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Settle In And Read These Reflections On the Dynamics of Our Local Housing Market |
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 Settle in with a nice cup of coffee (or your beverage of choice) and enjoy some excellent recent articles about the state of our local housing market from The Citizen and Brent Finnegan. Harrisonburg's housing crunch leads to fewer homes on the market — and those that are don't stick around long The Citizen - May 3, 2019 The Citizen - May 6, 2019 The Citizen - May 13, 2019 Brent Finnegan - May 16, 2019
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Why Sell A Rental Property? |
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 If you own a rental property, you might wonder from time to time whether you should keep or sell that property. I generally advise my clients to keep their rental properties, and not to sell them unless there is a good reason to do so. Here are some of those good reasons... VALUE - If the value of your rental property is currently high, and there is a reasonable chance that it won't be quite as high in the coming years, then now could be a good time to sell the rental property. INVENTORY - If there are very few competing properties for sale right now (which would lead to a speedy sale) but there will be many, many new properties built in the near future (which could result in a slow sale) then it might make sense to sell the rental property now vs. later. EQUITY - If you have owned the property for a decent period of time you may have a good bit of equity tied up in the property - and perhaps you'd like to do something else with that money. Maybe you'll use the sale proceeds for another investment (real estate or otherwise) or to pay off some debt, make a large purchase, go on a trip, who knows, but sometimes selling a rental property is a key part of freeing up some cash to make some other financial moves. HASSLE - Maybe you are tired of dealing with owning a rental property. Regardless of whether you manage the property yourself, or have a professional property manager, there can still be some annoying details to attend to with property maintenance, uncooperative tenants, etc. MAINTENANCE - Perhaps your rental property is 20 years old and you're pretty sure that if you keep it for another 3 - 5 years you'll have to pay for a new roof, new heating system and new water heater. If so, it might make sense to sell the property now to avoid those major capital expenses. TENANTS - If most of the prospective buyers for your rental property will be owner occupants, then the time between tenants might be the perfect time to sell your rental property. PARTNERS - If you purchased the rental property with a friend or family member, and they would like to move their investment dollars elsewhere, then it might be a good time to sell the property. RENTAL RATES - If rental rates are starting to decline, changing the performance of your investment, it might make sense to go ahead and sell, unless you see a turn around happening in the near future. IMPROVEMENTS - Perhaps your most recent tenant absolutely trashed the property, and you have just completely renovated it, such that the property has never looked better. This could be an ideal time to sell before the condition starts to deteriorate again. All of these potential reasons to sell are quite general - so feel free to touch base if you want to chat more specifically about your rental property and whether it would make sense to sell it now, or keep it for the next few years. | |
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Do We Focus On Buying Or Selling First? Which Will Be Harder? |
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 If you are getting ready to sell your home AND buy your home, it can sometimes be difficult to determine where to start... Do you start by finding a house you want to purchase? Or do you start by listing your home for sale? I would suggest that you start with whichever you anticipate will be the most difficult part of the two step process. If it will be difficult to sell your home (because of price, location, layout, features, age, etc.) and it will be at least slight easier to buy the next one (plenty of viable options are listed for sale) then you are likely best off starting with listing your home for sale. Work to get the more difficult half of the transition underway by getting your current home under contract, and then work on the easier side of the transition. If it will be more difficult to buy the next house (because of the specificity of your housing goals, or because of low inventory levels, etc.) and it will be at least slightly easier to sell your current home (because the property type, location or price are in high demand) then you are likely best off focusing first on finding the home to buy -- and then listing your home for sale. There are plenty of nuances we can discuss further to formulate a plan for attempting to simultaneously sell and buy -- but as a general rule of thumb, you'll be best off to start with the harder half of the transaction. | |
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The Danger Of Focusing On Just One Comparable Sale |
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 It's easy to want to do this -- as either a buyer or a seller. Let's think about it using the mostly fictional illustration below...
THE BUYER'S STATED PERSPECTIVE I know that your house is listed for $400K, but this one other home a few streets over sold for $350K last month, and it was a larger, so I'm not paying any more than $350K for your home. THE LARGER CONTEXT Just a few items...
Furthermore, aside from all of these differences in the two houses --- the other ($350K) house is not available any longer --- and there aren't three other houses just like it that the buyer can decide to buy. In this case, by focusing on this one not-actually-that-similar sale, the buyer has put themselves in a situation where they might miss out on purchasing a great home because of how they are viewing the market based on one comparable sale. THE SELLER'S STATED PERSPECTIVE I am confident that I can sell my house for $350K. After all, my friend owned a very similar house and he just sold it in a week, with multiple offers, for $360K! THE LARGER CONTEXT Just a few items...
Again, by focusing on this one not-actually-that-similar sale, the seller has put themselves in a situation where they might miss out on selling their home because of how they are viewing the market based on one comparable sale. So -- as a buyer or as a seller -- don't focus on just one comparable sale when deciding on a reasonable price to pay or to ask -- look for the larger context! | |
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If You Are Buying A House With A Basement, Test It For Radon |
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 As you can see above, Rockingham County is in Zone 1 -- which means we are in an area that is likely to have high radon levels. What is radon, and what does it mean for you? Read on, from the EPA.... Radon is a radioactive gas that comes from the natural breakdown of uranium in soil, rock and water and gets into the air you breathe. Radon typically moves up through the ground to the air above and into your home through cracks and other holes in the foundation. Radon can also enter your home through well water. Your home can trap radon inside. Learn more about radon and real estate here. | |
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Will All 264 Currently Listed Homes Be Appealing To You? |
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 If you are entering the market to buy a home, the number of homes you will have to choose from will vary widely based on what you are looking for in a new home. Some buyers have a very narrow scope and find themselves on a prolonged hunt for what seems to be an elusive or mythical home. Some buyers find plenty of options, evaluate quite a few, make a decision and move forward with an offer. However -- keep in mind that as you consider the 264-ish homes currently on the market for sale, that some of them have been on the market for 3 months, 6 months, 9 months or even longer. The freshest of fresh listings are those that have come on in the past 30 days -- which (this time of year) is less than 100 of the 264-ish homes currently listed for sale. Depending on your time frame for buying, and the narrowness of your scope, sometimes it makes sense to quickly evaluate the current options -- and then to wait and see what new and exciting listings will be coming on the market in coming days and weeks. Steps to get started include talking to a lender to get a sense of your target price range, and then chatting with me (in person, by email, by phone) so that I can also be keeping an eye out for suitable properties for you. Learn more about the home buying process at...  Keep up with new listings at ...  | |
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Second Highest Month of Contracts In Three Years |
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 April 2019 was a busy month for buyers (and sellers) with 158 contracts being signed for the sale of homes in Harrisonburg and Rockingham County. This is the second highest monthly rate of contract signing seen anytime in the past three years! It was topped only by last May when 171 contracts were signed. This is bound to lead to strong months of closed sales in May and June. Find out more about our local real estate market by reading my most recent monthly market report. | |
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Highest Month of April Home Sales in 10 Years |
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 It's been a while -- more than 10 years -- since we've seen so many home sales in a month of April. As shown above, the 112 sales seen in April was higher than any month of April all the way back through 2010. There were a few years (2006-2008) where we saw more sales than that -- which was during the real estate boom when median sales prices were (unrealistically) increasing by more than 10% per year. Find out more about our local real estate market by reading my most recent monthly market report. | |
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Home Sales and Contracts Surge in April 2019 |
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 After a somewhat slow start to 2019, the local real estate market has now picked up speed in April! But before we start looking at the data, two quick links for you...
Now, onward!  Lots going on above...but here are the high points...
 OK - here's what I was talking about earlier. January, February and March sales were simply nothing to write home about. This February was the slowest February out of the past four years. January and March were the 3rd slowest such months from the past four years. But April -- wow! Home sales surged in April, up to 112 home sales -- the best month of April seen in the past four years!  Zooming out from the granular data, this graph looks at long term trends -- the slowly shifting 12-month trend line for the pace and price of home sales. As you can see, sales prices have been increasing despite somewhat slower sales.  It shouldn't be too much of a surprise that stable sales, rising prices, low inventory levels and low days on market are leading to very little negotiating on price. Homes are selling at a median of 99% of their list price. This means that half of homes are selling for 99% or more of their list price.  OK - this one was a bit surprising. And I squished all of the data down so far to fit a large context on the graph above that the image is not quite as crystal clear as I'd like it to be. But the message is quite clear - buyers came out in full force in April 2019 -- the 158 contracts signed last month was the second highest month of contracts seen in the past three years! That said - prepare yourself to be at least a bit disappointed next month. I think it's relatively unlikely that we'll be able to see a spike of contract activity all the way up to the showing 171 contracts that were signed last May!?  Home buyers like choices, right? Well, right now, they don't have many. In all of Harrisonburg and Rockingham County there are only 270 properties listed for sale. This number has been steadily declining over the past few years -- and the supposedly busy Spring of plenty of listings has not been able to increase these inventory levels -- probably because buyers keep snapping the new listings up as soon as they hit the market.  As some welcome news for buyers who are able to find a home to buy - they're able to finance that purchase at a relatively low interest rate! After having risen all the way up to 4.86% (it seemed like 5% was bound to be seen) mortgage interest rates have now dropped all the way back down to the low 4% range. This gives buyers the ability to lock in low monthly housing costs for the long term! OK - we'll cut it off there for now - though there is plenty more that you can scroll through in the PDF of my full market report. My guidance to local soon-to-be home buyers and sellers remains consistent... SELLERS -- even though it is a seller's market in just about every price ranges right now, you must still focus on price, condition and marketing. For further reading on buying or selling in this area, check out.... | |
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Mixed Use Development Proposed on Peach Grove Avenue |
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 The Harrisonburg City Council will hold a Public Hearing on May 14, 2019 at 7:00 PM on a variety of topics, including the potential rezoning of land on Peach Grove Avenue for the development of "The Residence and Shoppes at Peach Groves". UPDATE: The applicant has tabled the request until May 28. The public hearing will not take place on May 14.  Here are some key points to know based on the information packet provided during the Planning Commission meeting in April.
If you want to provide input on this potential rezoning for this potential development, attend the City Council meeting on May 14, 2019 at 7:00 PM. UPDATE: The applicant has tabled the request until May 28. The public hearing will not take place on May 14. | |
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Merck Announces $1 Billion Investment in Elkton, Virginia Facility, Over Three Years, To Create 100 Jobs |
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 In a major employment announcement for Rockingham County, Virginia Governor Ralph Northam announced yesterday that Merck will be investing up to $1 Billion over the next three years to expand its manufacturing facility in Elkton, Virginia and create a new Gardasil Purification Center. This growth will add up to 100 new jobs and 120,000 square feet to the Elkton facility. Here's an excerpt from this report from NBC29... "As part of the expansion, Blue Ridge Community College (BRCC) and James Madison University (JMU) will collaborate to address Merck's short- and long-term workforce needs through the development of a custom workforce solution. BRCC and JMU will establish a pipeline of biotechnology engineering and computer science talent that will allow the Shenandoah Valley to accommodate the future growth of Merck and other life science industries and manufacturers in the region." Read more via this article at NBC29... Governor Northam Announces Significant Investment in Rockingham County Merck & Co., Inc. to expand Elkton manufacturing facility, creating about 100 new jobs. | |
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Operating a Short Term Rental in the City of Harrisonburg |
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 After quite a long time (over a year?) of debating different paths for regulating short term rentals (such as through airBNB) the City of Harrisonburg has finally made a decision and set forth their official regulations. Lots (and lots) of information is can be found here, but let's review some of the key points to remember:
Again, you can find much more information here as well as links to additional information to get you started with registering your Short Term Rental. One interesting part of this new requirement is that we're now seeing somewhat more clearly where these Short Term Rentals are being operated. These are the property owners that have applied for Special Use Permits thus far, with a public hearing on each of them scheduled for May 8, 2019. The packet of information with context for these five applications, and staff recommendations is here.
You can track public hearings here. | |
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Get Excited! Preston Lake Is Getting A Pool! |
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 Preston Lake, located just east of Harrisonburg offers single family homes, townhomes, duplexes, a community center -- and soon, a pool! The fate of the planned pool was uncertain, as a recent version of the proffers for the neighborhood only required the developer to build a pool if two-thirds of owners voted to indicate that they wanted the pool to be built. Here's the official word that was sent out earlier this week to Preston Lake homeowners...
So, it seems that a pool will be built at Preston Lake!  Can't wait for a new home to be built at Preston Lake? Here are two homes available for sale in the neighborhood that are move-in ready...  3071 Vera Vista Path - learn more  3120 Preston Lake Boulevard - learn more | |
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Understanding Price Per Square Foot When Talking With A Builder |
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 If you're thinking about hiring a builder to build you a new home, you may eventually be thinking about or talking about Price Per Square Foot. Let's try to create some context. Stick with me here... $111 = The average Price Per Square Foot for all properties sold in Harrisonburg and Rockingham County in 2018. But that includes condos, townhouses and duplexes - maybe those are throwing off our understanding of PPSF. $121 = The average Price Per Square Foot for all detached homes sold in Harrisonburg and Rockingham County in 2018. OK -- it didn't change much -- but perhaps the middle aged homes and really old homes are throwing us off as well. $149 = The average Price Per Square Foot for all detached homes less than 10 years old that were sold in Harrisonburg and Rockingham County in 2018. So -- new-ish homes sold in the MLS have been selling at an average of $149 per square foot. Though I should point out that the price per square foot does run all the way up to $218 in this same set of sales. A 2400 SF home at $149/sf (including the land) would cost $357,600. That's using the PPSF from the MLS for detached homes built in the past ten years. But your builder is likely quoting you a price per square foot for just the house -- and not the land. So if a builder says they can build for $125/SF... As a final (important) disclaimer here -- I'm not a builder. Talk with your builder about how they price the homes that they build for their clients. Carefully weight the pros and cons (financially and otherwise) of building vs. buying. In the end, you'll probably be able to get a house that is a better fit for you if you build -- but it might be at a slight premium over the price you might pay for a re-sale home. | |
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2019 Harrisonburg Solar Census |
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 Do you have solar panels on your roof? (or elsewhere) Go fill out this form so that you can be included in the Harrisonburg Solar Census. The Harrisonburg Solar Census Project (HSCP) aims to tell the story of Harrisonburg's Solar energy generation. From family residential arrays to commercial scale installations, solar is growing: providing clean energy across our friendly city. This project aims to capture every single solar array in the city and tell the story in KWs, pictures, individual and business motivations, and more. Click around the map and see all the ways Harrisonburg is making energy right here in our own neighborhoods. The goal of this project is to county EVERY solar array in Harrisonburg -- and as the map shows, it also includes areas outside of the City. Again, if you're not on the map -- here's the form to fill out to take part in the 2019 Harrisonburg Solar Census. | |
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Turning $1K into $3K When Preparing Your House For Sale |
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 Sometimes, spending $1,000 on improvements to your home can be extraordinarily worthwhile -- providing you with $3,000 more in an eventual sales price! This isn't a formula for turning $1K into $3K for every would-be home seller -- but hopefully it's enough to get some helpful discussions started. Here are three types of improvements that can be very financially helpful to make to your home before listing it for sale... Renewing Improvements - Sometimes an improvement, such as pressure washing and staining a deck, can breathe new life into an outdoor space -- eliminating a buyer's concern that they will have to completely replace an element of a house. Another example of this would be gutters that are sagging and have peeling paint -- an easy fix (nails, sanding, paint) to breathe new life into them. These types of improvements can make a buyer more comfortable paying more for your home. Complicated Improvements - Some improvements or repairs to a home can seem overwhelming to a buyer, such as repairing a half dozen pieces of exterior siding on a variety of sides of a home. To a buyer, this seems complicated -- where will I get the siding, what if it doesn't match, how do I just replace one piece, etc., etc. If, before you list your home for sale, you hire a professional to take care of what is a relatively easy and inexpensive repair, you'll provide some relief to would be buyers - and they're likely to be willing to pay more for your home. Elevating Improvements - If you have a house that was built 30 years ago you might still have the original light fixtures (likely brass) throughout your home. You might be able to replace all of those fixtures with something more modern (brushed nickel, for example) and completely change the class or category or feel of your home. This type of improvement can elevate the feel of your home to make it feel younger, more modern, and potentially result in a higher sales price. There is not "one size fits all here" -- it starts with a conversation about which potential improvements to your home do and do not make sense to pursue. Let me know if you'd like to chat. | |
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Should All Possible Improvements Be Made To A House Before Listing It For Sale? |
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 Should All Possible Improvements Be Made To A House Before Listing It For Sale? Maybe, maybe not. Selling a house (from an over-simplified perspective) comes down to price, condition and marketing. When we first meet to discuss your house, one of the things we'll discuss is the current condition of your house and whether there are improvements, repairs or upgrades that could be made to better position your house to sell in the current market. So -- should you, as a seller, make ALL of the possible improvements to your house before we then list it for sale? It depends. Here are a few types of repairs that probably won't make sense to make... Slow Improvements -- If it will take 60 days to accomplish some of the items, it may not make sense to wait that long to list your home, depending on the current time of year, and what the particularly slow improvement is. Elective Improvements -- If some buyers will find a particular improvement or repair to be essential, but others could care less, then we probably won't want to spend the money (and time) to make that change to your house. Net Loss Improvements - Sometimes you can spend $500 to make a repair or improvement to your house to result in selling it for $2000 more. Sometimes a $500 repair or improvement won't increase the likely sales priced at all. Thus, many of these net loss improvements (cost more than the value increase they provide) will not make sense to pursue. In the end, it's complicated -- and it depends on the time of year, market dynamics in your price range, and many other factors. If you're getting ready to put your house on the market, don't slow down and blindly make ALL possible improvements, but also, don't expect that you won't have to make any. Let's meet to develop a game plan that makes sense in the current market and given your circumstances and priorities. | |
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Buyers Are Racing To Contract On New Listings In The City |
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 It seems it would be an understatement to say that there are a LOT of buyers looking to buy homes in the City of Harrisonburg. Thus far in 2019 buyers have contracted to buy 99 homes in the City of Harrisonburg. Here's how fast they did so...
So, yeah, homes are selling (going under contract) very, very quickly right now in the City of Harrisonburg! | |
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Updated Urban Development Area Shows Current, Proposed Developments |
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 Take a close look at the updated Urban Development Area map for updates on current and proposed developments in Rockingham County's "Urban Development Area" just southeast of the City of Harrisonburg. Completed Projects:
Construction Underway:
Construction Pending:
Under Review:
Download a PDF of the map here. | |
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Sales Slow, Prices Plateau, Contracts Console in First Quarter 2019 |
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 Just like that - the year is already more than 25% behind us. Looking back over home sales activity during the first quarter we find a mixed bag of market indicators. Before we delve in, two quick links...
Now, on to the data...  As shown above...
 The green rows above are showing sales activity for detached ("single family") properties. The orange rows are for attached properties - which includes duplexes, townhouses and condos.
 Here (above) is a visual of the not-so-exciting way that this year has begun when we look at monthly home sales compared to the same months in recent years. February home sales were the slowest out of the past four years - and January and March were the second slowest. So - clearly - a slow start to the year - but keep on reading for some news on contract activity.  The graph above explores long term (rolling 12 month periods) trends in home sales and prices. Over the past year we have seen sales start to trend slightly downward - while prices have trended slightly upwards. Nothing drastic in either direction, really, but those are the general directions we're seeing the market move. Of note - the rising prices shown above have more to do with a change in the mix of what properties are selling (more higher priced detached homes and fewer lower priced attached homes) more than an actual increase in values. As shown a bit ago (scroll up) the median sales price of detached homes has remained flat over the past year.  Here's a slightly more depressing view of value trends for detached homes. Over the past few years the increase in sales prices has been decreasing (+7%, +5%, +2%) and with data only from the first quarter of 2019, the median sales price has actually declined. I am guessing that we'll actually end up with a net gain in median sales price once all 2019 data is in the books, but for now, prices are appearing slightly soft when just viewing first quarter data.  But if you're selling an attached (duplex, townhouse, condo) property - the state of the market is looking promising! As shown above, the prices they just keep on rising. Part of this is likely a result of constrained supply (not enough new townhouses being built) amidst increasing demand. This is keeping sales prices on the rise and that doesn't show signs of stopping in the near term.  OK - hopefully you read this far - because here is the silver lining of the first quarter of our local housing market. Despite slower sales in the first quarter, contract activity was STRONG in March 2019. In fact -- it was the second strongest month of contract activity in the past 21 months! This should lead to strong months of closed sales in April and May, and hopefully this is just the beginning of a strong Spring and Summer of contracts being signed.  For the past few years I kept saying I didn't think inventory levels could drop any further. Well, they did, they have, and somehow the market keeps on moving. As shown above, despite a monthly increase in inventory levels between the end of February and end of March, we have seen another year-over-year decline in the number of homes on the market. Unless we see a significant growth in new construction in this area, these low inventory levels are likely to remain the norm for the next few years.  And here's a bit of trivia for you -- the fastest growing price segment of our local housing market is --> the $200K - $300K price range. There has been a 19% increase in sales of homes between $200K and $300K, which is the largest increase of any of the price categories shown above.  What brought on the strong surge of contract activity in March 2019? Could it be the sudden drop in mortgage interest rates, down to an average of 4.06%? Probably not just that -- it was likely also a surge in new listings combined with anxious buyers who had seen very few options over the winter months. But the low mortgage interest rates likely helped and were an added bonus to anyone making a decision to commit to a home purchase during March 2019. Well, folks, that's a wrap. You read to the end of my overview of our local housing market. You can delve into even more details by downloading a PDF of the full report here. And as always, if you have questions about our local housing market feel free to be in touch. My guidance to local soon-to-be home buyers and sellers remains consistent... SELLERS -- even though it is a seller's market in just about every price ranges right now, you must still focus on price, condition and marketing. For further reading on buying or selling in this area, check out.... | |
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
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Commonwealth of Virginia
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