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!  :)

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.

Peruse my most recent monthly market report and you're certain to notice that our market (Harrisonburg & Rockingham County) has a very large supply of homes priced above $400,000.  In fact, at the rate these homes are currently selling (54 sold so far in 2008), it would take 26 months to sell them all (117 are currently for sale).

However, this doesn't necessarily mean that high priced homes are not selling, or that those sales have dropped dramatically compared to the rest of the market. 

The graph below shows the total number of single family home sales in Harrisonburg and Rockingham County over the past five years...



As you can see, there has been a 40% decline in single family home sales between 2004 and 2008 in Harrisonburg and Rockingham County.

The graph below shows the total number of single family home sales above $400,000 in Harrisonburg and Rockingham County over the past five years...



It may come as a surprise that there has been a 32% increase between 2004 and 2008 in home sales of those single family homes priced above $400,000.  The other factor at play here, however, is that homes have increased in value since 2004, so comparing these two charts isn't a perfect statistical analysis.  However, this does drive home the fact that indeed high priced homes are still selling in our market.

Thanks to John for this insightful comment...  "A great cliche about the housing market (and the stock market, too): Most people get in too late, and they get out too late. The second mistake has already been made by most. Don't let the first happen, too."

John also suggests that "Trying to call a housing market bottom is folly."

With that in mind, let's entertain ourselves by making wild guesses about December sales figures.  :)  November's market report will give you a context for your guess.  There were only 40 residential sales in Harrisonburg and Rockingham County last month.  How many will we see in December?  30? 50? 75?

The closest guess will receive a small, but delightful, gift certificate to Old Dominion Coffee Company in downtown Harrisonburg.  Feel free to leave your guess in the comment section below, or send me an e-mail.

After yesterday's analysis of year-to-year residential sales in Harrisonburg and Rockingham County, I thought it might be interesting to compare similar sales trends in sub-markets in Rockingham County. 

Here's what I found . . .

Each month I conduct a thorough analysis of home sales, but most of my analysis takes a look at a monthly snapshot.  Thus, at the request of one of my blog readers, I have compiled the monthly data to show a bit more clearly how the Harrisonburg and Rockingham County market has changed from year to year over the past six years.



Bear in mind that all of these charts show 2008 data through December 9, 2008 --- so there will still be a more sales before the 2008 data set is closed out.

We have seen decreases from 2005 through 2008 --- who wants to guess, will 2009 be an increase over 2008, or will we have to wait for 2010 for an increase?



Single family home sales, as we might have imagined, follow a similar trend line to the first graph that showed all residential sales.



One peculiarity seen here is that there was a sharp increase between 2004 and 2005 in the number of townhouse sales.  I suppose 2005 was the year of the townhouse!

As I mentioned yesterday, when interviewed by WHSV, there is still somewhat of a stalemate of buyers and sellers. Some sellers are holding their prices a little higher than perhaps they should be priced, and some buyers are not wanting to try to negotiate.So, you have that gap that likely could be bridged, but it just isn't happening. 

I tried to encourage buyers to make that first move yesterday, and in the past I've pointed out that sellers can make offers, but here are a few perspectives that sellers should consider in our current market.

1. This is not the most wonderful time to sell your home, as there are many more sellers in the market than there are buyers.  That doesn't mean you'll have to sell at a loss, and it doesn't mean that your house won't get snatched right up the first week it is on the market --- but if you don't have to sell right now, you might consider waiting until we have a more balanced market.
    
   
2. If you have to sell your home, or you really want to sell your home, you must price your home "correctly" from the start.  If your home sits on the market for several months with an overly optimistic asking price --- and nobody bites --- you're likely in for a long ride, with several price reductions and an improbable sale.  In a buyers market more than any other time, buyers are skeptical of homes that have been sitting on the market for a long time.  You must put your best asking price on your house at the start, your Realtor should market the home like crazy and follow up aggressively with any interested buyers.
    
   
3. Even though I told you to put your best asking price on your home from the start, you still must be prepared to negotiate, at least a little.  Even with a very well-priced home in today's market, buyers have a hard time paying full price or very close to that asking price.  With that optimal price on your home from the start, you'll still likely have to engage in some "token negotiation" so that the buyer knows and/or feels that they are getting a good deal on the house.
    
   
4. More than anything else (and this one is a bit out of order), you need to know your segment of the real estate market!  As you price your home, as your home is marketed, and as you negotiate an offer, you must be aware of the other homes on the market that you are "competing" with, and also the other homes on the market that have recently sold and now affect the value of your home.  This knowledge will educate your pricing and process, and is essential for any seller in today's buyers market.

Earlier I noted that you shouldn't sell your house right now if you don't have to or really want to.  And yet, even in this market, you can sell it relatively quickly and at a good price.  But to do so, you'll need to know the market, price the house "right", market it thoroughly, follow up aggressively, and negotiate wisely!

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:

• any incentives being offered by the seller, such as closing cost assistance
  
• how long the property has been on the market
• how recently, if at all, a price reduction has been made
• any context created by the seller's Realtor
• list / sale ratios in our market or in the neighborhood
• how the price compares to market value

But even after examining and discussing all of these factors, it's impossible to know the lowest price that a seller will accept for their home.  As I often tell my clients, the only way we're going to know is if we make the first offer.  The seller's response to that first offer is often very insightful, for example:

• If a house is listed at $235k and we offer $220k, we'll know a lot based on whether the seller responds with $233k or $228k.
• If a house is listed at $345k and we offer $300k, we'll know a lot based on whether the seller responds with $342k or $330k.

But again, the only way we're going to get to having that insight is if the (prospective) buyer takes that first step of making the offer.  If you have found a house that would work well for you, certainly there is a price at which you would definitely buy the home, so why not make the offer and see what happens!

As my November 2008 monthly market report shows, November 2008 was a rather slow month for real estate sales --- only 40 properties sold (closed) in Harrisonburg and Rockingham County, which is the lowest sales level we've seen in (at least) six years.  With so few houses selling, let's see if we can come to any conclusions about what did actually sell, but first, two side notes:

• All of my monthly reports, and this statistic of "only 40 homes selling" is based on data from the Harrisonburg-Rockingham MLS, and include the sales of all real estate companies in this area, not just Coldwell Banker Funkhouser Realtors.
• All of my monthly reports only focus on residential sales (single family, townhome, condo), and do not reflect what could be extraordinary months in sales of lots, acreage, farms, multi-family and commercial properties.
  
• No, I'm not planning on reviewing each house that sells each month on into the future -- given November's low sales totals, I thought it might be insightful to see what is selling in this market.

How long did it take these 40 houses to sell?

• 21 properties sold faster than the average of 179 "days on market"
• 5 of the 40 properties had been on the market for over a year before they finally closed this November.

Single family versus townhome

• Only 6 townhomes sold in November.

Where were these homes?

• 13 in Harrisonburg
  
• 9 in Rockingham County (outside towns)
  
• 9 in Broadway / Timberville / New Market
  
• 3 in Massanutten Resort
  
• 3 in Elkton
  
• 2 in Bridgewater/Dayton
  
• 1 in Grottoes

How were thes homes priced?

• 20 were priced at or under $200k
  
• 13 were priced between $200k and $300k
  
• 5 were priced between $300k and $400k
  
• 2 were priced above $400k

What can we learn from November 2008 sales?

• Even with slower home sales, buyers are still buying in most areas of our market.
• Event with slower home sales, buyers in each different price segment are still buying.

What other conclusions come to mind for you?

The November 2008 Harrisonburg & Rockingham County Real Estate Market Report is now available. Click here for a printable PDF of this report.



November 2008 sales (40) show a drastic drop (-63%) compared to a (higher than normal) month of sales in November 2007 (108). However, even with a slower sales pace, year to date average sales prices and median sales prices are holding relatively steady.



The pace of home sales has steadily declined since August 2008. November 2008 sales (40) were especially low compared to a surprisingly strong November 2007 (108 sales). A decline at this time of year is not atypical, but a 40-sale month is the lowest sales figure we have seen in six years. December has showed an increase over November in four of the past five years, so we may yet see an influx in buyers this year.



This graph shows a normalized trend of home sales by charting the ongoing sum of the preceding 12 months' sales. Despite an increase in sales pace for October 2008, this month we again see a continued decrease in this long-term sales trend.



Inventory levels have dropped to February 2008 levels, which will likely help the health of our local market. We have seen an oversupply of properties for sale for many months, and a decrease in supply (even amidst a decrease in sales pace) is a good sign.



Supply levels across most price ranges have stayed steady this month, except in the $400k+ price range. Six months of supply is often seen as a healthy balance between a seller's and buyer's market, so we still have some adjustments before we reach such a balance.

From the Daily News Record we learn that with the latest City assessment, the 173 parcels in the downtown business district had a median 25.22 percent increase in assessed value.

That's great news for downtown property owners, as the value of their properties have increased --- but not so great news for those same owners from a property tax perspective. 

And from a larger perspective, I think it's terrific news, as it shows that downtown Harrisonburg is continuing to be a great place to live, work, eat, shop, play and more.

A short sale is one where the sales price was insufficient to pay the total of all liens and costs of sale; and where the seller did not bring sufficient liquid assets to the closing to cure all deficiencies.  In other words, the seller had to sell at a price where they needed to bring money to closing, but they couldn't. 

A short sale almost always results in an incomplete payoff of one or more mortgage debts, so a lender has to agree to a short sale.  Lenders are apt (in the current market) to consider a short sale because they are likely to recoup more of the money owed to them than if they are forced to foreclose on the property.

I am listing a property this week that will almost certainly be a short sale, and I was surprised to learn from the owner that the bank had encouraged the short sale and was quite willing to go along with a short sale.  This was somewhat of a surprise to me because over the last years I have heard countless stories of lenders who are hesitant to consider a short sale, and instead pursued foreclosure. 

If you are considering buying a property that will be a short sale, it will likely take a little bit longer for the transaction to take place, as the bank must approve of the deal that is worked out between buyer and seller --- but a short sale can be a great opportunity to buy at a good value.

The October 2008 Harrisonburg & Rockingham County Real Estate Market Report is now available. Click here for a printable PDF of this report.



Sales continue to be slow compared to last year, but overall prices continue to slowly and steadily increase.  Both the median and average sales price increased when comparing January through October of last year versus this year.



After a strong September (compared to last September), October's sales figures are lower than expected.  October's sales (62) were 40% lower than last October's sales (103).  Perhaps last year's fall months (October & November) were an anomaly with their strong increase.



This graph shows a normalized trend of home sales by charting the ongoing sum of the preceding 12 months' sales.  Despite an increase in sales pace last month (October 2008), this month we again see a continued decrease in this long-term sales trend.



Inventory continues to decline in Harrisonburg and Rockingham County --- this month down to 866 active single family, townhome and condo listings.  This is a 9% decrease compared to June 2008's inventory level of 956 active properties.



As inventory continues to decline, likewise the number of months of housing that is on the market has also declined.  The top two price ranges ($300k-$400k, $400k+) both are headed back down towards (somewhat) healthier supply levels.

The September 2008 Harrisonburg & Rockingham County Real Estate Market Report is now available. Click here for a printable PDF of this report.



When comparing September 2008 to September 2007, both median and average sales prices show declines, of 3.85%, and 4.96% respectively.  However, when comparing Jan-Sept 2008 to Jan-Sept 2008, the median sales price still shows an increase of 1.03%.



Each year for the past six years, September sales have been slower than in August, and 2008 was no different.  However, September 2008 sales were stronger than September 2007, which, combined with the typical increase in October sales, make this a good trend to watch.



This graph shows a normalized trend of home sales by charting the ongoing sum of the preceding 12 months' sales.  Pay close attention this trend next month, as the September 2008 sales trend figure (Oct 1 ‘07 - Sept 30 ‘08) shows an increase in sales.



For quite some time, we have seen an elevated level of inventory -- thus, it is healthy to see  a decrease in inventory levels.  Yet, we may also be observing a seasonal trend in inventory that we will see continue through the winter.



Inventory has declined since August, and likewise, the number of months of housing that is on the market has also declined.  The sub-$200k supply has remained stable for several months, but the price range with the most extreme over-supply ($400k+) has declined.

Click on any of the charts or graphs below for a printable PDF of the August 2008 Real Estate Market Report for Harrisonburg & Rockingham County. 

Perhaps of most interest is that buyers are committing to buy properties at an almost equivalent rate as they were last year.  Last August, 77 properties went under contract, and this August 76 properties went under contract.  This seems to indicate that either we will see closed transactions pick up as the year continues, or that fewer buyers are able to get from contract to closing on a property.



We are in a buyers market.  In many markets around the country, which are also in buyers markets, prices have declined significantly over the past 18-24 months.  However, we continue to see average and median sales prices staying relatively level.  Both average and median sales prices increased (by less than 1%) when comparing Jan-Aug 2007 to Jan-Aug 2008.



Home sales continue to be largely seasonably predictable.  Sales increased in August (as compared to July) as they have in most previous years.  September, October and November will be interesting months to observe, as last year October and November showed a modest increase in sales activity.



Housing supply is holding steady, or increasing slightly in all price ranges.  The lowest price range ($0-$200k) continues to have the healthiest relationship between buyers and sellers, with the most expensive price range being the most out of balance.

If you are interested in a more specific analysis of a particular segment of the Harrisonburg or Rockingham County real estate market, please call (540-578-0102) or e-mail me.

I was showing property on Wednesday afternoon, and several other agents in my office were showing houses to their clients on Wednesday evening (Thanksgiving eve). 

We began negotiating a contract on this affordable, downtown property via fax, e-mail and telephone on Wednesday, and negotiations continued through Thanksgiving, towards what should be a ratified contract by this evening.

So, it seems, finding and buying that perfect house isn't something people put on the back burner for the holidays.  Though to the best of my knowledge there probably weren't too many showings yesterday on Thanksgiving Day --- though that could have worked out well . . . if we had been invited in for a meal!  :)

Happy Thanksgiving!

Admittedly, I'm drawing this conclusion from several disparate data points, but examine the facts...

• While shopping at Martins for half an hour this weekend I received 4 phone calls each related to a buyer (or their Realtor) wanting to view properties immediately.
• Tom was answering general phone inquiries for 2 hours this morning at our office, and received 3 calls from first time buyers who are itching to buy -- 2 of them are looking at properties later today.
• Web traffic so far this month (Nov 1 - 23) on our company and agent web sites has surpassed full month traffic numbers for July, August, September and October.

It will be interesting to review the market report numbers at the end of November and December to see whether all of this buyer excitement turns into closed real estate sales!

Especially in our current market, it is very challenging to predict the "popularity" of a house -- in other words, how many prospective buyers will come to view the house.

This comes to mind today, because over the weekend two new prospective buyers came on the scene for a very affordable home on East Rock Street.  The house has had many showings, and even an offer --- but we haven't had any showings in the past few weeks.  So it was a bit surprising to receive two calls within a few hours of each other with interest in viewing the house.  After weeks of inactivity, showing activity will sometimes pick up quickly and with unknown cause.

On a different note, I have seen several listings lately that have been priced appropriately (in my view), marketed well, and have seen few if any showings in the first few months they are on the market.  Sometimes even the houses you are sure will sell quickly, won't even show quickly.  Could it be the evil flyer syndrome?

And then there are the houses where buyers dutifully tour in and out several times a week, with no results to speak of.  I know of several homes on the market right now that have had over 50 showings, and still have not received any offers. 

Just as it is difficult to predict the pace of a sale in today's market, it is very difficult to predict the pace of showings! 

When asked for my professional real estate opinion, I used to ask "Do you want to know what I really think?"  Or I would find myself prefacing some of my comments with "Well, if you want to know what I really think..."

Over the past six to twelve months, I have had numerous conversations with buyers, sellers, builders and developers about the current real estate market.  As such, I have dropped my prior vernacular from these conversations. 

For better or for worse, I'm telling people what I really think about our current market, or about their situation, proposal or property.  Buyers, sellers, builders and developers need to know the facts within the context of their situation or property as they make huge financial decisions.

So -- if you want to know how to make excellent buying, selling, building or development decisions, feel free to ask me -- just know that I may not always tell you what you want to hear.  (Though, I suppose I will always tell you what you should want to hear!)