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Real Estate Showdown: Harrisonburg vs. Charlottesville |
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In a group discussion this morning about the Harrisonburg real estate market, someone wondered allowed about how the Charlottesville real estate market compared to Harrisonburg and Rockingham County over the past several years. Let's take a look, pulling from:
 As you can see (above) the Charlottesville Area has not had as much of a decline in market activity (-39% since 2006) as we have seen in Harrisonburg and Rockingham County (-47% since 2006). Furthermore, the market activity in the Charlottesville area is closer to leveling out (only a 1.5% drop in the last year) as compared to Harrisonburg and Rockingham County (7.1% drop in the last year).  As for median prices, the Charlottesville area fell further (12% drop from the peak to the trough) compared to Harrisonburg and Rockingham County (8% drop from peak to trough) --- however, the Charlottesville area (perhaps because of a faster price drop) has already started to see an increase in median prices (1% increase since last year) while Harrisonburg and Rockingham County continue to slowly decline (3% decrease since last year). Despite the drastic differences in sales volume and median prices, the two markets have had relatively similar trends over the past five years. | |
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Harrisonburg Housing Market Steadies in 2010, Except Townhomes |
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I have just published my most recent real estate market report with lots of information about the Harrisonburg and Rockingham County real estate market to help you make more informed real estate decisions in 2011. Click here to download the PDF, or read on....  While there were even fewer home sales in 2010 than in 2009, we seem to be nearing the bottom of a gradual decline we have been experiencing since 2005. After 14%, 13%, 25% and 13% year over year declines, there was only a 7% drop in sales between 2009 and 2010. Perhaps 2011 will finally be the year when we meet or exceed the prior year's sales count.  While the overall market may be recovering, the townhouse market continues to struggle to pick up any momentum. After only an 11% decline in the number of townhome sales between 2008 and 2009, we saw a full 20% drop between 2009 and 2010. And yes, this was amidst the first time buyer tax credit season!  While inventory levels were higher for most months of 2010 than in the same months in 2009, we have seen a significant decline in inventory over the past six months. After a high of 1,015 homes for sale in June 2010, the market is now down to only 787 homes for sale --- the lowest in the past two years.  Lot sales finally recovered -- at least in their pace, if not their price. After several very (VERY) slow years of lot sales, 2010 lot sales exceeded 2009 sales -- just barely. These sales are of lots smaller than an acre. Prices, as you can see, have dropped quite a bit over the past several years, down to the current median lot price of $55,000.  Click the image above (or here) to review the entire market report. 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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758 Homes Sold Last Year --- But How Many Didn't Sell? |
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This can be a deceiving graph....  In many ways, this graph would suggest that all homes sell. Thus, if you list your home --- there is a 61% chance it will sell in the first six months of being on the market --- but if it doesn't, it will definitely sell within two years. That's not how it works. The graph above is showing the length of time it took to sell the homes that actually sold. One of my clients asked me a rather interesting question this week --- how many homes don't sell? I haven't figured out a very good way to determine that through our MLS system, but here's one look at it..... Over the past six months, in Harrisonburg and Rockingham County, 478 homes have expired out of the MLS, or have been withdrawn from the MLS. That's a pretty significant number since there are only 780 active listings on the market right now. Listing your house for sale does not guarantee that it will sell. Appropriate pricing and creative, pro-active, aggressive marketing can help -- but there is still no guarantee. And it seems that plenty of homes just aren't selling these days! | |
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What you found to be most interesting in 2010... |
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As we finish up the last day of 2010, I though I'd take a look back at some of the most frequently viewed posts here on HarrisonburgHousingToday.com from 2010....
Happy New Year! | |
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The bigger they are (houses), the harder they fall (sales)? |
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At the current pace of the market, it would take 21 months to sell all of the housing currently on the market in Harrisonburg and Rockingham County priced over $400,000. Wow, those expensive homes certainly are suffering, aren't they? Maybe not.....  While large homes are not always expensive, and expensive homes are not always large, the trend above might be surprising given how many expensive homes are on the market. The graph above illustrates that although the pace of all home sales has fallen quite drastically over the past three years (a 38% decline), sales of large homes (3,000+ square feet) have only declined by 19%. So, it seems that the inventory statistics don't tell us the entire story. There are a relatively similar number of buyers of large homes in the marketplace as compared to three years ago......but significantly more sellers! | |
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Single Family Homes Under $200,000 in Harrisonburg and Rockingham County |
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For those looking to buy a single family home under $200,000 in Harrisonburg or Rockingham County, here's a bit of historical context for how realistic that is today. First, you'll note that there have been fewer and fewer homes purchased for less than $200,000 over the past decade, other than a slight increase this year.  What is MUCH more interesting, however, is that the percentage of the single family home market that has been under $200,000 has been steadily rising for the past four years!  We started out the decade with 88% of homes being purchased under $200,000. At the height of the housing boom, only 39% of single family homes in Harrisonburg and Rockingham County were being sold for under $200,000. However now, we have surpassed 50% again! And today, in fact, there are 206 single family homes under $200,000 for sale in Harrisonburg and Rockingham County! Click here to use the Power Search feature on my site to search for homes for sale. | |
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What do we do if the real estate market stalls out? |
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I'm not suggesting that the real estate market has stalled out in Harrisonburg and Rockingham County, but in talking to someone in another part of the country (thanks for the insight, Laura!) we came to a realization that some markets have stalled out -- and it's not clear what will get them started again. Laura and I realized that some markets are stuck in an endless loop: Buyers can't buy because comps aren't available to support appraisals......because buyers haven't bought......but buyers can't buy because comps aren't available to support appraisals............ Some would be quick to blame lenders --- why are they holding back the market? Buyer X wants to buy a house from Seller Y, and has written a contract to do so at a particular price. Why then, is the lender denying the loan on the basis of the appraisal? Well, it's actually quite reasonable for the bank to want and need to protect their interest. If they are going to invest $250k in a mortgage on a $300k purchase, they'd want to know if the house was only worth $200k. If that were the case, they would have made a poor investment, and their collateral (the house) would not sufficiently cover their investment should the borrower stop making payments. But you can likely see why this is frustrating for buyers and sellers alike. Even though it is reasonable for a lender to want to know (via an appraisal) that a house has a particular value --- if a buyer and seller have agreed to terms, and the buyer is not overpaying for the house, why must the entire process be stopped in its tracks simply because there aren't any comps available to support an appraisal. Here is a specific (though fictional) example of what this might look like, in a subdivision in Anytown, USA: 2008 sales prices: $250k, $255k, $260k, $255k, $250k, $255k, $255k, $255k 2009 sales prices: $250k, $245k, $245k, $245k 2010 sales prices: no sales! Then, when a buyer and seller agree on a sales price of $225k in early 2011, they certainly think that everything should go quite smoothly with the transaction. But if the lender can't find any comparable sold properties in the past 6 to 12 months that support , they will likely deny the loan on the basis of the appraisal. What are the buyer and seller to do? How does a market get started again after a very slow spell, given that appraisals are required for loans to move forward, and that comparable sales are required for appraisals??? | |
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Per CNNMoney.com, "Buying a home now is a no-brainer" |
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The market is slow, prices have slowly declined for the past few years, and likely will for the next year --- could this still be a good time to buy? Ali Velshi from CNNMoney.com says yes. (Thanks for the tip, Sue!) Velshi's logic is that even if prices fall a bit more, that today's super low interest rates make it a terrific time to buy: "Buying a fairly priced home at today's rates may be the best deal you will ever get." I tend to agree with his logic. You see, if you're going to be in a house for the next five years, and are considering the purchase of a $250k home, you're better off to buy it today at 4.25% than to buy it a year from now at $240k with a 4.75% interest rate. Assuming a 20% down payment....
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Is Homeownership For Everyone? |
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Several decades ago (and earlier) home buyers would wait to purchase a home until they had at least 20% of the purchase price saved up in their bank account, and they would only buy if they were going to stay in the same home and town for many years. At the time, the percentage of homes that were owner-occupied hovered between 40% and 50% (U.S. Census Bureau). Just a few short years ago, home buyers were buying with no down payment at all (or less), even if they planned to stay in the house for only a year or two. This led to an ever increasing homeownership rate, which peaked at 69.2% of families owning their home in the early 2000's (U.S. Census Bureau). Why the sudden change of pace? And what is a buyer to do today? Many of today's first time buyers are still buying with a very small down payment, and that can be o.k. Many loan programs are available with a small down payment, such as the FHA loan program which only requires a 3.5% down payment. The risk here is that a buyer doesn't have too much built-in equity in case they need to sell sooner than they think. Purchasing a $100,000 house with a 96.5% FHA loan results in a $96,500 loan, which has only been paid down to $95,000 one year later. With such a small down payment, it can be difficult to re-sell the home in a short time frame without bringing cash to closing. As becomes evident, the down payment and the length of ownership are quite intertwined. As shown above, a small down payment with a small length of ownership can be financially difficult. A small down payment with a longer length of ownership can work just fine. Conversely, a larger down payment provides security and makes even a small length of ownership feasible. What may become clear here is that homeownership is not for everyone. Even if you're making great money when you move to Harrisonburg for a new job, if there is a strong chance you'll be leaving again in 12 months, it may not make sense to buy right away. But for those with good credit, a down payment of some sort, and a solid job that will keep you employed and in the area for the next 3, 4, 5, 6, 7 years – homeownership may be a very exciting option for you right now. With low interest rates, lots of homes on the market, and many sellers ready to negotiate, this can be a most opportune time to act. Owning a home is a passive savings account of sorts, with money accruing as you pay down the principal of your mortgage each month. Owning a home also gives you the ability to establish yourself and potentially your family in a neighborhood that may be your home for years to come. Finally, owning your home gives you the ability to invest time, energy and money into your home that will provide a future resale benefit to you – as opposed to when you paint, re-model or otherwise improve a property that you are leasing. Now being excited about buying and thus owning a home, you might look around and realize that the local real estate market isn't booming right now. Median prices have dropped a few percentages per year for the last few years. Is the local market poised for a recovery? It seems that it might be, with sales volume possibly leveling off in 2011, but no one knows for sure. Is it wise to invest in real estate when the market, and prices are down? Many think that it is wise, given that you can fix your housing costs when prices are potentially the lowest that they'll ever be, and when interest rates are potentially the lowest that they'll ever be. In many ways, your housing costs compared to what you are buying couldn't be much lower than they are right now. Buying a home isn't for everyone, but excellent housing opportunities abound for those who plan to make the Central Shenandoah Valley their home for the years to come. | |
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Housing Market Report: Sales Increase, Prices Increase, Contracts Increase in Harrisonburg, Rockingham County |
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Below you will find several highlights from my December 2010 Harrisonburg and Rockingham County Real Estate Market Report, available as a PDF by clicking here. Our local real estate market still has a ways to go before recovering, but there are some positive signs this month.  First, you'll note (above) that home sales increased in November 2010 as compared to the previous month (October 2010). Sales in November were lower than in November 2009, but last November had the benefit of being the intended deadline for the home buyer tax credit -- thus lots of extra buyers closed in November.  Median sales prices and average sales prices both increased in November (10%, 8%). This, however, is likely because the median and average sales prices were much lower than normal last November as a result of so many first time buyers closing (on properties with low purchase prices) during November. Year to date figures still show a 3% year over year decline in prices.  More buyers committed to buy properties in November 2010 than we have seen in the past three Novembers! Hopefully we'll see a strong December as well.  Click the image above (or here) to review the entire December 2010 Harrisonburg and Rockingham County Real Estate Market Report. 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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City Homes Outperform County Homes |
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As I reported earlier this week, the single family home market in the City of Harrisonburg is improving, both in the number of homes sold, and the median price of those sold homes. There is also some good news in Rockingham County, but it's not quite as exciting.  As you'll note above, more single family homes are selling in Rockingham County this year as compared to last year. The bad news is that they are selling for less --- there has been a 7% decline in median sales prices. What does this mean if you are buying or selling a single family home in Rockingham County? SELLERS: Know they market! If prices have declined 7% over the past year, you shouldn't be basing your list price on sales prices from a year ago --- unless you are then adjusting downward. Furthermore, consider making your list price compelling today rather than potentially selling at a lower cost 6 to 12 months from now. BUYERS: Make sure that you are comfortable with what you are paying for a house --- and that you are comfortable staying in that home for several years. Median prices will likely still decline a bit further this coming year (2011) before starting to level off and increase. | |
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City of Harrisonburg Reassessment Shows Slight Decline in Home Values |
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The City of Harrisonburg just released updated assessment data for all City properties, which showed a 1% increase in overall property values. When diving down into residential properties we discover that there was a 1.4% decline in single family home values and a 0.3% decline in townhome values. These will result in small decreases in tax bills if the tax rate does not change. (see DNR article) Some, however, might suggest that these very small adjustments in value are out of line -- that their property values have adjusted much more than 1.4% or 0.3% over the past year. Indeed, our overall market area has experienced a decline in median prices of roughly 5% over the past year. But looking a bit closer, there are actually some areas where our local real estate market is performing reasonably well....  During the first 10 months of last year (Jan 2009 - Oct 2009) there were 121 sales of single family homes in the City of Harrisonburg, with a median sales price of $209,000. This year, however, during the same time period (Jan 2010 - Oct 2010) there were 128 sales of single family homes in the City of Harrisonburg, with a median sales price of $211,250. Again, this improvement runs counter to the market as a whole, where sales are still slowly declining and prices are still slowly declining. | |
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What has kept home values (relatively) stable In Harrisonburg??? |
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As I mentioned in my market report earlier this week, fewer and fewer buyers have been present in the market over the past six years (demand fell) but prices have not fallen in the way that that shift in demand would suggest. I'm watching hburgnews to try to learn some answers as well, but here's what I have so far.
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Despite Slow Sales, Home Values Remain Relatively Stable in Harrisonburg and Rockingham County |
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Read on for several highlights of the November 2010 Harrisonburg and Rockingham County Real Estate Market Report. Or click here to view the PDF.  Despite early gains in 2010 (particularly in April and June) home sales have stagnated over the past several months. July, August, September and October of 2010 have been the slowest such months during the past five years. Despite these low sales figures, however, year-to-date sales are only 4% below last year's sales.  Late 2009 through mid 2010 showed some promise. After several years of declining home sales (pace, not values) it seemed that our local market had finally turned around. Now looking back, that increase in sales pace may have been largely related to the home buyer tax credit, as the pace of sales is now on the decline yet again. What surprises lie in store for us in 2011?  As demand falls, prices should fall --- isn't that what I learned back in my economics class at JMU? Not so in the Harrisonburg and Rockingham housing market!?! Fewer and fewer buyers have been present in the market over the past six years (demand fell) but prices have not fallen in the way that that shift in demand would suggest. Calling all economists....how can we explain this?  Click the image above (or here) to review the entire November 2010 Harrisonburg and Rockingham County Real Estate Market Report, complete with an all new Executive Summary this month. 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 Value Of Your House Will Only Increase, Always, Forever, For Sure |
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 Here's an interesting report from NPR telling the story of an employee of Freddie Mac who manages an online calculator that has (intentionally or unintentionally) been telling web users that home values will only go up! Read more from NPR: Housing Guy Apologizes For Housing Bubble It is interesting --- I do wish home values would only go up --- and during most years values do increase. The last few years, however, have not held that promised increase. That said, it depends on the time horizon that you consider. First, the year to year bad news -- home values decreased for 4 out of the past 10 years. That is to say that the first six years of the decade showed an increase ('01, '02, '03, '04, '05, '06) but the most recent four years have shown a decrease ('07, '08, '09, '10). But here's an interesting cumulative look at the value of a $200,000 home purchased in 2000:
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Harrisonburg Home Sales Decrease, Contracts Increase, in September 2010 |
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Below are several highlights from the October 2010 Harrisonburg & Rockingham County Real Estate Market Report. Read on, or click here to download a PDF of the entire report.  As you'll note above, there were very few home sales in September 2010. In fact, there were very few home sales in in July, August and September! That was, however, after very high home sales in April and June. Thus, it would seem that the home buyer tax credit certainly rearranged the timing of 2010 home sales, regardless of whether it brought new buyers into the market nor not. The question now, of course, is how many of the October, November and December closings were borrowed by the first half of 2010.  After multiple years of a declining sales pace, the graph above shows that we were finally seeing a reversal for the first six months of this year. However, the past three months of slow sales has turned us back around into a declining market again. The fourth quarter of 2010 will be quite indicative as to a reasonable 2011 forecast.  Please note, above, the silver lining. Despite a lower than normal number of closings in September 2010 -- the buyers were out yet again, contracting to buy real estate. In fact, with 74 properties going under contract, buyers in our market outpaced the past two Septembers. This should be a good indicator for the coming months.  Above you'll see a decade-long comparison of two imprecise measures. The blue bars show the number of home sales recorded in the HRAR MLS -- this does not include private sales (sans Realtor), and some new home sales. The yellow bars show the number of Trustee Deeds recorded during each of the past 10+ years. Some of these foreclosed properties (203 in 2010) then show up in the blue bar when they are listed and then sold as bank owned properties. It would seem that foreclosures have increased nearly four-fold over the past ten years, and now make up somewhere between 15% and 26% of all home sales.  My full market report (click above -- or here -- for a 20 page PDF) includes LOTS more analysis to help you make informed real estate decisions. Read through it and let me know if you have any questions, or if any additional information would be helpful to you. You can contact me (nearly) anytime at 540-578-0102 or scott@HarrisonburgHousingToday.com. | |
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Will Home Values Fall in Harrisonburg and Rockingham County? |
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An Associate Press story printed in the Daily News Record a few days ago....  The beginning of the article references an increase in prices in July as shown by the Case Schiller index. So, will home values fall here in Harrisonburg and Rockingham County as is suggested in the article might happen in many markets? Let's take a look at the support for their theory that values will fall.....
Stay tuned! | |
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Oh September 2010, How You Confuse Me! |
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 In all of last September (2009) there were 72 residential sales in Harrisonburg and Rockingham County. Thus far, in the first 23 days of September 2010, there have only been 27 residential sales in Harrisonburg and Rockingham County. The sky is falling! The sky is falling! But wait.....is it??  In all of last September (2009) we saw buyers sign contracts to purchase 52 residential properties in Harrisonburg and Rockingham County. Thus far, in the first 23 days of September 2010, we have seen buyers sign contracts to purchase 59 residential properties in Harrisonburg and Rockingham County. What, oh what, can we conclude? Perhaps only that we're still on the roller coaster ride of a not-yet-stabilized real estate market. | |
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What Home Sales Could Have Been in Harrisonburg and Rockingham County |
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In an interesting e-mail dialogue about the current real estate market, I was offered this terrific insight... "It seems to me that houses bought and sold in a "normal" market should have some average per capita value ... the factors which affect whether people buy or sell houses should be relatively similar from year to year (people moving in for new jobs, divorces, retirements, etc.) in non bubble years." I couldn't agree more --- so let's run with that theory for a moment and see what we can learn.  The graph above shows the population for Harrisonburg and Rockingham County (source) compared to home sales per the HRAR MLS. You can see that while population has steadily increased over the past decade, home sales rose dramatically, and then fell dramatically. So....what if we took the per capita theory, and extrapolated from the year 2000....  This graph supposes that the number of home sales in 2000 compared to the total population in 2000 (0.77%) was the norm -- and then suggests what home sales would have been for each subsequent year -- still assuming they would be 0.77% of the population. You can see that home sales would have slowly increased just as the population did.  The graph above shows actual home sales (blue) compared to the theoretical 0.77% home sales --- what a difference in the peak years of 2004 through 2006! Per this theory, we're "behind" as of 2009 --- there should have been more home sales, given the population figure, and assuming that home sales will usually be 0.77% of the population.  To push the envelope a bit further, let's assume home sales should be 0.87% of the population. You see, in 2000 the per capita figure was 0.77%, but in 2001 it was 0.97%. If we split the difference, we have the graph above -- showing that last year the home sales were significantly below the norm. What does this mean for the future? If we buy into the per capita theory, then last year's home sales are not the pattern the future. We won't always have about 800-ish home sales per year, and see a steady increase from that number. Instead, we are likely going to see a return (over the next year or two) to a sales level closer to around 1,000 home sales per year, which will then steadily increase as the population grows. That is, of course, unless we see another market boom at some point in the future! | |
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Online Property Views and Residential Property Sales Appear To Be Heading Up! |
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A lot of you might view properties online today --- only a few of you might close on a home sale today. That said, there often seems to be a correlation between the number of people viewing properties online, and the number of people closing on properties. It makes sense --- if more people are going to buy a home, there will likely be more people looking at said homes online. Take a look at the interesting two year trends below. Not only do they mimic each other, but they are both headed up!   Now, I don't wear the rose colored glasses 24x7 --- I know we're not out of the woods yet. We still have super-high inventory levels, we haven't decidedly seen a turn of the tide in sales volume, and it will probably be another year or more before we see prices starting to stabilize. However, there are more and more indicators of late that we may be seeing a gradual change towards more positive times in the Harrisonburg and Rockingham County housing market. | |
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
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