Selling
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Many Homeowners Are Not Motivated To Sell Their Homes And Do Not Anticipate Being So Motivated Anytime Soon |
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Over the past five-ish years we were all living in a world of rapidly rising home prices, a fast moving real estate market and super low mortgage interest rates. Thus, if you owned a home but saw another home hit the market for sale that tickled your fancy, you might very well decide to sell your home. After all... [1] Your home was worth a good bit more than it was last year or a few years ago. [2] You were certain to be able to secure a contract on your home very quickly. [3] Your new mortgage payment would be oh, so low given 3% - 4% mortgage interest rates. But... some of these factors have changed now, though admittedly, some have not... [1] Your home is still likely worth a good bit more than it was last year or a few years ago. [2] Your home still relatively likely to go under contract quickly, though that is not the case for all homes any longer. [3] Your new mortgage payment will be oh... so... high !?! given mortgage interest rates above 6%. That last point... the potential housing payment for your new place if you decide to sell... is what is keeping many homeowners right where they are. Most homeowners are not very motivated to sell their homes right now -- because of their current low mortgage interest rate compared to the much higher rate if they sold and bought today -- and that low motivation level to sell does not seem positioned to change anytime soon. | |
How Long Have Current Active Resale Listings Been On The Market? |
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The graph above speaks for itself, but I'll point out a few more things that aren't explicitly referenced above... 76% of currently active resale listings (not new homes) have been on the market for more than a month. The median days on market of all 121 active listings is 65 days. That is to say that half of the current resale listings on the market have been on the market for 65 or fewer days... and half have been on the market for 65 or more days. The data above is relative to active listings. Let's contextualize this a bit further by looking at pending listings and then sold listings. Of the 87 resale homes currently under contract, the median days is 33 days. Of the 114 resale homes sold in the past 60 days, the median days on market was 17 days. Of the 894 resale homes that sold in the past 365 days, the median days on market was 7 days. So... Active listings = 65 days Pending listings = 33 days Sold in past 60 days = 17 days Sold over past year = 7 days Days on market -- the time it takes a home to sell -- seems to be drifting upward, at least recently, at least on resale homes. | |
Despite Fewer Home Sales, We Are Seeing Higher Prices, And Recently, More Contracts And Lower Inventory Levels |
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Happy Friday afternoon, Friends! I hope that your week has gone well and that you are looking forward to the next few weeks - presumably with some holiday celebrations, rest, relaxation and time with family and friends! Whether you are staying here or traveling afar, I hope it is a fulfilling and meaningful time for you and that you are able to spend some time with your loved ones! Before I dive into the housing data, I'd like to invite you to join me at a fun concert in January. The Steel Wheels are putting on an album release show with special guest Lindsay Lou on Saturday, January 20th at 7:00 PM in JMU's Wilson Hall. You can buy tickets online from JMU here, or... click here to enter to win the pair of free tickets I'm giving away! Regardless of whether you win the pair of free tickets, or buy your own tickets, I hope to see you in Wilson Hall in January to hear The Steel Wheels and Lindsay Lou! And now, on to the housing data and trends in our local market, starting with a few key indicators for our overall market... A few observations related to the data above... [1] Looking just at November sales data, we see a striking year over decline from 2021 through 2022 to 2023 when examining the number of homes that are selling each November. Two years ago there were 138 November home sales... last year only 93... and this year just 69 home sales in November. While it's only one month of sales data, that is a 50% decline over the past two years. It was a particularly slow November. :-) [2] When looking at the first eleven months of the year (the year is almost over!?) we see that there have been 25% fewer home sales this year (1,117 in 2023) as compared to last year (1,482 in 2022) in Harrisonburg and Rockingham County. It was markedly slower year this year than last. [3] Despite fewer home sales taking place this year, home prices keep on rising. The median sales price of all homes sold in the first eleven months of last year was $299,900... and this year it was 10% higher at $330,000. So, fewer home sales, but higher prices. Next up, one particular segment of our local market that has seen a particularly striking change... the City of Harrisonburg... I suppose I should have highlighted one other bit of data on data table above -- the first row. Pretend it is highlighted too... [1] With only 13 home sales in the City of Harrisonburg this November, we have seen a 52% decline compared to last year and a 72% decline as compared to two Novembers ago. Again, this is just one month, but still. If you want to buy a home in the City of Harrisonburg, it has been a tough time to try to do so. Very few homes are selling in the City. [2] A few lines down in the data table you'll see I have highlighted the data for the past six months. Over the past six months of this year we have seen 145 home sales in the City... compared to 296 in the same six months two years ago. Again, a rather striking decline... of 52% over two years. As I alluded to above, this is mainly a supply issue... there aren't enough sellers willing to sell this year to allow the same number of City home sales to take place. [3] In that same two year period I have referenced above, the median sales price of a home sold in the City has increased from $230,000 to $295,500! That is a 28% increase in the price of homes selling in the City... over a span of just two years. Now, let's look at existing home sales only (excluding new home sales) to contextualize the 10% increase in home sales prices in the overall market that I referenced earlier... All the way at the bottom of the data table above you'll note that when we look at the median sales price of existing homes only, it has risen by only 6% over the past year, not 10%. What does this mean? [1] The value of existing homes has not necessarily risen 10% over the past year in Harrisonburg and Rockingham County as was suggested when looking at the entire market of existing and new home sales. Existing homes (resale homes) prices have only actually increased by 6% over the past year. [2] The increases in new home sales prices over the past year, and the number of new versus existing home sales, have combined to drive the overall median sales price of all homes (new and existing) up 10% over the past year. Let's simplify things... for all you homeowners out there... [1] Don't assume that your home has increased in value by 10% over the past year, because the existing home median sales price has only increased by 6% over the past year. [2] Don't assume that your home has increased in value by 6% over the past year. It might have. Or, that increase might be somewhat larger, or somewhat smaller. The change in the median sales price is a general indicator of changes in the overall market, not a specific indicator that each and every home in a market area has shared that same change in value. Now, let's reflect on a moment on what a slooooooowwww November it was as far as the number of homes selling in Harrisonburg and Rockingham County... There were fewer home sales in Harrisonburg and Rockingham County in November 2023 than in any other month in 2023... and fewer than in any month in 2022... and fewer than in any month in 2021. But, keep on reading for some signs that perhaps we are seeing a slight reversal of this slow down. First, here's that downward ski slope (blue) of the number of homes are selling in a year's time in Harrisonburg and Rockingham County... The annual pace of home sales in the City + County has now declined to 1,205 home sales... which is the slowest annual rate of home sales in over five years! But yet, as we have seen for quite some time now... fewer home sales is not causing home prices to also start declining... in fact, the further home sales have declined, the higher sales prices have increased! These two trends are an indicator that while there are certainly fewer buyers buying, it is likely at least partly a result of fewer sellers being willing to sell. If we were seeing a decline in buyer interest and we were seeing the same number of sellers wanting to sell, then we could more reasonably think home prices might start to decline -- but that's not where we are right now in the local housing market. Let's say you sold your house in 2019 and left town and decided to move back just four years later in 2023. Oof. Here's what you'd find... When you (the imaginary you) left town in 2019 the median sales price of homes in Harrisonburg and Rockingham County was only $223,000. Now... just four years later, that median sales price has shot upwards to $330,000. That is a $107K increase in just four years. This is yet another view into some tricky timing aspects of when folks bought or didn't buy a home in this area... [1] If you bought your home in 2020 or prior, and still own it, you're in great shape. You likely paid much less for your home than it is worth now and you likely have a very low mortgage interest rate. [2] If you bought your home in 2021 or 2022, you're likely still in great shape as to how much your home value has increased, and you might have a great mortgage interest rate or not quite as great. [3] If you didn't buy a home and are working on buying one now, you are buying at the highest prices we have seen lately (until 2024 prices) and at higher mortgage interest rates than we've seen in over a decade. If you are thinking about buying a home right now, does #3 above make you want to pause and think twice before buying? If you don't buy in 2023 (yes, I know there are only 16 days left) you'll likely be paying an ever higher price in 2024 or 2025. This is not to say that everyone should buy a home right away, but many buyers who have been waiting to buy for the past few years because prices were increasing (and they hoped they would decline) likely wish they had gone ahead and bought last year, earlier this year, etc. One of the other metrics I follow is how many new versus existing homes are selling, and we have seen a bit of a shift in this break down in 2023... Last year, in 2022, we saw a decline in existing home sales compared to 2021... but new home sales kept on rising. Not so in 2023. When comparing this year (2023) to last year (2022) we see that existing home sales have declined... and new home sales have declined as well. We have also seen *the highest* mortgage interest rates in many (many!) years in 2023, which is likely a major contributor to this slow down in both existing and new home sales. But... what follows are a few slight changes in direction in our local market as of the past month... Monthly contract activity in 2023 (red line above) has been below 2022 (blue line) more often than not over the past six months, but in November... contract activity rose above where it was last November. Hmmm... why could that be... I wonder if mortgage interest rates started to decline from their 20+ year peak? And how about the number of homes that are under contract in total... As shown above, we saw a big jump in the number of pending (under contract) homes through the month of November. There are 262 homes under contract right now, compared to only 201 a year ago. This is a significant improvement from last month when we were even with the prior year, and an even more significant improvement from the prior six (plus) months when pending home sales were lagging significantly behind last year. Hmmm... why could that be... I wonder if mortgage interest rates started to decline from their 20+ year peak? Next up (before we get to mortgage interest rates) let's look at inventory levels... After four months of big increases in inventory levels in Harrisonburg and Rockingham County -- from 131 homes for sale up to 230 homes for sale -- we have now seen inventory levels start to decline again. Perhaps this is a result of more contract activity (causing inventory levels to drop as homes go under contract) or perhaps it is fewer sellers putting their home on the market during the holidays -- but regardless, November showed at least a temporary reversal in the trend of increasing inventory levels. Now, then, how about those mortgage interest rates... Indeed, mortgage interest rates are dropping. At this point it seems rates peaked at 7.79% at the end of October. Since that time, as shown, they dropped to 7.22%. Since the end of November, not shown, they have dropped even further... to 6.95%. Certainly, the three years or so when rates stayed below 4% were *not* normal times... and rates below 4% were *not* normal -- but it's been tough for many would be home buyers to afford a home (or to rationalize paying the requisite mortgage payment) over the past year with mortgage interest rates above 6%, and for quite a few months over 7%. The pace of sales slowed the most in Harrisonburg and Rockingham County over the past few months with mortgage interest rates over 7%. The news that they have now broken back down through that barrier to six-point-something is welcome news for home buyers as we head towards 2024. I'll wrap things up there for now, though if you want even more charts and graphs you can review them all here. At this point in our local housing market, we're mostly looking ahead towards 2024, so here are a few thoughts for a variety of positions you might find yourself in... If your home is on the market now but not under contract... You may very well find renewed interest from buyers after the first of the year, especially with slightly lower mortgage interest rates -- but you should make sure your home is priced appropriately. If a price reduction is in order, it might make sense to wait until just after January 1 to make that change since there will be less buyer activity than normal over the next few weeks. If you plan to sell your home in 2024... Let's chat sooner rather than later about pricing, preparation and timing. It's not enough any longer to simply whisper "I'm selling" out your front door to bring on the throngs of eager buyers with 3% mortgage interest rates. We'll want to make sure to price your home appropriately, prepare it well to show best to buyers and market it thoroughly from day one but knowing that the marketing may need to continue on for a few weeks or more. If you plan to buy a home in 2024... It seems very likely that you'll be financing your purchase with a lower mortgage interest rate than would have been available to you over the past few months, which is good news. That said, with home prices continuing to climb, your projected monthly payment might still be higher than you prefer. It's important to talk to a lender early in the process to understand how much you could spend and to consider how much you want to spend on your next home. If you own a home and don't plan to sell it anytime soon... Enjoy your likely increasing home value and your likely low mortgage interest rate. It's been a great few years to own a home... a much better than average, much better than normal, few years! And for any and all of you... if I can be of help to you related to real estate, or otherwise, don't hesitate to reach out. You can contact me most easily at 540-578-0102 (call/text) or by email here. I hope you and your family have a wonderful holiday season and I look forward to connecting with you in 2024! | |
47 Home Sellers Reduced Their List Price In The Past 30 Days And 15 Of Those Listings Are Now Under Contract |
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One indication that our local housing market isn't quite as overheated as it used to be is that we are starting to see sellers making price adjustments. For a few years there, nearly every home listed for sale went under contract in a matter of days, often with multiple offers and escalation clauses. Now, many (most) listings are still going under contract quickly -- but plenty of sellers are finding themselves needing to make a price adjustment to generate enough buyer interest to have an offer to consider. As a snapshot of those price reductions and their impact... Over the past 30 days... we have seen price changes on 47 homes in Harrisonburg and Rockingham County... and 15 of the homes are now under contract. If your home is listed for sale and 30 (or more) days have passed without an offer, you may also be considering adjusting the price... and that new price may attract enough additional buyer interest to generate an offer for you to consider. | |
Home Buying Activity Will Slow But Not Stop Over The Winter |
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Generally speaking, folks don't use their outdoor hose spigots in the winter. I suppose you might use it from time to time, but it's just not as fun to wash your car in the driveway on most December days. Oh, and if you did use your hose spigot, and left the hose attached, you'd potentially have serious problems when the water in the hose freezes, backs up into the spigot, maybe into the pipe, and something splits, cracks or bursts. As such... Once we get into Winter, most folks are turning off their hose spigots for the last time until Spring. But... Not so with the local housing marketing. Looking back over the past five years... Between March and August (Spring and Summer, as we'll call it) an average of 140 buyers signed contracts to buy houses each month. A pretty rapid pace of buyer activity. So, this winter, what should we expect? Will that supply of buyers be turned off like a hose spigot, and will the buyers slowly drip out at a rate of (for example) 10 - 15 buyers per month? Nope! Looking at last Winter (December, January, February) there were an average of... 95 buyers signing contracts per month! Yes, you read that correctly, we only saw a 32% decline in buyer activity during the Winter months -- as compared to the Spring and Summer months. So, unlike your hose spigot, which will likely be barely used during the Winter -- the local housing market doesn't slow down, or cool down, or shut down, nearly as much. | |
Demand Is Likely To Keep On Rising For Contractors And Home Renovators |
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We seem likely to see a continued increase in demand for contractors and home renovators in Harrisonburg and Rockingham County in 2024. If you're thinking about getting into the home renovation and repair business -- this might be your time! There are two main factors that seem to be creating this increased demand for home renovation professionals... 1. Higher mortgage interest rates are causing plenty of homeowners to decide to stay and upgrade rather than sell and buy. If you bought a home a few years ago and have a 3.5% mortgage interest rate, you aren't likely to sell your home and buy a new one with a 7% mortgage interest rate just to get that one extra room, or nicer interior finishes, or larger back deck. You're much more likely to stay in your very nice home -- with a very, very nice mortgage interest rate -- and hire a home renovation professional to help you add a deck, finish a room in the basement, update your interior paint or flooring, and on and on. 2. The several year period of having multiple offers on every new listing within days (or hours) seems to have drawn to a close. During those years, home sellers often didn't need to make many updates to the condition of their home before selling it. Now, with the possibility that your home won't go under contract within five minutes, many sellers are evaluating whether to have some repairs or upgrades completed prior to listing their homes for sale. So... 1. If you're in the home renovation business - you'll likely be busy over the next year or two - or more. 2. If you're a homeowner who is staying - or selling - you might have a slightly longer wait for someone to help you with your home updates. | |
Sometimes Upgrade Your Home (Selling And Buying) Results In An Even Larger Upgrade In Your Monthly Payment |
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"Our house isn't working well for us anymore. We are thinking of selling it and buying a new house." Sounds good, but let's look at a few basic numbers first... You bought for $190K, put $20K down and have a mortgage payment of $955 per month thanks to a refinance a few years back at 3.5%. Your house is now worth $275K and you are thinking of selling it to move up to a house priced at $375K. When you sell your $275K house, you'll end up with about $90K in your pocket after closing costs and paying off the $170K balance on your mortgage. You'll spend about $10K of that $90K on closing costs for your purchase, so you'll put down $80K as a downpayment. You'll be borrowing $295K ($375K - $80K) and you'll be financing it at a current mortgage rate of about 7.25%. Your new monthly payment will be $2,392. Wait... what!? You're moving from a $275K house to a $375K house and your monthly mortgage payment is going to increase from $955/month to $2,392/month. Yikes! Why is this happening? [1] Your current mortgage payment is based on your initial purchase price of $190K... which is a good bit lower than your home's current value of $275K. [2] Your current mortgage payment is based on on a mortgage interest rate of 3.5%... which is a good bit lower than the current rate of 7.25%. [3] The costs of selling and cost of buying reduce the amount of equity that you can roll from one home into the next. So... before you dive right into upgrading your $275K house (with a $955/month payment) to a $375K house... let's run your version of the numbers above to help you determine your new potential monthly payment. | |
Despite Fewer And Fewer Home Sales, There Are Plenty Of Reasons Why Buyers Will Still Buy And Sellers Will Still Sell |
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January 1, 2022 through November 20, 2022 = 1,445 home sales January 1, 2023 through November 20, 2023 = 1,082 home sales As of this week we have seen 25% fewer home sales this year than last! With fewer and fewer homes selling, sometimes it might feel like there aren't that many homes selling in our area. But yet, there are still plenty of reasons why buyers are still buying and sellers are still selling. Sellers are selling because:
Buyers are still buying because:
We are likely to close out 2023 with 25% fewer home sales than in 2022 -- and at this point it seems likely that we'll see even fewer in 2024 -- but there will always be some buyers buying and some sellers selling, even if not in as great of numbers as we have seen over the past few years. | |
Home Buyers Signed Contracts On These 15 Homes Over The Past 7 Days |
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Over the past week (15) home buyers in Harrisonburg and Rockingham County signed contracts to purchase (15) homes. A few observations...
What do you notice about these (15) homes that went under contract in the past week? What will go under contract over the next seven days? | |
Collecting, Organizing And Studying Showing Feedback Is Important, Again |
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For most of 2020, 2021 and 2022, nearly every listing went under contract quickly - often with multiple offers. During that time, feedback on showings was collected, but it was mainly a question of... "Will your clients be making an offer? We have three so far." Now, with 65% of active listings of existing homes having been on the market for more than 30 days, it is important (again) to collect, organize and study showing feedback. And as we start collecting that showing feedback, sometimes we start wondering whether all showing feedback is really actually about price... My house is needs many cosmetic updates, but all of the potential buyers (who did not make an offer on my house) didn't provide feedback about price, they provided feedback about the need for cosmetic updates. 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 provided feedback about price, they provided feedback about the railroad tracks. My house has a steep driveway, but all of the potential buyers (who did not make an offer on my house) didn't provided feedback about price, they provided feedback about the steep driveway. 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 probably 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. | |
If Your Home Will Need Improvements Costing X After Closing, Consider Adjusting Your List Price By 1.5X |
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Let's say your three neighbors just sold their homes for $400K... ...but when comparing your home to the homes sold by your neighbors... Your house needs $10K of painting - or your house needs $16K of new flooring - or your house needs a $22K new roof. When pricing your home, you shouldn't just subtract the price of that improvement from your neighbor's list price to arrive at... A list price of $390K - or $384K - or $378K. You likely need to subtract 1.5 times the cost of the improvement when pricing your home. Would be home buyers will likely round up somewhat in their mind when estimating the cost of making the improvement -- AND -- it will be much more of a pain for them to make the improvement after closing as compared to you have already completed it before selling your home. As such, it will likely be more realistic to consider a list price of $385K - or $376K - or $367K. | |
If Your Home Has Been For Sale For More Than 30 Days, You Are Not Alone |
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The numbers above might surprise you given that the median days on the market in 2023 is a mere six days. But that median of six days on the market is related to homes that have actually sold. We get a slightly different story when looking at currently available listings When considering active listings of resale homes (not new homes) we find that... 35% of active listings have been on the market for less than 30 days 65% of active listings have been on the market for more than 30 days So, if you are selling a home and it has not gone under contract within six days, or within 30 days, you are not alone. 65% of sellers with homes on the market for sale have had their homes on the market for more than 30 days. | |
It Does Not Seem That Home Prices Are Declining, Overall, But Some Sellers May Elect To Sell At Lower Than Expected Prices |
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The median sales price in Harrisonburg and Rockingham County has risen 10% over the past year. That's an increase from $292,000 to $322,750. As such, it really does not seem that home prices are declining, overall. But... some (but likely not many or most) sellers may elect to sell at lower than expected prices. Here's why... Let's say you're selling a home priced at $322,750 that you purchased five years ago. That $322,750 is the median sales price... so let's just walk it backwards to imagine what your home might have been worth 1, 2, 3, 4 and 5 years ago. Today = $322,750 1 Year Ago = $291,950 2 Years Ago = $265,700 3 Years Ago = $238,400 4 Years Ago = $215,250 5 Years Ago = $212,000 So... you bought your home for $212,000. Last year you estimated it was worth $291,950... a $79,950 gain in four years. Today you estimate it to be worth $322,750... a $110,750 gain in five years. So, if you are selling your house today, and you price it at $322,750... and it doesn't go under contract within the first few weeks... or not within the first month or two... will you keep it priced at $322,750 indefinitely? Likely not. You -- and some other sellers -- would likely be happy to sell for somewhere between $291,950 and $322,750. Selling (this fictional house) for $291,950 is certainly quite a bit below where we believe the value to be today, but it is also a $79,950 gain in five years. All this is to say, that if you are serious about selling, and you have your house on the market, and it hasn't gone under contract... we shouldn't get too stuck on what your house should be worth today, and what it is worth today... we should evaluate the price at which it makes sense for you to sell... and how we might price it to have it go ahead and go under contract... even if that is at a lower price than we might otherwise expect. Put more simply... home sellers from three or more years ago potentially have a LOT of equity to play with when pricing their home to sell... and can likely tweak the pricing to motivate a buyer to go ahead and commit to buying. | |
Real Estate Seemed Like A Liquid Asset For A While There, But That Was Not Normal |
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A liquid asset is an asset that can be easily converted into cash in a short amount of time. Is real estate a liquid asset? Nope. Did it feel like it was during 2020, 2021 and 2022? Yep. For a few years there, you could list your home for sale, it would almost certainly go under contract VERY quickly, with very favorable terms, with few contingencies, and would almost certainly get to closing. Real estate felt like a liquid asset. You could sell most any house and could "convert it into cash" within 30 to 45 days without much difficulty. But... we're not quite there any longer. Many houses -- but not all -- will still go under contract very quickly. We are starting to see many more inspection contingencies and/or appraisal contingencies. You may very well be able to convert your real estate (house) into cash within 30 to 45 days -- but you can't be as confident that it will definitely happen in very short order with very few speed bumps. And... that's normal. Real estate is not a liquid asset. It just felt like it was for a few years. | |
A Return To The Question Of Whether To Take Your House Off The Market For The Holidays |
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For a few years now, just about every new listing was going under contract in a matter of days, regardless of the time of year it was listed for sale. Big house, small house, high price, low price, good condition, not so good condition, big yard, small yard, flat driveway, steep driveway, optimistically priced, realistically priced, listed in April, listed in December -- everything was going under contract quickly. But now, some homes are coming on the market and are NOT going under contract right away. It might have even been 30, 60 or 90 days that some have been on the market without a buyer making an offer. Some such sellers are now returning to the question of whether to take their property off the market for the holidays. After all, if we aren't having many showings, maybe it makes sense to take the house off the market for a few months and start afresh in early Spring? It will be interesting to see if inventory levels drop as we get past Thanksgiving and/or as we get past Christmas. In years gone by we would often see these houses that were coming off the market for the holidays either vanishing in mid/late November (just before Thanksgiving) or in mid December (just before Christmas). | |
Buyer Demand Still Exceeds Housing Supply, But Not For All Properties |
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In 2020, 2021 and 2022, almost every new listing had LOTS of interest and likely had multiple offers. There was some variation by price range and property type, but they were all quite favorable scenarios for sellers and quite frustrating scenarios for would be buyers. For example, with three fictional properties at different price points or in different locations or of different property types, etc., here's how the first week might look... First Property = 30 showings, 10 offers Second Property = 20 showings, 5 offers Third Property = 10 showings, 2 offers Again, great fun for sellers, no fun for buyers... mostly brought on by super low mortgage interest rates and Covid-induced changes in how people thought about the space they needed or wanted in their homes. Today, things are a bit different... mortgage interest rates are much higher (twice as high as their recent low point) and a global pandemic is no longer stretching our use of our homes in quite the same ways. This is resulting in a slightly different market response to those same fictional properties in week one of being on the market... First Property = 10 showings, 4 offers Second Property = 3 showings, 1 offer Third Property = 1 showing, no offers As represented above, we're seeing several dynamics here... [1] Some properties are still seeing lots of buyer interest and are having multiple offers the first week they are on the market. [2] Some properties are seeing a few showings in the first week, one of which results in an offer from a buyer who is happy to go ahead and move forward with purchasing the home. [3] Some properties are having very few showings the first week, and no offers. Seller #1 is still delighted. Seller #2 is quite satisfied and decides they are OK not having had multiple offers because they just needed one buyer. Seller #3 might think their house will never sell, might wish they sold their house a year ago, might be discouraged, might be frustrated, might be surprised. My general advice for Seller #3 is to remember the market before 2020... it often took a few weeks or a few months for many properties to sell. That's OK. Be patient. Collect feedback from buyers who are coming to look at your home. Make adjustments to your home's condition, marketing and/or price to best appeal to prospective buyers. But again, be patient. We're not in 2020-2022 any longer. | |
Maybe We Will See Seasonal Declines In Housing Inventory Levels Again This Year? |
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All the way through 2019, we would see a seasonal decline in housing inventory levels each winter. Inventory levels would typically be the lowest between November and February as some sellers took their homes off the market for a few months -- and as some sellers decided to wait until spring to sell their homes. But then between 2020 and 2022, that all changed. The real estate market was on FIRE as Covid-induced work/life/home changes and super low mortgage interest rates pushed more buyers than ever into the housing market. Inventory levels that had been dropping for several years (2016 - 2019) dropped even further. All of a sudden, inventory levels were ALWAYS low. Spring and summer inventory levels - low. Fall and winter inventory levels - low. We stopped seeing seasonal shifts in housing inventory levels. But over the past few months inventory levels have been drifting back upwards a bit. So, as we (eventually?) start to see cooler temperatures, will we start to see seasonal declines in housing inventory levels again? | |
Many (Most) Home Sellers Are Adjusting Their List Price If Their Home Is Not Under Contract Within 30 Days |
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Here's how I get to the conclusion above... Today, there are... 200 homes for sale in Harrisonburg and Rockingham County per the HRAR MLS. Of those 200 active listings... 116 homes have been on the market for 30+ days. Of those 116 listings that have been on the market for a month or more... 65 homes have seen a price reduction in the past 30 days. So, yes, it would seem that many (most -- 56%) home sellers are adjusting their list price if their home is not under contract within 30 days. It makes sense... If a buyer hasn't made an offer, a price reduction may... 1. Cause existing buyers to reconsider your home. 2. Cause a new buyer consider your home for the first time. 3. Cause a buyer who has viewed your home to make an offer. Should all home sellers reduce their list price after 30 days on the market? Not necessarily. Should it be a discussion about the merits of making such a price change? Absolutely! | |
How Many Homes Are Selling For Less Than The List Price? |
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If we look at homes that have sold in the past six months... [1] 68% have sold for the list price or higher. [2] 32% have sold for less than the list price. [3] 40% have sold for over list price. Maybe several of these stats surprise you. Maybe none of them do. I think the most surprising to me is that 32% of homes sold for less than the list price. If often feels like buyers are barely ever able to negotiate on price -- and sellers are barely ever willing to negotiate on price. Interestingly, let's look back a year and a half (ish) to 2021 when mortgage interest rates were in the 3.something range... The numbers here are certainly different, though not quite as different as you might imagine. For all the homes that sold in 2021... [1] 73% sold for the list price or higher. [2] 27% sold for less than the list price. [3] 43% sold for over list price. So... is every home selling over asking price? Nope. Back in the crazy times of 2021, was every home selling over asking price? Nope. | |
If Your Home Has Not Sold We Should Look At What Buyers Are Actually Buying |
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As an aside... the market is definitely shifting in some ways... as we are no longer seeing every house go under contract in hours or days with multiple offers. We're still not seeing prices adjust, overall, but some homes are sitting on the market longer than they would have over the past few years. That nuance aside... let's say your house is listed for sale, and it just hasn't sold after 30, 60 or 90 days. How should we think about that? What information would be helpful in understanding why your house has not sold? I believe context is key here... [1] How many buyers have contracted to buy homes that are similar to your house since your house has been on the market. If you are selling a 3 bedroom, 2 bathroom, 2000 SF home -- let's look at how many buyers have contracted to buy 3 - 4 bedroom, 2 - 3 bathroom, 1800 - 2500 SF homes in the same timeframe that you have been trying to sell your home. Have lots of buyers contracted to buy similar homes? Or just a few? How have the prices of those other homes compared to your list price? [2] How many other sellers of similar homes are trying to sell their homes right now? If you are selling a 3 bedroom, 2 bathroom, 2000 SF home -- let's look at how many other sellers are trying to sell a 3 - 4 bedroom, 2 - 3 bathroom, 1800 - 2500 SF home right now. Do you have lots of competition? Or not very much? How do the list prices of those competing homes compare to your list price? -- As the local housing market continues to shift over the coming months it will be important to understand the context in which you are selling your home and making sure you are pricing and marketing your home in a way that will give it the best chance to sell relative to what buyers are buying and what other sellers are trying to sell. | |
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
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