As I expressed some time ago, my hope for the 2009 Harrisonburg and Rockingham County real estate market is that we would see the end of the ever-decreasing number of home sales in our market.  We have seen (approximately) a 25% decrease in number of sales between 2006-2007, 2007-2008, and 2008-2009.

Lot sales, however are doing much worse!



In the first four months of this year (2009), In all of Harrisonburg and Rockingham County, there have only been 11 lot transfers of less than one acre. 

The home pictured below, located at 115 West College Street in Bridgewater came on the market about two weeks ago.  Within a week we had 9 showings and 2 offers, one of which was negotiated and accepted.



But wait --- how could this be?!??  I thought sales were dreadfully slow right now in Harrisonburg and Rockingham County!??

Indeed --- home sales are quite slow right now compared to the past several years, but buyers are still buying, and some are moving quickly!

What were the secrets to the success of the sale of this home?

1. Great location (College Street in Bridgewater)
   
2. Great house inside & out (historic, unique, spacious, yard)
3. Price range with limited supply (sub $225k in Bridgewater)
4. Home improvements / decoration / staging
5. Proper pricing (not overly aggressive)
6. Marketing to best showcase the house.

Can this happen with your home too??  It's possible --- but as I mentioned a few days ago, one of the most difficult questions to answer in our current real estate market is how long it will take for a home to sell.  Since some of the factors above can be influenced (location, supply within price range, etc), here are the things we can focus on...

1. Make repairs and improvements to minimize buyer objections and to entice buyer interest.
2. Thoroughly analyze your segment of the market to appropriately price your home.
3. Use top-notch photos to market the home.
4. Create a compelling and highly informative brochure for drive-by prospects to take with them.
5. Make your home as accessible as possible by being flexible with showing appointments.

These are just a few things that can be done to sell your home as quickly and most effectively as possible.  These ideas and lists, however, are some generic ideas that don't account for the individual and unique nature of your home.  Every home ought to be marketed slightly differently depending on the factors and variables that make it compelling to buyers.

Feel free to get in touch if you'd like to discuss how to best market your home to sell.

Interest rates for a typical 30-year loan have never been better --- since they started being recorded in 1970.  They're hovering just below 5% right now --- could they go lower?

Of note --- rates for the purchase of an investment property may be as low as 5.25% on a 30-year fixed rate mortgage.  This was a quote from Debbie Huntley (540-568-1056) at SunTrust Mortgage yesterday (4/24/2009).

One of the most difficult questions to answer in our current real estate market is how long it will take for a home to sell.  The data below will start to shed some light on what you might expect, but there are still many variables that could make your property sell very quickly or very slowly.

This chart analyzes all homes sold in Harrisonburg and Rockingham County in the past six months, and attempts to provide more meaning to the "Days on Market" metric than I typically provide in my market reports.  Many thanks to Liz (who suggested a histogram format) and Tisha (who suggested breaking it down by price range).



Several observations can be made based on this analysis...

1. The sole days on market indicator I had been using (average = 183 days on market) is woefully inadequate for describing how long it is taking homes to sell.
    
   
2. Price is a huge factor --- homes that sell below $200k take (on average) 5 months to sell.  Homes that sell above $400k take (on average) 10 months to sell!
    
   
3. Of the homes that sold in the past six months, 31% of the homes that sold above $400k took more than a year to sell.  In contrast, only 3% of homes that sold below $200k took more than a year to sell.
    
   
4. Amazingly, one-third of homes that sold below $200k closed within 90 days.  In contrast to that, only one-tenth of the homes that sold above $400k closed within 90 days.
   

Before listing your home for sale, it can be helpful to look at days on market data for homes in the geographic area and/or price range of your home.  It won't always provide clear-cut guidance for you, but it may help further refine your expectations.

Things may be picking up in the Bridgewater real estate market according to observers on the Bridgewater Buzz --- not to mention that my new listing in Bridgewater went under contract in less than a week (with two offers). With all that excitement, let's take a moment to look at the last two years of the Bridgewater real estate market.



A few broad generalizations that can be made include:

1. When comparing 2007 and 2008, the real estate market slow down that was seen across the country affected Bridgewater a bit more than the county at large.
2. While home values (according to median and average numbers) stayed steady between 2007 and 2008 in the County, they may have slipped slightly in the Bridgewater area.  The average sales price is unchanged, but the median sales price is down 9%.
3. Homes in Bridgewater continue to sell faster than in Harrisonburg and Rockingham County at large, even though it took a little longer to sell homes in 2008 as opposed to 2007.

A few other interesting facts about the the homes that are selling in Bridgewater, when examining sales from Jan 1 '08 to the present:

1. Homes sold in Bridgewater were of an average age of 34.5 years, with 12 homes built since 2000, 12 homes built in the 80's or 90's, 15 homes built in the 60's or 70's, 6 homes built between 1900 and 1950, and 3 homes built in the 1800's!
2. Homes sold in Bridgewater had an average square footage of 1932 square feet.  Of these, 19 had less than 1500 square feet, 17 were have between 1500 and 2500 square feet, and 12 were larger than 2500 square feet.
3. Homes sold in Bridgewater are built on average of a third acre.  12 homes are on less than a quarter acre, 9 homes are on a half acre are more.

If you are looking to buy a home in Bridgewater, you currently have 39 choices, though only 6 are less than $200k, and 8 are over $500k!  Click here to view these 39 homes  The link expires in 14 days, so if it's past May 2, 2009 call (540-578-0102) or e-mail (scott@cbfunkhouser.com) me for a new list of properties for sale in Bridgewater.

A recent comment from my blog raises a great question:

"Statistical analyses always report "average days on market." As a buyer, I am wondering what a histogram of days on market for houses sold in the last 6 months looks like. In other words, how many houses sold within 1 week? 1 month? 6 months? How many took an entire year to sell?"

As this reader points out, I typically only report the average days on market, which isn't very helpful.  So, let's take a look at what we'll find when viewing the last six months of home sales in Harrisonburg and Rockingham County...


   Click on the chart above (or here) for a printable PDF.

As you can see, there are still quite a few homes selling within the first few months of being on the market (94 homes) --- but there are a LOT that are taking a VERY long time to sell.  There were 59 homes in Harrisonburg and Rockingham County that took more than a year to sell, with 30 of those taking more than two years!

Hopefully this sheds a bit more light on the time it takes to sell a home in Harrisonburg or Rockingham County.  A more detailed analysis of the days on market of your property type, location, price range, etc. is bound to be even more helpful for you.  Let me know if I can assist.

Get up close and personal (thanks to unanticipated loud construction equipment) with Harrisonburg mayor Kai Degner, and hear about the upcoming Mayor's Sustainability Summit to be held in downtown Harrisonburg.



As Kai mentioned, the agenda for the Summit will be formed around the interests and desires of those in attendance, but may likely include topics such as:

• renewable energy
• local foods
• preparing for a post peak-oil world
• green space
• bike share programs
• energy conservation initiatives
• climate change

Kai's theory is that the first step towards making any of these large scale community changes is to create dialogue in our local community.  It is bound to be a fun and thought-provoking day.  Mark it on your calendar....

Mayor's Sustainability Summit
Saturday, May 30, 2009
9:00 a.m. - 5:00 p.m.
Starting and ending in Court Square Theater
View more details by clicking here.

As can be seen below, home values across the U.S. have declined sharply over the past three years, after a sharp increase over the preceding years.  (Source: OFHEO)



In Harrisonburg and Rockingham County, however, we saw an increase in home values between 2003 and 2006, but we have not seen a comparable decrease between 2006 and 2009.  (Source: HRAR MLS)



One of my blog readers (who has a Ph.D. in Assessment and Measurement) wonders whether we will see a decline in home values in Harrisonburg and Rockingham County because of a principle called "Regression to the Mean".  This principle suggests that over time things (scores, prices, etc) revert back to the mean. 

Let's use this concept to examine what might happen to home values in our area.  Using OFHEO data, we see that home values across the entire United States have increased (on average) four percent per year since 1991.



A few notes on the graph above, where the blue line shows actual home prices and the purple line shows a 4% per year increase in prices. 

1. The increase between 1991 and 2001 is almost exactly 4% per year.
2. The increase in between 2001 and 2007 were significantly higher than 4%.
3. Declines since 2007 have brought the net 2001 to 2009 increase to 4% per year (the lines cross again in November 2008).
   

The graph above suggests that prices (nationally) are now at a reasonable level, though many believe that prices will have to decline further (nationally) before they'll start increasing again.

The graph below shows local median home price changes (since 2000) in green, with a the 4% per year increase shown with a purple line.



From the graph above we can see that since we haven't seen a sharp decline in prices in Harrisonburg and Rockingham County, that the actual median home price is still significantly above what it "should" be based on a 4% per year increase beginning in 2000.



If we go along with the theory that home prices locally will regress to the mean, there are several ways that it might happen.  The graph above shows what it might look like to return to the mean (of a 4% per year increase) --- if it happens by 2010 (sharp decline) vs. 2011 (moderate decline) vs. 2012 (no decline, or gain).

Again, please note that the idea that we must return to this mean is not carved in stone.  It is a mathematical principal that some people believe has applies to the housing market.  Below is one final graph to leave you feeling a bit more hopeful...



The red line above shows how we could see a steady (slow!) increase in home values every year from 2009 forward and still adhere to the principle of regressing to the mean. 

The yellow line above flies in the face of regressing to the mean, and shows a return to the 4% per year increase starting from today's home prices independent from any (real or imaginary) need to regress to the historical mean.

Some of my references as I researched and wrote this post were:

• Wikipedia: Regression toward the mean
• Housing: What Does "Return to Mean" Really Mean?
• S&P Regression to Trend
• Office of Federal Housing Enterprise Oversight
  

Click here to view a PDF of this entire report.  Enjoy!



The pace of home sales in Harrisonburg and Rockingham County continues to decline --- with a 25% drop in sales pace when comparing Jan-Mar 2009 to the same time frame last year.  Home values, however, seem to be holding relatively steady despite this drop in sales activity.  Median home prices have dropped 5% since last year and average home prices have increased 1%.

The next three months will be indicative of the overall health of our market, as we should see an increase in home sales as a result of seasonal trends, historically low interest rates, and the $8,000 first time buyer tax credit.

Given this information, sellers should price their homes carefully, market them aggressively, and be flexible within reason when it comes to negotiating a contract.

Buyers in our current market should look for good opportunities to buy at a reasonable price, but likely won't find too many opportunities to buy at a significant discount.  If we start to see a more significant decrease in average or median home sales prices, buyers will be able to negotiate more effectively.



Home sales in March 2009 (57) were decidedly slower than last March (92) -- a bit of a surprise after an exceptionally strong month of sales in February 2009.  We will likely still see an increase in sales over the next four months (as we see each year at this time) but we will have to wait to see whether we can match last year's overall sales pace --- I am optimistic that we will be able to, given the $8,000 first time buyer tax credit.



This graph shows a normalized trend of home sales by charting the ongoing sum of the preceding 12 months' sales.  The drop we see this month is a result of March 2009 sales being markedly lower than March 2008 sales. 



Active inventory continues to rapidly increase, likely as a result of homeowners' anticipation of more buyers in the spring/summer market.  This continued increase, however, will not help bring our market back into a balance between buyers and sellers.



Unfortunately, the increased inventory of homes on the market over the past several months has not been matched by a corresponding increase in sales.  Thus, the number of months of supply has started to increase again in all price ranges.



This graph captures all residential real estate activity as reflected in the Harrisonburg/Rockingham Multiple Listing Services.  The 2009 year-to-date sales figures now include three months of sales data, and show only a slight decline in median sales prices.  This is good, however, the pace of sales continues to decline.



When examining only single family home sales in Harrisonburg and Rockingham County we see a slight increase in median sales price, though this median sales price has not had a significant net increase or decrease since 2006.  During the same time, the sales pace has decreased drastically -- 28% between 2006 and 2008.



Sales of townhomes in Harrisonburg and Rockingham County continue to slow, though median sales prices continue to stay relatively steady.  We have seen an amazing 56% decline in townhome sales between 2005 and 2008 --- with even more of a decline likely to be evident by the end of 2009.



Examining the median price per square foot of sold single family homes in Harrisonburg and Rockingham County reveals a gradual (small) decline in home values (as defined by this metric) between 2006-Q3 and 2008-Q4.  Over the past three months, however we have started to see an increase again.

Click here to for a printable PDF of this entire report.

Our company (Coldwell Banker Funkhouser Realtors) is conducting a real estate survey.  Complete the survey and you'll be entered into a drawing for $300 cash!

I had suspected that the $8,000 tax credit for first time home buyers would get some buyers off the sidelines --- but I never expected that to happen so quickly, and at such an enormous scale.

My complete March 2009 real estate market report will be available in a few more days, but I couldn't wait to share the good news when I ran some preliminary reports on March 2009 sales.



As shown in the graph above, there were 158 home sales in Harrisonburg and Rockingham County during March 2009 --- more than we have ever seen in any March since at least 2005.  Mortgage companies, title companies and closing attorneys were slammed trying to keep up with the pace of the market this past month.

Again, I'll have my full monthly market report out in a few days, but until then please spread the good news about our local real estate market, oh yes, and April Fools!