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Real Estate: the best buying opportunity of a lifetime? |
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What do you think? Could real estate be the best buying opportunity of your lifetime?  Click on the image above to read this article from Time. | |
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Local foreclosures slow in 2011 |
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 Great news -- the local foreclosure rate is on the decline! There were 270 recorded trustee deeds in Harrisonburg and Rockingham County during 2010. In the first half of 2011 there were only 105 recorded trustee deeds. Yet there are some interesting foreclosure sales currently scheduled:
Learn more about short sales, trustee sales and bank owned properties. | |
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July 2011 Harrisonburg and Rockingham County Real Estate Market Update |
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I just completed my monthly analysis of the Harrisonburg and Rockingham County real estate market. Click here for a PDF of the 25-page report or read on for some highlights. While the local housing market hasn't fully recovered yet, there is plenty to be excited about from the most recent market data below....  While year to date home sales (364) are a good bit below last year (418), we're on track with a 2009 sales pace. The thing to remember about 2010 is that many home sales were pushed into the first half of the year because of the expiration of the federal home buyer tax credit. Thus, as we continue through 2011, we stand a good chance of catching up with (or surpassing??) the pace of 2010 home sales. Median sales prices are still declining, but if the sales pace stabilizes and starts to increase, it will lead to a stabilization of sales prices and home values.  June 2011 was a FANTASTIC month of contracts -- the second month this year with over 100 contracts signed. This is a strong indicator that we will see strong home sales in July and August.  The graph above explores the number of cumulative month-by-month home sales --- you ought to note that last July, August, September and October were quite slow after the expiration of the home buyer tax credit. I believe we're poised to see some strong performance in the local real estate market over the next three to six months --- and hopefully well beyond that time!  You'll find even more exciting news in my full market report (click here for the PDF) --- and some not so exciting news to keep you well balanced. As always, if you have questions about this report, or if I can be of assistance with real estate that you own, or that you'd like to own, please be in touch. You can reach me most easily at 540-578-0102 or scott@HarrisonburgHousingToday.com. | |
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The Wall Street Journal seems to suggest that the Harrisonburg and Rockingham County housing market may be headed towards a recovery! |
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The Wall Street Journal ran a very insightful article a week ago entitled "How to Tell if Your Housing Market Has Hit Bottom" which points out that there are some communities around the country that are actually doing OK right now in terms of their housing market. The Wall Street Journal (with the help of Zillow) identified 25 communities whose current home values are no more than 10% lower than their home value peaks. Looking at these communities may give us some perspective on how to tell when our own (Harrisonburg/Rockingham) real estate market is ready to start improving. There are three main factors that are identified, and if any or all of these are present in a real estate market, things may be ready to start improving again..... #1 - EMPLOYMENT If employment is stable or on the rise, a real estate market actually has a shot at improving. Many of the improving communities are college towns, as universities provide excellent employment stability for a community. Harrisonburg and Rockingham County continue to see very low unemployment rates -- much lower than the national average, so we're doing pretty well based on factor 1 of 3. #2 - RENTS The ratio between rental rates and home prices is an important indicator of the health of a market. If home prices soar out of control well beyond the comparable cost of renting, then fewer and fewer people will buy, as renting will be more affordable. Many rent vs. buy calculators use a factor of 15 to determine whether a market is balanced. "...if prices are more than 15 times annual rents, then a market favors renters; under 15 times, buyers." As a quick example, a two-story city townhouse might rent for $900/month and sell for $150,000. This shows that our market is (in some sectors) currently favoring buyers instead of rents. Another factor (2 of 3) in our favor. #3 - FORECLOSURES Our community (and any community) needs to see a decline in foreclosure rates before the housing market can really recover. We seem to be poised to see our first decline in the foreclosure rate this year (2011) after several years of increasing rates. This would appear to be factor 3 of 3 in our favor. The article is definitely worth reading in full (here) --- and it is some interesting food for thought that suggests that our local real estate market might see brighter days in the near future. | |
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Contracts soar in June! |
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Buyers are storming the market....look at these year over year numbers for the number of contracts signed by buyers (and sellers) this year compared to last year.....  June 2011's contracts (105) sailed past June 2010 (54) which is a whopping 94% increase!  But it's not just June.....year to date contracts are also showing a 17% increase over last year. This could be an early indicator that we'll see a recovery (in units sold) during 2011. Stay tuned.....I'll have my full report available in the next few days. | |
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The current decline in median sales price is (partially) due to more frequent sales of bank owned properties |
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The median sales price in Harrisonburg and Rockingham County has declined by 11% over the past year from $180K to $160K. That's a rather significant decline. But looking closer, it seems that one reason why it has declined as much as it has is because there are more bank owned properties selling this year as compared to last year.  As you can see above, last year (YTD) REO sales only accounted for 8% of all home sales in Harrisonburg and Rockingham County. This year, however, REO sales account for 14% of all home sales. The median sales price of the non-REO properties this year is $170,056, whereas the median sales price of REO properties this year is only $129,250. There are certainly other factors that are causing a decline in median sales price, but the proportional increase in bank owned (REO) sales is certainly contributing to the situation. | |
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Virginia home sales perk up in May to highest level since the tax credit |
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Per the monthly report published by the Virginia Association of Realtors this past week, home sales across Virginia were the highest in 10 months in May -- thus the highest since the federal home buyer tax credit.  Sales vary in different areas of Virginia, but it is encouraging to know that Virginia's housing market seems to be performing relatively well of late. Read more: | |
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Monthly home sales: sliced, stacked, side by side |
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 For each of the past five years, there have been fewer and fewer home sales in Harrisonburg and Rockingham County. First 1669 (2005), then 1438, then 1248, then 936, then 816, then 758 (2010). After this 55% decline in home sales, I know that we haven't seen a bottom to the local real estate market until we see the number of home buyers start to increase again. I am certainly rooting for 2011 to be the year that we see a reversal -- when we'll finally see an increase in home sales. The graph above, however, shows that we'll need to see a strong second half of 2011 in order for my prediction to come true. Of interest, you might note that:
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Home sales pace, sales price decline in Harrisonburg and Rockingham County |
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I just completed my monthly analysis of the Harrisonburg and Rockingham County real estate market. Click here for a PDF of the 24-page report or read on for some highlights. While there are several indicators that Harrisonburg and Rockingham County might be starting to see a recovery in the housing market, there are still plenty of trends that are not as hopeful.  Above you will note that sales are still lower this year than in 2010, with a 6% decline in May 2011 sales (compared to May 2010) and a 6% decline in year-to-date home sales. Median prices also continue to decline, with a rather steep 10% decline in median sales price over the past year (Jan-May 2010 vs. Jan-May 2011).  Despite a downward trend in the pace of home sales and in median prices, we are still on a several-month run of lots of buyers committing to buy homes in Harrisonburg and Rockingham County. This should, in theory, help to stabilize the pace of home sales over the next few months. May 2011 contracts exceeded both May 2010 and May 2009!  The graph above (inventory) is one trendline that we're happy to see decline. There are currently 13% fewer homes on the market as compared to a year ago! This helps to balance the market, though there are still many more sellers in the market than buyers.  Over the past five years, the pace of home sales has declined almost 50% in Harrisonburg and Rockingham County. Despite this tremendous decline in the number of home buyers in our market, the median price did not start declining until 2008, and even then, only had a slight decline (8%) through the end of 2010. As 2011 finishes out, we'll get a better idea of how these two trends (pace, price) will perform. For more reading, click here to download the full Harrisonburg & Rockingham County Real Estate Market Report as a PDF. As always, if you have questions about this report, or if I can be of assistance with real estate that you own, or that you'd like to own, please be in touch. You can reach me most easily at 540-578-0102 or scott@HarrisonburgHousingToday.com. | |
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Will Harrisonburg See a Double Dip In Home Values? |
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Well, it's hard to say, because we're still in the midst of the first dip....  The blue line above shows the Case-Shiller U.S. National Index Levels, which is a measure of home values across the United States. As you can see, home values declined between 2006 and 2009, but then started to increase again in 2009 and 2010 -- due largely to the federal home buyer tax credit. Alas, home values (nationally) have started to decline again, which many are calling a "double dip" in home values. For better or for worse, Harrisonburg and Rockingham County do not need to worry about a double dip in the near future --- because we're still in the midst of the first dip. As you can see above in the red line, local home values have only gradually decreased between 2008 and today. So, while median home values are still declining in Harrisonburg and Rockingham County, there is some good news on other fronts, for example despite April being a seven month low in contracts across the country, it was a twelve month high for Harrisonburg and Rockingham County! Stay tuned for more market analysis as the May data is compiled and analyzed over the next week. | |
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This it it folks, 2011 is (finally) going to be the year the local real estate market starts to improve! |
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With 149 days under our belts, I'm going to go ahead and make the bold prediction.....which is (barely) supported by hard facts and market data......  Above (at the top) you're looking at the number of contracts signed during the first 19 days of May. You can see that May 2011 has been a stronger month of contracts than May 2010. The bottom half of the chart shows that overall 2011 contracts (year to date) also exceed contracts from 2010. This is despite a large number of tax credit buyers who wrote contracts in the first four months of 2010. After five years of declining numbers of buyers in the Harrisonburg and Rockingham County market, I am predicting that this (finally) will be the year when we start to see the pace of market activity (number of sales) finally start to increase again. | |
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Home values usually go up over the long term |
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The fine folks over at Visualizing Economics have assembled another visual look at the housing market over the past two decades.  As can be seen above, nearly every state in the country witnessed an increase in home values over a twenty year horizon. Virginia fared particularly well, with a 30% - 40% increase over the twenty years.  The second map (above) shows the changes in home values over the past 11 years. Quite a few states here saw a decline (purple) in home values, but Virginia still showed a 30% - 40% increase! | |
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Sales of building lots in Harrisonburg, Rockingham County appear to have stabilized |
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 Click on the image for a larger version The median sales price of building lots (less than an acre) skyrocketed in 2005 and 2006 up to a peak of $99,900. But alas, these elevated values did not stick -- they fell just as quickly back down to $58,300 just two years later in 2008. After several years now in the mid $50K's, it seems (relatively) safe to say that the value of building lots has stabilized at a median of around $55,000. Lot sales also seem to have stabilized because the decline in the annual number of lot sales has ceased. There were more lot sales in 2010 than in 2009, and we seem to be poised to have another increase in 2011. The good news (perhaps?) is that this is still an overall increase above where values were before the rapid 2005/2006 escalation. In 2004, the median sales price of such building lots was $42,000, which makes today's median value of $55,000 a reasonable place to be given long term gradual increases in values. | |
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Where (in Rockingham County) are home values increasing? |
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Each area of Rockingham County has performed a bit differently over the past year. Some areas have seen an increase in median sales price, and some have seen a decrease.  As you can see above (and below) South-East and North-West Rockingham County performed the best when comparing the median sales price from the last 12 months with the prior 12 months.  | |
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Strong Sales, Stronger Contracts, Fewer Homes For Sale |
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Taking a look at the first four months of 2011, there are some signs of good news in our local market.....and certainly still some indicators that are not quite as positive. Click here to download the full Harrisonburg & Rockingham County Real Estate Market Report as a PDF, or read on for some highlights....  As seen above, year-to-date sales are only down 6% -- though median prices are down 12% as compared to a year ago.  Home sales have been going strong through March and April (the red line above), after a slow start in January and February. Hopefully we will continue to see a sales trajectory that will exceed May 2010, and perhaps come close to June 2010.  Buyers were QUITE active in April 2011 --- the number of contracts written (104) was the highest month of contracts in the past three years with the exception of last April. This bodes well for strong sales numbers in May and June!  Even better news is that while buyer activity is increasing, seller activity isn't getting too out of hand. We have significantly lower numbers of listings this spring as compared to the past two springs. Our real estate market still has a long way to go before it is stable -- but April 2011 market activity seems to indicate that we are headed in that direction. For more reading, Click here to download the full Harrisonburg & Rockingham County Real Estate Market Report as a PDF. As always, if you have questions about this report, or if I can be of assistance with real estate that you own, or that you'd like to own, please be in touch. You can reach me most easily at 540-578-0102 or scott@HarrisonburgHousingToday.com. | |
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Buyers are writing offers in droves |
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April 2011 was a busy month of contracts, with 105 contracts inked on properties in Harrisonburg and Rockingham County. Having surpassed 100 contracts, we'll call that droves of buyers....  But what, you might ask, did these buyers actually contract to buy? Let's expand our search a bit and look at the price range of homes that have gone under contract in the past 60 days....  As you can see, houses priced under $200K are still HOT! To put this in perspective.... Active listings under $200K: 435 26% of active inventory may go under contract in the next 60 days Active listings between $200K and $300K: 224 17% of active inventory may go under contract in the next 60 days Active listings between $300K and $400K: 97 19% of active inventory may go under contract in the next 60 days Active listings over $400K: 83 12% of active inventory may go under contract in the next 60 days When compared to the active listing inventory, the under $200K and $300K to $400K price ranges are performing the best at this time. | |
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Four Multiple Offer Scenarios In One Week! |
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It looks like this could be a fantastic spring/summer real estate market in Harrisonburg and Rockingham County. The real estate market may finally be picking up some speed after several years of declining sales figures. First -- I have been involved in four different multiple offer scenarios in the past week. One contract even had an escalation clause! It's been years since I have seen this much buyer activity in our market all at once. Second -- If you compare the first 25 days of April this year versus last year, we're looking solid for this year!
Stay tuned! | |
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Housing Market Sees A New Normal |
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My article from this month's issue of the Shenandoah Valley Business Journal... Change has been the only constant in the housing market over the past five years. Between 2000 and 2005, our local housing market (and most markets across the country) witnessed unprecedented increases in the number of homes selling, and the prices for which these homes sold. Then, however, the bubble (as some call it) popped. Over the past five years, we have seen fewer and fewer homes sell, and the prices for which they are selling have also slowly declined. Some observe that the local housing market might finally be steadying, with smoother sailing in the near future. If this is indeed the case, what might we expect as some new norms in the local housing market? More Renters. During the real estate boom, home values were increasing by double digit percentages per year. With such rapid appreciation, would-be renters decided to buy homes instead. After all, even if you were only going to be in the area for a year or two, with home prices increasing so quickly and steadily, why wouldn't you buy? These days, the new norm is that many would-be buyers (per recent logic) are now delaying a home purchase. Unless you will be in the area for 4, 5, 6 or more years, it may make more sense to rent instead of buying. After all, with home values currently falling a few percentage points per year, and with the cost of getting in and getting out of owning a home, buying for the short term just isn't as prudent. Thus, as the local housing market moves forward, we'll see fewer first time buyers and thus more renters. Slow Growth. Between 2000 and 2005, many new subdivisions were created as the real estate market shot skyward. Re-zoning after re-zoning created many new neighborhoods of single family homes and townhomes. Some people even became concerned that new developments were too quickly overtaking farmland in some areas in the Valley. Alas, these days of rampant and unfettered growth seem to be over. With the drastic real estate slowdown over the past five years, builders are not building speculatively, nonetheless developing new subdivisions speculatively. There will certainly be new neighborhoods and subdivisions over time, but they will develop much more slowly. Slow Sales. Depending on the price range, there are 12 to 24 months of housing inventory on the market in Harrisonburg and Rockingham County. Even a stellar month or two of sales won't cut into this excess inventory that exists because of a now persistent imbalance between the number of sellers and buyers in the market. Thus, with so many homes for sale, it will take a long time for the housing market to return to more normal inventory levels such as when there are six months of homes available for purchase at any given time. Living Close to Work. Gas prices spiked a several years ago which caused many people to reconsider how far they lived from their place of employment. Afterwards, gas prices subsided, and the length of commute lost a bit of its focus, but the home buying public seemed to hold onto a part this new mentality. Even if gas was cheap, buyers were now also thinking about how their quality of life was impacted by the length of their commute. Now that higher gas prices are upon us once again, it is quite possible that this concept has been cemented into our home buying perspective – it is important to live close to where you work. Larger Down Payments. While there are still low and no down payment programs available (FHA, VA), there are certainly nowhere near as many such programs available to home buyers. Gone are the days when anyone could obtain a mortgage so long as you had a pulse (as some joked). Mortgages are still widely available to those with decent credit and some funds set aside for a home purchase, but there will no longer be enormous swaths of the public buying homes without putting any funds into the deal. These are just a few of the new norms that are starting to emerge in the current housing market. It seems that we may be through the most turbulent of times in the local housing market, but we are still adjusting as a whole to what buying and selling a home now means given the financial changes that our society has witnessed over the past five years. | |
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Are Realtors Too Optimistic? |
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I have been cautiously optimistic about the real estate market improving for almost four years now. Each year, instead of improving, the market declined. So -- would you like to know what I am predicting for the upcoming year in the Harrisonburg and Rockingham County real estate market? I am cautiously optimistic that things will start to improve. Hmmmm........ Now, of course hindsight is always 20/20, but check out my comments back in January 2008 (a bit over 3 years ago): Preparing for the 2008 Real Estate Market "As 2007 progressed, sales increased, and inventory levels decreased. In most price ranges, there is still somewhat of an oversupply of housing – but this will likely continue to correct itself in 2008. As we move through the first quarter of 2008, expect to see a continued gradual increase in the number of sales, and a continued gradual decrease in the inventory of available homes. The continuation of both of these trends will restore a healthy balance between buyers and sellers in our market." Was a healthy balance in the market restored in 2008? No. Things became worse. And then worse yet in 2009. And then worse yet in 2010. So where IS the real estate market headed in 2011? I believe the market will start to incrementally improve this year --- but again, I have thought that for years now, without my beliefs being born out in market realities. And yet as I look to the future and provide projections and predictions to my clients I try to strike a balance between totally unrealistic optimism and totally depressing pessimism. Let me know sometime whether you think I'm striking an appropriate balance: scott@HarrisonburgHousingToday.com | |
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How Do Virginians Heat Their Homes? |
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Have you ever wondered how Virginians heat their homes? The Market Leaders Over Time: Coal......Oil......Electric  And for the graphically inclined....  Source: U.S. Census | |
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
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Commonwealth of Virginia
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