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!
Significantly less of this house would be visible after the leaves come out.
If you're thinking of selling this Spring or Summer, and you have trees (especially large house-obscuring trees) we should discuss taking some exterior photos NOW rather than waiting until later when we can't see your house at all.
Many people who bought their first home when home prices peaked between 2005 and 2008 have had difficulty selling their homes without taking a financial hit. It was, after all, during those same years that 100% financing was all the range – and some lenders were even making loans for more than the purchase price at the time. Understandably, when home values declined in the years that followed, many of those first time buyers with high loan-to-value mortgages did not have enough equity to sell when they were otherwise ready to move on to a second home. Some of these first time buyers opted to keep their first home as a rental property to avoid the pain of the financial hit of selling when they were under water. For many such people, keeping their first home will be a decision they will cherish in years to come.
Let's imagine for a moment that you purchased a $160,000 townhouse in the City of Harrisonburg on January 1, 2005 and financed 100% of the purchase price – that results in a $973 monthly mortgage payment. You stayed in the townhouse for seven years, and then (in 2012) either had to move out of the area for a new job, or needed to purchase a new home for your growing family. Facing a tough townhouse sales market, you felt forced to keep the townhouse. You start off, in 2012, renting your townhouse for $850 per month, leaving you still footing a part of the monthly payment ($123/month) but as the years progress, your mortgage payment stays constant, and your rental income grows as rental rates slowly increase.
Life is busy, and before you know it, the kids have grown up and headed off to college, and in 2034 you send in your last mortgage payment on that first home you ever purchased. You pause, looking back, to reflect on the 30 years that you have owned that townhouse, and decide to check to see how much you contributed towards paying down that mortgage, and how much help you received from your tenants. Shockingly, in that 30 year period, a total of $350,280 was paid to your mortgage company – but you only had to pay $79,380 --- your tenants over the years paid 77% of the total mortgage costs over the 30 year period. Never have you been so grateful for your tenants.
There are, of course, some extra expenses over the years, and to be fair we must consider those. Increases in taxes and insurance will likely cost you around $7K (+1% per year), we'll estimate maintenance costs a $15K, vacancy (1 month / 2 years) would cost you $11K, and hiring a property manager (after you are 15 years in) would cost around $14K.
Despite the $47K of extra expenses above, there are also some fantastic upsides to this accidental ownership of an investment property. The $149K of interest that you (and your tenants) paid during the life of the loan is tax deductible, thus $149K of your income has been sheltered, which (with a 25% tax bracket) provides $37K of extra income. Eventually, property values will start increasing again. If your property increases an average of 1% per year since the time that you became a landlord for the property (quite a conservative estimate!), the appreciation would add up to $39K of extra income.
While your head is starting to hurt from all of these calculations, you are determined to come to a final conclusion about whether it was a wonderful or terrible decision to keep that first home. Delightfully, you will discover that after investing $0 in 2005 to purchase your townhouse, you have had a cumulative $230,000 gain over those 30 years, thanks to your simple decision to keep your first home.
For all the details of this fictional scenario, click here.
If you've been wondering what is being built on the corner of East Market Street and Country Club Road, wonder no longer. A fifth McDonalds location is being built in the previous location of First Bank and Trust Co. Read more via the Daily News Record.
The former Dave's Downtown Taverna building, an enormous 6,500 square foot building in downtown Harrisonburg will soon house a new restaurant being opened by the owners of the Byers Street Bistro and Sauced in Staunton and The Palms in Lexington. Read more via the Daily News Record.
Finally, the Kmart on University Boulevard will be closing in June. Read more via the Daily News Record.
Last March, 67 buyers signed contracts to buy homes in Harrisonburg and Rockingham County, and I expect about the same number to commit to properties this March. With 556 homes on the market, how do we make sure they pick your home?
PRICE - First and foremost, we need to examine how your home stacks up to the competition when it comes to pricing. Are most other comparable homes priced below your list price? Very close to your list price? Perhaps we need to undercut the competition to make a buyer ready to commit based on the value and opportunity offered by your home.
MARKETING - Is your property marketed broadly and effectively? Does the marketing plan for your home focus first on the primary three ways (internet, sign, Realtor) buyers find the homes they purchase? Do the property photos, brochures, and online presence accentuate your home's strong points?
CONDITION - To the extent that we can generate showings through competitive pricing and appropriate and effective marketing, let's also make sure buyers are even more impressed when they view your home in person. Eliminate distractions and potential objections that buyers might perceive when walking through your home.
FOLLOW UP - We'll also need to proactively and persistently follow up with buyers (or their Realtors) that have viewed your house. What are their questions, their hesitations, their objections? What additional information can we provide them, or solutions can we research for them?
There are certainly some aspects of selling your house that are out of our control, but we do have the ability to affect the price, marketing and condition of your home to maximize the possibility that a March buyer picks your home!
Supply and Demand! More and more buyers.....fewer and fewer sellers. Eventually, this will also lead to some slow and steady increase in median sales prices.
Have you checked out Harrisonburg's Downtown Streetscape Plan?
With the rapid growth and unique challenges in our downtown area, the need for a comprehensive planning document for public infrastructure has arisen. To meet this need, city staff, along with a committee of key stakeholders, have been working to update the Downtown Streetscape Plan. This plan will build upon the 2005 Downtown Streetscape Plan by expanding the study area and covering additional elements that are necessary to clarify the vision for downtown.There is a 36 MB, 89-page PDF here that has lots of exciting details about the Downtown Streetscape Plan. Happy reading, and I'll draw out a few highlights in coming weeks.
As shown above, after some slow years in 2011 and 2012, the over $500K housing market bounced back in 2013.
The over $600K market had an even more dramatic recovery in 2013.
Search for $500K+ homes at HarrisonburgLuxuryHomes.com.
The population of Harrisonburg and Rockingham County is increasing.
If we take the average of 2000 and 2001 home sales as a baseline portion of the population to be buying in any given year, and then we project forward based on actual population growth, we can conclude that....
Based on the data presented above, I believe the new "usual" number of people to be buying per year may be around 1,150 home sales -- which is still a decent amount of growth beyond the number of home sales (1,013) seen in 2013.
And here is the data behind the graph....
It seems that 2011 and 2012 were the years when sellers had to negotiate the most off of their list price -- giving up over 5%, on average. Now, that has shifted down to less than 4%, and I expect that average amount of negotiating will continue to decrease through 2014.
That's right -- there was only one (one!) home sale over $300K in all of Harrisonburg and Rockingham County during January 2014.
We should see those home sales starting to pick up soon, but as you can see, January is not typically a time when a lot of homes in this price range sell.
Featured Property: 3050 Baybrook Drive, Harrisonburg, VA
I just published my monthly report on the Harrisonburg and Rockingham County real estate market -- and home sales in January were higher than any of the previous three months of January....
After strong gains in the pace of home sales during 2013, we are likely to see continued strong home sales in 2014. Two factors that will likely contribute to a strong local housing market in 2014 are the low mortgage interest rates and declining unemployment rates....
Hopefully we will see some additional listings coming on the market in the Spring, as inventory levels are still quite low compared to previous years....
But wait, there is lots more news to read....
Click here to read the full February 2014 Harrisonburg and Rockingham County Real Estate Market Report.
An Important Caveat: Yes, our overall housing market is improving. But no, that does not apply equally to all price ranges, locations and property types. We can chat about your specific property to see whether that segment of the market is performing better or worse than the overall market.
And as always, if you're interested in talking to me about buying a home in Harrisonburg or Rockingham County.....or if you are interested in selling your current home.....just drop me a line by email (scott@HarrisonburgHousingToday.com) or call me at 540-578-0102.
Click here to watch a great video explaining why Harrisonburg, VA is the Dining Destination of the Shenandoah Valley.
Also, if you hadn't heard, Harrisonburg is now the first city or town in Virginia with a Downtown Culinary District!
City Council approved establishing the district Tuesday night (Jan 28, 2014), making Harrisonburg the first city or town in the state with such a designation, said Eddie Bumbaugh, executive director of Harrisonburg Downtown Renaissance.Read the full Daily News Record article here.
Or read more on the Virginia Main Street blog.
Here are some good primers to what you'll need to know if you are considering purchasing an investment property in Harrisonburg....
Types of Investment Properties In HarrisonburgIf you're thinking of buying an investment property in Harrisonburg, let's set up a meeting to discuss your goals and review some of the basics.
From the Matchbox Realty blog....
The Ice Factory is one of Harrisonburg's most exciting 2014 projects. The project features over 130,000 square feet of mixed use (commercial/residential) space offering a unique mix of both recreational and living space.View more details (and fun photos) here....
Ice Factory overview
Will they keep going down?
Lock in now....or soon!
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