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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Monthly Housing Costs On The Rise |
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 It should come as no surprise that monthly housing costs are increasing, after all...
Thus, the 22% increase in monthly housing costs over the past three years should not be too surprising. For this analysis, I am measuring "monthly housing cost" by determining the mortgage payment amount (principal, interest, taxes and insurance) for a median priced home in Harrisonburg and Rockingham County, if a buyer were financing 80% of the purchase price and paying Harrisonburg real estate taxes. Looking forward, I would expect that all three of these factors (prices, interest rates, tax rates) that influence housing costs would likely continue to increase. | |
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When To Get Serious About A Mortgage For Your Home Purchase |
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 Here are the three sequences I see buyers follow most frequently....
As Late As Possible
Incredibly Proactive
A Reasonable Middle Ground
I try to encourage all of my clients to at least be in the "reasonable middle ground" sequence as outlined above. This gives them a firm idea of what they can afford and how a home price will compare to a loan payment. This also allows them to make a stronger offer, already having a pre-qualification letter in hand. I strongly discourage my clients from following the "as late as possible" sequence as outlined above. This doesn't help them make the best decisions about which houses to pursue, how far to negotiate, etc. This also doesn't allow us to make as strong of an offer on a house. Occasionally, one of my clients will fall into the "incredible proactive" sequence as outlined above, and wow, this makes the financing process a joy to work through! These buyers have already done so much of their work with the lender before even thinking about which house to buy -- which then allows them to focus on buying, negotiating, inspecting, etc., rather than be bogged down in the process of securing their mortgage. 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. | |
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Can All Homes In Harrisonburg Be Rented To Groups of JMU Students? |
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 With great regularity, potential buyers (either investors or parents of JMU students) will ask if a single family home can be purchased and rented to a group of JMU students -- often an intended group of four or more students.
I let them know that it will be no problem at all -- the adjoining property owners in the quaint neighborhood probably won't mind as long as the students aren't too bothersome -- and the City doesn't mind at all if their zoning ordinances are violated, so long as it's just "nice college kids".... WAIT! NOT REALLY! READ ON!!!! It seems that some buyers are really getting that feedback of "sure, it will be fine" -- though I'm not sure if they're getting it from their Realtor, or from someone else advising them in the transaction, or if they just aren't thinking about whether their planned use of a property is allowable. The REAL answer, and the feedback that I ACTUALLY provide to my clients is.... 1. We need to check to see how this property is zoned, and whether that zoning classification allows for that number of unrelated people to live in the property. 2. We need to check to see if there are recorded restrictive covenants for this neighborhood that restrict the number of unrelated people who live in the property. A few notes.... 1. Most single family homes in the City of Harrisonburg are zoned R-1 or R-2 and do NOT allow for three or more unrelated people (students or otherwise) to live in the property. 2. If a property has been used in a non-conforming manner (for example, four students living in it) since before the zoning ordinance was put in place, without a 24 month gap in the non-confirming us, it MIGHT be possible to continue to use the property in that non-conforming manner. And, if #2 above is starting to get confusing, then we arrive at my main reason for writing today.... CALL COMMUNITY DEVELOPMENT TO UNDERSTAND ALLOWED USE OF A PROPERTY! Yes, in fact, there are very helpful City staff in the Community Development department -- who can very quickly help you understand whether a property can be legally used as you intend to use it. And it is imperative that you make this call BEFORE you buy the property, and even BEFORE you make an offer on the property! | |
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Mortgage Interest Rates Edge Back Down, A Bit |
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 Mortgage interest rates have steadily climbed over the past nine months -- from 3.78% last September to 4.66% about two weeks ago. Now, however, they have drifted back down a bit to 4.56%. Will this be a trend? Are we headed back below 4.5%? Not necessarily. But -- it might be an indication that we're not going to keep on rolling all the way up to 5% anytime soon. If you are buying a home and are under contract to buyer a particular property and have not yet locked in your mortgage interest rate, this week would seem to be a particularly good time to do so. Explore historical interest rates here. | |
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Showing Feedback Unrelated To Price Might Really Be Related To Price |
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 My house has an unbelievably steep driveway, but all of the potential buyers (who did not make an offer on my house) didn't complain about price, they complained about the steep driveway. My house is next to the railroad tracks, but all of the potential buyers (who did not make an offer on my house) didn't complain about price, they complained about the railroad tracks. My house is needs many cosmetic updates, but all of the potential buyers (who did not make an offer on my house) didn't complain about price, they complained about the need for cosmetic updates. Guess what --- unless you're going to flatten the driveway, move the railroad tracks (or the house), or make all of the cosmetic updates -- it really is an issue of price! If you're getting consistent feedback about your house that is unrelated to price, in almost all cases, you need to adjust the price to accommodate for that specific issue. If the price is lower then buyers might actually buy despite the specific issue that they were complaining about. | |
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FOMO (Fear Of Missing Out) in Real Estate is Real and Reasonable |
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 OK -- I'll bend the definition of FOMO a bit to make a point. The "real" definition -- "anxiety that an exciting or interesting event may currently be happening elsewhere, often aroused by posts seen on a social media website" But then, for real estate... Sometimes a property can be on the market for a few weeks (or even a few months) without an offer -- and then when an offer comes in, all of a sudden a 2nd or 3rd buyer is also then ready to make an offer. So, what's happening here? Is it random timing? Likely not -- I think it is FOMO -- Fear Of Missing Out...
So, as a seller -- if you have had a good number of showings, but no offers -- don't be surprised if a second offer quickly materializes after the first offer comes in. And as a buyer -- if you are still potentially interested in a house, but have not made a decision about making an offer -- make sure the seller's Realtor knows of your continued interest, so that they can alert you or your agent if an offer does show up. The seller will want to make sure you have the opportunity to make an offer as well. | |
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This House Is Sold AS IS, Inspection For Informational Purposes Only |
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 Sometimes a seller is stating this as soon as they list a property: All inspections are for informational purposes only. or This house is being sold in "as is" condition. And, sometimes a seller will introduce this amidst negotiations. This can certainly trigger some warning signals for a buyer......but should it?
Here are the top three innocent reasons why a seller would want a home inspection to be for informational purposes only....
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Your 1200 SF In Your Basement Is Not The Same As My 1200 SF Above Grade |
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 So -- your neighbor's 2400 SF, circa 2000, 4 BR, 2 BA home just sold for $300K. It's probably reasonable to think that your 2400 SF, circa 2000, 4 BR, 2 BA home will also sell for $300K, right? After all, you have made the same updates (systems and cosmetic) over time -- and you're on the same street!
Well, maybe -- but maybe not! Consider the possibility that....
These two homes will not be seen as having an equivalent value -- not by potential purchasers and not by an appraiser. Above grade square footage has a higher value attached to it -- both specifically by appraisers, and generally by purchasers. Even if all of the other factors (condition, age, location, bedrooms, bathrooms) are the same between two houses, if one has a significant portion of the square footage in the basement then it will be seen as less valuable than the home that has all of its square footage above grade. | |
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Focusing Only On One Comparable Sale Can Lead Us Astray |
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 It's easy to want to do this -- as either a buyer or a seller. Let's think about it using the mostly fictional illustration below...
THE BUYER'S STATED PERSPECTIVE I know that your house is listed for $400K, but this one other home a few streets over sold for $350K last month, and it was a larger, so I'm not paying any more than $350K for your home. THE LARGER CONTEXT Just a few items...
Furthermore, aside from all of these differences in the two houses --- the other ($350K) house is not available any longer --- and there aren't three other houses just like it that the buyer can decide to buy. In this case, by focusing on this one not-actually-that-similar sale, the buyer has put themselves in a situation where they might miss out on purchasing a great home because of how they are viewing the market based on one comparable sale. THE SELLER'S STATED PERSPECTIVE I am confident that I can sell my house for $350K. After all, my friend owned a very similar house and he just sold it in a week, with multiple offers, for $360K! THE LARGER CONTEXT Just a few items...
Again, by focusing on this one not-actually-that-similar sale, the seller has put themselves in a situation where they might miss out on selling their home because of how they are viewing the market based on one comparable sale. So -- as a buyer or as a seller -- don't focus on just one comparable sale when deciding on a reasonable price to pay or to ask -- look for the larger context! | |
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Where Will Recent JMU Graduates, Staying In Harrisonburg, Buy Houses? |
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 It's a numbers games, folks.... Some percentage of each graduating class at JMU (and EMU, and Bridgewater College) will decide they want to stay in Harrisonburg and make it their home. These three institutions seem to graduate around 6,000 students each year. How many might decide to stay in Harrisonburg? In chatting with several folks about this yesterday, I pondered aloud whether enough new "for sale" housing is being built for recent grads to buy, once they decide they want to stick around and buy a home. Or, more broadly, is our housing stock growing as fast as our population. I suspect that it is not -- based on how quickly homes are selling and how low our inventory levels remain month after month. So, what are these recent (within the past few years) JMU grads to do? Perhaps make several offers on several properties, missing out on most because of multiple offer situations, and then eventually securing a contract to buy a home. Or, perhaps they just rent because there is so little to buy. But if many or most of them do rent, it is -- at least in the short term -- a net loss for our community. If they buy a home, they will be putting down roots, committing to stay in the area, investing even further in our local economy, etc. If they are renting, not so much on any of those fronts. Not so long ago (ok -- fine -- 16 years ago) I was a recent JMU graduate -- having just finished up my master's degree -- and my wife (fiancé at the time) and I decided we wanted to stay in this area. We were able to find a townhouse to buy, and were excited to make this our home. The landscape now, at least for recent graduates buying homes, is a bit different. | |
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Is $250K The Sweet Spot of our Local Housing Market? |
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 As Hannah observed out this morning (thanks Hannah!) the $250K price point seems to be the sweet spot for our market. As a random aside, while I use the expression "sweet spot" with some regularity, I had forgotten its primary meaning, which Google informs me is... "the point or area on a bat, club, or racket at which it makes most effective contact with the ball" As a further aside, I have no idea if the tennis player pictured above is about to hit the tennis ball at the sweet spot of the racket!? But I digress. The second definition of "sweet spot" per Google is... "an optimum point or combination of factors or qualities" And that, I believe, sums up Hannah's point about the $250K price point... 1. There are LOTS of buyers who would like to buy $250K-ish homes. 2. Inventory is extremely low around the $250K-ish price point. 3. Builders aren't really hitting that $250K price point with many new homes being built. So - if you own one of these homes already - congrats, and know that you could likely sell it if you need to do so. And if you want to buy one of these homes, consider my usual advise for buyers in this fast paced market -- know the market, know the process, know your buying power, and closely monitor new listings! | |
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Sometimes The Home You Want Will Dictate Where You Will Buy |
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 Wouldn't it be nice if you could buy a restored early 1900's home in five different areas in Harrisonburg, east of the City, west of the City, etc.? Wouldn't it be nice if you could buy a mid-range $225K single family home in any school district you'd like in Harrisonburg and Rockingham County? Wouldn't it be nice if you could buy a four bedroom home built in the past 10 years in downtown Harrisonburg, or on a variety of one acre lots in many different parts of the County? Yeah -- it would be nice. But, this is a rather small area. Sometimes, the home you want to buy will dictate where you will live. This is the most surprising to buyers moving here from larger metro areas -- where any different type of home (style, price range, age, etc.) is available in countless areas in and around the ___ metro area. Not so much in Harrisonburg and Rockingham County. So -- we can talk about what you want to buy -- and where you want to buy. But then we'll have to pause to make sure the what and the where appropriately overlap to give you a chance of finding that home. If not, we'll either have to adjust the what, or the where! | |
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Understanding the Total Financial Impact of Selling AND Buying a Home |
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 If you will be selling your home to buy another, there are a lot of numbers floating around....
Above you will see a spreadsheet I put together to help you think about some of these numbers as you are evaluating if and when you will make a move to a new house. In yellow, are all of the inputs you will need to provide, or that you and I can determine together, such as your current payment, your home's current value, your mortgage payoff, whether you will be putting any additional money into the transaction, etc. In green, I have identified your potential future mortgage payment and the net change in your monthly payment. All of the numbers without a background color will automatically calculate for you. Click here to download this worksheet as an editable Excel file. | |
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What Does a Realtor Do in Representing a Buyer? |
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 If you are purchasing a home, before you call the listing agent to see that home, you should understand a bit more about buyer representation. In representing you as a buyer in your home purchase, your buyer's agent would be performing tasks such as:
So -- you can call the listing agent (who is contractually bound to represent the seller's best interests) or you can hire a Realtor to represent YOUR best interests as the buyer. Clearly, I recommend the second option. Beyond buyer representation, there is a lot more to know about and think about regarding the home purchasing process. Read more at....  | |
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How Historic Are Our Current Low Housing Inventory Levels? |
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 Just how historic are the current low housing inventory levels? Quite historic, it seems. The graph above shows the inventory level at this time of year (end of March) for each of the past 11 years. As you can see, we have been seeing steady declines since 2010 -- though things were relatively steady with around 600 homes for sale between 2013 and 2016. Last year, however, we saw a 33% decline -- and this year we have seen another 20% decline. Low inventory levels leads to homes selling much more quickly, and buyers often having a more difficult time securing a home to purchase. Stay tuned to see whether we start to see increases in inventory levels as we continue through the Spring and Summer. Read more about our local housing market at HarrisonburgHousingMarket.com. | |
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Buying vs Building A $400K+ Home |
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 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. | |
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Be Careful What You Say When Touring A Home For Sale |
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 As a buyer, when you are walking through a home, keep in mind that the seller might be listening. These days, there are plenty of ways that a seller could be monitoring their home, with a security camera, or other recording device that could allow them to hear every word you are saying while you are in their house. So..... 1. Don't insult their house. It won't help during negotiations.By the way, sellers, it may not be legal for you to record conversations in your home while you are gone. You should likely either NOT record conversations, or disclose that it is taking place. P.S. I am not an attorney. Consult one if you want an actual legal opinion. Ask me if you need a recommendation. | |
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The Layout of a Home Often Trumps Nearly Everything Else! |
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 If a buyer is buying over $400K, or even over $300K, the layout of the home becomes very important to them. That is not to say that it is unimportant for a $200K buyer -- but someone buying a more expensive home oftentimes plans to stay in it for a longer time frame. If not the #1 feedback, the #2 feedback I receive from showings of homes priced over $400K is that the layout just didn't work for the buyers....
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14% Increase in Home Buyers Signing Contracts in January and February |
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 Mortgage interest rates are edging up again, as you may have heard. The average 30 year fixed rate at the end of February was 4.4% -- up from 3.9% just three months prior. Could this (slight) rise in the cost of financing your home be affecting the pace at which buyers are signing contracts? Possibly. It seems that 14% more buyers signed contracts this January and February as compared to last year during the same timeframe. This is a likely indicator that we'll see stronger months of closed sales in March and April. Then, the questions will be....
Let's hope for yes and no, in that order. | |
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As Home Price Increases, So Does Pickiness |
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 Here's one thing I have found to be true of most buyers.... As the price of a home increases, so does a buyer's desire for that home to be a wonderful fit for their needs and wants, both now and in the future. And it makes sense -- 1. If you're buying an expensive (fill in your own definition here) home then you are likely to be planning to stay for a while, and thus the home should work quite well for you. 2. If you're buying an expensive home, it is a major investment (or more major than if it was a less expensive home) and thus you want to make sure the home is exactly what you want. 3. If you're buying an expensive-ish home you could probably also consider building a home -- which would give you exactly what you want in a house -- so the resale home you are considering better come darn close to that ideal. Anyhow -- this is just what I consider to be a reality of buyers considering the purchase of higher end homes. Some of the resulting implications are.... 1. Buyers of expensive homes often spend more time in the home search process -- waiting for "the right" home to come along. 2. Sellers of expensive homes should expect to hear "it just wasn't a good fit" quite a bit when asking what buyers thought after viewing the house. 3. Buyers of expensive homes are typically willing to be very patient in waiting for the ideal fit, as it is a big investment. 4. Sellers of expensive homes sometimes have to sell for less than they feel their home is or should be worth -- if there aren't any buyers (over a prolonged time period) for whom the house is an ideal fit. Oh, and one last note, this correlation between price and pickiness does not necessarily extend in both directions. Buyers of lower priced homes are not universally non-picky or hasty to buy or overly willing to compromise. | |
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
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