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!
I often chuckle when I see "Priced To Sell" in the description of a property in the MLS.
This is funny to me because in theory you should be able to adjust the price until your house sells --- but oftentimes in the current market, pricing alone won't sell a house. If a house should be priced at $330k, it could be listed or six months at $300k without finding a buyer, and then another six months at $270k without finding a buyer.
Again, great pricing does not create a buyer that isn't there to be begin with!
All that said, listings that are "priced to sell" (per the listing agent's opinion) do perform better than most....
Do bear in mind --- simply adding "priced to sell" onto your current listing won't necessarily make it sell faster --- it probably actually does need to be priced to sell!
Over at Patchwork Nation, you can create maps to show all sorts of data, including these below that examine foreclosure rates as of January 2011....
The states that should stand out as having high foreclosure rates include California, Nevada, Arizona, Michigan and Florida.
Looking a bit closer (above) you'll see that Harrisonburg and Rockingham County are categorized as having low foreclosure rates. This has likely led to the relative stability in our housing market, whereas many Virginia markets north of us have seen significant price adjustments largely as a result of their high foreclosure rates.
In case you're wondering, on Patchwork Nation you can also create fun maps such as the counties where Cracker Barrel restaurants exist....
Three times in the past three weeks I have been in real estate related meetings when someone asked "So, how much do you have to put down on a mortgage these days, twenty percent?" Each time my jaw dropped, and I explained that the down payment on a purchase can be as little as 3.5%....and sometimes as little as no down payment at all. Their jaws then dropped, as they asked questions along the lines of "but, I thought it was nearly impossible to get a mortgage these days" and "but, what about reforming the mortgage market after all the crazy loans that were issued?" These are reasonable questions and objections, which I then discussed with them, but what I hoped stuck with them is that you don't need to wait to buy until you have 20% of the purchase price as a down payment.
At this point it is important to note that having 20% as a down payment is not at all a bad idea –it is certainly something to be strived for – but it shouldn't necessarily limit your purchasing decision. If home prices declined over the next few years, a larger down payment (for example, 20%) would help you to avoid getting stuck in a house with a mortgage you could not pay off in order to sell. A 20% down payment can also lower your mortgage payment, as you will be financing a smaller amount, and you should not have to pay mortgage insurance in addition to the principal, interest, taxes and insurance. Despite these benefits, however, waiting to purchase until you have a 20% down payment can significantly change when you are able to buy a house, particularly if you are a first time buyer.
Are there really loan programs that only require a 3.5% down payment? The most frequently utilized loan program these days is the FHA loan program, which is underwritten by the federal government and only requires a 3.5% down payment. The federal guarantee of the loan allows lenders to offer you lower interest rates, which makes the monthly payment more affordable to you. Many (or most) first time buyers utilize the FHA loan program, however it can be used for mortgages up to $277,150 in Harrisonburg or Rockingham County.
Isn't it difficult to get a mortgage these days? A few years ago, it was said that if you had a pulse, you could get a mortgage. Indeed, there were mortgage programs where your lender did not need to verify your income, nor your assets, nor your employment, etc. It is certainly more difficult to get a loan now if that is our basis of comparison, however new mortgage guidelines are not absurdly strict. Most people with reasonably good credit and with steady, predictable income can obtain a mortgage with reasonable terms. One of my clients recently asked me whether a significant portion of contracts fall through these days as a result of buyer not being able to obtain financing – thankfully, this is not seen too often in our area. If you are wondering whether you can obtain a mortgage, talk to a bank or mortgage company to quickly and easily be pre-qualified. If you're not sure who to talk to, start by speaking with a Realtor, who can certainly give you some recommendations on reliable, professional lenders in the area.
What about mortgage reform? It is true – there were some wild and crazy things happening in the mortgage market over the past several years, and new guidelines are now in place (and being put in place) to attempt to ensure that we will not travel down those roads again. Despite these new guidelines, however, it is still possible for hopeful buyers with a reasonable amount of income to obtain a mortgage without too much of a hassle, without too much cost, and with very favorable terms.
What is next in the mortgage market? Interest rates are still phenomenally low compared to the past several decades, so opportunities abound to buy and obtain a fantastically low fixed interest rate on your mortgage. Many people predict that interest rates will rise as we continue through 2011, though many people have predicted that for the past several years without any great supporting evidence after the fact. It is important to note, however, that changes to the mortgage market may be coming down from the administration. Current plans are in the works to re-vamp how the mortgage market works, which some argue will increase mortgage costs to consumers.
Each of the three people who presumed that a 20% down payment was required these days is a very smart person – but each of them had an incorrect assumption about the current state of the mortgage market. If you are considering buying, or refinancing, don't make a decision based on your assumptions, or based on what your neighbor or friend tells you. Talk to a mortgage professional who can accurately explain your options and help you find the best path for your future.
Not too many years ago concerns were frequently raised about all of the farmland that was being used up for housing developments. In fact, back in 2008 I wrote an article entitled "Will Rockingham County Be Paved Over?"
Now, apparently, the tables have been turned.....
(from the Saturday, March 26, 2011 edition of the Daily News Record)
It seems that we have a bit of a role reversal here -- a house is being torn down so that land can be used for farming.
What will we do now?? Should the home builders rally to save the housing development land from the growing threat of farming??
Even when there are plenty of homes for sale, some (or many?) buyers won't be able to find "the perfect house" -- even after looking at a lot of houses. What is a buyer to do?
Some would say every buyer must compromise on some aspects of the house they are searching for. Above you can see that a full third of home buyers responding to the National Association of Realtors research methods did not consider themselves to have compromised at all in their home purchase. From there, we jump down to size and price of the home, followed by condition.
The areas where buyers were unwilling to compromise included items such as schools, neighborhood and distance from family and friends.
Where would you prefer to compromise as a buyer?
The graph above shows the cumulative number of home sales having occurred as we moved past each of the first 83 days of this year (as compared to last year). As you can see, we were doing well through the end of January, but the gap started to widen slightly through February, and more significantly through March.
Due to the first time home buyer tax credit, we may see the gap widen even further in April, though hopefully we'll have some strong summer months of sales to keep us relatively on pace with 2010 home sales.
Apparently web searchers are a bit pessimistic (or realistic?) about the real estate market....
Google auto-complete suggests completing the query "why is the real estate market" with: failing, bad, down, important and falling. These results are based on Google's best guess as what you might be searching for.
The searching public is losing interest in the real estate market....
Maybe it's the continual bad news, but fewer and fewer web searchers are looking for information about the real estate market. I suppose it's exciting to learn about and hear about the real estate market when things are going well, but when things aren't going so well....
Searching for properties for sale is quite seasonal....
It shouldn't be too surprising, but web searchers look for properties for sale in a rather regular pattern. The two big spikes in returning interest in real estate for sale seem to be in April/May and in December of each year.
Contracts have been strong over the past several months, but what has been going under contract? By the numbers, the following is the break down of the properties currently under contract:
The graph above, however, shows how the number of properties under contract in each price range compares to the total number for sale. A few observations:
If the development of Preston Lake had taken place just five years earlier, it might have been a much greater, faster, happier success story.
Given its timing, however, Preston Lake was developed and constructed at a very slow rate, which recently reached a significant milestone when Wells Fargo foreclosed on the remaining developed lots at Preston Lake. Why did it happen? It could have been the decline in the housing market....or the decline in the national economy....or that the developer's bank (Wachovia) went out of business....or many other reasons.
Regardless of the cause, the development and construction of Preston Lake was much slower than anticipated, and is now in a state of limbo. Here's a re-cap of where things are at Preston Lake, with a few bits of new information:
Homeowners Association: The Preston Lake Homeowners Association is still controlled by the developer, which is now effectively Wells Fargo. For now, however, the on-the-ground association management is being handled by a Harrisonburg-based association management company, and thus far it does seem as if any services to residents will be interrupted, nor will dues increase.
Ownership of the Land: The undeveloped residential lots all transferred to Wells Fargo (or REDUS VA HOUSING, LLC as it appears at the courthouse). Read more.
Ownership of the 4 rowhouses: Most people attending the foreclosure auction were surprised to hear the announcement that morning that separate from the auction of all of the undeveloped lots, the bank would be auctioning off four rowhouses at various states of completion. Since potential bidders were not prepared to consider purchasing a rowhouse, all four of these properties were bought back by Wells Fargo. Further details follow....
Current Listings: Three re-sale properties are currently on the market. Click here for details.
Apparently this varies by region --- in a conversation earlier this week someone was sharing with me that in each part of the country where they had lived, it was a bit different. In one part of the country, nearly every home had a bedroom on the first floor. In another part of the country, only a very small number of homes had a bedroom on the first floor. What is your guess for Harrisonburg and Rockingham County?
64% of currently available single family homes offer a bedroom on the first floor! This was a bit surprising to me, as I assumed it might be less than half of all homes. I will often have buyer clients that are requesting this feature in a home and it seems to limit their options --- but apparently not too significantly. Breaking it down by price range, there also isn't much variation:
49% of currently available multi-level single family homes offer a bedroom on the first floor!
Looking just a little bit further, let's examine whether there is a difference in "sellability" of homes with vs. without a bedroom on the first floor.
When examining multi-level homes sold in the last year:
Are you considering buying a home, or building a home? Do you have questions about what you should be looking for or avoiding in a house? I'm happy to share my opinion, or the facts as shown by home sales data. Call me at 540-578-0102 or e-mail me (scott@HarrisonburgHousingToday.com) and we can discuss your situation.
It's rather puzzling. Despite fewer (and fewer) townhome buyers, prices are holding relatively steady....
One of my clients hypothesized that perhaps prices are holding steady because the townhomes that buyers are actually buying these days (2010/2011) are new townhomes, and are thus worth more.
To test this theory (which I definitely agreed with) I examined the median age of the townhomes that sold for each year between 2006 and 2010....
Based on the information above, it doesn't seem that townhomes are holding steady in price because buyers are just buying new townhomes these days. In fact, the reverse is true, more of the townhomes purchased 4 and 5 years ago were new than of those purchased in 2010/2011.
Examining the data from another perspective, I thought I'd check the percentage of the townhome market that is made up of sales of new townhomes....
Again, the data shows that fewer and fewer (proportionally) of the townhomes being purchased are new townhomes --- thus the theory that prices are holding because newer townhomes are what is actually selling does not seem to hold true.
So, what could it be? Any other theories that I can test? Why are townhome values so resilient in Harrisonburg and Rockingham County?
Thank goodness we experienced huge gains in home values between 2000 and 2006, because values have been steadily retreating since that time. Harrisonburg and Rockingham County are not in a unique situation in seeing a decline in home values (as measured by median sales prices) over the past five years (2006-2011). In fact, many areas of the state and our nation saw much more significant declines in home prices during the past five years.
How far, though, did we retreat into the past with this decline of home values?
When examining single family homes and townhomes together (above), you'll note that the current median sales price (2011 year-to-date) of $166,000 marks a retreat back to 2004/2005 home values.
Single family home values (median price 2011 year-to-date = $175,006) have also retreated back to 2004/2005 levels.
Despite drastically low sales thus far in 2011, townhomes have fared better than the detached home market. Median sales prices of townhomes (2011 year-to-date = $158,000) have only retreated back to 2005/2006 levels.
What does the future hold? I have long held to the prediction that we will not see an increase in median home values until the pace of home sales stabilizes and starts to increases again. Last year there was only a 1% decline in the number of single family homes in Harrisonburg and Rockingham County, so I am hopeful that 2011 may be the year that we see a stabilization in the pace of home sales, even if it is not until 2012 that value start to stabilize.
Despite many negative indicators in our local housing market, there may be hope for better news in the coming months. Click here to view a PDF of my most recent market report on the Harrisonburg and Rockingham County Real Estate Market, or read on for several excerpts....
As can be seen above, sales have dropped significantly as compared to a year ago -- both in February alone (28% decline) and in year-to-date figures (21% decline). Furthermore, we continue to see declines in both median sales prices (3% decline) and average sales prices (2%). As would be expected, this has lead to an increase (21%) in the time it takes to sell a house.
Above you will note that January home sales (39) were roughly equivalent to previous years' January sales. February 2011 home sales however (38) were significantly lower than February sales in 2008, 2009 and 2010. Thus far, the trend line for 2011 home sales is headed in the wrong direction -- if you're one of those people who likes to see positive improvement.!
The pace of home sales has declined steadily for three years (orange line above), as has the median sales price in this area (green line above). Of note, the median sales price has actually stabilized and increased somewhat over the past six months.
Above (in red and blue, instead of silver) is the silver lining of this month's housing market report. Buyers were out in full force in February 2011 --- with a full 69 properties going under contract. This marks a 44% increase over February 2010, which should lead to strong sales figures in March and April.
There's plenty more news in my monthly housing market report -- click on the image above (or here) to download and view the full PDF.
As always, 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.
69 properties went under contract in Harrisonburg and Rockingham County last month (February 2011) --- showing a 53% increase over last February.
Moving beyond this startling good news, the question becomes (for many of my clients) what was it that actually sold in February!?
Contracts by Price Range:
Did you know Facebook is now estimated by some to be valued at $65,000,000,000? Yes, that's $65 BILLION dollars. How do analysts come to that number? The valuation is based on the percentage stake that is given to a new investor as compared to the dollar value of the investment that they make in the company. Just two months ago, a Goldman Sachs investment in Facebook put the value at $50 BILLION.
How does this relate to real estate in Harrisonburg, VA? An investor just bought a significant stake in the student housing market in Harrisonburg, which provides another data point upon which other student housing owners can value their investment.
The big news --- 38 North has been sold for $32.8 million.
The specs of this recently built (2008) student housing complex include:
I attended a Realtor Association event last evening that featured the delightful music of Glick and Phillips. I had never experienced their show before, but it was a lot of fun, even if occasionally insensitive or inappropriate. :) They played a lot of songs last evening that poked fun at a variety of towns in this area such as Elkton, Grottoes, Bridgewater and Dayton -- but they also performed several songs (such as "It's Beginning to look a lot like Fairfax") that poke fun at the rapid pace of development in this area.
Had I heard this song five years ago (in 2006) I would have smiled, nodded, and thought -- well, they're right, the rapid pace of development certainly is certainly eating up farmland and creating more and more subdivisions all over the county. But I had a different response last evening as I realized that the pace of development has drastically slowed down over the past five years.
As you can see in the graph above, the sale of new single family homes has fallen drastically since a peak of 186 new homes in 2005 down to only 42 new homes in 2010. Thus, it seems that Harrisonburg's explosive growth into a Fairfax-like metropolis has been delayed or avoided.
Also, back in 2008 I examined the breakdown of land use in Rockingham County and found that much of Rockingham County will likely never be developed (33% is owned by the government) --- and we still have an extraordinary amount of undeveloped land.
Certainly, though, the source of the Glick & Phillips song inspiration was the creation of so many new subdivisions between 2000 and 2005. Below you'll see a strong concentration of those subdivisions in the area just southeast of the City of Harrisonburg, bounded by Boyers Road, Cross Keys Road, Route 33 and Port Republic Road.
Click on any subdivision in the map above to jump to active listings in that neighborhood.
Please know that I'm not accusing Glick & Phillips of being out of date -- but I do think the pace of development, and hopefully our community's view of development has certainly shifted over the past five years. It no longer appears that we are in danger of overtaking Fairfax. Would you agree?
Good news -- it won't be a problem if you don't have a 20% down payment. Some people think that you need a 20% down payment these days, since financing guidelines have become so much more restrictive over the past year or two. That's simply not the case.
The FHA loan program is an excellent example of a low down payment loan option that many buyers are using these days. You can purchase a home with as little as 3.5% of the purchase price as a down payment. Furthermore, your closing costs and/or your down payment can be a gift.
The VA loan program (available to qualified veterans, reservists, and active-duty service members) requires no down payment and your closing costs can be a gift.
For more information about FHA loans or VA loans, read more on the Government Loans section of Wells Fargo's web site.
Again -- remember -- you don't need a 20% down payment to buy a house these days. If you'd like to talk more about your buying situation, feel free to contact me at 540-578-0102 or scott@HarrisonburgHousingToday.com.
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