Not only have 30-year fixed mortgage interest rates been at or below 4% since November 3rd, they also hit an all-time low this past week at 3.87%.
 
Buying a median priced home a year ago:
   Price:  $180,000
   Interest Rate:  4.81%
   Monthly Payment:  $884  (assuming 80% LTV)

Buying a median priced home now:
   Price:  $174,900
   Interest Rate:  3.87%
   Monthly Payment:  $781  (assuming 80% LTV)
  

As the real estate market heated up, the opportunity to buy a single family home in the City of Harrisonburg for less than $100K cooled down.  Now, however, there are more opportunities to buy such homes. 

The even better news is that it's more affordable than ever to buy such a property.



The chart above shows the principal and interest payment on a $96,500 loan (a 96.5% FHA loan on a $100K purchase) given the interest rates over the last 11 years.  This does not include taxes, insurance, and PMI.

If you are looking for an affordable house --- either from a sales price perspective, or a monthly payment perspective --- don't hesitate to contact me (scott@HarrisonburgHousingToday.com or 540-578-0102).  I'd be happy to help you find a home to meet your needs.
  

If you are in the market to buy a home, some of the properties you might be considering are foreclosures – but there are some distinctions to be aware of at different stages of the foreclosure process. It is possible to buy a home from the owner before they are foreclosed on even if they cannot pay off their mortgage – this is called a short sale.  Or, you might buy a property at the courthouse steps when it is being auctioned – this is called a trustee sale.  Finally, if a property does not sell at the auction, you can buy the property from the lender after they have taken ownership of the property – this is called a bank owned property or REO property.

SHORT SALES:  Some homeowners must sell their home, but market conditions won't allow them to sell it at a high enough price to be able to pay off their mortgage(s).  In this example, a homeowner might have a $250,000 mortgage balance but can only sell the property for $230,000.  As a prospective buyer, it is sometimes possible to purchase this type of a property through a process called a "short sale."  In such an arrangement, the homeowner petitions their lender to accept less than the full payoff of the mortgage and in return to still release the deed of trust so that ownership of the property can be transferred over to you, the new owner.  This can benefit the lender, as they skip the time delays and cost of the foreclosure process.  This can also benefit the homeowner, as a short sale will have a slightly lesser negative impact on their credit as compared to a foreclosure.  As a buyer, however, you must know that there are challenges to buying a property as a short sale.  The biggest challenges of late seem to be the uncertainty of the purchase and the time table.  Even if you and the homeowner agree to a price of $230,000, the homeowner's lender must still agree to accept that price – since it won't allow the homeowner to pay off their $250,000 mortgage balance in full.  This process of waiting to hear back from a lender, and then complying with all of their various terms can sometimes take 60 to 120 days – or longer!

Research potential short sales in Harrisonburg and Rockingham County online via www.HarrisonburgShortSales.com




TRUSTEE SALES:  If a short sale does not take place, and a homeowner is behind on their payments (or not making them at all), eventually the property will be sold by the lender on the courthouse steps.  Buying a property at a "trustee sale" can be exciting, and can be a great opportunity – but there are challenges as well.  If a property to be sold at a trustee sale is also listed for sale with a Realtor, you can usually view the property ahead of time by calling your Realtor.  Otherwise, you will likely not have the opportunity to see inside the property before the trustee sale, and thus you will not know too many details about the condition of the property. Furthermore, your purchase of the property at the trustee sale cannot be contingent upon viewing the property, or inspecting the property.  In this instance, you are purchasing the property in "as is" condition, regardless of what you then find out about the property.  It is also important to note that many times the lender will have an opening bid at the trustee sale that is close to (or sometimes higher than) the amount that they are still owed on the mortgage. Thus, in the example above, they might make an opening bid of $250,000.  As a result of this opening bid process, many (or most) properties available for purchase at a trustee sale are not great opportunities.  Occasionally, a property will be foreclosed upon that has had a mortgage in place for many years, whereby the balance of the mortgage is much lower than current market value – these are great opportunities for a buyer.

Research upcoming trustee sales in Harrisonburg and Rockingham County online via www.HarrisonburgForeclosures.com




BANK OWNED PROPERTIES:  If you don't buy the property before the auction (as a short sale), and don't buy it at the trustee sale, you'll have a third opportunity to buy it once the bank owns it.  These properties are called "bank owned properties" or REO properties ("real estate owned").  Oftentimes, the prices on these properties are quite realistic, if not under market value.  It would not be atypical for a house such as the one mentioned above to come on the market after the trustee sale at a price of $210,000.  In such an instance, you should expect to be buying the property in "as is" condition, and you will also be buying with a slightly different contract document.  Most lenders have a long standard contract or contract addendum that spell out a variety of additional contract terms designed to protect them from any future liability – and rarely will a lender agree to have these contract documents changed in any way.  As you can see above, oftentimes buying the property as an REO property is where the best opportunity lies.

Research currently available bank owned properties in Harrisonburg and Rockingham County online via www.HarrisonburgREO.com




When a home goes into foreclosure it is often for very sad and unfortunate reasons – such as the loss of a job – and I do not wish such circumstances on any homeowner.  However, if you are a buyer in today's market it is important to be familiar with different methods for buying a property when it will be, is being, or has been foreclosed upon.

For information about purchasing a property as a short sale, or purchasing a bank owned property, please e-mail me at scott@HarrisonburgHousingToday.com or call me at 540-578-0102.

Looking for a job in Harrisonburg or Rockingham County?  Here are the 50 largest employers....

1. James Madison University
2. The Rockingham Memorial Hospital
3. Rockingham County School Board
4. Cargill Meat Solutions
5. Wal Mart
6. R.R. Donnelley and Sons Company
7. Harrisonburg City Public Schools
8. Great Eastern Resort Management  (Massanutten Resort)
9. Merck & Company, Inc.
10. Aramark Campus LLC  (JMU Dining)
11. Marshall's
12. Fairfield and Sons, LTD  (Rosetta Stone)
13. City of Harrisonburg
14. Perdue Products
15. County of Rockingham
16. Tenneco Automotive Operations
17. Pilgrims Pride Corp
    
18. Va Poultry Growers Coop Inc
19. Eastern Mennonite University
20. Millercoors LLC
21. Stellar Management Grouping
22. Dynamic Aviation Group
23. George's Foods
24. Beam Brothers Trucking
25. Whitewave
26. Virginia Mennonite Retirement
27. Riddleberger Brothers, Inc
28. Sysco Food Services
29. Bridgewater College
30. Food Lion
31. Great Eastern Resort Corporation  (Massanutten Resort)
    
32. Sunnyside Presbyterian Home
33. Ntelos Wireless Dip Inc
34. Bridgewater Home, Inc.
35. Cargill Turkey Production
36. Owens Brockway Plastic Products
37. Tenneco Packaging
38. Warsaw Health Care Center
39. Lowes' Home Centers, Inc.
40. Pleasant View Home for the Handicapped
41. Shenandoah Growers Inc
42. Postal Service
43. Costco
44. McDonald's
45. Tyson Farms
46. Rockingham County Community Services Board
47. Comsonics Inc.
48. Pactiv Corporation
49. Martin's Food Market
50. Massanutten Ski Lodge
    

Source:  Virginia Workforce Connection
   

A great question from a blog reader.  Any thoughts, other blog readers? 
 

In preparing to list a home for sale, I met with my clients and we examined the competition that their home would have given its characteristics (size, location, age, price).  We were surprised that there were not too many comparable homes (at all) on the market right now.  If someone wants to buy this home, they won't be comparing it side by side with others that are quite similar in size, location, age and price.

One reason why some homes for sale don't have as much competition is because of the overall decline in the number of homes listed for sale.  Inventory levels have dropped 16.5% over the past year, and there are now only 657 homes (single family, townhomes, condos) on the market in Harrisonburg and Rockingham County.

This is good, folks, especially if you are ready to put your house on the market and it is in a decent neighborhood, has been well maintained, and you are able to price it reasonably given market conditions.  If you'd like to examine your competition, just call (540-578-0102) or e-mail me (scott@HarrisonburgHousingToday.com) and we can set up a time to meet.
  

What a wild ride it has been for the townhouses market in Harrisonburg and Rockingham County.  How about a brief history before looking at today's great opportunities....

Early 2000's:  moderate sales (200/y) and low prices ($100K)
In 2000 and 2001 there were around 200 townhouse sales per year, and the median sales price for townhouses was right around $100K.  At the time, interest rates were around 7.5%, so a monthly payment on a 96.5% (FHA) loan would have been right around $745/month.

Mid 2000's:  escalating sales (650/y) and escalating prices ($170K)
As real estate markets across the country heated up between 2003 and 2006, there were more townhouse buyers than ever in Harrisonburg and Rockingham County.  The pace of sales peaked in 2005 with an amazing 644 townhouse sales, and prices peaked in 2008 with a median sales price of $167K.  At the time, interest rates were around 6%, so a monthly payment on a 96.5% (FHA) loan would have been $1,085/month.

Early 2010's:  slow sales (150/y) and softer prices ($140K)
Since the high of 644 townhouse sales in 2005, the pace has drastically dropped, down to only about 160 sales in 2011.  This reduced demand for townhouses has brought prices down, and median prices are now at $143K.  Interest rates are currently just under 4%, so a monthly payment on a 96.5% (FHA) loan would be right around $760/month.

So, now on to some specific examples of the great opportunities in today's market:

• Some of my clients sold a townhouse this week to a young professional who was paying close to $1000/month in rent for an apartment before she purchased her townhouse.  Her new townhouse -- an end unit with two master suites and a full unfinished walkout basement now costs her a grand total of around $790/month.  Wow!  If she ends up moving out of the area at some point, she could easily rent the townhouse (likely for around $900/month) and have positive cash flow from day one!
   
  
• Another of my clients is buying a three bedroom bank owned townhouse with a full unfinished basement for just under $130K.  Bank owned properties certainly offer some good opportunities, and this investor has already lined up tenants who will be paying him over $1,000/month in rent.  With a 20% down payment (it's an investment property) the mortgage payment will only be taking about $600/month out of this $1,000 of rental income per month.

As you can see, there are some great opportunities in the current townhouse market --- both for first time buyers, and for investors.  Please let me know if you'd like some assistance in finding a property!  I'd be excited to help you find a great opportunity.
 

Yesterday I pointed out that monthly housing costs have declined 28% since 2007 because of modest declines in median sales prices and significant declines in average mortgage interest rates.  But let's make it a bit more specific....

The first townhouse pictured above was sold in 2007 for just $100 more than the median sales price at the time, and your monthly housing cost would have been $1,096 if you financed 80% of the purchase price at the average interest rate of 6.21%.

The second townhouse pictured above is for sale now for only $159,200, and would require a monthly housing cost of only $719 -- again, assuming you financed 80% of the purchase price at today's average interest rate of 3.99%.

This is quite a dramatic difference (-34%) in housings costs, and hopefully helps to illustrate the wonderful opportunities for buyers in today's market!
 

If you are looking for properties with owner financing available in Harrisonburg and Rockingham County you can now easily find them on www.HarrisonburgOwnerFinancing.com.

Also, don't forget, If you are looking for properties available for lease/purchase in Harrisonburg and Rockingham County you can find them on www.HarrisonburgLeasePurchase.com.

Also, don't forget, if you are looking for potential short sales in Harrisonburg and Rockingham County you can find them on www.HarrisonburgShortSales.com.

Also, don't forget, if you are looking for bank owned (REO) properties in Harrisonburg and Rockingham County you can find them on www.HarrisonburgREO.com.

If you are looking for properties available for lease/purchase in Harrisonburg and Rockingham County you can now easily find them on www.HarrisonburgLeasePurchase.com.

Also, don't forget, if you are looking for potential short sales in Harrisonburg and Rockingham County you can find them on www.HarrisonburgShortSales.com.

Also, don't forget, if you are looking for bank owned (REO) properties in Harrisonburg and Rockingham County you can find them on www.HarrisonburgREO.com.
  

If you are looking for potential short sales in Harrisonburg and Rockingham County you can now easily find them on www.HarrisonburgShortSales.com.

Also, don't forget, if you are looking for bank owned (REO) properties in Harrisonburg and Rockingham County you can find them on www.HarrisonburgREO.com.

If you are looking for bank owned (REO) properties in Harrisonburg and Rockingham County you can now easily find them on www.HarrisonburgREO.com.
   

Yesterday's Daily News Record had a thorough look at buying vs. renting from a variety of perspectives.  Here are a few (long-ish) excerpts....



HARRISONBURG — Chris and Kate Kelty had no plans of jumping back into the housing market a year after selling their townhouse.

The couple with three young children figured they'd remain renters for a few years while building back up money for a down payment.

Then they watched mortgage rates start plummeting. After a bit of number-crunching, the Keltys switched gears.

"We realized, oh, my Lord, it makes a lot more sense to start thinking about buying," Kate Kelty said. "It was kind of a no-brainer."

In August, the Keltys closed on a 2,500-square-foot home west of Bridgewater for $230,900.

Their mortgage is $1,300 a month through a USDA Rural Development loan. Kelty, 32, said that's about how much renting a similar-sized house in the area would cost.




A good deal on a home in the county near Rockingham Memorial Hospital enticed Chris Foster, 25, to buy his first house in early October for $220,000.

His mortgage payments are about $200 more per month than what Foster shelled out as a renter, but he doubled his living space while adding a garage and a finished backyard.

"I had a goal all along to purchase sooner rather than later," said Foster, a pharmaceutical representative. "This was kind of a perfect storm, so to say."




Record-low mortgage rates have made buying a more attractive option for some renters. Interest rates on the average 30-year loan are hovering around 4 percent.

"It would be difficult for renters to not strongly consider buying a home," said William Haithcock, chief executive officer of the Harrisonburg-Rockingham Association of Realtors.


Those were just some excerpts, so be sure to read the full article online if you have a subscription.  Of course, as usual, buying doesn't make sense for everybody, but it is becoming a much more compelling option for many these days.
 

Average 30-year fixed mortgage interest rates are now below 4.0%.  Wow!  I have shown houses to quite a few people over the past two weeks who are seriously considering a housing transition because of the extraordinary opportunity provided by these record low interest rates.
 
Are you considering a move?  Talk to a lender (ask me if you need references), and let's start exploring your opportunities.
 

Frank is renting a townhome in Avalon Woods, and is paying $875 per month for the privilege to do so.  He has thought about buying a home, but assumes he'd have to pay quite a bit more per month.

Well, maybe not!  If Frank were to buy a townhome in Avalon Woods (or Liberty Square, Beacon Hill, Harmony Heights, etc) he might pay around $140,000 for the townhouse --- or even less!

Assuming $140,000, here is an illustration of what Frank's mortgage payment might look like, with a ridiculously low rate of 3.875% (which one of my clients was quoted yesterday)....



Frank will still have to pay $40/month for the Property Owners Association on top of this mortgage payment, but his monthly housing cost is now going to be $775.

Wait a minute.......Frank is going to move from paying $875 in rent to paying $775 for a mortgage payment?  How could this be?

• extraordinarily low interest rates
• more townhouse sellers than buyers, driving prices down

The great news here is that if Frank decides he wants to move on after five years, he would have a fantastic opportunity to keep the townhouse and rent it.  After all, his monthly payment will still be right around $775, and his rental income will probably have increased to $900 or $925.

What are you waiting for?  If you're a potential first time buyer, let's talk through your situation to see if a home purchase might fit into your short term (housing) and long term (investment) plans.
  

How low can they go?  Mortgage interest rates (on 30-year fixed rate mortgages) dropped again yesterday per Freddie Mac's Primary Mortgage Market Survey.  The national average for a 30-year fixed rate mortgage is now 4.12%.  Wow!

If you're planning to buy sometime in the next few months, now would be a GREAT time to lock in a mortgage interest rate!
 

Buyers at Founders Way will currently receive these great promos from the builder:

• $3,500 seller paid closing cost credit
  
• $3,000 towards upgrades or closing costs
  
• free upgrade to granite countertops in the kitchen
• one year of builder-paid condo association dues
  

Plus, you get all of this while buying a unique, beautiful, brand new condo with an open floor plan and exciting architectural features! 

Buyers at Founders Way are often attracted to:

• brand new one-level living at a low price point
• all exterior and grounds maintenance is performed by the condo association
• high speed internet and expansive cable package at a low cost through the condo association
• open floor plan (some with lofts) that provide a very different feel than a two-story townhome

Find out more about Founders Way:

• Visit the Founders Way web site 
• View photos of Founders Way
• View floor plans at Founders Way
• Come visit us on Saturday or Sunday between 1PM and 3PM
• Call me at 540-578-0102 or e-mail me

Full Disclosure:  I represent the Scripture Communities, the builder/developer of Founders Way.
 

As I pointed out a few days ago, if you bought a townhouse a few years ago, you might be in a position where you can't sell it -- and thus end up being an accidental landlord. 

But there may be some unintended very positive consequences for keeping that townhouse.  Let's examine what might happen if you kept your townhouse for the remainder of the term of your mortgage.



In the illustration above, let's imagine you bought your townhouse for $160K in January 2005 and financed 100% of the purchase price.  You stay in the townhouse for seven years, and then move out of the area for a new job.  Faced with a tough townhouse sales market, you feel forced to keep the townhouse.  What happens next.....

• You rent the townhouse for $850/month, and are losing about $123/month (comparing your mortgage payment to your rental income) for the first year.
• Your rental income keeps (very gradually) increasing such that ten years into renting the property you are finally breaking even when comparing the mortgage payment to the rental income.
• But here's the fantastic news --- over the full 30 years of owning the townhouse you have payed your mortgage company $350,280 in total mortgage payments --- but only $79,380 of that money came from you, as your tenants paid the rest.

Now, admittedly there are a few details omitted here, some of which can create further monthly expenses for you as a landlord:

• While your principal and interest won't increase over the life of the loan, your taxes will increase slightly over time, as will your insurance premium.  If taxes and insurance increase 1% per year, you'll have $7K of extra expense over 30 years.
  
• You will have some maintenance costs during the course of your ownership of the property.  Let's guess $15K of extra expense.
  
• You could have some vacancy between tenants.  If you have one empty month every other year, that's $11K of extra expense.
  
• You might feel the need to hire a property management company to take care of the property for you.  If you hire a property manager for half of the time that you own the property, that's $14K of extra expense.
  

Despite the $47K of extra expenses above, there are also some fantastic upsides to this accidental ownership of an investment property:

• The $149K of interest that you (and your tenants) paid during the life of the loan is tax deductible, thus $149K of your income has been sheltered, which (with in a 25% tax bracket) provides $37K of extra income.
• Eventually, property values will start increasing again.  If your property increases an average of 1% per year since the time that you became a landlord for the property, the appreciation would add up to $39K of extra income.

So, let's try to sum all of this up, remembering that the first seven years of mortgage payments don't need to count as an expense, since you had use of the townhouse as a residence during that time.



As you can see, after investing $0.00 on Day 1, you end up having a cumulative $230,352 benefit after 30 years.  Wow!  So, can this make you a bit more optimistic about being (or feeling) forced to keep your townhouse?
 

The downgrade of the United States' credit rating sure helped mortgage interest rates!  Wow!  The average rate on a 30 year fixed rate mortgage is now 4.15%.

This is certainly a great time to lock in a rate and buy a house.  You will likely be locking in your housing costs to the lowest possible point they could be for the near-term future given both low interest rates and low median home values.
 

For your daily real estate reading, consider perusing this article from The Atlantic a few weeks ago entitled "Is Now the Right Time to Buy a Home?"

The author considers factors such as:

• interest rates
• prices
• financing
• your economic stability

I'll ruin the end of the story for you --- the answer is --- it depends!  Oh, what  reliably consistent answer to nearly every question about the real estate market these days!

Again, enjoy the read of "Is Now the Right Time to Buy a Home?"