| Newer Posts | Older Posts |
 |
 |
Harrisonburg Housing Market Still Speeding Right Along |
|
 Happy Tuesday morning, friends! The starting and ending point of summer likely varies for many of us, but it seems like we're somewhere around the middle of summer. Gasp! As such, I hope the first half (or so) of the summer has treated you well, and that you still have some fun, adventures and relaxation in the works for the second half of summer. Before we get to the real estate news of the day, I'll mention that Red Wing was *fantastic* this year...  I enjoyed seeing many of you out at Natural Chimneys over that long (but not quite long enough) weekend and I hope the rest of you will consider checking it out next year! Sign up for Red Wing Updates here. Next, I should mention that the beautiful home on the cover of my market report is on the market, for sale, as of this morning! Find out more about 390 Callaway Circle here. Finally, if you're looking for a good cup of coffee (or a caramel latte) one of my favorite coffee spots in the 'burg is Black Sheep Coffee, tucked away over on West Bruce Street. Interested in checking out Black Sheep Coffee? I'm giving away a $50 gift certificate, which you can enter to win here! And now, let's spend a few minutes together exploring the latest news and happenings in our local housing market...  Right off the bat, we get to some rather fascinating updates just checking out the very basic metrics of our local market. As referenced in the tiny red numbers above... [1] A normal June might have around 135 or 145 home sales. Last June (2021) we saw an impressive 175 home sales. I did not think we would clear that high bar this June. But... we did. There were an astonishing 184 home sales in June 2022! [2] The median sales price in the first half of this year was $299,000! That is almost 15% higher than it was in the first half of last year, when it was $260,600. Even with *much* higher mortgage interest rates, homes keep selling at higher and higher prices! [3] Homes are still selling fassssssssst! The median days on the market in Harrisonburg and Rockingham County during the first six months of 2022 was... only five days, just as fast as when we look at the entire past 12 months of data. So... lots of sales, prices that are higher than ever, and homes are going under contract faster than ever. Hmmmm... things don't seem to really be slowing down thus far in 2022!? This fast moving market has been one contributor to the steady increases in home prices seen over the past two years. Take a look at these increases...  [1] The median sales price of detached homes was only $250,000 just two years ago... but over the past two years that median sales price has risen to $310,000! [2] The median sales price of attached homes (townhomes, duplexes, condos) was only $180,400 just two years ago... but over the past two years that median sales prices has risen to $240,000! Homeowners have been delighted with these increases. Sellers have also been big fans. Buyers... not so much. It can be tough for buyers to get excited about paying a *much* higher price alongside their *much* higher mortgage interest rate... but buyers still seem to be moving forward full steam with their home purchases thus far in 2022. Those home buyers are moving along so steadily that we're breaking (tying) some records...  Over the past ten years, the most home sales we have seen in a month has been 184 home sales... which took place last year, in August. Well, what do you know!? This June (last month) we saw... 184 home sales! Looking ahead, what should we expect for July? The past three months of July have been tightly clustered around that 145 - 155 range, so I'm going to play it safe and guess we'll see right around that many home sales in July 2022. Perhaps 150 on the nose!? As I have mentioned to many of you, I fully expected (and still expect) that we'll see a bit of a slow down in home sales activity in 2022 due to higher mortgage interest rates... but... the data just isn't agreeing with me thus far...  As shown above, the 787 home sales we've seen in the first half of 2022 exceed the number of home sales in the first half of each of the past three years! If I didn't know better, I'd think mortgage interest rates must be *lower* than ever in 2022 to spur on so much buyer activity!? But, no, not so much. More on that later. Looking at these big picture trends in a slightly different way, it's astonishing to see three years in a row of double digit growth in the median sales price in our market...  How much did our area's median sales price increase in 2020? 10% How much did our area's median sales price increase in 2021? 10% How much has our area's median sales price increased thus far in 2022? 11% It's been an astonishing few years in our local market to see home values escalating so quickly... without any signs of slowing down. But... to try to reel us back in a bit from cloud nine...  It's hard not to look at the graph above and think that things could be, might be, possibly be changing... [BLUE] The top, blue, line shows the number of buyers buying in a six month period as evaluated over the past four years. This metric has been steadily marching upward over the past two years... but... it seems that the number of buyers buying might be flattening out a bit. Again, not that the amount of buyers buying is decreasing, but buyer activity might not be continuing to increase as quickly as it has for most of the past two years. [GREEN] The bottom, green, line shows the numbers of sellers selling at any given time... the inventory levels at the end(ish) of each month. For most of the past four (plus) years we have seen fewer and fewer (and fewer and fewer) homes on the market, due largely to excessive amounts of buyer demand. But... over the past six months... we're starting to see some modest flattening out of inventory levels in our local area. Inventory levels seem to be steadying themselves. Bear in mind that it is still definitely a strong (strong!) seller's market, but we might be starting to see some early signs that the market might be slowing down a touch... perhaps cooling off from a strong-strong-strong seller's market to a strong-strong seller's market!? Changing gears, slightly, here's an interesting trend to make sure that we recognize...  After typically only seeing around 70 - 90 new (detached) home sales per year, we saw a remarkably high 144 such sales last year... and this year we seem to be on track to see around 180 new detached home sales in Harrisonburg and Rockingham County. These recent, steady increases in the number of new homes selling in our market is doing two things... one, allowing the overall number of home sales to increase without relying just on resale homes as inventory... and allowing the median sales price in our market to keep climbing, given that new homes are typically more expensive than resale homes. OK, shifting back to the overall sales market, here's a look at recent months of contract activity... measured by when contracts are signed...  Looking at the highlighted months... [2022] We have seen 630 signed contracts in the past four months. [2021] In the same months last year, we saw 620 signed contracts. So, yes, even with *much* higher mortgage interest rates, we are seeing more buyers sign contracts to buy homes now as compared to a year ago. Is this surprising? Yes, relative to interest rates. No, relative to what seems to be a significant number of buyers who wanted to buy homes in this area in the past two years who have not yet been able to do so. In other words, demand exceeds supply. There are still lots of buyers who want to buy... even if the interest rates are higher than they were previously and higher than they would prefer. So, demand is high. How about supply? Well...  It is possible that our local housing supply is increasing, slightly. After multiple years of constantly declining inventory levels, we now seem to be seeing inventory levels increasing a bit. Sadly, these *slightly* higher inventory levels aren't evenly spread across all property types, locations and prices... so many buyers will still find inventory levels to be *quite* low in their segment of our local market. Because inventory levels are still so low in most segments of the market, we are still seeing homes selling just as quickly has they have for the past year...  As shown above, the pace at which homes go under contract once listed (days on market) declined steadily through 2020 and 2021 until it seemed to bottom out at a median of five days on the market. That is to say that half of homes go under contract in five or fewer days... and half go under contract in five or more days. This metric hit a median of five days on the market back in July 2021 and has stayed there ever since. If or when the market starts to slow, soften or cool, we'll start to see this metric drift upward again. Finally, that one topic that isn't quite as exciting to talk about... mortgage interest rates...  Just six months ago... the average mortgage interest rate for a 30 year fixed rate mortgage was... 3.55%. Now, it has risen all the way up to 5.7% as of the end of June. This drastically affects the monthly payment for buyers in today's market as compared to just six (or twelve, etc.) months ago. I don't think we'll see interest rates rise above 6% but it is definitely possible. If there is one thing that could cool off our local housing market, it's this "cost of money" in the form of the mortgage interest rates. But, again, it hasn't happened yet despite drastic changes in interest rates. And here we find ourselves again, at the close of what seems to be another red hot month of real estate activity in Harrisonburg and Rockingham County. By the headlines... [1] More and more home sales are selling! [2] Homes are selling at higher and higher prices! [3] Homes are selling as fast as ever! [4] Inventory levels are increasing, slightly, in some pockets of the market. [5] Mortgage interest rates are higher than they have been in years! What will we see over the next few months in our local real estate market? Most likely, more of the same... but we won't know for sure until those next few months pass... and I'll pause each month to check the numbers and share some thoughts with you so that we can all have a good sense of where we have been, where we are and where we might be going next. Speaking of next... If you are planning to SELL a house in the next few months, sooner is likely better than later, and I'd be delighted to chat with you about how we might work together. If you are planning to BUY a home in the next few months, you ought to check in with your lender sooner rather than later to get proper expectations of your potential mortgage payments within the context of rising mortgage interest rates... and yes, I'd be delighted to help you with buying as well. Be in touch at any point if I can be of any help to you or your family or friends. You can call/text me at 540-578-0102 or email me here. Until next month... may your summer be as relaxing as this crazy real estate market can be stressful! ;-) | |
 |
 |
|
|
How Quickly Will We Plan To Respond To An Offer On My House? |
|
 When we receive an offer, how quickly will we plan to respond to that offer? Well, as is often the answer... it depends... We will certainly look at the acceptance deadline on that offer to see when the buyer hopes we will respond... but we might not always respond within that timeframe. Here are a few of the guidelines that will likely inform our response timeline... [1] If the offer is an extremely strong offer with very favorable terms, we will likely respond sooner rather than later. [2] If the offer is OK or good, but not great, we will likely wait until nearly the end of that response timeframe, or possibly even later. [3] If we already have feedback from every other buyer who has viewed the home and none of them plan to make an offer, we will likely respond sooner rather than later. [4] If there were a half dozen showings today and we're still waiting to hear back as to if those buyers will be making offers, we will likely wait a bit to respond to the offer. [5] If we have no other showings scheduled or requested, we will likely respond sooner rather than later. [6] If we have a dozen more showings scheduled and requests coming in beyond that, we will likely wait a bit to respond to the offer. So... as you can see, there isn't one set answer to how quickly we respond to any given offer. It will depend on the context for that offer as informed by the factors noted above, and other factors as well. | |
|
|
|
|
But Officer, I Just Slowed Down!?! |
|
 So, you're cruising along on Interstate 81 (somehow not stuck in traffic) in a 70 MPH speed zone.... ...but, you're going 115 MPH. Wow! But then, you slow down a bit, to 95 MPH. When your friendly, neighborhood police officer pulls you over and asks you why you were going so fast... 95 MPH... you tell the officer you just slowed down. "Sure, pal, you may have slowed down... but you were still driving very fast!" Maybe you see where I'm going with this... The local housing market has been moving very quickly over the past two-ish years, perhaps it's been going 115 MPH... well beyond the speed limit, and definitely a seller's market, often with 5+ or 10+ offers on new listings within days if not hours. The local housing market has now slowed down a bit, perhaps to 95 MPH... still well faster than normal, still definitely a seller's market, often with 1 to 3 offers on new listings within days, but likely not within hours. So, yes, the local real estate market seems to have slowed down a bit over the past few months -- but it is still moving very, very quickly! | |
|
|
|
|
The Short Term Rental Market Seems To Be Quite Active In and Around Harrisonburg |
|
 If you are looking for a weekend stay, or a week long stay, in or near Harrisonburg there seem to be LOTS of options on AirBNB. The search above, showing 93 options, was with flexible dates in August / September / October. If you are considering purchasing a property to use as an AirBNB, keep in mind that there seem to be plenty of current options for those looking to book a short term stay. Driving a bit further east, there seem to be right around 300 available options at or near Massanutten Resort. What a difference from just a few years ago when short term rentals were just starting to pop up in this area! | |
|
|
|
|
New Home Construction (For Sale or Rent) Is Likely The Only Path Towards A More Balanced Local Housing Market |
|
 Over the past two (to five) years the local real estate market has seen... [1] More and more homes selling. [2] Higher and higher sales prices. [3] Higher and higher rental rates. Over the past six months, mortgage interest rates have increased significantly (from around 3% to nearly 6%) and yet... [1] We're still seeing just about the same number of homes selling. [2] Sales prices keep climbing. [3] Rental rates keep climbing. One conclusion that I keep coming back to in recent weeks and months is that... There are more people who want to live in Harrisonburg and Rockingham County than there is housing in which they can live. Generally speaking, when demand for housing exceeds supply, prices go up... that's what we're been seeing over the past few years. So, what's the answer? If there are 134,000 people living in Harrisonburg and Rockingham County, but there are 140,000 or 150,000 who would like to live here... ...the only path towards a more balanced housing market is to have... ...more homes. So, whether it's new homes being built to be sold... or new homes being built to be rented... that will help bring balance to our local housing market. It's certainly not clear how much more housing is needed, in what locations, or of what property types, sizes, or prices... but overall, more housing needs to be created (built) to account for the ever increasing number of people who would like to live in this area. | |
|
|
|
|
An Early Look At June 2022 Home Sales |
|
 As mortgage interest rates rise, many continue to wonder whether it will significantly slow down the amount of home buying activity we are seeing in our local market. It's a reasonable thing to wonder about. Here's a quick preview of how things went last month (June 2022) compared to the same month a year ago... June 2021 Mortgage Interest Rate at Start of Month = 2.99% Closed Home Sales in Harrisonburg & Rockingham County = 175 Contracts Signed = 143 June 2022 Mortgage Interest Rate at Start of Month = 5.09% Closed Home Sales in Harrisonburg & Rockingham County = 168 Contracts Signed = 129 Conclusions By the numbers... there were 4% fewer home sales this June compared to last June... and 10% fewer contracts. So, maybe (?) things are slowing down, a bit? That said, in many months over the past few years home sales seem to be constrained by the number of sellers willing to sell, and not so much the number of buyers interested in buying. Stay tuned for further updates as I take a fuller look at the market over the coming week. | |
|
|
|
|
Price Reductions In A Fast Moving Housing Market |
|
 A few years ago (maybe five) a home seller would often wait a month or two before giving serious thought to adjusting the asking price of their home if it was not yet under contract. But now, with a median "days on market" of just five days... home sellers are often concluding much more quickly that their asking price might need to be tweaked to inspire a buyer to make an offer. This faster pace of price reductions makes a lot of sense unless you have a super unique house or property that is only going to appeal to a very small pocket of buyers. In the current market, if you listed your home for $450K (for example) and didn't have any offers in the first two weeks, you may very well have priced it a bit higher than the market will bear. Perhaps it should have been priced at $425K instead. So... for as long as the market continues to move as quickly as it has been for the past few years, you can gather pricing feedback rather quickly once your house is on the market, and quickly adjust your pricing if you are not generating offers... or if you are not generating enough showings to make you confident that an offer will be forthcoming soon. | |
|
|
|
|
Harrisonburg to Purchase Shenandoah Presbytery Property For Use As Homeless Shelter |
|
 The City of Harrisonburg has contracted to purchase a 6,000+ SF building on the north end of town that used to house the Shenandoah Presbytery. The building is situated on a 3.68 acre parcel just shy of Vine Street and Mt Clinton Pike if you were driving north on Route 11 from downtown Harrisonburg. The City will purchase the property with $700K from the American Rescue Plan Act and the shelter will be operated Open Doors. Read more about this purchase at The Citizen... | |
|
|
|
|
Increased Mortgage Interest Rates Can Significantly Decrease Your Home Purchasing Power |
|
 If you have $2,000 per month in your budget for your mortgage payment, that budget won't allow you to buy quite the same house now as compared to six months ago. Six Months Ago = 3.22% Mortgage Interest Rate = $451,000 house Six months ago, you could purchase a $451,000 house in the City of Harrisonburg, put 20% down, finance the purchase with a 30 year fixed rate mortgage at 3.22%, pay your tax bill and homeowners insurance all for a smidge less than $2,000. Today = 5.81% Mortgage Interest Rate = $353,000 house Today, you can purchase a $353,000 house in the City of Harrisonburg, put 20% down, finance the purchase with a 30 year fixed rate mortgage at 5.81%, pay your tax bill and homeowners insurance all for slightly less than $2,000. $98,000 of Purchasing Power... Gone! As such, if you have a fixed budget for your housing costs, you have lost $98,000 of purchasing power over the past six months given the increased interest rates. But Remember... Six months ago, plenty of buyers with a $2,000 budget may have been buying $353K houses... not $451K houses... so for some buyers the increased monthly costs are likely painful, but may not change their purchasing decisions. -- This article was inspired by an even more thorough analysis of this dynamic over here. | |
|
|
|
|
Homes Not In Property Owners Associations Might Still Have Restrictive Covenants |
|
 Just because the house you are buying is not located in a Property Owners Association... that does not mean that there are not rules that affect your ownership of the property. Many neighborhoods developed in the past 20 to 30 years do not have Property Owners Associations... but do have Restrictive Covenants. These restrictive covenants often set down guidelines such as... [1] If you want to make exterior changes to your house or add an outbuilding, etc., you may need to first seek approval from an architectural review committee. [2] Non domestic animals (chicken, pigs, goats) are often prohibited. [3] There may be restrictions on parking commercial vehicles, campers, trailers or boats on your property. ...and the list goes on! So, if you are buying a house that is not a part of a Property Owners Association, let's also take a moment to check for any restrictive covenants that may affect your ownership of the property and make sure you are familiar with and comfortable with those restrictions. | |
|
|
|
|
Is The Local Real Estate Market Softening? |
|
 Anecdotally, it seems like a maybe the local real estate market is softening... but the data certainly doesn't show it yet. Here are a variety of current market anecdotes for you... [1] Many new listings are still having a flurry of showings and multiple offers and are selling at or above the list price with very few contingencies. [2] Sometimes a hot new listings receives just two offers instead of the five to eight that might have been anticipated. [3] Sometimes, new listings are coming on the market and sitting for a week or so before generating an offer. [4] Sometimes sellers start at one asking price and adjust it down a few weeks later after not having received any offers. And some data... [5] Thus far (Jan - May) in 2022, 4.75% more homes have sold than last year. So... is the market softening? Items 1 and 5 above would indicate... no. Items 2, 3 and 4 would suggest... maybe. I'll keep monitoring the data to see if it starts to show anything different... but for now, I'm leaning more towards believing the story told by the data more than the story told by the occasional anecdote. | |
|
|
|
|
It Can Be Particularly Challenging For Relocating Home Buyers To Buy Right Now |
|
 There have been three instances in the past week where I really wish the fictional private jet shown above existed... ;-) It is particularly challenging for a relocating home buyers to buy houses in Harrisonburg and Rockingham County right now. If you plan to move to the Harrisonburg area at the end of the summer, and you live four hours (or more) away from Harrisonburg, when a new listing of potential interest hits the market, you're often caught in a dilemma. I can "show" you the house virtually via FaceTime, but then, do you... [1] Make an offer without having seen the house yourself, in order to have a chance at having an offer submitted in time for it to be considered. [2] Hop in the car or book a plane ticket to get to Harrisonburg to see the house yourself, the following day, to make a decision about submitting an offer after having seen the house in person. Neither option seems great to relocating home buyers. Many buyers just simply aren't comfortable with buying a house without having seen it themselves, in person, and having walked through it. Understandably. Some buyers are reluctant to hop in the car for an eight (+) hour adventure, or a two day excursion by plane, to see a house in person... perhaps to then either not like it as much as they thought... or to love it even more but then submit an offer that is not accepted. So, what is a relocating home buyer to do? Our company does not currently have plans to purchase a private jet to fly buyers in to see homes... but I'll let you know if we start exploring that possibility. Private jets aside, the options seem to be... [1] Get comfortable with submitting an offer to buy a house without having seen it yourself in person. You might not feel better or worse about this depending on the property, its condition, and how well it fits your needs. [2] Commit to making the trek (by car or plane) to Harrisonburg to see new listings of interest, even though sometimes the trip will not yield a contract on a house. [3] Plan to rent an apartment or townhouse for six months upon arriving in Harrisonburg to then be able to explore houses for sale, in person, quickly, as they hit the market. If the pace of the market were to ever slow down, the dynamic described above could change... but right now that doesn't seem to be happening. | |
|
|
|
|
The Summer Housing Market Often Provides An Irregular Flow Of New Listings |
|
 Starting and stopping and starting again. Home buyers hoping to buy a house in Harrisonburg or Rockingham County over the next month or two might become confused, or frustrated (or both) with the start and stop nature of the market during the summer months. There might be 300 homes listed for sale over the next two months... but there won't be five new listings per day for the next 60 days. Why, you might ask? Mostly because of seller's vacation plans. "I'm going to get the house ready to go on the market on ___. Oh, wait, we're going on vacation just before that, so let's push it back a few weeks." "I'm going to be ready to have the house photographed by ___. Oh, wait, then we leave on vacation immediately after that and I don't want to be out of town when the house is being shown." If you are a home buyer hoping to buy soon... don't get overly discouraged when there is a slow week or so of new listings... that will almost always be followed by a burst of new listings in the following few weeks. | |
|
|
|
|
Will Mortgage Interest Rates Decrease Again, Somewhat, In The Next Few Years, Allowing 2022 Home Buyers To Refinance? |
|
 It's an interesting question that I have discussed with several home buyers lately. The economy is on a tear... inflation is rampant... housing markets (including our own) are seeing double digit per year increases in sales prices. One action that the Federal Reserve is taking to combat these factors is to raise interest rates. Mortgage interest rates are now approaching 6% -- after having started the year just over 3%. Wow! But... if the rates have risen this high to get things (the economy, inflation, housing markets) to cool off a bit... if/when they do, will interest rates eventually decline again? I don't know that they'll ever go back down towards 3%, and maybe not 4%... but is it possible within the next few years that we will see mortgage interest rates of 4.5% or 5%? It seems possible? I certainly won't say that it is likely, but it is certainly possible. This possible future reality is providing some residual comfort to home buyers who are going ahead and buying in 2022. They can afford the mortgage payments at the current rates of close to or at 6%, but they'd love to be paying a lower mortgage payment for their home at some point in the future. If their theory holds true... perhaps we will see interest rates eventually decline, somewhat, allowing 2022 home buyers to refinance to take advantage of future lower rates. Clearly, there is no guarantee that this will happen... but it does seem possible. | |
|
|
|
|
Harrisonburg Area Housing Market Reaches New Heights |
|
 Happy Friday morning, friends... and Happy Summer! If you have school age kids, or college age young adults, I hope the school year finished out well and that they (and you) are ready to relax a bit over the summer. Luke just finished 11th grade and is gearing up for his senior year (gasp!) and Emily finished out middle school and will be in 9th grade in the fall. Here they are in the obligatory "last day of school" photo...  Transitions it seems, are upon us. School is ending and summer is beginning. Cooler spring days are being replaced by hot and humid summer days. And... as some folks seem to be wondering these days... are we seeing a transition in our local housing market? I don't think any of us will really know the answer to that question for another six to twelve months when we can look back and reflect on what happened in the second half of 2022, but here are some things that seem to be true... [1] Mortgage Interest Rates Are Rising [2] Some Home Buyers Are Getting Priced Out Of the Market [3] The Stock Market Is Not Doing So Well [4] Inflation Is Upon Us ...and yet, with all of these transitions taking place, this month you'll learn that... [1] More homes sold in the past 12 months than ever before in any 12 month period in Harrisonburg and Rockingham County. [2] The median sales price in the past 12 months is the highest it has ever been. So, is our local housing market transitioning? Is it cooling? Is it leveling off? Is it settling down? Maybe it is and the data doesn't show it yet? Maybe it will eventually? Maybe there are some early signs that it might soon? We'll explore the data together below, but I'm not finding many, if any, signs that our local housing market is undergoing significant changes. But first... My Favorite Spots... Each month in this space I highlight one of my favorite spots to enjoy a meal, a cup of coffee, or an experience. This month, I'd encourage you to check out Village Juice & Kitchen on West Bruce Street in downtown Harrisonburg where you'll find delicious smoothies, smoothie bowls, salad and grain bowls, juices and so much more! My favorite smoothies (so far) are Mint Chip and Mocha Nana. Explore the menu at Village Juice & Kitchen, on me, by entering to win a $50 gift certificate here. I'll pick a winner in about a week. Download All The Charts & Graphs... Now... let's take a look at the data together...  Looking at all of the numbers above, a few things jump out to me... [1] Looking only at the first five months of this year (Jan-May) we have seen a 4.75% increase in the number of homes selling in Harrisonburg and Rockingham County. [2] Looking at a slightly longer timeframe, the past 12 months, the increase in the number of home sales has been over 7%. [3] The median price of homes sold thus far in 2022 has been $297,450... almost 19% higher than a year ago when it was only $250,000! [4] Looking at a full year of data, the median sales price in Harrisonburg and Rockingham County over the past year was $285,000... which is 14% higher than a year ago when it was $250,000. This is a significant increase in home sales prices over a single year. Can we break it down any further to understand why these prices are going up so much?  At least one observation that can be made is that change in prices are happening a bit differently when looking at detached homes compared to attached homes... [1] The median sales price of a detached, single family home, is now up to $311,000 in Harrisonburg and Rockingham County, over 12% higher than a year ago. ...but... [2] The median sales price attached homes (townhomes, duplexes, condos) has increased 21% over the past year to $238,285! This much larger increase in the median sales price of attached homes seems likely to be a result both of townhomes selling at higher prices... and most newly built townhouses being larger and more expensive than townhomes as a whole. Beyond property type (detached vs. attached) can we find any other differences in changes in property values? Why yes, we can...  Above you'll note that... [1] The median sales price of homes sold in the City of Harrisonburg over the past year has increased 5% to $231,100. ...while... [2] The median sales price of homes sold in Rockingham County has increased over 13% during the past year. Again, this may be at least partially a result of what happens to be selling... with many newer, larger, more expensive homes being built in the County right now... which causes the median sales price (of what has sold) in the County to increase. Now, looking visually at how this year has played out on a month by month basis...  After a comparatively strong month of home sales in April 2022 (well above previous months of April) we saw a slight decline in monthly home sales from 146 sales in April to only 139 in May. Looking ahead, it's anyone's guess as to what exactly will happen in June. It seems somewhat unlikely that we'll exceed the shockingly strong 175 home sales seen last June... but perhaps we'll be in the 160 range, or maybe right around 140 again (like this month) or could we have the slowest June in the past three years? Stay tuned to find out. Sorting the data out and stacking it up a bit differently, you'll notice that 2022 is looking pretty solid...  Those circled brown numbers might look pretty similar, but one is 569 and one is 596... so we have seen more home sales in the first five months of 2022 than we saw in the first five months of last year, and of the year before that, and the year before that! We're still on track to meet or exceed the 1,673 home sales seen last year, though we are certainly experiencing some headwinds now with rising mortgage interest rates. If our local housing market does slow down a bit, when will it happen, or when will we see it? In June? July? Again, illustrating the story of the market that has not yet slowed down...  Two "highest ever" or "most ever" data points above... [1] The median sales price of $285,000 over the past 12 months is the highest such median sales price we have ever seen in Harrisonburg and Rockingham County. [2] The 1,700 home sales seen in Harrisonburg and Rockingham County in the past 12 months is the most, ever, that we've seen in that timeframe in our local market. So, yes, there are plenty of reasons why our local market could be slowing down, or might eventually slow down, but thus far the data doesn't seem to be showing it. If or when the data does show it, I'll be sure to point it out. There are a few possible leading indicators below...  I suppose I could take the title and numbers off of the graph above and we could imagine it to be a graph of any variety of things these days... the cost of health care, the cost of higher education, the cost of gas, the cost of groceries, but in this case... it's the cost of housing. The median sales price just keeps... on... going... up! This might be the third year in a row where we will see a 10% increase in the median sales price in our local market! OK... now... to "cool our jets" a bit, as my mom used to say...  While it's still quite a bit higher than May 2020... only 158 contracts were signed for properties in May 2022, down a bit from the 166 that were signed a year ago in May 2021. Furthermore, over the past year there have been 1,694 contracts signed... compared to only 1,673 in the prior year. So... as a possible early, early, early leading indicator that the market might be slowing, slightly... contract activity might be getting close to leveling off. Right now, it's still on the rise... more homes went under contract in the past year than the previous year... but they're getting close to being even. And another indicator that we might be seeing a transition in the market...  Inventory levels, as shown above, are starting to creep up, a bit in our local market. The market bottomed out with fewer than 100 homes for sale a year ago... but now we're up to 152 homes for sale in Harrisonburg and Rockingham County. Admittedly, many of these options are new homes in a handful of communities that will only appeal to some pockets of the buying public (based on size, price or location) but regardless of what the options are that are for sale... there are more options for sale now than there were a year ago. There are, clearly, still well fewer options now than two years ago or earlier, but inventory levels are no longer declining... and they seem to actually be increasing! But, despite a possible leveling off of contract activity... and despite inventory levels creeping up a bit... most homes seem to be selling just as fast as ever...  As shown above, the median "days on market" for homes sold in Harrisonburg and Rockingham County fell all the way down to five days about a year ago... and has been there ever since. Two years ago, the median was over two weeks, but we're just not in those times any longer. If the market does slow, we should see it taking an extra day or two (or 7 or 10) for homes to go under contract... but that is not yet happening in our local market. Finally, how about those mortgage interest rates?  Towards the end of last year, mortgage interest rates were as low as 3% but have since risen to 5%, and in the past few weeks (not shown on this graph) they have risen even higher... now exceeding 5.5%. Your mortgage payments will, clearly, be higher if you buy a house this year as compared to if you had bought a house last year. These higher mortgage interest rates could (should?) decrease the demand for housing... which might cause the real estate market to slow down or cool off a bit. Again, we haven't seen it yet. And with that, I'll draw this to a close. In summary... [1] More homes are selling on an annual basis than have ever sold before. [2] Homes are selling at higher prices than ever before. [3] Rising mortgage interest rates could cause our local housing market to slow down or cool off. [4] We don't yet seem to be seeing any slowing down or cooling off. [5] Even though we aren't seeing it yet, that doesn't mean it won't happen. Is a five point summary condensed enough to be considered a summary? Hopefully so. BUYERS: Check in with your lender to update your expectations as to mortgage payments. If you'd like to buy a home soon, let's chat about what to expect related to contingencies, competing offers and escalation clauses. SELLERS: You should probably get your house on the market sooner rather than later to hedge against interest rates rising even further, causing some portion of would be buyers to not be able to afford your home any longer. If you're planning to get your house on the market this summer or fall, let's talk sooner rather than later to discuss timing, pricing and more. If I can be of any assistance to you, feel free to call or text me at 540-578-0102 or email me here. | |
|
|
|
|
I Like This House! I Will Buy This House! Right? |
|
 If only it were so easy. :-/ If you see a new listing of interest... ...and when we walk through it on the first day on the market you love it... ...and if you are pre-approved for a mortgage... ...and you make a strong offer, above the asking price, without a home inspection contingency or appraisal contingency... ...you'll get to buy the house, right!? Maybe!? Sometimes!? Our local market is still very competitive, especially under $300,000. There are lots of buyers ready to pounce on each new listing... some who already live here (and are renting) and some who are moving to the area. On many or most new listings under $300K it seems that there are still plenty of buyers ready to move quickly and aggressively in making strong offers, even with mortgage interest rates having risen steadily over the past few months. So, as a buyer in this market, especially if you're hoping to buy under $300K... we might end up having to find a few perfect houses on which to make an offer before you secure a contract to buy a home in Harrisonburg. It can be done... but it's not as simple as just seeing a house that you like and deciding to buy it. The competition is still high! | |
|
|
|
|
Ideally, We Should Talk About Potential Contingencies Well Before Making An Offer On A House |
|
 In a fast moving housing market, it's important to be ready to make an offer quickly after seeing a house that you like. But... making an offer includes a variety of other decisions that may require more a bit of thought and planning. FINANCING This one is perhaps the most straightforward. By the time you are going to view a house for sale you should have already talked to a lender and have a pre-qualification or pre-approval letter in hand. You don't want to be in a situation where you like a house but haven't even talked to a lender yet to be able to have a letter documenting your financial ability to purchase the house. A seller in this market (and in most markets) will not seriously entertain an offer with a financing contingency if a lender letter is not included. Ideally, you should know how high you can go on price... and have a sense of what the monthly payment will be at a few different price points. This will allow you to thoughtfully consider the price that you might want to offer when we are viewing a house. INSPECTION Many offers are made without inspection contingencies these days. Are you willing to do so? It's fine to include an inspection contingency in your offer, but you should know that doing so will make it less competitive if there are other offers on the house that may not have inspection contingencies. You should think this through (whether you are comfortable buying without a home inspection) before going to see houses... even if you plan to make the decision on whether to conduct an inspection on a property by property basis related to the agent and condition of the house. APPRAISAL Most offers used to include appraisal contingencies, allowing the buyer the opportunity to try to renegotiate the sales price if the appraisal came in below the contract price. These days that is much less common... and some buyers are specifically indicating that they can and will proceed with the purchase at the contract price regardless of the appraised value... or are stating in an offer that they are willing to proceed at the contract price so long as the appraised value is within $___ of the contract price, etc. Are you comfortable paying a bit above the appraised value in order to secure a contract on a house? Are you willing to pay a contract price regardless of the appraised value? These are, again, questions we should discuss generally even before we think about them specifically related to a house we are viewing. Furthermore, you should understand (through a conversation with your lender) how a low appraisal will or will not affect your loan terms related to the LTV (loan to value) ratio, mortgage interest rate, funds required for closing, etc. Yes, we will talk about all of these potential contingencies when we are considering an offer on a specific house... but it can be helpful to think about them generally, and talk to me about them, ahead of time so that you can give some thought to what you are and are not willing to do in the current competitive market. | |
|
|
|
|
City Townhouse Sales Prices Increase 34% Over Four Years |
|
 Townhouse values in the City of Harrisonburg have certainly increased rather quickly over the past few years... As shown above, we have seen a 4% to 11% increase in median sales prices for each of the past four years. There has been an overall 34% increase in the median sales price since 2018. If you happened to buy a townhouse a few years ago, you'll likely be in great shape if you're selling now or soon! Also helping this segment of our local housing market is that most new townhouses are now in the $250K+ price range. | |
|
|
|
|
How Should The Square Footage Of Your Home Be Measured? |
|
 So -- are you trying to figure out the square footage of your home? Here are a few methods that are not certain to give you the correct answer....
So, how do you really measure square footage? It starts outside the home! You'll need to measure the exterior dimensions of each level of your home -- and then subtract any open areas, such as the open space above a foyer. This measurement method, as odd as it may be, is what is used by nearly every appraiser, as it is how "gross living area" is defined by Fannie Mae, HUD, FHA, ERC and ANSI. As such, it is important that you're measuring the square footage of your home in the same way that nearly every appraiser and Realtor would be measuring it, so that you're comparing apples to apples when comparing the size (SF) of your home to another home that has sold or that is on the market for sale. And here's why I consider it to be an odd way to measure square footage....
While the City and County measurements for tax assessment purposes are often very accurate, it is often a good idea to double check the square footage of your home when we're putting it on the market for sale. | |
|
|
|
|
Housing Inventory Levels Seem To Be Slowly Rising, With One Third Of Them Being New Homes |
|
 There are almost 150 homes for sale now in Harrisonburg and Rockingham County... we're at 147 at the moment... and this would be the first time since late 2020 that there were 150 options for home buyers. But... do note that more than a third of them (53 of 147) are new homes. This isn't a bad thing... it's just that new homes in new home communities are only going to work for some buyers... they are particular property types, at particular price points in particular locations. Higher inventory levels means more choices for buyers which could mean -- if inventory levels were to keep climbing -- that there wouldn't be quite as fierce of competition for some new listings. That said, I have been a part of several "multiple offer" scenarios over the past two weeks, so the overall market isn't necessarily calming down or cooling off yet. | |
|
|
| Newer Posts | Older Posts |
Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
Licensed in the
Commonwealth of Virginia
Home Search
Housing Market Report
Harrisonburg Townhouses
Walk Through This Home
Investment Properties
Harrisonburg Foreclosures
Property Transfers
New Listings
