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The median sales price of building lots (less than an acre) skyrocketed in 2005 and 2006 up to a peak of $99,900.  But alas, these elevated values did not stick -- they fell just as quickly back down to $58,300 just two years later in 2008.  After several years now in the mid $50K's, it seems (relatively) safe to say that the value of building lots has stabilized at a median of around $55,000.  Lot sales also seem to have stabilized because the decline in the annual number of lot sales has ceased.  There were more lot sales in 2010 than in 2009, and we seem to be poised to have another increase in 2011.

The good news (perhaps?) is that this is still an overall increase above where values were before the rapid 2005/2006 escalation.  In 2004, the median sales price of such building lots was $42,000, which makes today's median value of $55,000 a reasonable place to be given long term gradual increases in values.
 

The abundance and low prices of re-sale homes can cause great frustration for custom home builders these days.  Over the past few months I have had lengthy conversations with several clients who want to build a new home.....but then they get sidetracked by re-sale homes.

They start out, you see, quite focused on buying a lot, selecting and designing floor plans, hiring a builder, and building their dream home ---- but WAIT!  Just before they tip the first domino, they take a look online at a few re-sale homes and they start to second guess themselves.

They're about to build a $400,000 home, and they think they see comparable re-sale homes (that are only a few years old) for only $350,000.  Or they're about to build a $475,000 house, and there seem to be quite a few comparable $430,000 homes that are only a few years old.

My universal answer to this angst is to suggest that we spend some time viewing the re-sale homes.  I suggest to them that looking at the re-sale homes will DEFINITELY give them their answer.  They'll either confirm their decision to hire a custom builder --- or they'll fall in love with a re-sale home and move forward in that direction. 

You'd think, with the price gaps we're discussing, that these clients would often end up buying a re-sale home --- but that's not usually what happens.  While there are some compelling re-sale houses for sale, they almost always determine that they'd rather pay more to have a house exactly how they want it.  Sometimes this is the floor plan, sometimes the neighborhood, or the lot size or topography, or the exterior materials of the home, or the interior finishes, or the level of maintenance needed into the future, or the views.......or a combination of many of these.

Sometimes this process will result in one of my clients deciding to buy a re-sale (instead of hiring a custom builder), but it almost always is a process that helps to confirm their decision to move forward with a custom build.

If you're in this situation --- ready to build, but full of self-doubt when examining the re-sale market --- please be in touch.  I'd be happy to help you explore the re-sale market to either confirm or derail your current plans.
 

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:

• Magnolia Ridge and Crossroads Farm led the way with the most frequent lot sales. 
• Massanutten Resort and Stone Spring Manor were the most affordable lots. 
• Crossroads Farm and Belmont Estates were the most expensive lots.

Where, though, are lots currently for sale if you were looking to buy a lot in or near Harrisonburg?  (I excluded a few subdivisions further outside of Harrisonburg.)

A few notes:

• You have the most buying options in Crossroads Farm and Magnolia Ridge -- also (interestingly) where the most lot sales were in 2010.
• The most affordable lots are currently for sale in Holiday Hills and Sunset Heights.
• The most expensive lots are currently for sale in Crossroads Farm and The Springs at Osceola.
  

One more interesting (and not so exciting) look at the lot sales market....

• In 2010, there were 63 sales of lots of less than an acre in Harrisonburg and Rockingham County.
• There are currently 341 lots for sale of less than an acre in the same area.
• Thus, it would take 5.4 years to sell all of the lots that are currently for sale....if no other lots were listed in that time period.

 

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.
 

Using data provided by the City of Harrisonburg, the information below is what I am finding on vacant land in the City of Harrisonburg.  Bear in mind that there is a bit more vacant land than referenced below, but I chose to exclude land owned by educational institutions, local government, religious organizations, state government. 

Vacant Land In Harrisonburg:

• 918 Residential Parcels (750 acres)
• 135 Multi-Family Parcels (192 acres)
• 216 Industrial Parcels (484 acres)
• 183 Commercial Parcels (320 acres)
• 14 Large Parcels (88 acres)

This is a total of 1,466 large parcels totaling 1,833 acres.

• The 1,466 vacant parcels account for 10% of the 15,075 total city parcels.
• The 1,833 acres account for 19% of the 9,655 total city acres.
  

Here is a visual to show the amount of vacant land remaining in the City of Harrisonburg:

Rockingham County, Virginia (not including the City of Harrisonburg) is comprised of (approximately) 46,600 parcels of real estate.  Some of these lots or tracts are very small, in towns such as Grottoes, Dayton or Elkton.  Others are quite expansive and are in the far flung corners of the County.  Below is a visual representation of the distribution of lot sizes of those 46,600 properties --- you might need to click on this link to view the full size document for easier reading.


Here's the summary:

• 20,108 parcels less than a half acre
  
• 6,889 parcels of 0.5 - 1 acre
  
• 9,801 parcels of 1 - 5 acres
  
• 5,513 parcels of 5 - 20 acres
  
• 2,355 parcels of 20 - 50 acres
  
• 1,933 parcels of 50+ acres

There is quite a bit more to break down from this data set, but here are a few interesting surface level observations:

• Almost half (43%) of the parcels in Rockingham County are less than a half acre
  
• 79% of the parcels in Rockingham County are less than 5 acres
  
• There are a lot (1,933) of large tracts of land (50+ acres) left in Rockingham County

And the most interesting facts I've gleaned from this data thus far revolve around the largest parcels in Rockingham County:

• The largest parcel in Rockingham County is owned by the (and is the) U.S. National Forest, with a size of 140,001 acres.
• The second largest tract is 37,980 acres, and owned by the U.S.Department of the Interior --- I'm guessing this is also National Park land...
  
• These two largest parcels combined encompass one-third (33%) of the total acreage of Rockingham County.
• The combined value of these two parcels (though I doubt they pay property taxes!?) is roughly $186 million!
  

As I expressed some time ago, my hope for the 2009 Harrisonburg and Rockingham County real estate market is that we would see the end of the ever-decreasing number of home sales in our market.  We have seen (approximately) a 25% decrease in number of sales between 2006-2007, 2007-2008, and 2008-2009.

Lot sales, however are doing much worse!



In the first four months of this year (2009), In all of Harrisonburg and Rockingham County, there have only been 11 lot transfers of less than one acre. 

Most homeowners, or those who hope to be homeowners in the future may not have paid too much attention to the news earlier this month that Harrisonburg water and sewer connection fees will be increasing. But maybe we all should have taken note . . .

The Change

Example #1: three-quarter-inch water meter --- in this example, the sum of the water and sewer connection fees will soon be $7,000, instead of the existing $2,000. This size would be typical for a single family residence.

Example #2: a six-inch water meter --- in this example, the sum of the water and sewer connection fees will soon be $300,000, instead of the existing $17,500. This size would be typical for a large commercial project.

Peruse the current fee schedule here, and the new schedule here (effective July 1, 2008).

The Effect

As Todd Rhea, of Clark & Bradshaw, commented at last week's Smart Growth Symposium, when builders or developers are faced with new fees, we're fooling ourselves if we think they absorb those costs. They ultimately get passed on to the buyer. With this logic, one could argue that city housing costs will increase universally by $5,000 come July.

Action Item

Builders and developers should note that the fees are charged at the time of obtaining the building permit --- so as long as a lot has a building permit prior to July 1, 2008, you can take advantage of the lower fee schedule.  For a developer of a major residential or commercial project, this could equate to hundreds of thousands of dollars of savings.

I have heard some people talk about development as if in the next few years, or decades, all of Rockingham County will be developed --- with the farm land destroyed, and our history no longer preserved.

Below I'll try to put that thought in the context of actual land use, but for the record --- I don't think many at today's Smart Growth Symposium thought that the above statement is true.  (Lest anyone conclude that I am referring to any of the attendees).



The data above is extracted from the Rockingham County Comprehensive Plan, particularly page 18 of the section on Strategies, Policies and Actions.

Here's the full list of how Rockingham County land is being used:

• Agriculture - 248,000 acres (46%)
• Forest - 50,000 acres (9%)
• Commercial - 4,000 acres (0.7%)
• Industrial - 1,400 acres (0.3%)
• Single Family Residential - 44,000 acres (8.2%)
• Multi-family or Duplex - 175 acres (<0.1%)
• Mobile Home Park - 1,100 acres (0.2%)
• Federal Government - 178,000 acres (33%)
• State Government - 500 acres (0.1%)
• Local Government - 1,700 acres (0.3%)
• Regional Government - 130 acres (<0.1%)
• Charitable/Religious/Education - 2,300 acres (0.4%)
• Other - 7,000 acres (1.8%)

As you can see --- 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.

Over the past several years, prices of lots in eastern Rockingham County, particularly in the Peak View school district have increased dramatically.  However, in 2007, the average sales price dropped below the 2006 average sales price. 

2003:  $47,546  (81 sales)

2004:  $55,354  (112 sales)

2005:  $89,112  (98 sales)

2006:  $118,075  (51 sales)

2007:  $110,875  (35 sales)

As you can above, during this same time, demand for lots decreased rather significantly.  This was compounded by the fact that the inventory of available lots increased during the same time --- there are currently 109 lots available in the Peak View school district, as follows:

Subdivision	Lots for Sale	Average List Price
Barrington	3	$112,433
Battlefield Estates	3	$89,500
Bridlewood	2	$106,200
Crossroads Farms	22	$130,482
Givenchy Commons	10	$129,900
Great Oaks	1	$99,900
Highland Park	2	$118,700
Lakewood	1	$109,900
Magnolia Ridge	65	$117,888