite fierce in Harrisonburg and Rockingham County. Here are three recent examples I've been involved with or heard of in the past 10 days... [1] A townhouse in the City of Harrisonburg under $200K received 12 offers within three days. [2] A duplex in the County in the $300K's received 7 offers within three days. [3] A detached home in the City of Harrisonburg in the $300K's received 16 offers within four days. Wow! Now, this won't be the case for every new listing, in every price range, in every location... there are more buyers in some price ranges and for some locations than others. This also won't hold true independent of how a seller prices their home. A home that ends up selling for $200K will likely have a different number of offers based on whether they priced the property at $195K, $199K, $205K or $225K. But... yes... the market is still quite active, with plenty of buyers ready to buy, and many (to most) new listings being scooped up quite quickly. If you're getting ready to sell this spring, we should talk sooner rather than later about timing, preparations, pricing and more. | |
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Timing The Sale Of Your Rental Property |
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 Do you own a property in Harrisonburg occupied by a tenant? When you are ready to sell it, how will you go about that process? In the past, many landlords would try to secure a buyer for the home before their tenant moved out -- because they did not want a potential gap of several months without rental income while they waited to see if the rental property would sell. These days, if you'd like to sell your rental property, I'd suggest... 1. Give your tenant a notice of the non-renewal of the lease. 2. Once the tenant moves out, do any necessary minor cleaning or repairs and consider whether it would make sense to paint the interior of the property and/or replace any flooring. 3. List your property for sale. 4. Get overwhelmed by an incredibly high number of showings and likely a multitude of offers. 5. Gleefully select the offer with the most favorable terms and the fewest contingencies. 6. Proceed quickly and smoothly to closing. It won't always go this way -- of course -- but the market is starved (!) for new listings right now, especially in the price range where many tenant occupied properties fall. If you have a rental property that you would consider selling in 2022, let's talk! | |
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Yes, This Is A Great Time To Sell Your Townhouse, or Duplex, In Harrisonburg! |
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 Over the past six months, there have been 90 townhouse sales in the City of Harrisonburg. That's about 15 sales per month. Of those 90 townhouses, 55 of them went under contract within a week of being listed for sale. There are currently 17 townhouses on the market and under contract in the City of Harrisonburg. There is currently... one... townhouse (actually, a duplex) for sale in the City of Harrisonburg, and likely the only reason it is not yet under contract is that it just came on the market yesterday. So... if you own a townhouse or duplex in the City of Harrisonburg and are wondering if this is a good time to sell it... Yes. The answer, quite simply, is yes. | |
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New Homes are an Increasing Share of Total Home Sales in the Harrisonburg Area |
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 First, some raw data... Resale Home Sales:
So, there have been more and more resale homes selling over the past five years. New Home Sales:
There have also been more and more new homes selling over the past five years. The graph at the top, though, tells a third story -- an increasing portion of home sales are new home sales. Between 2017 and 2020 new home sales comprised 12% - 14% of all home sales. Then, in 2021, that jumped up to 19% new home sales. Thus, last year, approximately one in every five homes sold was a new home. This would seem to be good news, generally, as there is an ever increasing number of people who want to buy homes and make Harrisonburg their home -- so we'll need to see more new homes to help provide that housing. | |
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200 Home Buyers Paid More Than 5% Over Asking Price For Their Homes In The Past Year |
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 Sometimes, you have to be willing to pay the price to get the house... Over the past year-ish (Feb 7, 2021 - Feb 6, 2022) there have been 1,660 home sales in Harrisonburg and Rockingham County. As noted earlier this week, 73% of buyers paid full price or more for their home -- which is 1,229 of those 1,660 home sales. But going a bit further... 200 buyers paid more than 5% over the asking price for the home they purchased in the past year. Looking just at those 200 transactions where buyers paid more than 5% over the asking price... on average, buyers paid $25,561 over the list price! How does that number strike you? It was much higher than I thought it would be... I guess the guy in the photo above is holding out $40,000 of cash -- slightly higher than the average of $25,561 noted above -- sorry for my illustrative exaggeration. ;-) | |
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74% of Homes Sold for Full Price or Higher in the Past 12 Months! |
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 A somewhat shockingly high number of homes sold at or above asking price over the past year...
So, what does that mean for you if you are selling or buying in 2022? SELLERS: If you want to sell for $400K, you likely don't need to list your home for $420K in order to leave yourself room to negotiate down on price. Listing it for $400K will likely do the trick, and might result in the house selling for more than $400K. BUYERS: Understand that you are likely to need to pay full price or higher for the house you plan to buy -- though that needs to be put in the context of the value of the home. Certainly, if a $400K house is listed for sale for $475K then you shouldn't pay full price or higher... Understanding the local real estate market is more important than ever for buyers and sellers in 2022! | |
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If You Will Sell Your Home This Spring You Should Be Planning For It Now |
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 A friend asked me yesterday if this is a busy time for real estate. It's busy - but not in the usual ways. It is not busy with showing lots of houses (there aren't many on the market) or with listing lots of houses (few sellers put their houses on the market in January) but it IS a busy time for planning. This January (as with most months of January) I'm spending much of my time meeting with homeowners who plan to sell their homes this Spring. Some are planning to put their house on the market on March 1, some March 15, some April 1 - you get the idea. We're making general plans about timing as it relates to their other preparations. The other items we are discussing and working on in January include... 1. Are you going to make any improvements inside or outside of your housing before getting it on the market in the spring? 2. What do you need to do as far as packing up, organizing, de-cluttering, cleaning, etc., to make your home show best to buyers? 3. Even though we'll look at the data again just prior to listing your home for sale, what does the current market data tell us as far as what price expectations are reasonable and what pricing strategy is advisable? So, if you are a homeowner who is thinking about selling this spring, now is the time to start planning for that big event. Feel free to email me or call/text me (540-578-0102) to set up a time to meet at your house and start developing a plan. | |
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There Is Currently Only ONE Townhouse For Sale in the City of Harrisonburg!? |
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 Yes, it can be done... ...you can buy a townhouse in the City of Harrisonburg... ...but it's much more difficult now than it was in the past! Townhouses Sales in 2021 in the City of Harrisonburg = 195 Townhouses Under Contract Today in the City of Harrisonburg = 16 Townhouses Currently Available For Sale in the City of Harrisonburg = 1 I should also point out that the median sales price of townhouses in the City of Harrisonburg in 2021 was $194,900 -- up from $185,000 in 2020 -- and up from $166,000 in 2019. So, yes, you can buy a townhouse in the City of Harrisonburg, but you'll need to be ready to act quickly when one hits the market as they don't stick around long. The median "days on market" for the 195 townhomes sold in 2021 was only four days! | |
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Selling Your Home In The Next Six Months? Selling Now Is A Good Plan. Waiting For Spring Is A Good Plan. |
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 So, you are thinking about selling your home sometime in the next six months? Two common concerns I have heard lately from folks thinking about selling in the next six months are... [1] I was thinking about listing my home for sale now but I have heard that the market is super slow during the winter months, so maybe I should not list my home right now? [2] I was thinking about waiting to list my home for sale in the spring but I have heard that the market might have cooled down and prices might have started declining by spring, so maybe I should act more quickly? In my opinion, either path forward (list now, list in the spring) are good plans... Selling Your House Now Is A Good Plan. Last December and January a total of 211 buyers signed contracts to buy homes. In March and April of this year a total of 283 buyers signed contracts to buy homes. So, yes, the market is slightly slower in the winter months but we'll still see about two thirds as many buyers in these winter months as we would see in the spring. Furthermore, inventory levels tend to be the lowest in the winter months, giving buyers who are in the market very few choices of homes to pursue. As such, I believe homeowners who choose to sell their house now (Dec, Jan) will do quite well and do not need to wait until spring to list their home for sale. Waiting For Spring To Sell Your House Is A Good Plan. While it is possible that the pace of the local housing market might not be quite as hectic or frenetic next spring as it was this past spring, it does not seem likely that the market will significantly cool or that home prices will start to decline. As such, I believe homeowners who choose to wait until spring (Mar, Apr) to list their home for sale will do quite well and do not need to hurry up and get their house on the market now before the market significantly slows. Maybe this advice (it's okay not to wait OR to wait) wasn't helpful. Did you need me to help you make up your mind as to when to get your house on the market? Just let me know... I'll tell you there is only one right choice. ;-) | |
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
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