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Home Sales Still Slowing, Home Prices Still Rising, In Harrisonburg, Rockingham County |
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 Happy Friday morning, friends! We're about halfway through February, so it's time to take a moment to look back and see what we can learn about our local real estate market based on January's data. Thanks for joining me as I break things down so that we can all better understand the data and trends.  I hope you have had a fun start to your year. Some fun on our end included a quick extended weekend trip to the beach for Shaena, Luke, Emily and I a few weeks ago. I was reminded anew of the value of disconnecting (at least partially) from work for a bit, and spending time with loved ones. Whether it is the beach, the mountains, a long walk on an unusually warm February day, or relaxing on your back porch, I hope you find some time to disconnect from the busyness of life and spend time with those who you love in the coming days or weeks.  Before I get into the market data, I also want to encourage you to check out my featured listing of the month, a newly renovated in downtown Harrisonburg pictured above and located at 142 Broad Street. Find out all about it at 142BroadStreet.com. Finally, a fun giveaway, just for you...  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 a Steel Wheels concert, Grilled Cheese Mania, and Walkabout Outfitter. This month... I'm giving away a $50 gift card to one of my favorite local restaurants, A Bowl of Good. If you haven't checked out A Bowl of Good yourself, make plans to do so - they have a delicious menu of comfort foods and many items with an international flair. Click here to enter for a chance to win the $50 gift card! And now, let's move on along to the most recent data on our local real estate market...  Looking first at the overall home sales data above, I'm noting a few things of interest... [1] Home sales are still slowing. We saw a 28% decline in home sales this January, with only 75 home sales as compared to 104 last January. When we stretch the window out a bit further to three months (November through January) we see an even larger, 35% decline in the number of homes selling in Harrisonburg and Rockingham County. [2] When we look at a full year of data (February through January) we see a smaller, 8%, decline in the number of homes selling in our market, though this may become a larger decline as we continue through the year. [3] Despite fewer homes selling, home prices keep on rising! The median sales price has risen 11% over the past year, and even if you narrow the focus down to the past three months (when home sales were slower) the median sales price was 10% higher than during the same three months one year prior. So, home sales are definitely slowing, but home prices are definitely still rising. Now let's start to slide into some graphs to further understand these most recent trends...  The 75 home sales seen in January 2023 (the red "75" above) marked a significant decline from last year's 104 January home sales. If we look back a bit further, and average out the number of January home sales between 2019 and 2022 we find an average of 94 home sales in January... and we also fell short of that bar in January 2023. Where do we go from here? Interestingly, we usually see a decline in home sales between January and February... so will we see fewer than 75 home sales in February 2023? Or will we see a reversal of that trend and see more than 75 home sales this month? Stay tuned! Here's a visual reminder of how much things have changed over the past two years...  A little less than two years ago, the median sales price in Harrisonburg and Rockingham County was only $250,000. Now, less than two years later, it has just surpassed $300,000! But yet, despite the steady increases in the price of homes in our area, we have seen significant ups and downs relative to how many homes are selling. As per the blue line above, we flew past 1,500 home sales a year about two years ago -- saw that annual pace of home sales climb all the way up to 1,727 home sales per year -- before declining even more rapidly to the current annual pace of 1,535 home sales per year. What does the rest of 2023 have in store for us? I'm predicting that we'll see continued (slower) increases in the median sales price -- and continued (slower) decreases in the number of homes selling in Harrisonburg and Rockingham County. One interesting dynamic to watch in 2023 seems to be the mix between new home sales and existing home sales...  For each of the past four years we have seen an increase in the share of new home sales in Harrisonburg and Rockingham County. Back in 2018, only 11% of the homes that sold were new homes -- but last year (2022) that rose all the way up to 26% of home sales being new homes. With only one month of data thus far it is probably too early to draw any significant conclusions yet about 2023, but in January 33% of the homes that sold were new homes. To get some glimpse of what the next few months might look like for how many homes are selling, we can take a peek at contract activity...  And... surprise! :-) Despite lower than expected home sales activity in January... we saw higher than expected contract activity! Over the past four years (2019-2022) we have seen an average of 106 contracts per month signed in January. Last January (2022) we saw 110 contracts signed. This January that monthly contract figure rose to 116, making it a busier January (for contract signing) than we might have otherwise expected. It's possible that declines in mortgage interest rates (referenced again later on) helped spur on some of that January contract activity. Another interesting trend to watch is the number of pending sales at any given time...  A "pending sale" is a house that is under contract, waiting to get to closing to become a home sale. One year ago there were 271 pending sales in Harrisonburg and Rockingham County. Today there are only 234 pending sales -- which is lower than where we were last year -- but is higher than the average January pending sales figure over the past four years. So, to roughly extrapolate from the past two data sets, home sales in 2023 seem likely to be lower than in 2022, but higher than the average of the past few years. But to be clear, in order for homes to sell, they need to be for sale...  Some folks might observe a decline in sales activity and assume that inventory levels are starting to climb -- with sellers wanting to sell but buyers not wanting to buy. That is not what we are currently observing in the Harrisonburg and Rockingham County real estate market. Fewer sales may very well be equally caused by fewer buyers buying AND fewer sellers selling. There are currently 109 homes on the market for sale (not under contract) which is slightly less than a year ago (115) and much (!) much less than the average over the past four years of 172 homes being listed for sale at this time of year. The big questions for just about every buyer is whether we will start to see meaningful increases in inventory levels as we move into the spring months. Buyers should be encouraged to know that we typically see lots of new listings hitting the market in March, April and May -- but if there are still lots of buyers waiting in the wings for those new listings we may not see inventory levels rise all that much. Lots of new listings plus lots of new contracts will still equate to rather low inventory levels. I mentioned earlier that a slightly higher than expected number of contracts in January might have been related to mortgage interest rates. Take a look at why I'm guessing that might have been the case...  It has been a wild and crazy year with mortgage interest rates. Just a year ago, interest rates were below 4%, then climbed all the way up above 7% and have now decline back towards 6%. Those highest months of interest rates in September, October, November and December almost certainly contributed to the much slower (-35%) months of home sales in November, December and January. The decline over the past three months may have contributed to the increase in contract activity in January 2023. Where will mortgage interest rates be headed in 2023? Probably not above 7%. Probably not below 5%. Probably not anywhere for more than a few weeks in a row. Does that help? Probably not. ;-) Given all of the market data above, when I look ahead to the remainder of 2023, I believe the following will likely be true: [1] We will see fewer home sales than in 2022. [2] Home prices will likely be higher than in 2022. [3] Inventory levels will likely remain low most or all year. [4] The decline in the number of existing home sales will likely be larger than the decline in the total number of existing and new home sales. [5] Mortgage interest rates will likely close out the year lower than where they started the year. As you look ahead to 2023... do you hope to buy a home... or do you plan to sell your current home? If you are thinking about heading down either path, let's find a time to connect soon to talk about your hopes and plans and dreams and how they will be best accomplished amidst the market trends outlined above. Feel free to reach out to start that conversation by emailing me or texting or calling me at 540-578-0102. If you don't plan to buy or sell a home this year, but want to learn more about our local housing market... [1] You can review even more charts and graphs with further analysis of our local housing market here. [2] I publish a variety of articles about the market, new housing developments, and more over on my blog several times a week here. And that's a wrap, folks! I hope you have a wonderful Friday and weekend ahead. Please be in touch if I can be of any help to you -- with real estate or otherwise! | |
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Sometimes Housing Inventory Levels Are Not A Good Indication Of Housing Availability |
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 Reflect with me for a moment on the definition of a paradox... paradox - a seemingly absurd or self-contradictory statement or proposition that when investigated or explained may prove to be well founded or true. Here's the paradox of the day... Sometimes Housing Inventory Levels Are Not A Good Indication Of Housing Availability Let's think it through together... Let's say you want to live in the infamous (and completely fictitious) "Riverside" neighborhood in Rockingham County. If you wanted to get a sense of whether it is possible to find housing in the Riverside neighborhood which method would you use? Method #1 for understanding housing availability... Look at how many homes are for sale in Riverside right at this very moment. There are currently zero homes for sale in Riverside, thus it is seemingly *impossible* to buy a home in Riverside, right? Method #2 for understanding housing availability... Look at how many homes have sold in Riverside during a particular timeframe, such as the past year. Oh, wait. There have been 15 home sales in Riverside over the past year. Thus, you likely will be able to buy a home in Riverside if you can wait for some new listings beyond what happens to be on the market at this very moment in time. As can be seen above, housing inventory levels were not a good indicator of housing availability in Riverside. -- Shifting gears a bit, let's consider whether housing inventory levels are a good indicator of housing availability in a real place, the City of Harrisonburg, but only examining homes priced under $300,000. Method #1 for understanding housing availability... Houses Currently For Sale in the City of Harrisonburg Under $300K = 5 houses Hmmm. Method #1 would lead us to believe that houses are not generally available in the City of Harrisonburg for less than $300,000. Method #2 for understanding housing availability... Houses Sold In The Past Year in the City of Harrisonburg Under $300K = 275 houses Wait a minute. There were 275 home sales under $300K in the City of Harrisonburg over the past year? That seems to point to a rather different conclusion about housing availability. -- And one more real example... Houses in Harrisonburg and Rockingham County combined priced under $200K: Currently Available Homes = 5 Sold Over The Past Year = 211 -- So... again... Sometimes Housing Inventory Levels Are Not A Good Indication Of Housing Availability Now, this does, of course, create the possibility that a would-be home buyer will simultaneously feel... 2. Encouraged... to know that there may very well be 270 more options in over the coming year. -- And one last point... If LOTS of homes sell each year in a particular location and/or price range but VERY FEW are available at any particular moment in time then two things would seem to be true... 1. Houses are generally available for purchase in this location and price range. 2. Demand for said houses likely exceeds supply, and if more such homes existed that could help bring more balance to that segment of the market. -- OK, fine, one more last point... If you are looking to buy a home in the coming year, yes, let's look at what's available now... but much more importantly, let's look at what has sold in the past year. The number of homes that have sold in the past year will likely be the best indicator of what to expect in the year to come. | |
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21 Unit Affordable Housing Community Coming Soon In The City Of Harrisonburg |
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 21 new attached homes (duplexes, triplexes) will soon be built on Suter Street in the City of Harrisonburg to include... As to who will build the homes... (11) homes to be built in partnership with Central Valley Habitat for Humanity (10) homes to be built by a private developer As to the structure of the homes... (3) homes will be within a single triplex building (18) homes will be within nine duplex buildings As to whether these homes will be sold or rented... (11) homes built in partnership with Habitat for Humanity will be sold (6) homes built by the private developer will be sold (4) homes will be rentals Here's the general layout, from above...  Read more details about this development and the developers via the Daily News Record... ...and also on the Central Valley Habitat for Humanity website. | |
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27 Single Family Homes Proposed On Garbers Church Road |
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 view a larger image here The Harrisonburg Planning Commission reviewed a new proposal for a residential development on Garbers Church Road, just north of its intersection with Rhianon Lane. The property is currently zoned R-1 and the developer is proposing an R-8 zoning classification to allow more homes to be built on the property. The proposed R-8 zoning classification would allow 27 single family homes to be built on this 3.778 acre parcel. The developer indicates that these would be small homes, likely two story in height due to the smaller lot sizes. Three members of the Planning Commission recommended approval and three were opposed. The Harrisonburg City Council will review this proposal and potentially make a decision about it during their March 14th meeting. Download an information packet about this proposed development here. | |
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Now Could Be An Ideal Time To Sell A Residential Rental Property! |
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 If you own a rental property in the City of Harrisonburg or in Rockingham County, perhaps a townhouse or duplex or small single-family home, this could be an ideal time to sell the property. If you would like to explore the possibility of selling a property that you have been renting out for the past few years, let’s talk about timing and logistics. You will likely be selling the property at a very favorable price with very favorable contract terms and as an added bonus you will be helping out what seems to be a continued backlog of owner occupied buyers who are still trying to buy a home and settle down in the Harrisonburg area. | |
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Are Home Prices Cooling? Move Beyond The Headlines To Be Sure! |
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 Many news outlets (typically national news outlets, not local news outlets) are running stories with headlines referencing cooling home prices. Are home prices cooling? Here's a funny one, once you read it... US home prices continue to cool off, reflecting weak housing market Reading that headline, you'd think home prices are dropping, right? Well, here's what the start of the article actually goes on to say... "Single-family home price appreciation eased to a 6.9% pace in December, the lowest rate recorded since the late summer of 2020." Oh... so it's not that home prices dropped... it's that they *only* increased by 6.9%... and that's a smaller increase in home prices than previous increases. ;-) So... before you read a few headlines about cooling home prices and conclude that home prices are falling... click through to read the story. In this area, home prices continue to rise. In many other markets, the same is true, though headlines might not always make that clear. | |
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Inventory Levels Largely Unchanged From Two Years Ago |
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 How have inventory levels changed over the past two years in Harrisonburg and Rockingham County? Some might assume there have been fewer (and fewer and fewer) homes on the market as we have progressed through the past 24 months. As it turns out, inventory levels are largely unchanged over the past two years.
Certainly, there have been some changes in between...
But in the end, current inventory levels are in just about the same spot they were two years ago. | |
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This Is Completely Anecdotal, But Showing Activity Seems To Be Trending Upwards Again |
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 Clearly, showing activity (the number of showings on any listing) will vary from property to property, based on... - price range - property type - location - how competitively it is priced ...but, based on several of my recent listings, combined with conversations I have had with other local agents about their recent listings... ...it seems that showing activity is trending upward again. The number of buyers in the market to buy seemed to have trended downwards during November, December and January, but things now seem to be starting to speeding back up again. It's important to note that... [1] November, December and January are usually some of the slower (or slowest) months of the year, so it shouldn't be totally surprising that buyer activity might start increasing again as we move into and through February. [2] Mortgage interest rates climbed above 7% in November and then took there time during December and January drifting back down towards 6%. The average rate (for a 30 year fixed rate mortgage) is currently hovering around 6.1%. It shouldn't be totally surprising that buyer activity might start increasing again as rates settle in at or near (or just under!?) 6% -- if that is where they are over the next few months. [3] This is totally, totally, anecdotal. Over the next month or two (or three) we'll see what the actual data shows us as to the pace of buying activity. Until then.. just know that we're starting to see a few more buyers in the market, more showings on new listings, etc... after a few months of slightly slower buyer activity. | |
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What Is An Affordable Home Purchase For A First Year Teacher? |
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 Q: What Is An Affordable Home Purchase For A First Year Teacher? A: Technically, $161K, but maybe more? Let's look at the numbers... It seems a first year teacher in the City of Harrisonburg would expect to be paid around $50,000 annually per this salary scale. A commonly accepted guideline for housing affordability is a housing cost, including utilities, that does not exceed 30% of a household's gross income. If we estimate utilities at around $125 per month, to include $40 for water/sewer and $85 for electricity, we would then conclude that this first year teacher could spend up to $1,125 per month on their mortgage payment. $50,000 x 30% = $15,000 for mortgage + utilities (per year) $15,000 / 12 = $1,250 for mortgage + utilities (per month) $1,250 - $125 utilities = $1,125 for mortgage How, then, does that translate into a potential purchase price of a home for this first year teacher? We'll assume a small-ish (5%) down payment for this first year teacher, and thus 95% financing, and a slightly above market rate of 6.5% for a 30 year fixed rage mortgage. To determine a housing budget for this first year teacher, let's look at a few mortgage payments (including principal, interest, taxes and insurance) given 95% financing at 6.5% and City taxes... $250K purchase = $1,748 / month $225K purchase = $1,572 / month $200K purchase = $1,398 / month $175K purchase = $1,223 / month $161K purchase = $1,126 / month $150K purchase = $1,048 / month So, a few things to note here... [1] An affordable home purchase for a first year teacher given the assumptions above would be priced right around $161K. [2] Let's tweak the numbers a bit. We'll look at a teacher's salary after three years ($52K) and we'll round utilities down a bit ($100 instead of $125) and we'll hope for a loan program with a slightly lower (6.25% instead of 6.5%) interest rate. This increases the monthly budget to $1,200 which translates into a $176K home purchase instead of $161K. So... a bit better, but not much. [4] Circling back to the original $1,125 per month figure... there are rental options at this price point even if it proves difficult to find a suitable home to purchase for $161K with that same $1,125 per month budget. [5] Certainly, if the first year teacher is married or is in a relationship such that there are two buyers instead of one, with two incomes instead of one, then all of this math changes... and they will find more housing options that will fit the affordable criteria. P.S. Do you come up with different numbers when you do that math? What assumptions above are too high or too low? What else am I not considering in this analysis? Let me know. | |
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An Early Look At January 2023 Home Buying Activity |
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 Contract activity slowed considerably in the fourth quarter of 2022 compared to the fourth quarter of 2021... Oct- Dec 2021 = 383 contracts signed Oct - Dec 2022 = 230 contracts signed That's a 40% decline in contract activity! Those higher mortgage interest rates seemed to finally make an impact in the fourth quarter last year. As a result, one of the indicators I am watching closely this year is contract activity in 2023. The graph above shows the number of contracts signed in January for each of the past five years including 2023. Here's what we find...
I expected we would see fewer contracts signed than in the past two to three years when super low interest rates and Covid's impact on the real estate market were driving record amounts of home buying activity. It's encouraging to see that where were more contracts signed in in January 2023 than in January 2019. It will be interesting to see how things continue to track as we move through the rest of the first quarter of 2023. | |
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We Will Likely Have More Clarity On The Pulse Of The Local Housing Market By April |
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 Home sales have been slower in November, December and January. This is somewhat normal from a historical perspective - winter months are normally slower. They haven't been slower during the COVID housing boom, but this winter is certainly slower than the past two winters. Mortgage interest rates have been shifting down a bit in recent weeks but they are still quite a bit higher than they have been over most of the past five years. These higher interest rates (combined with higher home prices) are pricing some would be home buyers out of the market. So, where is our local housing market headed in 2023? Some would say that the number of home sales will decline, prices will level out or decline somewhat, homes will not sell as quickly, and inventory levels will climb. Some say that there will only be a slight decline in the number of home sales, that prices will keep climbing, that homes will still sell very quickly and that inventory levels will not meaningfully climb. Which reality will we see play out in 2023? Both are likely possible... but we are likely to have any indications in one direction or the other until April as we head into the spring real estate market. | |
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Resale Home Might Be Harder To Find This Year Than Last |
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 We saw a 14% decline in existing home sales (sales of resale homes) in 2022... Existing Home Sales in 2021 = 1,347 Existing Home Sales in 2022 = 1,159 With many homeowners having bought with or refinanced to long term mortgage interest rates below 4%, it seems likely that plenty of homeowners will not want to sell in 2023 based on mortgage interest rates alone. After all... if you bought a home in 2015, refinanced in 2021 at 3.5%, and now have the possibility of selling, paying off that 3.5% mortgage and taking out a new mortgage at 6% or higher... would you? Plenty of homeowners will sell because they are moving out of the area, because they really need to move into a larger home or really need to downsize... but I think there will be an overall decline in resale home sales this year. How low will it go? Will we see as few as 1,100 existing home sales this year? As few as 1,000? If you are looking to buy a home in 2023 -- and you're not planning to buy in one of the area's new communities -- keep in mind that resale listings might be coming on the market a bit less frequently than last year. | |
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Home Buyers Happy To See Mortgage Interest Rates Continuing To Decline |
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 A year ago, the average 30-year fixed mortgage interest rate was 3.6%. Over the course of the past year that climbed... and climbed... and climbed... to a peak of 7.08% in October and November of 2022. As such, many buyers entered 2023 assuming we would likely see mortgage interest rates at or above 7% for much or most of 2023. Thankfully, that doesn't seem to be how 2023 is likely to unfold. After peaking at 7.08%, the average mortgage interest rate has been mostly declining... down to an average last week of 6.15%. I think it is extraordinarily unlikely that we would get back down to mortgage interest rates below 4% in 2023. It is also relatively unlikely that we'll see interest rates below 5%. But... I think it is now seeming unlikely that we'll see mortgage interest rates stick around above 7%. As such... we seem likely to see mortgage interest rates above 5% and below 7% in 2023... and if we give it a few more weeks we might conclude that rates might stay above 5% and below 6% for most of 2023. This is a trend that home buyers in 2023 are quite happy to see! | |
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The First Three Questions We Will Try To Answer When Meeting To Discuss Selling Your Home |
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 So, you're planning to sell your home this spring? Perhaps we should meet to discuss! Here are the first three questions we will try to answer, together, when we meet... [1] TIMING We may talk this through forwards -- how soon are you ready to put your house on the market -- or maybe backwards -- how long do you want to be able to stay in your house. We'll talk about how long it will take you to prepare your house for the market... how long it is likely to be on the market before going under contract... and how long it will likely take to then get to closing. We'll map out a few different timeframes to make sure they work with everything else that you have planned -- which could be a simultaneous purchase, or a move out of town, etc. [2] PREPARING We'll walk through your home together to identify any small or large improvements or preparations you will make prior to putting your house on the market for sale. Plenty of this may end up being in the category of "straightening up -- or simplifying -- or decluttering" but we'll also talk about any small fixes or cosmetic improvements that might help your home show better or reduce the number of potential buyer hesitations. [3] PRICING We'll review the main selling attributes of your house (size, age, condition, features, neighborhood) that will both set it apart -- and will determine it's value in the current market. We'll then (during our meeting or as a follow up) build a list of comparable sales of the most similar properties to help guide us towards a pricing strategy. If you're ready to sell this spring, let's start the conversation sooner rather than later so that we can answer these first three questions of timing, preparing and pricing. Oh, and yes, you are welcome to have PLENTY of other questions all along the way... about the process, the market, and more! | |
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Foreclosured Started To Increase Again In 2022, Sort Of... |
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 Foreclosures in Harrisonburg and Rockingham County increased 71% in 2022. Gasp! ;-) Well, yes, technically they did... after only 14 foreclosures in 2021 there were 24 in 2022. That's a 71% increase. But... that dip down to only 14 foreclosures in 2021 was due in large part to the moratorium on foreclosures during Covid. So, really, we need to skip that year of data. Looking back a bit further we'll note that the 24 foreclosures in 2022 was the lowest of anytime since 2008. Somewhat surprisingly, between 2008 and 2017 there were over 100 foreclosures a year. As such, the 24 foreclosures seen in 2022 is quite low - and a sign of general health in our local housing market - or a sign that home values are increasing, making foreclosures less likely to be a necessity. Looking ahead, will we see more foreclosures in 2023 and/or 2024? I suspect we'll only see a significant increase if home values were to flatten out or decline and/or if buyer demand were to significantly decline. Both of those seem relatively unlikely at this point, so we seem poised to see another year of fewer than 50 foreclosures in 2023. | |
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Home Sales Slowed Considerably In Late 2022 But Home Prices Kept On Rising |
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 Happy Thursday afternoon, friends! And... Happy New Year! It's hard to believe the New Year is upon us. Actually.. we're already more than halfway through January at this point. What a whirlwind. I hope you had a delightful finish to 2022. I capped off the year with a slightly warmer than anticipated New Years Eve Glow Run, another fantastic community running event put on by VA Momentum. Below is a photo just prior to the start of the race... after which it became progressively darker and our glow bracelets and necklaces were lighting up the hilly course at Heritage Oaks Golf Course...  Two other items of business before we get into the real estate data... First, take a few minutes to check out my featured home of the month... 3078 Preston Lake Blvd...  This beautiful cottage home with a finished basement is located in the Preston Lake community with a clubhouse, pool, walking paths and playground, all just minutes from Sentara RMH, JMU, Merck and Coors! You can check out the house here or walk through it here. Finally, 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 Grilled Cheese Mania, Walkabout Outfitter and Bella Gelato. And this month...  This month it's back to music... I'm giving away a pair of tickets to see The Steel Wheels and Sierra Hull at JMU's Wilson Hall on February 11th! Read all about the event, and the artists, here - and if you're interested in a pair of free tickets, enter to win them here. :-) Now, onward to the latest data on our local housing market! First, how many homes have been selling lately...  There's a lot to note in the graph above, and some of these numbers informed the headline for this article... [1] There were only 83 home sales in December 2022... compared to 144 in December 2021. That's a rather surprising 42% decline in home sales for the month of December. [2] When we pile in a few more months (October and November) we see that there were 28% fewer home sales in the fourth quarter of 2022 than in the fourth quarter of 2021. [3] Finally, when looking at the full year of 2022... there were 7% fewer home sales than in 2021. After several years of rapidly increasing numbers of home sales, it seems that higher mortgage interest rates finally slowed down buyer activity... though not very significantly until the very end of 2022. But yet, despite slowing sales, home prices did what!?  Home prices... kept on rising! [1] Starting from the bottom of the chart (above) this time we see that there was an 11% increase in the median sales price when comparing all of 2021 to all of 2022. That's a rather significant increase in the median sales price and it follows on after two preceding years of 10% increases in the median sales price. Needless to say, homes have become quite a bit more expensive over the past several years. [2] The median sales price in December 2022 was 3% higher than in December 2021. This could be an indication that we'll start to see a slow down in the rate at which home prices are increasing... or, as is more likely, it may be lower than the longer term trend (+11%) because it is a smaller data set of only the homes that sold in a single month. So... was it just December when we were seeing slowing home sales?  The decline in home sales was certainly significant in December... but if you track that red line (2022) back to November and compare it to the blue line (2021) you'll see that the slow down started before December rolled around. The graph above (and many of the graphs in this month's report) are in a slightly different format than in past months. I spent some time going through to revamp my monthly market analysis process to hopefully make the resulting graphs and analysis even more helpful and pertinent for all of us as we see how 2023 unfolds. As such, the graph above is showing the current (just finished) year of 2022 with a red line -- and the previous year of 2021 with a blue line -- and the grey line is showing a longer term trend calculated by averaging 2018 through 2021. Next up, let's look at monthly cumulative home sales...  The graph above provides another illustration of the fact that 2022 was keeping pace with 2021 all the way through the end of October... and then November and December fell short. This resulted in the second strongest recent year of home sales in Harrisonburg and Rockingham County. Indeed... there were 7% fewer home sales in 2022 than in 2021... but there were well more than in 2019 and 2020! Next, let's look at general long term trends over the past few years...  The top green line is showing the median sales price of all homes selling in Harrisonburg and Rockingham County... measured monthly by looking at the median of the previous 12 months. In tiny letters underneath someone (ok, me) wrote "can't stop, won't stop, can't stop, won't stop" -- but, I should definitely, definitely clarify that -- yes -- the median sales price could stop increasing. It didn't do so anytime in the past three (plus) years as illustrated above, but as they say, past performance is not a guarantee of future results. The bottom blue line (above) is a monthly check-in on the annual pace of home sales. During Covid the annual rate of home sales in our area shot up from around 1,300 sales per year all the way up to 1,700 sales per year... but as mortgage interest rates rose during 2022, eventually the annual pace of home sales started to decline again. Where did we finish out 2022, you might ask, within the context of the past few years?  We ended up seeing 7% fewer home sales in 2022 than in 2021 -- though there were 5% more home sales in 2022 than in 2020. So, again, this past year was the second best year of home sales in recent times. You can see again here (in the graph above) that the median sales price has been aggressively climbing for multiple years. Five years ago (in 2017) the median sales price was $198,250... and it closed out 2022 just shy of $300K with a median of $299,912. This marks an 11% increase in the median sales price in 2022 after a 10% increase in both 2020 and 2021. Wow! This next one might surprise you. It surprised me, at least for a moment...  The 7% decline in home sales in 2021 was actually a much larger decline if we focus in on resale homes. There was actually a 14% decline in resale homes during 2022! We only ended up seeing a 7% decline in overall market activity because of the sale of new homes. We saw a 24% increase in new home sales in 2022. As a result (and as circled above) the balance between new home sales and existing home sales continues to shift with over a quarter of all home sales (26%) being new homes in 2022. I think there is a decent chance this ratio will be similar in 2023, or that we might see even more new home sales as plenty of homeowners will sit tight and enjoy their super low mortgage interest rate rather than selling their home. What comes next, I wonder...  The graph above tracks how many contracts are signed (by buyers and sellers) each month... and here you can see that the slow down actually started halfway through 2022. Each month of contract activity in the second half of 2022 (red line above) was lower than the corresponding month in the second half of 2021 (blue line above) though the gap became much more pronounced in the last three months of the year. Interestingly, if we look at the typical November to December trend in contract activity per the grey line (four year average) we see that it is typical to see about 74 contracts in December... and December 2022 was only slightly below that with 67 contracts. Here's a new graph that provides a bit more insight into how many contracts are out there waiting to get to closing...  The graph above shows the number of properties that are pending (under contract) at the end of any given month. If you look at the second half of 2021 (blue line) you can see there were anywhere from 260 to 321 contracts pending from month to month. As we moved our way through 2022 the number of pending sales sank lower and lower... below that previous low of 260 all the way down to 189 pending sales at the end of the year. This graph (and the prior graph) would indicate that we will likely see a relatively slow month of closed sales in January and February. But again, looking a bit further back for context... the 189 pending sales at the end of 2022 is... just a smidgen below where we might have otherwise expected to be in a month of December. The anomaly here, it would seem, was the end of 2021 when things were still bonkers in the local real estate market due to super low mortgage interest rates among other factors. And how about those inventory levels -- they must be moving up given slower sales, right?  Well... maybe not. We closed out the year with 127 homes on the market in Harrisonburg and Rockingham County. Yes... this is a higher inventory level than one year prior when there were only 119 homes on the market... but it's not that much higher. Furthermore, even though the inventory levels in 2022 (red line above) were higher than in 2021 (blue line) they were still well below (!!!) the average of 2018 through 2021. These are still times over very low inventory... much to any home buyer's dismay. Oh, and how quickly are homes selling now? Slower, probably, right?  Not so much. The graph above shows the median days on market -- how quickly properties go under contract after being listed for sale -- within a six month timeframe. For over a year this metric stayed right at five days... so as to say that half of homes were under contract within five days and half took longer than five days. That has risen to... six days now. Clearly, not a significant shift, but perhaps we will see it shift further as we move forward. Of note, the median days on market two years ago was seven days... but that was after dropping steadily from double digits the summer prior. Interest rates, interest rates, all you talk about is interest rates...  Well, yes, that's true. I have talked a lot about mortgage interest rates this month (and over the past year) because they have been rising, quickly. A year ago (as shown above) the average mortgage interest rate (on a 30 year fixed rate mortgage) was only 3.11%. We closed out 2022 with an average of 6.42%. Thankfully, these rates have continued to decline a bit further in the first few weeks of 2023... but the cost of financing a home purchase is still MUCH higher now than it was a year ago. And yes... these higher mortgage interest rates directly contributed to the slow down in home sales in the second half of 2022. Well folks, that's all for today. I hope the analysis above provides you with a bit more insight into all that has transpired in our local housing market in 2022... and a few thoughts as to where things might be headed in 2023. If you are thinking about selling or buying a home in 2023, I would be happy to assist you with that process. Yes, I spend a good bit of time analyzing our local housing market to educate our local community -- but the majority of my time is spent helping individual home sellers and home buyers. Feel free to reach out to start that conversation by emailing me or texting or calling me at 540-578-0102. I'll provide another update in about a month -- looking back at the first full month of 2023. Until then, I hope you and your family stay healthy and enjoy (???) the constant fluctuations between winter and spring temperatures we seem to be experiencing this year. ;-) Happy New Year! P.S. You can review a few more charts and graphs with further analysis of our local housing market through the close of December 2022 here. | |
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Harrisonburg Planning Commission To Consider 897 Unit Bluestone Town Center Proposal To Include 415 Apartments, 349 Townhomes, 133 Detached Homes |
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 The City of Harrisonburg Planning Commission will hold a public hearing tomorrow, Tuesday, January 17th as they consider a proposal called Bluestone Town Center which would include 897 residences on 90 acres.  In addition to 415 apartments, 349 townhomes and 133 detached homes, the master plan also proposes a community center, playground and retail shops. You can explore the proposed development further on the website put together by those seeking the rezoning... You can download the Planning Commission agenda here which includes links to all of the supporting documents for this rezoning application. It is likely to be a lively public hearing as there seem to be plenty of folks both supporting and opposing this proposal. Change.org Petition #1... Change.org Petition #2... Here are some other my thoughts and observations...
As details of this proposal have become increasingly available over the past few months... [1] I have had many conversations with people who are strongly in support of BTC because they want more affordable housing options to exist in the City. [2] I have had many conversations with people who are strong opposed to BTC because they are concerned about (among other things) what they see as a likely increase in City taxes to pay for the impact of this development. From here, the Planning Commission will review the proposal and make a recommendation to City Council... and then City Council will decide whether to approve this development in the City. The final decision by City Council (to approve or deny) will be a big decision that (regardless of the decision) will affect the future of the City for decades to come. | |
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A New And Improved But In 2023 (Keep Reading, Really) |
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 OK, OK, I'm not talking about workout goals. I'm not suggesting you get a better BUTT in 2023... I'm just pointing out that some would be home sellers have a better BUT this year... A Would Be Home Seller's But In 2022... I would sell my home BUT it's so hard to buy a home right now because soooo many buyers are competing over each new listing. A Would Be Home Seller's BUT in 2023... I would sell my home BUT I have a super low interest rate on my current mortgage and I don't really want to get a new mortgage on the new home with a much higher interest rate. Low inventory issues have been an issue (for buyers) in the Harrisonburg and Rockingham County for the past few years. There have been fewer and fewer options of houses on the market to for a buyer to purchase. It doesn't look like the inventory situation is going to improve anytime soon. Last year plenty of would be home sellers decided not to sell because they weren't confident they'd be able to secure a contract to buy a new home after they sold. This year plenty of would be home sellers likely won't sell because they don't want to let go of their super low interest rate on their current mortgage and exchange it for a higher rate on a new mortgage. So, while we can in some ways blame would be home sellers for the shortage of inventory... we can't really blame them for the reasons why many are choosing not to sell. | |
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We Are Starting 2023 With Fewer Homes On The Market For Sale Than Anytime In The Past Decade |
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 Yet another reason why it seems relatively unlikely that we will see home prices start to decline in this area... One main factor that could cause downward pressure on home prices would be if inventory levels were starting to meaningfully rise. If more sellers wanted to sell homes than there were buyers to buy them... then we might see prices level out or decline. But... as shown above... we're starting 2023 with fewer homes on the market for sale than anytime in the past decade. So... there's that. Will we see meaningful increases in the number of homes available for sale at any given time during 2023? Buyers sure hope so... but it is not yet clear whether that will actually happen this year! | |
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Maybe, Just Maybe, Buyers Might Be Able To Look At More Than One House At A Time In 2023?? |
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 The actual process of home buying has been a bit bananas for the past two years. Buyer: I want to buy a house. Me: Cool. Buyer: Let's go see a bunch later this week, K? Me: Every house for sale you might like is already under contract. Buyer: Ugh. Me: Wait, a new listing just came on the market, let's go see it, ASAP. Me, Two Weeks Later: Now there's another new listing! Me, Three Weeks Later: Ooooh, another new listing! Basically, many (most?) home buyers have only been able to consider one house at a time for the past two years. Homes were going under contract so quickly after they were listed for sale that it was rare for there to be two or more houses of interest on the market, not under contract, all at the same time. Which... lead to some less than ideal decision making for buyers. A buyer would have to decide whether to make an offer on each house, individually, without yet knowing what the other options would be (or might be) in the coming days or weeks. So, if the market starts to transition a bit in 2023 -- and if (a big IF) inventory starts to creep up a bit -- then maybe, just maybe, buyers will finally be able to look at more than one house at a time this year?? And compare and contrast them? What a novel concept! ;-) | |
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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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