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!
These helpful maps were created by the folks over at Design & Geography....
Virginia fared better than most states pre-bubble with a 80% to 120% increase in housing prices between 2000 and 2006.
Virginia homes lost value between 2006 and 2010 (0% - 20%) but not as much value as some states such as California, Florida, Nevada and Arizona.
Virginia is one among a handful of states that experienced a net gain in housing prices between 2000 and 2010.
Virginia's housing market continues to fare well, and hopefully we will see a further increase in the market both in Virginia as well as Harrisonburg and Rockingham County.
It looks like this could be a fantastic spring/summer real estate market in Harrisonburg and Rockingham County. The real estate market may finally be picking up some speed after several years of declining sales figures.
First -- I have been involved in four different multiple offer scenarios in the past week. One contract even had an escalation clause! It's been years since I have seen this much buyer activity in our market all at once.
Second -- If you compare the first 25 days of April this year versus last year, we're looking solid for this year!
My article from this month's issue of the Shenandoah Valley Business Journal...
Change has been the only constant in the housing market over the past five years. Between 2000 and 2005, our local housing market (and most markets across the country) witnessed unprecedented increases in the number of homes selling, and the prices for which these homes sold. Then, however, the bubble (as some call it) popped. Over the past five years, we have seen fewer and fewer homes sell, and the prices for which they are selling have also slowly declined. Some observe that the local housing market might finally be steadying, with smoother sailing in the near future. If this is indeed the case, what might we expect as some new norms in the local housing market?
More Renters. During the real estate boom, home values were increasing by double digit percentages per year. With such rapid appreciation, would-be renters decided to buy homes instead. After all, even if you were only going to be in the area for a year or two, with home prices increasing so quickly and steadily, why wouldn't you buy? These days, the new norm is that many would-be buyers (per recent logic) are now delaying a home purchase. Unless you will be in the area for 4, 5, 6 or more years, it may make more sense to rent instead of buying. After all, with home values currently falling a few percentage points per year, and with the cost of getting in and getting out of owning a home, buying for the short term just isn't as prudent. Thus, as the local housing market moves forward, we'll see fewer first time buyers and thus more renters.
Slow Growth. Between 2000 and 2005, many new subdivisions were created as the real estate market shot skyward. Re-zoning after re-zoning created many new neighborhoods of single family homes and townhomes. Some people even became concerned that new developments were too quickly overtaking farmland in some areas in the Valley. Alas, these days of rampant and unfettered growth seem to be over. With the drastic real estate slowdown over the past five years, builders are not building speculatively, nonetheless developing new subdivisions speculatively. There will certainly be new neighborhoods and subdivisions over time, but they will develop much more slowly.
Slow Sales. Depending on the price range, there are 12 to 24 months of housing inventory on the market in Harrisonburg and Rockingham County. Even a stellar month or two of sales won't cut into this excess inventory that exists because of a now persistent imbalance between the number of sellers and buyers in the market. Thus, with so many homes for sale, it will take a long time for the housing market to return to more normal inventory levels such as when there are six months of homes available for purchase at any given time.
Living Close to Work. Gas prices spiked a several years ago which caused many people to reconsider how far they lived from their place of employment. Afterwards, gas prices subsided, and the length of commute lost a bit of its focus, but the home buying public seemed to hold onto a part this new mentality. Even if gas was cheap, buyers were now also thinking about how their quality of life was impacted by the length of their commute. Now that higher gas prices are upon us once again, it is quite possible that this concept has been cemented into our home buying perspective – it is important to live close to where you work.
Larger Down Payments. While there are still low and no down payment programs available (FHA, VA), there are certainly nowhere near as many such programs available to home buyers. Gone are the days when anyone could obtain a mortgage so long as you had a pulse (as some joked). Mortgages are still widely available to those with decent credit and some funds set aside for a home purchase, but there will no longer be enormous swaths of the public buying homes without putting any funds into the deal.
These are just a few of the new norms that are starting to emerge in the current housing market. It seems that we may be through the most turbulent of times in the local housing market, but we are still adjusting as a whole to what buying and selling a home now means given the financial changes that our society has witnessed over the past five years.
Inspired by a great article in yesterday's Daily News Record about foreclosure rates in the Harrisonburg and Rockingham County area, here is a comparison of foreclosure rates in Harrisonburg and Rockingham County as compared to Virginia.
A few other notable observations from the DNR article:
In the first 20 days April 2010..............58 contracts were written...
In the first 20 days of April 2011..............75 contracts were written!
Beyond this 29% increase in the pace of sales this April, it is interesting to note how many buyers are moving quickly once they see a house come on the market that works well for them, and is priced right.
Note the large percentage of homes above that went under contract within the first two months that they were on the market.
After staying relatively stable over the past few years, townhome values are dropping quite quickly in 2011 -- per the median home value of Harrisonburg and Rockingham County townhomes....
Townhome Sales between January and March 2010:
Townhome Sales between January and March 2011:
I believe what we're seeing here is that the median (and average) sales prices are coming down because of the composition of which (townhome) properties have actually sold in the first quarter of 2011. If my theory is correct. the median (and average) sales prices might increase quickly as the year continues. Alternatively, they could stay quite low if the smaller, older, more remote townhomes continue to sell -- at lower prices than most.
Properties selling in 2011 (1Q) under the $126,000 median sales price included:
Many buyers (and sellers) have a misunderstanding of how the home inspection process works. For example:
It's been an interesting week showing houses over $400,000 in Harrisonburg and Rockingham County. Both of the following seem to be true:
But wait --- if there are soooooo many homes for sale, how are there also TOO FEW homes for sale over $400K? Well, as I drove my clients through neighborhood after neighborhood, there were so many areas where there was not a single home for sale. In fact, looking back two years, there were 125 homes for sale over $400K, but now there are only 81 homes for sale over $400K. This 35% reduction in inventory significantly limits the homes from which a buyer can choose.
So, what happened? I think many (many) sellers who wanted to sell their homes, and tried over the past year or two, have become discouraged and have taken their homes off the market. They look at the oversupply (25 months) and figure they'll be better off just taking their home off the market. Many sellers are out of the game!
And what is happening now? Given limited inventory levels, (some) buyers aren't finding what they are looking for. Frustrated by not finding a home that works well for them, buyers are also out of the game!
What a conundrum!
One of the questions we asked hundreds of visitors to our booth at the 2011 Shenandoah Valley Builders Association Home & Garden Show was..... "How do you think our local real estate market is doing?" Here are the responses....
So, what do you think? Do you agree with those in attendance at the Home & Garden Show?
March 2011 home sales show plenty of positive indicators, though the local market is still a ways off from a full recovery.
After mediocre performance in January and February, the Harrisonburg and Rockingham County housing market finally witnessed some growth in March 2011. March's 61 home sales exceeded March 2010 (49 sales) and March 2009 (57 sales), and contributed to an overall decline in home sales of only 6% between 2010 (YTD) and 2011 (YTD).
Not only did buyers close on properties in March, they also contracted on properties --- though probably not the same buyers. March 2011 showed another strong month of contracts (75), exceeding March 2009 figures (68). Last March's contract figures (95) were significantly affected by the home buyer tax credit.
Despite increases in inventory over the past two months, it appears that 2010's peak of over 1,000 properties for sale will not be met this year. We have seen an overall decline of 13.5% over the past year in the number of residential properties for sale, which can help restore balance to the market.
Despite the strong indicators noted above, we do see that the median sales price of single family homes has started to decline again more sharply after a relatively steady year last year. We may not be totally out of the woods yet.
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.
I have been cautiously optimistic about the real estate market improving for almost four years now. Each year, instead of improving, the market declined.
So -- would you like to know what I am predicting for the upcoming year in the Harrisonburg and Rockingham County real estate market? I am cautiously optimistic that things will start to improve.
Now, of course hindsight is always 20/20, but check out my comments back in January 2008 (a bit over 3 years ago):
Preparing for the 2008 Real Estate Market
"As 2007 progressed, sales increased, and inventory levels decreased. In most price ranges, there is still somewhat of an oversupply of housing – but this will likely continue to correct itself in 2008. As we move through the first quarter of 2008, expect to see a continued gradual increase in the number of sales, and a continued gradual decrease in the inventory of available homes. The continuation of both of these trends will restore a healthy balance between buyers and sellers in our market."
Was a healthy balance in the market restored in 2008? No. Things became worse. And then worse yet in 2009. And then worse yet in 2010.
So where IS the real estate market headed in 2011?
I believe the market will start to incrementally improve this year --- but again, I have thought that for years now, without my beliefs being born out in market realities. And yet as I look to the future and provide projections and predictions to my clients I try to strike a balance between totally unrealistic optimism and totally depressing pessimism.
Let me know sometime whether you think I'm striking an appropriate balance: scott@HarrisonburgHousingToday.com
Have you ever wondered how Virginians heat their homes?
The Market Leaders Over Time: Coal......Oil......Electric
And for the graphically inclined....
Source: U.S. Census
I recently listed a home in Barrington that, in the first month, had multiple showings and two offers. One of the offers was accepted, and the property will be under contract later this week.
Oh wait, think for a minute about the price range that this home was in -- over $400,000. Does that price range strike you as particularly hot right now?
There were 57 home sales in Harrisonburg and Rockingham County during March 2011 (as reported thus far), and only one of them was a house over $400,000. So no, the housing market over $400,000 isn't tremendously active right now --- but there seem to be buyers waiting in the wings, waiting for good opportunities to present themselves.
It was somewhat humorous when the property first came on the market, as I relatively quickly had showings scheduled by Realtors who had shown my other similar listings in Barrington and Lakewood during the recent months. It was clear that these buyers were just waiting for the right property to come along.
What does this mean to you? While there are no guarantees, if you price your house well, and it is marketed well, you might just have a chance to sell your property, even in a not-quite-so-good-yet real estate market.
As of today, you can obtain an amazing 3.625% interest rate on a 5/1 adjustable rate mortgage through FHA. Until recently, I had thought that 30 year fixed rate mortgages were the only product offered through FHA, but Oguz Sengul pointed out that FHA also offers a 5/1 ARM.
A "5/1 ARM" is a mortgage that has a fixed rate (3.625%) for five years, and then can adjust once every year.
If you anticipate only being in your home for 3, 4, 5 or 6 years, this can be a fantastic loan program to consider!
Fortune Magazine makes some bold predictions after LOTS of detailed analysis....
Click on the image above (or here) for a PDF of the entire article, which deserves a careful read.
To entice you to read the entire article, consider the following excerpts....
Bill Meadows, a new resident of Dayton, Virginia, holds a distinct honor -- he was the only person to buy a home anywhere in Harrisonburg or Rockingham County during March 2011.
As shown above, January and February sales were quite low, but most people were expecting that we would see a rebound in Harrisonburg and Rockingham County home sales during March 2011. Alas, we did not, as only one person (Bill Meadows) bought a home during the entire month of March. Most analysts are hoping for stronger sales in April, to at least hit the double digits.
"I was quite surprised to find out that I was the only one to buy a house this month," Bill commented, "I was pretty sure I had heard several co-workers and friends also talking about buying a home this month."
Home sellers are trying hard to keep this in perspective but some sellers, such as Sally Peters, are having difficulty staying calm about this new development. "With only 1 home sale last month, and 821 active listings, that shows a 68 year supply of homes on the market," Sally explained, "Since I'm already 52 years old myself, I am obviously a bit concerned that it might take 68 years to sell all of the houses on the market. I might be over 100 before my home sells!?!"
Stay tuned for a full report on the housing market in roughly a week, until then, watch for additional details on these breaking stories:
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