Subscribe!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!
Buying
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Buy a home now while you still have options! |
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 It's December 30th, which means that we're less than 48 hours away from the largest inventory reduction that we've seen all year! OK --- perhaps I'm being a bit over-dramatic, but I predict that we will see a significant inventory drop as the calendar flips over from 2008 to 2009. Many listing agreements with hopeful home sellers were likely written with a December 31, 2008 expiration date, with a seller intending to try to sell until then end of the year and then re-evaluate. So...today, there are 778 residential properties for sale in Harrisonburg and Rockingham County. This includes single family homes, townhomes and condos. How many will still be on the market on January 1, 2009? Double check those available homes before the New Year rolls around before it's too late! :) | |
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Buying and selling in this real estate market |
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 As featured in the December Shenandoah Valley Business Journal... Absent hard data on the local real estate market, we could make erroneous assumptions by listening to national news stories. Here is a quick overview of how things stand in the Harrisonburg and Rockingham County real estate market: Are property values falling? No. The median sales price of all residential properties shows a 1% increase when comparing 2008 (Jan-Nov) to 2007 (Jan-Nov). Are buyers buying? Yes. However, it is at a significantly slower pace than last year. In 2007 we saw 1,182 residential sales (Jan-Nov) and this year we have only seen 861 sales (Jan-Nov). This indicates a 27% decline in market activity. Are sellers selling? Yes. Homes are selling at approximately the same pace as last year with an average "Days on Market" of 166 this year (Jan-Nov 2008) as compared to 171 last year (Jan-Nov 2008). Hopefully this draws out the realization that while the national housing market is not doing so well, our local housing market is a different story entirely. But yet, the state of our housing market isn't good news for everyone: A Buyer's Delight Buyers currently enjoy many housing choices, as the slow pace of sales provides for high inventory levels. Inventory levels have declined since September, and will likely continue to do so through the winter, yet current levels still provide buyers with many options for their next home purchase. The current slow rate of sales can allow for significant price negotiations in some instances. Even as median home sales prices stay steady, some sellers are ready to negotiate to provide for a faster sale instead of waiting for months amidst the masses of homes for sale. Buyers are also enjoying tremendously low interest rates, now below 5% again with many lenders for a 30-year fixed rate mortgage. The most recent time we have seen interest rates this low was in 2003. A Seller's Despair Despite no significant change in the time it has taken for homes to sell, high inventory levels equates to a long wait for many sellers. This can mean month after month of keeping a home ready to be shown, or it can equate to weeks or months of discouragement from a lack of showing activity. Buyers want to negotiate on price like never before, which means that not only do sellers need to price their homes competitively to attract market attention, they also need to still have room to adjust once negotiations begin. Many sellers of late find themselves balancing money and time as they consider a buyer's offer. Where We Go Next? As 2008 comes to a close, we still find ourselves in a buyers market, and we will likely see a similar market into the first and second quarter of 2009. We could start to see an across-the-board downward shift in home values, but if we were going to see a tremendous shift, I believe we already would have seen the start of it. One of my colleagues in the financial sector recently shared a great cliche about the housing market: "Most people get in too late, and they get out too late." As he pointed out, the second mistake has already been made by most. Don't let the first happen, too. | |
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Got Lead? Here's what you need to know! |
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 If you're buying a home built before 1978, you must know that your new home may very well have paint that contains lead (lead-based paint). This type of paint can be hazardous to your health -- especially if paint chips are ingested, or if dust from lead-based paint is breathed. Lead-based paint is more dangerous for children than adults because they are more likely to put their hands in their mouths, their bodies absorb more lead, and because their brains and nervous systems are more sensitive to the damaging effects of lead. So, what's a buyer to do? I have worked with buyer clients who decided not to buy a home built before 1978 because they didn't want to live with the possibility that lead might exist in the paint. If you see this issue in that way, it's probably not worthwhile to even go look at potential homes if they are built prior to 1978. Other clients that I have worked with are comfortable buying a home built before 1978, but thoroughly educate themselves on the risks and the precautions they should take. The principal fact to remember is that if you are engaging in renovations or remodeling that will disturb the paint (chipping, scraping, sanding), then you need to take precautions to protect yourself and your family. But what about the contract? An astute home buyer will realize that the sales contract allows them to test for lead. I haven't had a buyer engage in this testing, so I'm not too familiar with the process, but if you're buying a 1950's home, it wouldn't seem to me that you'd need to do testing to determine whether lead-based paint was present in the home. Additional Resources Here are some additional resources from the EPA that may be helpful for you.
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Offering to buy, or offering for sale, which comes first!? |
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 So you want or need to buy a new house, but you must sell your current house before you can close on the new one. Do you wait to try to sell your house until you have a contract on a new house, or do you wait to make an offer on a new house until you have a contract on your current house? This is a bit of a puzzling question in the current market, and two of my clients are currently wrestling with this enigma. Option 1 - offer to buy first
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Jump out there and make the offer! |
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 Home sales are slow which means that buyers will likely be able to negotiate on the price of the home they hope to purchase. All of my clients that have ears know this, and thus I often find myself answering the question of "how much do you think we could negotiate on the price?" I always have some thoughts on how much we may be able to negotiate, often influenced by:
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How close are buyers coming to the asking price? |
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 One issue that often seems to be on a buyer's mind these days is the question of how much they should be able to negotiate off of an asking price for a house. Let's take a look at closings from the past 30 days to provide some insight into what buyers are actually accomplishing right now in the market. Examining all residential sales in Harrisonburg and Rockingham County (10/17/2008 - 11/16/2008) we find...
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Would it be alright if we go see the house again? |
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 I sometimes have buyer clients who after seeing many homes, feel the need to re-visit one or some to further lock-in their priorities and decision. Sometimes these buyers tentatively ask if it would be o.k. to revisit such a home. My answer? Absolutely! If we need to return to a home a second time (or a third time) to take room measurements, get a feel for the layout and flow, become comfortable with the size of the yard, that's fine! Buying a home is a huge investment of your money, and your new home will hopefully be where you live for many years to come. Let's make sure we're finding you the right house! | |
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Looking for investment properties in Harrisonburg? |
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 Some investors wonder whether there are any good opportunities anymore in buying investment properties. You will find good investment opportunities if...
If you're interested in seeing either of these properties, or having an investment analysis for these or other properties, feel free to call (540-578-0102) or e-mail me (scott@cbfunkhouser.com). | |
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Comparing Good Faith Estimates (GFE's) |
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 I always encourage my buyer clients to talk with at least two lenders. Different lenders offer different loan programs, closing costs, incentives, and more. Often, however, this leads to comparing what can be two very confusing documents --- the good faith estimates from each lender. The Good Faith Estimate is a document intended to outline all of your purchasing costs, and thus is a good document to use when deciding between your two favorite lenders. But it can often be quite difficult to make the comparison because costs can have so many different names on the GFE, and because there are non-lender fees included in these estimates. If you are deciding which lender to use based on closing costs, remember to subtract out all of these costs before you make the comparison:
I hope I haven't complicated things further --- just remember that you should not just look at the bottom line of the Good Faith Estimate when you are comparing lenders. | |
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Covenant Heights - affordable housing in Harrisonburg |
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Hope Community Builders is a non-profit organization in Harrisonburg who builds and sells high quality, affordable housing for those who otherwise may not be able to afford to buy a home.  As an example, someone who can only qualify for a $140,000 mortgage, may still be able to purchase one of these brand new duplexes or townhomes in Covenant Heights that are selling between $168,000 and $175,000. Here are some same financing scenarios from recent purchasers...  As you can see, there is a potential for $150 to $175 a month savings on mortgage costs. For more information about Covenant Heights, either...
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Discovering Termites at Closing |
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 That's not to imply that any settlement agents in Harrisonburg have wood-destroying insects in their conference rooms, but rather... The standard Virginia purchase contract places some minimum termite treatment and repair requirements on the Seller, but does not mandate disclosing the infestation or damage at the time of discovery. Here's what you need to know:
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Choosing a Realtor as a First-Time Buyer |
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If you're buying a home as well as selling a home, many people select the Realtor that they will work with based on how each Realtor will market their home for sale. If you're a first-time buyer, and you don't already have a relationship with a Realtor, this leaves you with the following main options:
Set up a brief meeting with a few Realtors and talk to them generally about what is important to you in a house, and in a Realtor. Select the Realtor you will work with through the buying process based on having had real, in-person conversations with several Realtors so that you understand the service that they will provide to you, and so that you can sense whether your personality and communication styles will work well together. I would certainly love to be one of those Realtors you talk to as you decide who to work with through the buying process. Call (540-578-0102) or e-mail (scott@cbfunkhouser.com) if you'd like to set up a time to get together, perhaps for some coffee. | |
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Multiple offers? In this market? |
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Yes --- sometimes we are still seeing multiple offers! A house that shows well, is priced well, and is marketed well can still generate strong buyer interest --- even in a market where we are seeing 22% fewer sales than last year. We received three offers in the first week on this delightful home on the northern end of Harrisonburg.  1143 Waterman Drive, Harrisonburg, VA | |
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What if you could buy a house for $100.00!? |
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 In some real estate markets, home owners are turning to a raffle to try to sell their home. (Thanks to Josh for the tip!)For example, Angela Schaab in Grand Rapids, Michigan is attempting to sell her boardwalk condo by selling 2,500 $100 raffle tickets. As of today (9/27/2008) she has sold 235 tickets. Or, read the story of several owners attempting raffles in the Wall Street Journal's Raffles: Real Estate's Latest Game of Chance. So --- what do you think? If there were a house on the market in Harrisonburg, and you could buy a raffle ticket for $100 --- would you buy one? | |
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Three small, but significant words . . . "on or about" |
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 The "Settlement" section of a standard Virginia real estate contract reads....Settlement shall be made at the office of the Purchaser's settlement agent on or about October 1, 2008. Did you catch the three small words so innocently wedged between the location and date of the closing? The meaning of those three words (on or about) is often overlooked! Some sellers think, or assume that the date filled into the contract will be the actual closing date. It very well might be --- but oftentimes a buyer or seller's circumstances will shift it a few days in either direction. So, the first thing to remember is that it is usually just a close estimate of when the closing will occur. But what happens if (in the above example) a buyer informs the seller that they won't actually close until October 22nd --- three weeks later. May the seller indignantly demand that the buyer close on October 1st, OR ELSE? Contractually, no! "On or about" is typically understood to mean plus/minus 30-60 days, depending on the attorney. That certainly allows for some flexibility, and this is the second thing to remember --- the standard contract language will not allow you to precisely plan the day or week of closing. So, what is a seller to do? BAD: If you need to close on a precise date, or no later than a particular date, you'll want to add "time is of the essence" to the standard contract language. With such language, if the settlement does not take place by the date in the contract, the contract automatically becomes null and void. Of note -- I rarely suggest using "time is of the essence". Having the contract "die" after a certain date usually doesn't help either the buyer or the seller. If the buyer wants to buy, and the seller wants to sell, and the final closing documents are one date late, should the deal really automatically die?? BETTER: A better option is to introduce a (positive or negative) financial incentive for the buyer to close in a timely fashion. Perhaps a positive financial incentive for closing on (or before) the scheduled closing date. Or, an increased purchase price or other penalty if the closing is more than X days later than scheduled. BEST: Leave well enough alone --- don't change the standard contract language. Understand the above, but be flexible and willing to adjust, within reason to make the closing process smooth and successful. I hope this is clear --- feel free to leave a comment below, or call/e-mail me for further clarification. | |
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What is market value? |
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I received a call the other day from a Realtor who was representing the seller of a house that I had showed to some of my buyer clients. I was informed that "the owner just had the house appraised, and the appraisal came in $20,000 above the asking price." I believe the conclusion that I was supposed to come to was that the house was a great deal, even at the asking price.
Certainly, this is a bit ambiguous, but my main point is that we can't make any assumptions about what the market value is of a house. | |
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Price Points: estimating housing payments... |
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I often have conversations with people considering their first home purchase who want to first get an idea of how much they would have to pay for housing on a monthly basis. I have devised an Excel mortgage calculator that I can use to give them a rough idea, or I recommend that they call a lender to get pre-approved. | |
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The effects of motivated, equity-laden home sellers |
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As I regularly mention, even though home sales are down in this area (the number of properties being sold) -- median and average prices are staying steady or increasing slightly. And yet, there is an interesting phenomenon going on that I have observed several times lately in different neighborhoods in Harrisonburg... | |
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The time-value of an interest free $7500 loan to first-time home buyers |
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Over the past few weeks I have been explaining to many first time home buyers that if they buy a home before July 1, 2009 they can take advantage of a $7,500 tax credit. Some, though, have been less than enthused because the full $7,500 tax credit has to be repaid over 15 years. Yes, that's right --- even though you will pay $7,500 less in taxes for the tax year in which you make your first home purchase, you do have to repay these tax savings in years three through seventeen. I thought I'd take a look at the value of what is essentially an interest free $7,500 loan. For this analysis, I am examining the aggregate savings from not paying interest on the $7,500, using a current interest rate of 6%.  As you can see --- over the course of the 17 years, you save a total of $4,050. Thus --- even though you are paying back the $7,500 tax credit, it is still at a significant ($4,050) savings. | |
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Go For The Gold: How to compete and win as a home buyer |
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Are all buyers created equal? Certainly not --- especially from a seller's perspective in our current market.  Here's how I would rank buyers, from the most exciting to sellers (#1) to the least (#9)...
The good news is that you can (sometimes) take steps to move up this list:
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Scott Rogers
Coldwell Banker
Funkhouser Realtors
540-578-0102
scott@cbfunkhouser.com
Licensed in the
Commonwealth of Virginia
There are now only 736 residential properties for sale --- that's a decrease of 42 homes (5.4% reduction). Not as big of a a shift as I had imagined!
January 2, 2009 4:23 pm
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