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!
If you are in the market to buy a home, some of the properties you might be considering are foreclosures – but there are some distinctions to be aware of at different stages of the foreclosure process. It is possible to buy a home from the owner before they are foreclosed on even if they cannot pay off their mortgage – this is called a short sale. Or, you might buy a property at the courthouse steps when it is being auctioned – this is called a trustee sale. Finally, if a property does not sell at the auction, you can buy the property from the lender after they have taken ownership of the property – this is called a bank owned property or REO property.
Short Sales: Some homeowners must sell their home, but market conditions won't allow them to sell it at a high enough price to be able to pay off their mortgage(s). In this example, a homeowner might have a $250,000 mortgage balance but can only sell the property for $230,000. As a prospective buyer, it is sometimes possible to purchase this type of a property through a process called a "short sale." In such an arrangement, the homeowner petitions their lender to accept less than the full payoff of the mortgage and in return to still release the deed of trust so that ownership of the property can be transferred over to you, the new owner. This can benefit the lender, as they skip the time delays and cost of the foreclosure process. This can also benefit the homeowner, as a short sale will have a slightly lesser negative impact on their credit as compared to a foreclosure. As a buyer, however, you must know that there are challenges to buying a property as a short sale. The biggest challenges of late seem to be the uncertainty of the purchase and the time table. Even if you and the homeowner agree to a price of $230,000, the homeowner's lender must still agree to accept that price – since it won't allow the homeowner to pay off their $250,000 mortgage balance in full. This process of waiting to hear back from a lender, and then complying with all of their various terms can sometimes take 60 to 120 days – or longer!
Trustee Sales: If a short sale does not take place, and a homeowner is behind on their payments (or not making them at all), eventually the property will be sold by the lender on the courthouse steps. Buying a property at a "trustee sale" can be exciting, and can be a great opportunity – but there are challenges as well. If a property to be sold at a trustee sale is also listed for sale with a Realtor, you can usually view the property ahead of time by calling your Realtor. Otherwise, you will likely not have the opportunity to see inside the property before the trustee sale, and thus you will not know too many details about the condition of the property. Furthermore, your purchase of the property at the trustee sale cannot be contingent upon viewing the property, or inspecting the property. In this instance, you are purchasing the property in "as is" condition, regardless of what you then find out about the property. It is also important to note that many times the lender will have an opening bid at the trustee sale that is close to (or sometimes higher than) the amount that they are still owed on the mortgage. Thus, in the example above, they might make an opening bid of $250,000. As a result of this opening bid process, many (or most) properties available for purchase at a trustee sale are not great opportunities. Occasionally, a property will be foreclosed upon that has had a mortgage in place for many years, whereby the balance of the mortgage is much lower than current market value – these are great opportunities for a buyer.
Bank Owned Properties: If you don't buy the property before the auction (as a short sale), and don't buy it at the trustee sale, you'll have a third opportunity to buy it once the bank owns it. These properties are called "bank owned properties" or REO properties ("real estate owned"). Oftentimes, the prices on these properties are quite realistic, if not under market value. It would not be atypical for a house such as the one mentioned above to come on the market after the trustee sale at a price of $210,000. In such an instance, you should expect to be buying the property in "as is" condition, and you will also be buying with a slightly different contract document. Most lenders have a long standard contract or contract addendum that spell out a variety of additional contract terms designed to protect them from any future liability – and rarely will a lender agree to have these contract documents changed in any way. As you can see above, oftentimes buying the property as an REO property is where the best opportunity lies.
When a home goes into foreclosure it is often for very sad and unfortunate reasons – such as the loss of a job – and I do not wish such circumstances on any homeowner. However, if you are a buyer in today's market it is important to be familiar with different methods for buying a property when it will be, is being, or has been foreclosed upon.
For information about upcoming trustee sales, please refer to HarrisonburgForeclosures.com.
For information about purchasing a property as a short sale, or purchasing a bank owned property, please e-mail me at scott@HarrisonburgHousingToday.com or call me at 540-578-0102.
In a lot of ways, they are --- but it's not as extreme as you might think.
After observing several houses go under contract at fantastic prices I was pondering aloud that it seemed that finding the right price would make buyers appear . . . because you'd be offering them a great deal.
That prompted someone to ask me about current price per square foot prices for houses --- and whether buyers were getting great deals these days. Thinking about one of the houses that had recently gone under contract, I commented that yes, houses are DEFINITELY selling at GREAT price per square foot rates.
That will teach me to make a broad statement based on one or two data points. This evening I dove into the data to take a closer look --- and to confirm what I was quite sure to be true.
To get the best possible sense of the deals buyers are getting these days on a price per square foot basis, I decided to narrow down the sold properties I was examining. If I examined all properties of a variety of sizes and ages, there would be so many variables at play that it would be hard to draw any conclusions. Here's how I limited my two sample sets of data:
My second data set examined homes matching the same criteria that sold during 2010 -- there were 35 such homes, and they sold at an average of $111/sf.
Hmmmmm......$4/sf better than a year ago.....is that a great deal for a buyer? That provides a $8,000 savings on a 2,000 square foot house. Instead of buying the house for $230k (in 2009) you'd have paid $222k (in 2010). That doesn't seem like an extraordinary cost savings to buyers --- so perhaps in the aggregate buyers aren't getting amazing deals now (compared to a year ago), even though they are getting slightly better deals.
Examined one other way, 26% of these houses sold for less than $100/sf in 2009......and in 2010, 29% sold for less than $100/sf.
So, it seems that while there are some isolated AMAZING DEALS in the current real estate market, you probably won't be able to get a FANTASTIC DEAL on EVERY house that's out there.
But, of course, every seller trying to sell their house right now would like me to remind you that:
I say yes --- but do bear in mind, I've thought this a few times before.
I recently realized that the overall trend I examine in my market report each month (total number of residential sales) might not be the best indicator of what is taking place in our residential real estate market. That overall trend, you see, not only includes single family (detached) homes, but also includes townhomes and condos. At least some number of townhomes and condos are investment properties, and thus that segment of the market can look better or worse than the more traditional "I'm buying a house to live in it" segment of the residential market. For that reason, I believe that we will likely get a better sense of the health of the residential (I'm buying a house to live in it) market by examining only single family home sales.
And with that preface aside, here's what we find.....
As you can see, there were steady declines in the single family home market from 2005 through 2009 (-11%, -12%, -18%, -14%). That steady decline, however, slowed down significantly between 2009 and 2010 (-1%). That is a wonderful sign that the residential real estate market may truly be stabilizing.
So, what are my predictions for 2011? I don't think we will see any more than a 2% decline in single family (detached) home sales --- as shown (approximately) with the red line. I also, however, don't think we will see any more than a 2% increase in single family (detached) home sales --- as shown (approximately) with the green line.
After five years of a declining residential real estate market in Harrisonburg and Rockingham County, I think we might finally be poised to see an increase in sales activity.
The Associate Press (AP) story below ran a few weeks ago in the Daily News Record. AP stories often don't reflect market realities here in Harrisonburg and Rockingham County, so I must admit I didn't really believe it to be true in our local area.
This headline came to mind again, however, when I was analyzing the 47 properties to go under contract in Harrisonburg and Rockingham County thus far in 2011. Each statistic below speaks to the types of properties that are actually selling these days, and the types of buyers that are actually buying.
Of the 47 properties that have gone under contract thus far in 2011....
Let's take a bit of a closer look at lot sale in Harrisonburg and Rockingham County --- first, with a more visual look at the 2010 sales figures I reported a few days ago.
A few notes:
A few notes:
One of my clients forwarded me a great article from the Wall Street Journal that you might have interest in reading.... Real Estate: Finally a Good Investment? (Smart Money / The Wall Street Journal)
The article has four premises for concluding that real estate might finally be a good investment, all of which seem reasonable to me:
Click here to take a quick read --- and let me know what you think.
Per a Trustee Sale advertised in today's Daily News Record (view ad), the bulk of the Preston Lake subdivision may be headed to foreclosure. This doesn't necessarily mean that the foreclosure sale will take place, but this is a significant step in that direction.
Preston Lake is Harrisonburg and Rockingham County's first master planned community, intended to include nearly 500 townhomes and single family homes, a large section of retail stores with a main street appearance, and many amenities such as a community center, soccer fields, swimming pool, and more.
Main Street renderings
Amenities at Preston Lake
Now, however, all of those plans may be coming to an end, at least for now. On February 3rd at 12:00 p.m., 124.693 acres of Preston Lake is scheduled to be auctioned at the Rockingham County Circuit Court. Please note that an advertised trustee sale (all that has happened thus far) does not necessarily mean that the foreclosure process will take place.
This wasn't the first sign of trouble for Preston Lake, as the developer of Preston Lake and its lender (Wachovia) have been in the midst of legal proceedings for almost a year now, as described in the Mar 2, 2010 article from the Daily News Record:
Preston Lake Homes and its developer, the Hine Group, filed claims against Wachovia in Rockingham County Circuit Court on Dec. 11 for breaking its loan contracts, according to the lawsuit. Preston Lake is seeking $32.4 million in damages for lost profit.
Wachovia filed a counterclaim in U.S. District Court in Harrisonburg on Dec. 29. The Charlotte, N.C.-based bank is suing Preston Lake for $15.6 million in outstanding debt.
While it was happening quite slowly, residential construction at Preston Lake had been continuing even over the past year. Since the first closing in 2008, there have been 37 sales at Preston Lake recorded in the HRAR MLS, ranging from $318k to $883k, with a median price of $421k. Three of these sales took place as recently as the fourth quarter of 2010.
Today, only four properties are being marketed for sale at Preston Lake per the HRAR MLS -- three are resale properties, and one is being sold by the developer. (view active listings at Preston Lake)
A few notes about the foreclosure sale:
The pace of lot sales (of less than an acre) has declined significantly in Harrisonburg and Rockingham County over the past several years, from a high of 408 lot sales in 2004 down to only 58 lot sales in 2009. We did see a slight increase in 2010, up to 63 lot sales.
So where were these 63 lots that sold in Harrisonburg and Rockingham County during 2010?
BELMONT ESTATES: (4) lot sales between $74k and $90k
view active listings in Belmont Estates
BLUE STONE HILLS: (1) lot sale at $51k
view active listings in Blue Stone Hills
CROSSROADS FARM: (6) lot sales between $80k and $155k
view active listings in Crossroads Farm
GREAT OAKS: (1) lot sale at $65k
view active listings in Great Oaks
HARMONY HEIGHTS: (1) lot sale at $86k
view active listings in Harmony Heights
LAKE POINTE: (1) lot sale at $68k
view active listings in Lake Pointe
MAGNOLIA RIDGE: (12) lot sales between $55k and $84k
view active listings in Magnolia Ridge
MASSANUTTEN RESORT: (6) lot sales between $10k and $32k
view active listings in Massanutten Resort
MEADOWBROOK: (1) lot sale at $61k
view active listings in Meadowbrook
MONTE VISTA ESTATES: (1) lot sale at $80k
view active listings in Monte Vista Estates
OVERBROOK: (2) lot sales at $60k
view active listings in Overbrook
STONE SPRING MANOR: (4) lot sales between $29k and $39k
view active listings in Stone Spring Manor
THE CROSSINGS: (3) lot sales between $50k and $55k
view active listings in The Crossings
WOODBRIDGE: (2) lot sales between $37k and $50k
view active listings in Woodbridge
There were several other lot sales during 2010, that were not in subdivisions. Let me know if you have any questions about the building lot market in Harrisonburg and Rockingham County.
In a somewhat turbulent real estate market, it is often difficult for a seller to determine an appropriate list price. Many sellers are certainly trying to find it....
148 of the 802 active residential listings in Harrisonburg and Rockingham County have seen a price change in the past 60 days.
So, what does it take? Is there a magical number, below which a house will instantly sell? Sometimes there is!
A house that has been listed with our company for over a year has seen quite a few price reductions, but the most recent change in price (-$20,000) apparently brought it to a price where it was much more marketable! After over a year without an offer, there were four offers on this property within a 10 day period!
That house is now, thankfully, under contract --- though two of the hopeful buyers each increased their offers to fight it out for the opportunity to buy this now very well priced home.
Reducing (and reducing, and reducing) the list price of a home until it sells won't always work -- but in a decent number of cases, if you really do want to or need to sell, getting below a certain price point can all of a sudden create a flood of buyer interest.
Follow this "months of supply" logic with me....
Remember....30 houses for sale, 3 houses sell per months, so it probably looks like this....
Do you believe it? It doesn't really work that way. Here's the problem (for sellers) --- each month when three houses sell (go under contract), they will always almost be replaced by another three new listings. Thus, every month the odds are the same (roughly) --- there will again be 30 houses for buyers to choose from, and only 3 houses will be chosen.
It then becomes clear that some houses will NOT be chosen, month after month. Again and again, a house will be a part of the 27 instead of a part of the 3. Thus, if 10 months of housing supply exists in a particular market segment, and a house has been on the market for 11 months, it isn't necessarily a terrible house --- it just has not been able to rise to the top 10% during any of the past 11 months.
That, then, is an interesting object lesson for sellers. What do you need to do (with marketing, price, etc) to be in the top 10% of the houses for sale? Settling for being in the top 30% might not work so well for youIf the top 10% keeps selling, and new listings keep landing in the top 10% --- your "top 30% house" could sit on the market for month after month.
Full Disclosure: I represent the developer of Founders Way.
Harrisonburg home buyers haven't had too many condo options to choose from in the recent past if they actually wanted to live in the condo....
Now, however, there is a new option in town --- Founders Way Condominiums. The condos at Founders Way feature 2 or 3 bedrooms, and start at only $142,900 (see all pricing). These newly built condos feature upscale kitchens, an open floor plan and spacious master suites -- think hardwood laminate floors, granite countertops, contemporary lighting fixtures, nine foot ceilings, decorative archways and colonnades, etc.
Oh, and quite a few of these new condos are selling! The community will eventually consist of 72 condos -- but for now the first building of 12 has been constructed, and the condos are at various stages of completion. Of the twelve condos in the first building at Founders Way....
Let me know if you'd like a tour of Founders Way --- I'd be happy to meet you on site. You can reach me at 540-578-0102 or scott@HarrisonburgHousingToday.com.
In a group discussion this morning about the Harrisonburg real estate market, someone wondered allowed about how the Charlottesville real estate market compared to Harrisonburg and Rockingham County over the past several years. Let's take a look, pulling from:
As you can see (above) the Charlottesville Area has not had as much of a decline in market activity (-39% since 2006) as we have seen in Harrisonburg and Rockingham County (-47% since 2006). Furthermore, the market activity in the Charlottesville area is closer to leveling out (only a 1.5% drop in the last year) as compared to Harrisonburg and Rockingham County (7.1% drop in the last year).
As for median prices, the Charlottesville area fell further (12% drop from the peak to the trough) compared to Harrisonburg and Rockingham County (8% drop from peak to trough) --- however, the Charlottesville area (perhaps because of a faster price drop) has already started to see an increase in median prices (1% increase since last year) while Harrisonburg and Rockingham County continue to slowly decline (3% decrease since last year).
Despite the drastic differences in sales volume and median prices, the two markets have had relatively similar trends over the past five years.
I have just published my most recent real estate market report with lots of information about the Harrisonburg and Rockingham County real estate market to help you make more informed real estate decisions in 2011. Click here to download the PDF, or read on....
While there were even fewer home sales in 2010 than in 2009, we seem to be nearing the bottom of a gradual decline we have been experiencing since 2005. After 14%, 13%, 25% and 13% year over year declines, there was only a 7% drop in sales between 2009 and 2010. Perhaps 2011 will finally be the year when we meet or exceed the prior year's sales count.
While the overall market may be recovering, the townhouse market continues to struggle to pick up any momentum. After only an 11% decline in the number of townhome sales between 2008 and 2009, we saw a full 20% drop between 2009 and 2010. And yes, this was amidst the first time buyer tax credit season!
While inventory levels were higher for most months of 2010 than in the same months in 2009, we have seen a significant decline in inventory over the past six months. After a high of 1,015 homes for sale in June 2010, the market is now down to only 787 homes for sale --- the lowest in the past two years.
Lot sales finally recovered -- at least in their pace, if not their price. After several very (VERY) slow years of lot sales, 2010 lot sales exceeded 2009 sales -- just barely. These sales are of lots smaller than an acre. Prices, as you can see, have dropped quite a bit over the past several years, down to the current median lot price of $55,000.
Click the image above (or here) to review the entire market report.
If you have questions about this report, or if I can be of assistance with real estate that you own, or that you'd like to own, please be in touch. You can reach me most easily at 540-578-0102 or scott@HarrisonburgHousingToday.com.
This can be a deceiving graph....
In many ways, this graph would suggest that all homes sell. Thus, if you list your home --- there is a 61% chance it will sell in the first six months of being on the market --- but if it doesn't, it will definitely sell within two years. That's not how it works. The graph above is showing the length of time it took to sell the homes that actually sold.
One of my clients asked me a rather interesting question this week --- how many homes don't sell? I haven't figured out a very good way to determine that through our MLS system, but here's one look at it.....
Over the past six months, in Harrisonburg and Rockingham County, 478 homes have expired out of the MLS, or have been withdrawn from the MLS. That's a pretty significant number since there are only 780 active listings on the market right now.
Listing your house for sale does not guarantee that it will sell. Appropriate pricing and creative, pro-active, aggressive marketing can help -- but there is still no guarantee. And it seems that plenty of homes just aren't selling these days!
"There are deals to be had" one of my clients commented to me today as we were discussing the local market and a particular property that he was considering. I agreed, but we then both remarked that many of them are hidden opportunities.
With many more sellers in the market then buyers, there are certainly some sellers who are getting fed up with waiting around to see when their house will sell. They either really want to or really need to sell NOW! Some of them, however, haven't yet adjusted their asking price to communicate that to the outside world.
How do we discover these hidden opportunities, you might ask? Unfortunately, many of them can only be discovered by making an offer to purchase the property. Does it need to be a written offer, with all of the details spelled out? Yes -- to truly find out how much of an opportunity might exist with a given property you are much better off making the offer in writing, with all the details such as price, closing date, financing terms, inspection contingency, etc.
Now, of course, there are always some opportunities that stare right out at you --- prices on houses that are obviously lower than they should be. However there are quite a few other houses on the market right now that could be purchased at a price that would likely be very compelling to you --- but we won't know that until and unless you make an offer.
There are only two risks in making a low / low-ish offer to see how much flexibility may exist in the pricing of a house. First, you may become emotionally attached to the house, and decide you'll pay whatever it takes to get that house of your dreams --- this could be problematic, so let's discuss it if you know you are prone to such inclinations. Second, you might actually buy the house at a price that you're excited about --- oh wait, that would be the goal!
While there are plenty of houses on the market (maybe most?) where you won't find much negotiating room, there are always some where you'll be pleasantly surprised at how much you can negotiate on price. Let's find them!
For another interesting look at single family detached home sales in Harrisonburg and Rockingham County during 2010, let's check out the....
SMALLEST HOME SOLD IN 2010
This 574 square foot home in Hinton features 2 bedrooms and 1 bath, and sold for $74,250 in October 2010.
LEAST EXPENSIVE HOME SOLD IN 2010
This 1,300 square foot home features 3 bedrooms and 1 bathroom, and only had a few vines growing through the walls and windows. This home sold for $39,000 in December 2010.
LARGEST (AND MOST EXPENSIVE) HOME SOLD IN 2010
This 8,400 square foot home in Highland Park features 5 bedrooms and 5.5 bathrooms, and sold for $1,250,000 in August 2010. It was both the largest, and the most expensive home sold in Harrisonburg and Rockingham County in 2010.
As I type, active listing inventory in Harrisonburg and Rockingham County stands at 745 residential listings --- which I believe is the lowest level we've seen in the past two years. This includes single family detached homes, townhomes and condos.
Less a month ago, in my most recent market report, active inventory was at 846 listings. Thus, we've seen a 12% drop in less than a month. Furthermore, current listing inventory (745) is 27% below the highest inventory we've ever seen --- 1,015 active listings, just seven months ago in June 2010.
We still have a largely imbalanced housing market in Harrisonburg and Rockingham County, with many more sellers in the market than buyers. Thus, a decline in listing inventory is great -- it helps to balance the market, making it a healthier market. The question, therefore, is whether this low inventory level will last....
A significant portion of the lower inventory levels are a result of listings that expired on 12/31/2010. There are 101 fewer listings now as compared to December 8th (745 vs 846) --- but 80 listings expired between 12/31/2010 and 1/1/2011. It is possible that a small (or large) portion of those 80 listings were not intended to have expired, and that they'll return to the market in the next few days.
Within the next week we'll have a better idea of whether these low inventory levels will last. What do you think? And what do you hope?
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