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How Quickly Your Home Will Sell Might Depend On The Price Range |
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 The "Median Days On Market" in Harrisonburg and Rockingham County is six days... that is to say that half of homes go under contract in six or fewer days and half go under contract in six or more days. That is based on home sales in the first half of 2023. But... when we zoom into some different price ranges we start to see a slightly different story. The median Days On Market for homes over $500K is 10 days... ...for homes over $600K is 25 days... ...for homes over $700K is 35 days... ...and for homes over $800K is 70 days. So, yes, market-wide, the median Days on Market is six days... but that doesn't necessarily mean your home will go under contract in about six days... especially if it is in one of the upper price ranges for our area. | |
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Far Fewer Homes Are Selling, But Sales Prices Keep Rising |
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 Happy Friday Morning, Friends! As per the headline above, far fewer homes are selling this year, but sales prices keep rising. But before we dive into it... First, if you're looking for a spacious four bedroom home in a neighborhood in the Spotswood High School district, be sure to check out 350 Confederacy Drive...  This beautiful, well maintained house in Battlefield Estates has had many updates over the past few years and is currently listed for sale. Find out more at 350ConfederacyDrive.com. Second, I hope you have had a fun first half to your summer. The weeks are flying by and before you know it, we'll be thinking about and planning for the coming school year. I was out of town for a few days last week for some fun on the water...  I have always loved water skiing but in recent years I have become the boat driver so it was great to have Luke drive this year so I could ski again. It was a fun and relaxing time away with family, and I hope you find time to have fun this summer as well... whether at the lake, at the beach, or right here in the beautiful Shenandoah Valley. Third, and finally before we get to the market data, each month I offer a giveaway, of sorts, for readers of this market report, highlighting some of my favorite places, things or events in Harrisonburg. Recent highlights have included Red Wing Roots tickets, The Little Grill, and Cuban Burger. This month I am giving away a $50 gift certificate to Jimmy Madison's... located in downtown Harrisonburg. If you find me at Jimmy Madison's, I'll be enjoying one of many favorite items from their fantastic menu... but always with a side of their delicious Jimmy Sprouts -- Caramelized Brussels Sprouts with sweet pecans, candied bacon and honey thyme vinaigrette. I'm getting hungry just talking about them! Click here to enter to win the $50 gift certificate to Jimmy Madison's. Now, on to the data...  As shown above... [1] There were only 113 home sales in June 2023, which was a 40% decline from last June. We'll see this visually in a graph in a bit. [2] We've seen 603 home sales in the first half of the year which is a 24% decline from the first half of last year. This is the "far fewer homes are selling" part of my market report. [3] If we stretch back a full year (12 months) we will find 1,374 home sales -- a 20% decline from the 1,727 home sales seen in the 12 months before that. So, regardless of how you slice or dice the data, fewer homes are selling in Harrisonburg and Rockingham County this year than last. But... [4] The median sales price in June 2023 ($344,990) was 15% higher than last year when it was $299,622. [5] The median sales price in the first half of 2023 ($330,000) was 10% higher than the first half of 2022 when it was $299,000. [6] The median sales price over the past 12 months ($315,000) was 10% higher than in the in the 12 months before that when it was $286,000. As such, regardless of how you look at it, the median sales price is still on the rise in Harrisonburg and Rockingham County, despite far fewer homes selling. Here's a visual of the drop off in the number of homes selling...  The blue line above shows the number of homes selling per month last year -- compared to the red line which shows this year's home sales. As is quite evident, the number of homes selling has been far lower this year than last, particularly over the past few months -- April, May and June. The grey line above shows the average number of home sales per month based on the past four years (2019-2022) of data. When looking at all three lines together it becomes clear that home sales last year were significantly above historical averages and home sales this year are now (particularly in May and June) significantly below historical averages. As I'll continue to discuss throughout this report... this decline in the number of homes selling is (perhaps obviously) both a result of fewer sellers selling and fewer buyers buying. We need both a seller and a buyer for a home sale to take place. As we'll see in later graphs, inventory levels remain low -- so it seems likely that the main constraint on home sales is the number of sellers selling... not a limit on the number of buyers who would like to buy. But before we get to inventory levels, let's look at a slightly longer historical perspective...  The blue line above shows the number of home sales per year, updated each month. This snapshot looks back to late 2020 (in the thick of Covid) when home sales were surging upwards, from 1,365 annual sales all the way up to 1,727 annual sales. But over the past year we have seen annual sales steadily drop... all the way back down to 1,375 sales per year... about the same place as where we were in the early months of the pandemic. If the pandemic (and low mortgage interest rates, and lots of people working from home) drove the number of annual home sales up over the course of two years... it was immediately followed by much higher mortgage interest rates driving the number of annual home sales down over the course of the most recent year. When the number of home sales in our market was surging in 2020, 2021 and 2022 it certainly made sense that home prices were rising steadily, as shown in the green line above. But over the past year, even as the number of homes selling has declined, and even with higher mortgage interest rates, we have continued to see home prices keep on rising. This (ever higher prices) is an indication (along with continued low inventory levels) that the limitation of the number of homes selling is almost certainly primarily a supply side issue -- not enough sellers being willing to sell. To put rising home prices in context... take a look at this change in the median sales price in our local market over the past four years...  The median sales price in Harrisonburg and Rockingham County has increased by more than $100,000 over the past four years. Wow! Four years ago your purchase of a median priced home would have had you spending $223,000 -- and today you'd be spending $330,000. This is certainly wonderful news if you have owned a home over the past four years -- or if you bought a home four years ago -- and less exciting news if you do not own a home and/or have been trying to buy a home for any or all of the past four years. It is important to note that these figures are not adjusted for inflation. I'll take a look at that separately, hopefully soon, as we have seen significant changes in what a dollar buys you over the past few years -- not just with houses, but across the majority of the economy. As should come as no surprise, the precursor to fewer home sales is... fewer contracts being signed...  As to the point I made earlier, the blue line above (last year's monthly contracts) was certainly above the historical average (grey line) but this year's trajectory of monthly contracts (red line) is well (well!) below historical averages. Looking ahead to home sales for the rest of the summer and into fall, we are likely to see continued to declines in home sales based on continued low levels of contracts being signed. As mentioned previously, one of the main reasons why we are seeing fewer home selling... is because there are fewer sellers selling...  Over the past four years (grey line above) we have seen an average of 180 to 190 homes for sale as we have rolled through March, April, May and June. This year (red line above) we have seen between 116 and 136 homes for sale during those same months. Inventory levels are remaining low despite far fewer home sales. This is the data point (alongside continued increases in the median sales price) that seems to rather clearly confirm that the decline in home sales is almost entirely related to fewer sellers selling -- and not fewer buyers wanting to buy. Across many (though not all) price ranges and property types, home buyers keep snatching up most new listings that come on the market -- which is keeping inventory levels quite low. How quickly are those new listings getting snatched up, you might ask? That is most readily measured via the "days on market" metric...  The graph above tracks the median "days on market" metric -- looking at six months of data at a time. As such, the most recent data point of a median of six days on the market is based on January 2023 through June 2023 home sales. After dropping, dropping, dropping to a median of only four days on the market in mid-2021, we saw a steady report of a median of five days on the market all the way through the end of 2022. But then, it seemed that things might be changing as the median days on market crept up to eight days on the market in early 2023. But... maybe not, after all... as median days on market has shifted back down to only six days over the past few months. If we ever see a significant shift in market balance -- with more sellers trying to sell than there are buyers to buy -- we are likely see that reflected in this median days on market metric. As is likely evident from the graph above, we're not seeing that type of market shift right now, despite far fewer homes selling this year than last. Finally, how about those mortgage interest rates. :-/  Please only looking briefly (and wistfully) at that 3.02% rate from two years ago... and then focus more on the past year. We have seen relatively volatile mortgage interest rates over the past year -- starting at 5.7%, ending at 6.7%, drifting as high as 7.1% and as low as 6.1%. It seems likely that we will continue to see mortgage interest rates over 6% for the balance of 2023... though home buyers would certainly love to see that be closer to the 6.31% seen in January rather than the 6.7% at the end of June or the 6.96% seen this week. Having sifted through all of the data above, what does it all mean for current home sellers and would be home buyers? Home sellers are likely to still do quite well in the current market, as the median sales price keeps rising and inventory levels (your competition) remain quite low. Home buyers are likely to continue to have difficulty securing a contract on a home as we move through 2023 due to fewer sellers selling, homes still going under contract very quickly, and likely competition from other buyers for many new listings. If you are planning to sell your home, or buy a home, in the coming months I would be happy to chat with you about how your segment of the local housing market (based on location property type and/or price) is performing as it compares to the overall market. Feel free to reach out to me if I can be of any assistance to you as you make plans to buy or sell. You can reach me most easily at 540-578-0102 (call/text) or by email here. Until next month, I hope you find some time to disconnect and enjoy the summer season with your family, friends and loved ones... and if you need me to drive the boat while you water ski... just let me know... ;-) | |
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Do We Care How Many Homes Are Selling, Or More About Their Sales Prices? |
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 Each month I publish a comprehensive report on our local housing market. A few years back, after I published a report showing that sales had risen by _% and prices had risen by _%, one of my past clients shared an interesting perspective. He said, I don't care if there are 20% more home sales, or 20% fewer home sales this year... what I care about is the prices that were paid for those homes! I get his point. If home values rose 3% per year over a 10 year period, would you, as an individual homeowner, care if the number of homes selling for year bounced back and forth from 500 to 700 to 400 to 800? Probably not. You might find it interesting to see so much variation in the number of homes selling per year - but you'd mainly be focused on how the prices of those homes changed over time. I'll publish my latest market report later this week if all goes well, and it will likely include statistics somewhere along the lines of... Home Sales Decline 15% - 20% Median Sales Prices Rise 10% So, far fewer homes selling... but at much higher prices. Circling back around to my client's point... will we care? Should we care? If continue to see fewer and fewer home sales per year over the next two to three years... do we care about that decline, if home prices keep on rising? Existing homeowners probably wouldn't care. The number of homes selling per year wouldn't seem to impact them much. Home sellers would likely be glad. Fewer homes selling means less competition -- so long as inventory levels stay relatively low. But (wannabe) home buyers, yeah, they won't be thrilled to see a decline in the number of homes selling. That decline means there are fewer homes that they can attempt to buy - assuming that inventory levels stay relatively low. So, if the number of homes that sell continues to decline, but prices continue to rise, will we care? It depends on who the "we" is. | |
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How Could Housing Market Affordability Be Restored? |
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 Here's an interesting article for your perusal... If you can't access the entire article, here's the gist of it... There are three levers that can ease housing affordability:
As per this article... "A new housing report put out by Morningstar expects mortgage rates will indeed be the primary lever that helps to ease housing affordability." "As of Friday, the average 30-year fixed mortgage rate tracked by Mortgage News Daily stands at 7.14%. Morningstar expects that’ll trend down in the second half of the year, and we’ll average 6.25% for 2023. Morningstar’s forecast model then expects mortgage rates will average 5.00% in 2024 followed by 4.00% in 2025." The entire article is worth a read. Other groups putting out predictions for future mortgage interest rates aren't thinking they'll get as low as Morningstar predicts, but they do think they will decline over the next few years. The last paragraph of the article holds a key reminder... "When it comes to mortgage rate and home price forecasts, it might be best to take them with a grain of salt. Uncertainty in the economy makes it hard to predict both mortgage rates and house prices." So... you certainly shouldn't count on lower mortgage rates in the future (relative to either waiting to buy until rates drop, or buying now with a plan/need to refinance to a lower rate later) but it is interesting to see multiple groups now predicting lower mortgage interest rates over the next few years. That change would be welcomed by home buyers! | |
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Contract Activity In June 2023 Was The Slowest It Has Been In A Decade, Much To The Dismay Of Would Be Home Buyers |
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 It remains a tough time to buy a home in many or most price ranges and locations -- with limited resale inventory leading to continued low levels of contract activity. As shown above, the 99 contracts that were signed in Harrisonburg and Rockingham County in June 2023 was the lowest number of contracts signed in a month of June for the past decade. At first glance some might assume that the low number of signed contracts is an indication that fewer buyers want to buy homes right now -- but with inventory levels starting the month low and ending the month low -- the bottleneck seems to be almost entirely on the supply side of the equation. There aren't enough sellers willing to sell their homes. Getting into the details of new homes versus resale homes for a moment, let's take a look at the highest and lowest data points... June 2020 = 124 resale homes + 49 new homes = 173 total contracts June 2023 = 73 resale homes + 26 new homes = 99 contracts So, if we take out new homes, not only did only 73 buyers sign contracts to buy home in June 2023 compared to 124 in June 2020... only 73 sellers were willing to sell their homes in June 2023 as compared to 124 in June 2020. I don't expect we'll see much of an increase in resale homes being listed for sale as we continue through 2023, so any upside potential for increased contract activity likely lies on the new home side of the equation. If you were one of the 99 buyers to secure a contract to buy a home in June 2023... congrats! | |
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It Is The Beginning Of The End Of Summer When It Comes To Real Estate |
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 Yes, yes, I know... the official first day of summer was June 21st, which was only two weeks ago. But, when it comes to real estate, we're just about at the beginning of the end of summer. Here's the math, working backwards for anyone hoping to be settled into a new home before the start of next school year... August 23 - first day of school in Rockingham County August 22 - first day of school in the City of Harrisonburg August 18 - latest closing date to have a full weekend to move into a new home before school starts July 18 - a month prior to that August 18 closing date So... if you're hoping to close on the purchase of a home before the upcoming school year begins, you have a bit less than two weeks to do so. And... if you're hoping to sell your home to someone that wants to close on their home purchase before the upcoming school year begins, you should probably have your house on the market in the next two weeks. Happy Summer! ;-) | |
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Contract Activity In The First Half Of 2023 Was... Rather Slow |
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 It's the last day of the first half of the year! Wow! As such, I've taken a moment to look at contract activity in the first half of 2023 as compared to the first half of each of the nine years prior to 2023. As you can see, above, contract activity (buyers and sellers signing contracts) has been quite slow this year compared to every other year since 2014. Will we see contract activity ramp up in the second half of 2023? Maybe. But it will have to start with sellers being willing to sell. There are plenty of buyers ready to buy -- but not quite as many sellers willing to sell. | |
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How Quickly Can You Sell A Second Cup Of Lemonade, Or Your House? |
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 Let's say you set up a lemonade stand early on a Saturday morning around 8:00 AM. Before you can even put the last sign up, you have your first customer at 8:04 AM. After you sell them that cup of lemonade, you are excited for the rest of the day and you start squeezing lemons for a second batch of lemonade because you just know that you'll have a strong day of lemonade sales, probably with a new thirsty customer every few minutes. Four hours later you sell your second cup of lemonade of the day. As those four hours passed by, without a second customer, you start to realize that... Just because the first lemonade customer showed up quickly, that did not necessarily mean that there would be lots and lots of lemonade customers that day. Maybe there is only one person in the market for lemonade in your area right now!?! I'm glad you asked... When you are getting ready to sell your home you might look around at recent sales and find that one of your neighbors recently sold their home -- and that it went under contract very quickly, and sold at or above list price. That would likely cause you to conclude that when you list your home for sale you will also find a buyer very quickly and sell at a great price. That may very well be the case! They might have had 10 showings and 3 offers, and you might have 9 showings and 2 offers. Great news for you if that is the case! Or... maybe there was only one buyer in the market (right now) for a house like your neighbor was selling and that you are selling... maybe they had 3 showings and 1 offer, and you might have 2 showings and no offers. Not quite as exciting for you. So just as we concluded with lemonade... Just because the first lemonade customer showed up quickly, that did not necessarily mean that there would be lots and lots of lemonade customers that day. Maybe there is only one person in the market for lemonade in your area right now!?! ...so it goes with any particular house given its price, location or property type... Just because a house sold recently, very quickly, at a great price, that does not necessarily mean that there are lots and lots of other buyers currently in the market for your very similar house. Maybe there is (was) only one person in the market (at least for now) for that particular type of house given its price, location and property type. So, how do you know what situation you'll be in as a lemonade or house seller? When selling lemonade, you won't know how quickly you will (or will not) sell that second cup of lemonade until the minutes or hours start going by with or without any lemonade sales. When selling a house, you won't know how quickly you will (or will not) sell your house until you have your house on the market and you can start seeing how quickly showings are (or are not) being scheduled. | |
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Existing Home Sales Are Down 19% In 2023. Why? |
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 We've seen a 19% decline in existing home sales in 2023 - which includes all home sales in the HRAR MLS except new construction sales. In the first five months of last year there were 466 existing home sales - but there have only been 377 existing home sales in the first five months of 2023. Why are there fewer existing home sales taking place right now in Harrisonburg and Rockingham County? Theory 1 - Affordability Home prices have increased significantly (+32%) over the past three years and mortgage interest rates have as well (+108%) and these two trends have caused housing payments for most new buyers to increase significantly. So, one theory for why we are seeing fewer existing home sales is because homes are less and less affordable. But... if this theory were true... that higher home prices and higher mortgage interest rates were making housing too unaffordable... thus reducing buyer demand for existing homes for sale... then we would see inventory levels starting to climb as a result. But, we're not seeing inventory levels meaningfully rise -- which calls into question whether the reduction in existing home sales could really be related to affordability. Theory 2 - Homeowners Want To Hold Onto Their Low Mortgage Interest Rate Another potential theory for why we are seeing fewer existing home sales... is that perhaps we are not seeing a decline in the number of buyers who want to buy... but rather... a reduction in the number of sellers who are willing to sell. Take a look at the mortgage interest rates of current homeowners! 82% of homeowners have mortgage interest rates below 5%. 62% of homeowners have mortgage interest rates below 4%. If those homeowners sell their current homes (existing homes) they would be trading in their low mortgage interest rate for a new one around 6.5% or a touch higher. Thus, it is quite possible that we are seeing lower number of existing home sales because fewer homeowners are willing to sell... because they LOVE their low mortgage interest rates. Theory 3 - What Say You? Have any other theories? Email me! | |
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Monthly Tax Bills in the City of Harrisonburg and Rockingham County Over Time |
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 If you're buying a median priced home in our market (Harrisonburg and Rockingham County) you would be spending $325,000. 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:
Also of note -- this analysis of monthly property tax bills over time does not adjust for inflation. A $260 monthly tax bill in the City of Harrisonburg in 2023 is not the same as a $260 monthly tax bill in 2013 as inflation has been running hot over the past few years. Certainly, one reason why the City tax bill has increased as much as it has over the past few years has been to fund the new high school currently under construction in the City. Will this difference in tax rates in the City and County result in some buyers deciding to buy homes in the County instead of the City? Maybe - but my experience has been that the tax rate is not what causes a home buyer to consider a home in one locality or the other. Multiplying by 12, here's a look at the annual tax bill in the City vs. County for a median priced (market wide) home in our area...  | |
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Monthly Housing Costs Up 84% In Three Years |
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 Over the past three years... [1] The median sales price has increased by about 10% each year. [2] The average mortgage interest rate has doubled. [3] The City real estate tax rate has increased by 12%. Given these three changes, and how each plays into housing costs, it shouldn't be much of a surprise that monthly housing costs have increased significantly over the past three years. Three years ago, if a home buyer financed 80% of their purchase of a median priced home, they would be paying about $1,064 per month. Now, if a home buyer finances 80% of their purchase of a median priced home, they will be paying $1,959 per month. Beyond the "wow, that's a crazy increase" here are a few of my other thoughts and observations... [1] Perhaps this is a statement of the obvious... but this "increase in monthly housing cost" only affects those who are buying homes now. Anyone who already owns a home is not seeing this type of an increase in their housing costs. They might have a minor increase in their monthly housing costs due to rising assessed values, rising real estate tax rates and/or rising homeowners insurance rates, but those will amount to a relatively small increase in their monthly housing costs compared to what is described above. [2] Yes, this is a big increase... but it's partially because monthly housing costs were abnormally low for quite a few years as a result of super low mortgage interest rates. We have now exited a prolonged period of tremendously low mortgage interest rates. This kept housing costs very low for anyone buying a home (or refinancing their mortgage) during that unique time of low mortgage interest rates. Thus, the increase in monthly housing costs seems huge -- but it's only partially because of how high mortgage rates are now, but also very much about how low those mortgage rates were very recently. [3] Just a note on methodology. The housing cost numbers above are calculated using the median sales price of homes sold in Harrisonburg and Rockingham County per the HRAR MLS, combined with the average mortgage interest rate for the duration of the year, combined with the real estate tax rate for the City of Harrisonburg, and assumes a 20% downpayment. Bottom line -- it is quite a bit more expensive for someone to buy a home now compared to just a few years ago. | |
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If Your Offer Is Competing With Other Offers, You Should Max Out Your Preapproval Letter |
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 A few (4+) years ago, most offers were made without having to compete with another offer. In such as a circumstance, it often made sense to tailor your preapproval letter to match the price you were offering. For example... $275,000 = List Price $350,000 = Your Max Preapproval Amount $265,000 = Your Offer $265,000 = The Preapproval Letter You Include After all, why let the seller know that you could pay $350K when you're trying to negotiate them down from $275K to $265K. :-) These days, however, things work a bit differently. You should consider maximizing the amount of your preapproval letter to show your financial strength. $350,000 = List Price $475,000 = Your Max Preapproval Amount $375,000 = Your Offer (after escalating) $475,000 = The Preapproval Letter You Include Yes, you could certainly include a preapproval letter from your lender showing you are qualified to pay $375K for the house -- but the strength of your finances will be much more evident to the sellers if you include the maximum preapproval letter of $475,000. So... in a competitive offer scenario, don't hide the top price you can afford, as it might sway the seller in your favor as they are considering multiple offers. Most sellers, if presented with these three offers would choose the third offer... [1] Offer of $375,000 with pre-approval letter of $375K [2] Offer of $375,000 with pre-approval letter of $395K [3] Offer of $375,000 with pre-approval letter of $475K As a side note -- even if you don't want to spend $475K, and you won't spend $475K, if you qualify for $475K it can still be helpful to have that letter from your lender for the reasons outlined above. | |
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Think About These Questions Before You Go See A House You Want To Buy |
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 The market is still moving quickly in Harrisonburg and Rockingham County. As such, once we walk inside of a house, and you decide you like it enough to make an offer, the clock will start ticking. We'll have a limited amount of time for you to make a few big decisions... [1] What price do you want to offer? [2] Do you want to include an escalation clause? [3] How high will that escalation clause go? [4] Do you want to include a home inspection contingency? [5] Do you want to include an appraisal contingency? Some of these questions are certainly property specific -- and your answer will be different when asked about different properties. But some questions can be made somewhat more generic... [1] Will there ever be a time when you are comfortable making an offer without an inspection contingency? [2] Are you comfortable paying more than the appraised value for a house? Including a home inspection or appraisal contingency (or both) will definitely make your offer less competitive if there are multiple offers and if one (or more) of the other offers does not include either or both of those contingencies. So... before you go see a house that you then might discover that you love... think about... [1] Would you be comfortable buying a home that you love without doing an inspection? [2] Would you be comfortable paying more than the appraised value for a house that you love? Thinking about these questions generically will prepare you for when I ask you to think about your answer to that question when we're inside of one specific home. | |
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Homes Still Selling Quickly, At Record High Prices, Despite Decline In Total Home Sales |
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 Happy Monday morning, friends! They say summer doesn't start until June 21st, but the 85 degree temps yesterday certainly felt like summer. Regardless of the formal start of the season of summer, most students have finished out their school year now, which also certainly makes it feel like summer. One such student who finished up his school year is this guy, below. Luke has now officially graduated from high school! :-) We are delighted for his accomplishment of this major milestone, and are excited for all that lies ahead. And yes, Emily also finished up 9th grade! These kids they sure do grow up quickly!  Looking for a new (to you) house this summer? Look no further than this brand new listing (just listed this morning) in the City of Harrisonburg...  Find out more about this spacious four bedroom City home on a large lot by visiting 3121HorseshoeLane.com. And finally, one last item of business before we get into the real estate data. Each month I offer a giveaway, of sorts, for readers of this market report, highlighting some of my favorite places, things or events in Harrisonburg. Recent highlights have included The Little Grill, Cuban Burger and Taste of India.  This super relaxing and family friendly music festival from June 23 - 25 at Natural Chimneys Park in Mt Solon features wonderful music (on multiple stages throughout the weekend), great food, lots of activities (hiking, biking, running, yoga, kids events), and all around great fun with family and friends. Have you considered going to Red Wing but haven't been yet? Maybe this summer is the time for you to make it one of your favorite family traditions. I am looking forward to being there with my family and I'm hoping you'll join in on the fun... from June 23rd through 25th. If you're interested in going to Red Wing but don't have tickets... I'm giving away a pair of three-day general admission tickets. Click here to enter to win the tickets... I'll pick a winner later this week. Now, on to the real estate data...  As mentioned in the headline, and as shown above, we're seeing far fewer home sales this year than last... [1] This past May (last month) we saw 112 home sales in Harrisonburg and Rockingham County, which marks a 25% decline from last May. [2] When looking at the first five months of this year, there has been a 20% decline in home sales compared to last year during the same (Jan-May) timeframe. [3] When looking at a full year of data (June - May) the number of homes selling in our area has declined 16%. A year ago we were seeing an annual pace of 1,714 home sales... and that metric has now declined to an annual pace of 1,445 home sales! But... fewer home sales has not resulted in lower sales prices...  As home sales have started to decline, some folks speculated that prices would also start to decline. That hasn't been the case, and I believe it's because the decline in sales is a supply side issue, not a demand side issue. There seem to be plenty of buyers still wanting to buy... but fewer sellers willing to sell. We need both a buyer and seller in order for a home sale to happen... so fewer sellers results in fewer home sales... but the continued ready supply of buyers is keeping competition fierce for most new listings, which is causing home prices to keep on rising. As shown above, the median sales price thus far in 2023 ($325,000) is 9% higher than it was a year ago ($298,400) and when we look at 12 months of data (June - May) we also see a 9% increase in the median sales price over the past year. I should point out that each month I prepare many more charges and graphs than make it into this report. You can also view those over at HarrisonburgHousingMarket.com including this month's charts and graphs here. One of the data subsets I dive into in the extra charts and graphs at the link above is the breakdown of new home sales vs. existing home sales...  As shown above, when we look at the past 12 months we see slightly different trajectories when it comes to new vs. resale homes... [1] There have been 2% more new home sales over the past 12 months as compared to the previous 12 months. [2] There have been 21% fewer existing home sales over the past 12 months as compared to the previous 12 months. Certainly, when we look at other timeframes above, we see declines in sales activity of both new and existing home sales, but it's worth nothing that a significant cause of fewer home sales in our market... is a lower number of homeowners who are willing to sell their existing (resale) homes. Why, might you ask? Mortgage interest rates are likely a key piece of the puzzle. Most homeowners have current mortgage interest rates under 5%, and many under 4%... compared to current mortgage interest rates that are above 6%. As such, the difference in mortgage payments is quite significant for a homeowner who would sell their home and pay off a mortgage with an interest rate under 4% (for example) to then take out a mortgage with an interest rate above 6%. I expect we will continue to see lower numbers of homeowners willing to sell their homes throughout the remainder of 2023. Getting into some visuals now, here's how slow May was...  After a 17% decline in April home sales (149 to 123) we then saw a 25% decline in May sales (149 to 112) which is almost certainly going to result in an even larger decline in June home sales... since there were a LOT of sales in June last year. As I have already mentioned, sales prices keep on climbing, so a decline in the number of homes selling isn't really a concern for home sellers, or homeowners, but it is not as exciting of news for would-be home buyers. We are likely to continue to see fewer home sales throughout the remainder of 2023 in Harrisonburg and Rockingham County... and it will be a result of fewer homeowners being willing to sell... not a result of fewer would be home buyers being interested in buying. Here's another visual of the general trends we're seeing in our local housing market right now...  We're still seeing a general increase in the number of homes selling per year if we compared pre-pandemic (early 2020 and prior) and post-pandemic (2023) but we've seen a steady decline in annual home sales over the past year, from 1,714 sales/year to 1,445 sales/year. So, after a steady increase in home sales during the pandemic (largely brought on by the pandemic - with super low mortgage interest rates and everybody needing their home to serve more functions than before) we have now seen a steady decrease in home sales as the pandemic has come to a close. We're returning to where we were pre-pandemic as far as how many homes are selling a year... with the home sales trendline being dragged down by a limited number of home sellers being willing to sell. There seem to still be plenty of buyers ready and willing and able to buy. With continued high levels of demand, but lower levels of supply, we have continued to see steady increases in sales prices as shown by the top line. That trendline (rising prices) seems unlikely to change course significantly anytime in the near future. But even if we aren't likely to see home prices stop rising, or to see them decline, perhaps we'll see a slight tapering off of the surge in sales prices?  In the last full year before the pandemic (2019) we saw a 5% increase in the median sales price in Harrisonburg and Rockingham County. Then, we saw three years of double digit increases in the median sales price with a 10%, 10% and 11% increase in 2020, 2021 and 2022. Thus far in 2023, we are seeing a slightly smaller increase in that median sales price, with an 8% increase through the end of May. Of note... sales prices are not declining... they are just increasing slightly more slowly than they have over the past three years. Stay tuned to see how this metric does or does not continue to change as we move through the next few months. Looking ahead, though, contract activity is our best indication of what we are likely to see in the way of closed home sales over the next few months...  As you can see, we have now closed out the fourth month in a row of significantly lower levels of contract activity in Harrisonburg and Rockingham County. The red line is measuring contracts signed per month this year, and the blue line shows the same months last year. As such, we are likely to continue to see lower levels of closed sales over the next few months, given lower numbers of contracts being signed. And finally, here's a visual of the supply side of the market...  Despite 20% fewer home sales this year... inventory levels are lower than they were a year ago. The red line above shows inventory levels this year, compared to last year in blue. If we were seeing a shift in the market, with demand softening, we would start to see inventory levels increasing. We're just not seeing that. As such, the 20% decline in home sales seems almost certainly to be a result of an insufficient number of homes being available for buyers to buy. Now, for all the stats folks out there, here's the statistic that could be the most misleading...  We have seen a 40% increase in the time it takes for a house to go under contract in Harrisonburg and Rockingham County! Gasp! Oh my! But wait... that just means that it is taking seven days for a house to go under contract... instead of five days? Yes, that is correct. The 40% increase in the median days on market is an increase from five to seven days. Ask just about any would-be buyer and they will report that this doesn't measurably change how quickly they need to act on seeing and pursuing new listings. And another interesting phenomenon in our current market, mortgage interest rates...  Despite fewer homes selling... sales prices keep rising. Despite higher mortgage interest rates... sales prices keep rising. Two years ago the average mortgage interest rate was around 3%. A year ago that had risen to 5%. Now, it is bouncing around between 6% and 7%. And yet, buyers keep buying, and they are paying ever higher prices for the homes they are purchasing. As you can imagine, that means that mortgage payments are higher than ever for today's home buyers -- as a result of both higher sales prices and higher mortgage interest rates -- but these higher rates haven't seemed to have impacted buyer interest enough to then impact sales prices. So, given all of the data above, what does this mean for you? If you are planning to sell... you'll likely still have plenty of interest from buyers, you're likely to sell at a very favorable price, and your home is still likely to be under contract within a week. If you are hoping to buy... you'll need to see homes quickly when they come on the market, you will still have stiff competition from other buyers, and you should talk to a lender to understand mortgage payments based on current mortgage interest rates. If you own a home and aren't planning to sell... lucky you. Home values keep on increasing, and you likely have a low or low-ish mortgage interest rate. I hope this overview of the latest trends in our local housing market has been informative and helpful, especially if you are gearing up to buy or sell soon. Feel free to reach out to me if I can be of any assistance to you as you make those plans. You can reach me most easily at 540-578-0102 (call/text) or by email here. Until next month, I hope you enjoy the start to summer, and perhaps I'll see you at Red Wing! | |
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It Can Be Frustrating To Try To Buy A Home Right Now, But Keep At It! |
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 Surely, homeownership isn't for everyone... [1] You might only know that you'll be living in the Harrisonburg area for a year or two, and thus it might not make sense to buy. [2] Your overall financial picture might not be stable enough right now, or yet, for it to make sense to buy a home. [3] You might not be ready to take on the long term commitment to the ongoing costs of homeownership such as replacing a heat pump, a roof, etc. But... there are seem to be plenty of people locally who are not currently homeowners, but who are ready to own a home... [1] They know (or are very confident) that they'll be in this area for 5+ or 7+ years. [2] Their finances are stable and they have funds saved up for a downpayment and closing costs. [3] They understand and are prepared for the ongoing costs of homeownership such as improving or replacing the systems or building components of a home over time. Plenty of these well prepared, would-be, homeowners have not been able to successfully secure a contract to buy a home over the past few years because of extremely high levels of buyer interest in buying in our local market - which often results in multiple buyers making offers on the same house within the first day or two that it is on the market. So, yes, it can be quite frustrating to try to buy a house right now. You might make offers on 2, 3, 4 or more houses and still not have a contract to buy a home. What should you do? Should you give up? Rent forever? If you match the description above (staying here, financially stable, prepared for home maintenance costs) I would encourage you to keep trying to buy a home. Eventually it will work out, and you will successful contract to buy a home and then you'll be able to start enjoying the many benefits of homeownership, including... [1] Mostly stable housing costs - with the principal and interest portion of your mortgage payment staying level, even if there are some increases in taxes and insurance over time. [2] An increase in the value of your home over time - maybe not every year, but certainly over the long-term. [3] The ability to make a house/property your own, improving or upgrading it to fit your specific needs and wants. [4] The tax benefit of paying mortgage interest. [5] Often longer-term relationships with neighbors which doesn't happen if you're bouncing around from one rental to the next. The list could go on, but I think you get it -- there are plenty of great reasons for many (but certainly not all) folks in our area to buy a home -- so even if you miss out on an offer or two, don't give up the hope yet! | |
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NERD Apartments LLC Proposes 20 Apartments In Five Story Building On Evelyn Byrd Avenue |
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 We may soon see the development of 20 apartments on Evelyn Byrd Avenue between Harrisonburg Crossing, Texas Roadhouse, Regal Cinema and Forbes Crossing. The developer is requesting a special use permit to allow multi-family dwellings and/or mixed use buildings in the B-2 district. A few details from the proposal include...
Read more in the proposal documents here. | |
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An Early Look At May 2023 Home Sales In Harrisonburg And Rockingham County |
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 May is over! Gasp! It's June. Already! Here's a quick look at a few early indicators of trends in our local housing market in May 2023... May 2020 = 112 home sales May 2021 = 122 home sales May 2022 = 149 home sales May 2023 = 106 home sales So... unless quite a few more (6+) home sales are reported over the next few days as having been sold in May via the HRAR MLS, it seems May 2023 may have been the slowest (number of sales, not speed of sale) month of May in several years. Mortgage interest rates were also a bit higher this May than last, and much higher than two years ago... Early May 2021 = 2.96% Early May 2022 = 5.27% Early May 2023 = 6.39% And yet, despite fewer home sales and higher mortgage interest rates, home prices seem to keep on rising... Median Sales Price, Jan 2022 - May 2022 = $298,400 Median Sales Price, Jan 2023 - May 2023 = $325,000 Stay tuned for a fuller analysis of local market trends in about a week. | |
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What Might The Rest Of 2023 Look Like In The Local Housing Market? |
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 Let's take some wild guesses here. Between June and December of 2023, what trends do I expect to see in the following areas... [1] Home Sales = no change (similar pace as early 2023) [2] Home Prices = increase [3] Mortgage Interest Rates = decrease (though likely not by much) [4] Inventory of Resale Homes = no change / decrease [5] Inventory of New Construction Homes = increase What about you? Would you predict anything wildly different? [1] Will mortgage rates drop significantly? [2] Will home prices stop rising? [3] Will inventory levels rise? | |
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Improving Your Home Might Make More Sense Than Selling And Buying |
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 Let's say your current home doesn't work quite as well for you now as it has in the past. Perhaps you need more room, or a room on the main level, or perhaps you'd like a nicer (newer) kitchen, or deck, or flooring, etc., etc. As a result, you may be faced with a decision of whether to improve your current home (to make it work better for you, or so that you like it a bit more) or to sell your home and buy a new one. Perhaps the improvement(s) you would make would cost $100,000. Yikes! That's a lot. Your next question may very well be whether you will see a $100K increase in your home value -- and the answer is -- probably not. Most home improvement projects do not increase the value of a home by the total cost of the improvement. Perhaps the $100K improvement would only increase your home value by $50K. Hmmm... maybe you should sell your home and buy a new one instead to avoid losing the $50K difference between the improvement cost and the increase in your home value? But... maybe not... let's take a look at why it might make sense to stay and improve your home -- despite not recouping the full cost of the improvements via an increase in your home value. For this fictional example, we're pretending you own a $450K home and you might spend $100K on improving it, after which time it will be worth $500K. $24,000 = approximate transactional cost of selling your $450K home $15,000 = approximate transactional cost of buying the $500K home $11,000 = approximate cost of moving to the new home and making any needed improvements These three costs add up to a total of... $50K! So... you could spend $100K to improve your $450K home to make it worth $500K... and "lose" $50K. Or... you could sell your $450K home, buy a $500K home, have $50K of transactional costs and thus still "lose" $50K. As such, even if the improvement cost of your home exceeds the increase in your home value after the improvement... it still might make sense to make that improvement rather than selling your home and buying a new ones. | |
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Buying A Home In Harrisonburg When You Do Not Yet Live Here Is Particularly Difficult Right Now |
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 TUESDAY: Nice! A pretty sweet new listing just hit the market. I will definitely plan to make the (four hour) drive to Harrisonburg this weekend to see that house! THURSDAY: Oh, shoot. It's already under contract!? Argh. Anyone who lives out of town right now, but is attempting to move to Harrisonburg and buy a house in Harrisonburg is likely experiencing some variation of the scenario described above. It is a challenging time to buy a house in Harrisonburg if you don't already live in (or pretty close to) Harrisonburg right now... and it's all because of how quickly homes are going under contract. If you want to see a home in person before you make an offer to purchase it, and you live a few hours away and have a work or life schedule that doesn't allow you to hop in the car for a day (or overnight) trip on a moment's notice -- it can be hard to lock down a contract on a house. Enough about the problem... what's the solution? Here are a variety of the strategies you could employ... [1] Keep Hoping. Keep Trying. Hope that a great property will hit the market on a Friday when you're already planning to drive to Harrisonburg on Saturday, such that your timing and the timing of that new listing will work together perfectly. [2] View Houses Remotely. I can certainly walk you through (and around) a house via FaceTime or Zoom to allow you to more quickly see a house even if you can't make it to town. The question will then be whether you are willing to commit to purchasing a house that you have only seen via a phone (or tablet, or computer) screen. [3] Rent First, Buy Later. Go ahead and move to Harrisonburg, renting an apartment, townhouse or home, so that you are "on site" and ready to look at homes as they come on the market and pursue a house when you find the right now. Low inventory levels make it hard for even local home buyers to buy a house -- and it is even more difficult if you are trying to buy here but are not yet physically located here. If you find yourself in this situation, I'm happy to support you with any or all of the strategies noted above. Just reach out to connect so that we can talk about a game plan. | |
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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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