If you're looking to buy a house right now, this might be a familiar experience...

A new listing hits the market that seems to fit ALL of your needs...

Welcome to Island Ford Estates in McGaheysville, VA!

The same builder who brought you The Glen at Cross Keys is now building a very similar floor plan just a few minutes further East in McGaheysville...

The site is being prepared for these duplexes -- and wow -- what amazing mountain views!

Island Ford Estates duplexes offer an open floor plan on the main level which includes a kitchen, dining area, living room, master bedroom, office or sitting room and laundry room. Enjoy spectacular mountain views and a cul-de-sac location in these thoughtfully designed homes. These homes feature 9 foot ceilings in many areas, light-filled living areas, luxury vinyl plan flooring, upscale cabinetry, granite countertops and many options and upgrades.

Visit IslandFordEstates.com to find floor plans, a site plan, standard features, a vicinity map and more!

 

Most folks who buy a home this year will not be paying cash. An important early stage of the home buying process is to talk to a lender to become pre-approved for a mortgage. As you meet with a lender, remember that there is often a difference between:

• How much money you can borrow to purchase a home.
   
  
• How much money you want to borrow to be comfortable with the monthly payment.

When you are just starting the home buying process, I recommend that you talk to one lender to get a rough idea of the price range of home you will pursue and to make sure there aren't any credit issues that would be a surprise to you. Once we are ready to make an offer, or after we have a contract on a house, it then makes sense to check with at least one additional lender to make sure that the interest rate and loan terms offered by the first lender are competitive.

If you are looking for a qualified mortgage professional, shoot me an email (scott@hhtdy.com) and I can give you some recommendations.

As you are navigating the home financing process, I am happy to help you understand the information you are receiving and the decisions you are being asked to make. There are a variety of loan programs that can likely work well for your situation, but we'll want to make sure you are aware of all of your options.

Learn more about the home buying process at BuyingAHomeInHarrisonburg.com.

 

In summary - not yet.

If you need to sell your house in order to buy a new house -- and if your house is not already under contract -- then even if you find your DREAM HOME -- resist the temptation -- do not make an offer yet!

If you make an offer on a house with a home sale contingency without your house already being under contract...

So -- if you view your dream home and you are ready to make an offer but have to sell in order to buy -- don't make the offer yet -- instead...

 

Most buyers looking to spend over $400K (or certainly those looking over $500K) will also be considering building a new home.

Typically, the tension between buying vs building is one of:
     1.  Goals
     2.  Money
     3.  Timing

If you build, you can get the house you want, but you'll pay more for it and it will take a lot of time and attention. 
     1.  Goals = Win
     2.  Money = Lose
     3.  Timing = Lose

If you buy an existing home, you won't get exactly what you want, but you will pay less for the house and the process will not be a drain on your time.
     1.  Goals = Lose
     2.  Money = Win
     3.  Timing = Win

Don't let my oversimplification of this issue fool you -- this is something that buyers can get stuck debating for months, or even years, often while looking at resale homes to try to convince themselves to buy instead building.

If you are stuck in this quagmire, I'd be happy to meet with you to talk through some of the pros and cons and try to help you come to a decision you'll be pleased with in the short and long term.

 

If you have lived in Harrisonburg for a while (more than a few years) which side of I-81 do you live on?  The East or the West?

Would you consider moving to the other side of I-81?

Regardless of which side you are on now, I'm guessing most of you wouldn't flip-flop to the other side.

Most people stay on one side of I-81 after they buy on that side -- because they get used to the patterns of life on that side of our community.  Nothing is necessarily better or worse on one side or the other -- but they are different, that's for sure.

EAST:  Most of the residential development over the past 15 to 20 years has been on the East side of Harrisonburg, in the general vicinity of the new hospital.  This makes it an exciting place to live -- for some people.  There are many newer developments where homes have recently been built, and there are newer commercial destinations (Stone Port, Martin's grocery store, Target, etc) all on the East side of town.  But this also makes it a bit more hectic for getting around.  Of note, there is also plenty of outbound traffic East of town, towards Massanutten, Elkton, Charlottesville, etc.

WEST:  There hasn't been as much residential development West of Harrisonburg over the past 15 to 20 years (other than Belmont and Monte Vista Estates) and this is just fine with most people who live on the Western side of Harrisonburg.  Things are a bit calmer, without as much hustle and bustle, and in some cases with more established neighborhoods.  The towns of Dayton and Bridgewater end up falling into this side of town as well for many people.

I am not doing justice to all of the differences between the East side of town and the West side of town, but I believe that most people in this area are oriented towards one side of town or the other, for very specific reasons.  Furthermore, most people who have spent any considerable amount of time living on one side of Harrisonburg likely wouldn't think about moving over to the other side of Harrisonburg.
 
So -- if you're just moving to the area -- choose East or West carefully -- you might never switch to the other side!  :-)

 

Let me know if you have questions about how I have described these sequences -- and let me know if you would like a few recommendations for lenders in the Harrisonburg area.

 

If you have three non-negotiable home search criteria, it is important to reflect on (or at least be aware of) how much overlap exists between these criteria. 

Above are two examples of this way of thinking about your home search....

The first set of buyers will likely have lots of options (large yellow overlap area) because many homes share these criteria:

The second set of buyers will likely have very few options (small yellow overlap area) because there are very few homes that share these criteria:

These are fictitious illustrations -- they don't represent the actual amount of overlap that does or does not exist based on the criteria noted above -- but you should give some thought to how small of an overlap area you are creating for yourself based on what you are defining as non-negotiable in your home search.

If that area is too small, you'll have very few options to consider, and eventually you may decide to flex a bit on what you had previously considered to be a non-negotiable point.

 

Only 3% of local home buyers spend $500K or more on their home purchase (per sales data over the past year) but this segment of the local housing market has been strong over the past few years.

As shown above, there were 40 home sales over $500K last year - more than any time in the past decade.  This year we seem to be on track to possibly match that, with 33 home sales over $500K in the first eight-ish months of the year.

Reigning in our enthusiasm a bit, though, this is a relatively small number of buyers.  If you are selling a home over $500K, you need to keep in mind that only about 40 buyers per year (just over 3 per month) spend that much money on a home in ALL of Harrisonburg and Rockingham County!

Let's look a bit further into even smaller segments of the high end local market...

While last year (15 home sales) wasn't quite the strongest year for $600K+ home sales -- this year looks like it will be.  We have already -- in eight months -- matched the highest number of $600K+ home sales seen in a year when looking back for 10 years.

And one more look at an even higher price point...

Above, you'll see that most years there are only 5 or fewer home sales over $700K.  But back in 2015 there were 11 (which was more than double the norm) and this year there have already been 10 such home sales!

So -- overall, the high end home sales market is doing well -- comparatively, but that is not to say that selling a home over $500K is an easy task - it's not.  Home sellers over $500K are aiming for a tiny pool of potential buyers -- even if that pool of buyers might be slightly stronger this year than last.

 

Mortgage interest rates kept dropping lower - and lower - and lower all summer long!  The current average rate for a 30 year fixed rate mortgage is only 3.55%, well below the 12 month average of 4.3%. 

If we look back even further, we're approaching the lows of mid-2016...

All of this adds up to VERY favorable times to be buying a house - in that you can lock in your monthly housing costs at some of the lowest long term interest rates ever seen.

 

Looking at two different price points for townhouses ($175K, $225K) a quick analysis would indicate that...

If you are making a low offer, you can increase the appeal of your offer by strengthening your other offering terms....

DEPOSITS
Make the largest deposit you are comfortable with so the seller knows you have money "on the line" and that you won't risk losing that money by attempting to walk away from the deal.

CLOSING COST ASSISTANCE
Sellers don't just look at the contract price --- they calculate their net proceeds based on the offer price and any credits or closing cost assistance. Only ask for assistance if you truly need it.

FINANCING
Provide as much detail as possible about your financing intentions, and always include a pre-approval letter. Sellers who believe you are capable of financing the purchase will be less hesitant as they consider other terms of your offer.  And yes -- offer cash, a large pile of it, if you are able.  :)

PERSONAL PROPERTY
Don't automatically ask for everything the seller intends to convey --- if you don't need them all, leave them out of the offer. Allowing the seller to keep their washer/dryer (for example) may make them more flexible in other areas.

INSPECTIONS
Having a professional inspect the property you are purchasing is usually a good idea; however if you only intend to do it for informational purposes, consider leaving it out of the contract negotiations and conducting it post-settlement.

SETTLEMENT & POSSESSION
If possible, cater your settlement date and the details of transferring possession of the property to the needs or wants of the seller. This can go a long way towards gaining seller flexibility on other contract terms.

Finally, research the seller's context for selling. That information can be invaluable in negotiating a successful contract.

  

Several buyers have recently asked me about how to determine how much they can and should spend on a home purchase.  Those are actually answered differently...

CAN -- How much you *can* spend will best be determined through a conversation with a mortgage lender.  They will evaluate your income, existing required recurring debt payments, credit score, etc., to tell you the maximum that you can spend on a home.

SHOULD -- How much you *should* spend is best determined by calculating what portion of your income you are comfortable spending on housing while still having enough left over for all of your other life expenses.  In other words, a budget! 

I created the budget spreadsheet shown above (download it here) as a starting point for thinking this through.  Let me know if you have questions about how to use this spreadsheet.

 

And let me know if you'd like a recommendation on a local mortgage lender. 

 

Summer is here! Oh wait, summer is gone!?  Once that first week of August hits, it seems it's almost time for school to start again.  Where did the summer go!?!  While I ponder how another summer flew by so fast, let's take a few minutes to reflect on the state of our local housing market.

But first - the beautiful home pictured above is this month's featured home - a spacious upscale home in Barrington with a finished basement, guest house and private courtyard!  Check out the details at 2860BarringtonDrive.com.

Now, onto the data!  Download the full 28-page market report as a PDF, or read on...

As shown above, July was a strong month for home sales...

As shown above, there are some differences in these two broad segments of our local market...

This is the slooooooooowest moving graph ever - it looks at a rolling twelve months of sales data.  Here, though, we see that the general trend is a consistent-ish pace of home sales -- and slowly rising prices.

And when we look for some overall indicators just for detached homes...

This is where we see (above) that despite some year to year turbulence as to the pace of home sales, we're seeing overall increases in sales prices all the way back to 2014.  Some years (2015, 2016, 2017) have been larger increases than others (2018, 2019) but it has followed the same general trend.

So, what's next?

Well -- it would seem we are likely to see another strong month of home sales in August.  After all, we saw an uptick (from 119 to 126) in July contracts, and over the past five months there have been 684 contracts signed, as compared to only 670 during the same months last year. 

How, though, will those contracts come together with such limited inventory?

That is, of course, an excellent question!  Inventory levels have fallen 22% over the past year.  This means today's buyers are finding fewer and fewer options when looking for a home to buy at any given time.  That said - a relatively consistent number of homes are selling - so a buyer might just have to be a bit more patient, and then be ready to jump quickly when the right house comes on the market.

And one last note about mortgages and financing...

In case you missed it, today's buyers are locking in below 4% on 30 year fixed rate mortgages!  We went through 16 months with rates above 4%, and we have now been back below 4% over the past few months.  Anyone who locked in at 4.25%, 4.5%, 4.75%, etc., still has a wonderful long-term fixed rate mortgage interest rate -- but 3.something? Wow!

I'll wrap it up there for now, with a few closing thoughts...

 

Some buyers are close -- so close -- but not quite in a position to be able to make an offer yet on a house.  It might be a matter of a few weeks -- or a month or two -- before you are able to actually sign a contract.  This might be because you are waiting for a new job to start, or to finish paying off your car, or any number of other reasons.

So -- if you're not able to make an offer on a house quite yet, should you still start looking at homes?

Yes and no.

YES - you should start looking at homes...

Moving from one house to another is tough work!

Even tougher (sometimes) is arranging the timing and logistics to work well for all parties.

If you're selling a house in order to buy a house, it's possible that...

Buying a house can be an enormous decision - full of plenty of emotions - anxiety, apprehension, excitement and much more!  Buy a house is likely to be one of the largest financial decisions you will ever make - AND you are making a decision (where you will live) that will affect countless other aspects of your life, likely for many years to come.

So, are you good at making difficult decisions in a highly emotional state?  Many people find that to be difficult!

Let's imagine this scenario -- you're buying a $245,000 home and you are SO excited to buy it because if it's charm, character, location, and so much more!  It is within walking distance of the downtown scene - and even though it is an older home, it seems to have been well maintained and updated.

But then, you do the home inspection and you find out that the ___ will need to be replaced in the next few years.  Technically, this could be any number of items -- heating system, roof, appliances, etc. 

What to do...what to do!?

Perhaps it is going to cost another $5,000 to make this update - and the seller is not willing to adjust the contract terms based on your inspection findings because, after all, the ____ is still working properly now.

So - do you throw the whole purchase out the window?  You're going to have another $5,000 of costs within the next few years!?  The seller should be willing to negotiate to cover some of that cost!?  Is your "really good decision" now actually a "really bad decision"?!?

This advise is not prescriptive to all situations, but I would encourage you to consider the big picture as rationally as possible.  You are about to buy a home that is (in my fictional scenario) going to totally change your life.  It's a home you can see yourself living in for 10 - 15 years.  You look forward to the memories formed in the house, the places you can walk and experience based on its location, the opportunity to have a garden in the backyard, and so much more! 

A question that you could then ask yourself would be whether you'd pay $250K for this awesome, amazing, perfect, life changing house and opportunity, instead of the $245K you have contracted to pay.  If so, and if you'll have cash available to make the needed upgrade to the ____ sometime in the next few years, then maybe it's not really a terrible idea to continue with the purchase despite the newfound information about the condition of the house and despite the seller's unwillingness to assist with it financially.

Again - this is not generic advice of "don't worry about the issues that come up in the inspection" - but more of an encouragement to consider the big picture of what you are buying, why you are buying it, what it is worth to you, etc.

 

There are a lot of types of basements - and they have very different values to buyers and appraisers.  Here are a few examples, to get you thinking...

The blue line above shows the number of homes for sale at the end of the month for the first six months of last year, 2018.

The orange line shows the same (homes for sale at the end of the month) for the first six months of 2019.

Last year, inventory levels rose 24% between the end of January and the end of June.

This year, inventory levels actually dropped negligibly (by one listing) between the end of January and the end of June.

So - for all you would-be home buyers out there feeling like you don't have many options, or that the ones you do are going under contract quickly after having had multiple offers, the data backs up the pain you are feeling.

What's next?  How do we get out of this trend of fewer and fewer homes for sale?  New construction is the likely anecdote, but there doesn't seem to be a whole lot on the horizon right now.