Welcome! This blog tracks the real estate market in the Central Shenandoah Valley, featuring market data and analysis, an exploration of common buying and selling questions, and candid commentary on all things real estate.
If you are interested in discussing any of the topics on this blog, or the details of your specific real estate situation, call or e-mail me!
Here's an interesting report from NPR telling the story of an employee of Freddie Mac who manages an online calculator that has (intentionally or unintentionally) been telling web users that home values will only go up!
Read more from NPR: Housing Guy Apologizes For Housing Bubble
It is interesting --- I do wish home values would only go up --- and during most years values do increase. The last few years, however, have not held that promised increase.
That said, it depends on the time horizon that you consider. First, the year to year bad news -- home values decreased for 4 out of the past 10 years. That is to say that the first six years of the decade showed an increase ('01, '02, '03, '04, '05, '06) but the most recent four years have shown a decrease ('07, '08, '09, '10).
But here's an interesting cumulative look at the value of a $200,000 home purchased in 2000:
We've had a turbulent real estate market over the past several years, and one of my clients was wondering if all property types had weathered the storm similarly. More specifically, the question was raised of whether split foyers or ranches typically held their value better. Let's take a look....
As you'll see above, both split foyers and ranches have seen a decline in sales over the past (almost) five years.
The median sales price of both home styles have declined since 2006.
Finally, examining the time it takes to sell each type of home (average days on market) we find that there used to be a difference in how long it took to see each type of home, but there is not any longer.
Finally, let's examine the supply of each type of home.
Buyers, please remember.... This information can be wisely understood to mean both that you should and that you should not buy a split foyer (or a ranch).
Please Note: The 2010 figures above are based on sales from 1/1/2010 - 10/20/2010. Additionally, the "split foyer" data includes split foyers, split 3-level homes and split 4-level homes.
It really depends on how you measure housing supply. Here's the graph I include in my monthly market report....
This graph (above) shows the number of months of supply in four price ranges. This value is calculated by comparing the number of homes for sale in a particular price range with average number of home sales in that price range over the past 12 months. Thus, if over the past year there were 120 home sales in one of these price ranges, that would be 10 sales per month; if 130 homes are for sale, that would be 13 months of supply. This means it would take 13 months to sell all of the active listings if buyers kept buying at the same pace as had occurred over the past 12 months.
But let's examine the market overall using this same calculation....
Removing the price ranges from the equation, you can see that the number of months it would take for all listings to sell has shifted upwards from 11 months to 15 months. It is interesting to see (in the graph above) how supply trended down approaching November 30, 2009 (anticipated deadline for home buyer tax break) and then again approaching June 30, 2010 (actual deadline for home buyer tax break). This would suggest that the tax credits helped our market, even if for a short while.
You'll note (especially compared the graph below) that the graph above shows a relatively smooth trend line -- without significant increases or decreases. This is a result of comparing each month's inventory of homes for sale to the average number of homes sold per month over a 12 month period. If we compared active listings each month to the number of homes sold in that one particular month, we'd get different results....
This graph (above) compares active inventory to one month of home sales. Thus, the number of months of supply can change dramatically from month to month and season to season. Spikes in home sales will result in low months-of-supply figures --- this phenomenon can be seen in November 2009 and June 2010.
So, help me determine which graph I'll use going forward. Leave a comment below, or e-mail me at scott@HarrisonburgHousingToday.com and let me know which graph(s) above are the most helpful for you.
Yesterday I discussed that when the real estate market improves all homes will increase in value. Thus, holding out to sell your current home for a higher price won't do you any good -- as you'll then also have to pay more for the house you are buying.
But let's flip that on it's head....when the market is getting worse, do all ships sink at the same rate? I'd suggest that some sink faster than others, and that they sink deeper than others, for example:
This is primarily the result of the high inventory levels that almost always exist in times of slower market activity. A few years ago, being located on a busy road might have only equated as a $5k price difference because buyers didn't have many houses from which to choose. Now, however, when buyers have LOTS of houses from which to choose, most buyers will look past the house on the busy road, instead choosing a house within a neighborhood.
More choices for buyers means that houses with significant "issue" (see bullet points above) will sit longer and longer on the market, and sell for less than you would expect them to sell for, given their other characteristics.
It is said that a rising tide lifts all boats. Apparently, there are some larger political or economic meanings to the concept, but for today we'll just consider it within the context of the local real estate market.
"You see -- if we wait until later to sell your house, you'll be able to sell it at a higher price -- but the owners of the house that you want to buy will also be able to demand a higher price for their home!"
The rising tide lifts all boats!
Put another way, it's o.k. to sell low in a tough market, as long as you are also buying low in that same tough market. This is especially important to remember given today's low interest rates. Let's compare buying now versus buying later....
If you haven't stopped by Founders Way yet to see these newly finished condominiums, you might want to considering doing so this coming weekend during the SVBA Parade of Homes. Founders Way won several awards including Realtors Choice, Best Interior, Best Exterior and Best Overall.
But let's give Founders Way some context.... There are lots of townhouses for sale in Harrisonburg priced around $160k, with 1300-1400 square feet. The condos at Founders Way are similar ($160k, 1300-1400 SF) but they have some significant differences.
For more information, visit FoundersWay.com or call me at 540-578-0102 to schedule a time to look at this very new and very exciting product in our market.
Below are several highlights from the October 2010 Harrisonburg & Rockingham County Real Estate Market Report. Read on, or click here to download a PDF of the entire report.
As you'll note above, there were very few home sales in September 2010. In fact, there were very few home sales in in July, August and September! That was, however, after very high home sales in April and June. Thus, it would seem that the home buyer tax credit certainly rearranged the timing of 2010 home sales, regardless of whether it brought new buyers into the market nor not. The question now, of course, is how many of the October, November and December closings were borrowed by the first half of 2010.
After multiple years of a declining sales pace, the graph above shows that we were finally seeing a reversal for the first six months of this year. However, the past three months of slow sales has turned us back around into a declining market again. The fourth quarter of 2010 will be quite indicative as to a reasonable 2011 forecast.
Please note, above, the silver lining. Despite a lower than normal number of closings in September 2010 -- the buyers were out yet again, contracting to buy real estate. In fact, with 74 properties going under contract, buyers in our market outpaced the past two Septembers. This should be a good indicator for the coming months.
Above you'll see a decade-long comparison of two imprecise measures. The blue bars show the number of home sales recorded in the HRAR MLS -- this does not include private sales (sans Realtor), and some new home sales. The yellow bars show the number of Trustee Deeds recorded during each of the past 10+ years. Some of these foreclosed properties (203 in 2010) then show up in the blue bar when they are listed and then sold as bank owned properties. It would seem that foreclosures have increased nearly four-fold over the past ten years, and now make up somewhere between 15% and 26% of all home sales.
My full market report (click above -- or here -- for a 20 page PDF) includes LOTS more analysis to help you make informed real estate decisions. Read through it and let me know if you have any questions, or if any additional information would be helpful to you.
You can contact me (nearly) anytime at 540-578-0102 or scott@HarrisonburgHousingToday.com.
In Virginia, each newly constructed home must convey to the purchaser with a warranty from the builder, as outlined in the Virginia statute (55-70.1) entitled Implied warranties on new homes. In brief, the builder must warrant the construction of the house for one year, and the foundation for five years.
One important thing to note, however, is that this required warranty on new homes does not apply if you first buy a lot and then hire a builder. Here's the first section of the statute that speaks to this:
"In every contract for the sale of a new dwelling, the vendor shall be held to warrant to the vendee that, at the time of the transfer of record title or the vendee's taking possession, whichever occurs first, the dwelling with all its fixtures is, to the best of the actual knowledge of the vendor or his agents, sufficiently (i) free from structural defects, so as to pass without objection in the trade, and (ii) constructed in a workmanlike manner, so as to pass without objection in the trade."
The issue, you'll note above, is that if you hire a contractor to build a house on your own lot, you are not in a contract for the sale of a new dwelling. There will not be a conveyance of real estate -- title will not transfer -- you already own the real estate and are hiring someone to improve it.
From talking to a local real estate attorney, there are likely still construction quality expectations of builders of new homes when you have contracted with them to build on your own lot --- but those are are not neatly summed up in a statute. They are, instead, a part of the "common law" --- the aggregation of laws as defined by judges making rulings about such matters over the years.
Click here to learn more about the Virginia one year new home warranty.
An Associate Press story printed in the Daily News Record a few days ago....
The beginning of the article references an increase in prices in July as shown by the Case Schiller index. So, will home values fall here in Harrisonburg and Rockingham County as is suggested in the article might happen in many markets? Let's take a look at the support for their theory that values will fall.....
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Cottages @ Stone Spring
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Potential Short Sales
Recent Price Changes
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