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!
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Why Did So Many Homes Sell In Our Area In 2020? |
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 As shown above, the annual pace of home sales took a nose dive in April 2020 related to COVID, but has taken off since August 2020 and quickly accelerated the market to a pace of almost 1,500 home sales per year. Why is this happening? Here are some of my best guesses... Pre-COVID, most of us likely spent the minority of our waking hours in our homes. We would be at work much of the time. During COVID, many folks find themselves spending 90% or more of their waking hours in their homes. For many people, this made them quickly realize that their home was no longer working for their needs or those of their family. If you're working from home and your kids are learning from home, you suddenly have higher expectations for the space and spaces that your home offers. I suspect this "being at home much more than normal" dynamic caused more people to decide to sell their home and buy a new home during 2020. Mortgage interest rates have been dropping throughout most of 2020, making it an excellent time to buy a home from a monthly mortgage payment perspective. These lower rates likely made it pretty easy for the "my home doesn't work during COVID" buyers to consider upgrading to a new home. There is an extraordinary amount of pent up buyer demand in our area. Perhaps more sellers than usual listed their homes in the second half of the year, most of which were scarfed right up by eager buyers, thus leading to higher than normal home sales. This also seems to have lead to higher sales prices! What do they say? The whole is greater than the sum of its parts? It seems that... more buyers wanting to upgrade to a new home + super low interest rates + pent up buyer demand + quickly rising home prices = a red hot real estate market in 2020! As one other aside, it is also possible that we may have seen more second home purchases in 2020 than in other comparable years. More and more people found they could work from home, or from out of town, and this likely drove at least some number of new buyers of second homes into our market. | |
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Spring and Summer Looked A Bit Different This Year In Our Local Housing Market |
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 We always (I mean, always!) see more contract activity in the spring than the summer. More buyers contract to buy homes between March and May than between June and August. Always. For sure. Definitely. But not in 2020. Over the past three years we have seen a 15% - 18% decline in contract activity when comparing summer to spring - but this year contract activity INCREASED 32% when comparing summer to spring! This certainly had a lot to do with COVID-19. Plenty of buyers and sellers were feeling a bit uncertain this spring, which slowed down the pace of sales in our real estate market. But -- everything came roaring back this summer! Who knows what fall will look like this year in our local real estate market, but summer was certainly unusual! Yes, and I suppose spring was as well. :-) | |
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20 Year History of Harrisonburg Area Median Home Sales Price |
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 Here's a really long look back at the median sales in Harrisonburg and Rockingham County. There have been a variety of different stages in the market over the past twenty years...
Where do we go from here? I think we'll see another solid increase in the median sales price in 2020 and likely over the next few years. What do you think? Email me at scott@hhtdy.com. | |
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My Predictions for the 2020 Real Estate Market |
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 As is my annual tradition, I am making some predictions about what we'll see in the Harrisonburg and Rockingham County real estate market in 2020. Above, you'll note that there was only a 1% increase in home sales between 2018 and 2019 -- and I am predicting a 2% increase between 2019 and 2020. A few thoughts along those lines...
So -- I'm betting on another increase, albeit a small increase, in the number of home sales in Harrisonburg and Rockingham County in 2020. And how about those prices...  As shown above, we saw a 7% increase in the median sales price in 2018, followed by a 5% increase in 2019! I am -- perhaps too boldly (?) -- predicting we'll see another 5% increase in the median sales price this year. If I'm wrong on either prediction, perhaps it will be this one -- perhaps we'll start to see prices rising, but not quite as fast as they have over the past two years. The chances seem relatively low that we'd see an actual decline in the median sales price in 2020. OK - enough about my predictions --what about for you? Email me (scott@HarrisonburgHousingToday.com) and let me know where you think our local market will go in 2020. And keep up with all the market data between now and next January by signing up to receive my monthly housing market report by email if you are not already receiving it. | |
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Inventory Levels Seem Unable To Drop Below 250 |
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 It's been the story for quite a few years now (at least 10 years, it seems) that inventory levels are dropping -- buyers have fewer and fewer homes from which to choose when they are looking to buy in Harrisonburg and Rockingham County. Here are how many homes have been on the market in October for the past 10 years...
So, it's certainly a more challenging time to be a buyer than anytime in the past 10 years -- but inventory levels seem to now be bottoming out around 275. Here's what the past six months have looked like...
So, over the next year, I wouldn't be surprised if we never dipped lower than 250 and we never rose above 300. Given these limited inventory levels, it is more important than ever that buyers in today's market are ready to be patient and then to ACT QUICKLY! :-) Buyers can make it a bit easier on themselves by knowing the market, knowing the process, knowing your buying power, and closely monitoring new listings! | |
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Harrisonburg Area Home Sales Over $500K Small But Strong Segment of Local Market |
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 Only 3% of local home buyers spend $500K or more on their home purchase (per sales data over the past year) but this segment of the local housing market has been strong over the past few years. As shown above, there were 40 home sales over $500K last year - more than any time in the past decade. This year we seem to be on track to possibly match that, with 33 home sales over $500K in the first eight-ish months of the year. Reigning in our enthusiasm a bit, though, this is a relatively small number of buyers. If you are selling a home over $500K, you need to keep in mind that only about 40 buyers per year (just over 3 per month) spend that much money on a home in ALL of Harrisonburg and Rockingham County! Let's look a bit further into even smaller segments of the high end local market...  While last year (15 home sales) wasn't quite the strongest year for $600K+ home sales -- this year looks like it will be. We have already -- in eight months -- matched the highest number of $600K+ home sales seen in a year when looking back for 10 years. And one more look at an even higher price point...  Above, you'll see that most years there are only 5 or fewer home sales over $700K. But back in 2015 there were 11 (which was more than double the norm) and this year there have already been 10 such home sales! So -- overall, the high end home sales market is doing well -- comparatively, but that is not to say that selling a home over $500K is an easy task - it's not. Home sellers over $500K are aiming for a tiny pool of potential buyers -- even if that pool of buyers might be slightly stronger this year than last. | |
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Should You List Your Home in August or September or October? |
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 Generally speaking, you should list your home sooner rather than later. As shown above, we are likely to see a declining number of buyers signing contracts between August and September - though then a slight increase again in October. If you want to sell your home in the next few months, let's meet SOON (!!) to start discussing market value and any preparations you need to make in your home before putting it on the market. | |
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I Know You Know This, But These are RECORD Low Inventory Levels |
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 I looked back further, and further, and further, and could not find ANY time in the past 10 years when there have been fewer houses listed for sale than there are RIGHT NOW! And yet, despite the fact that we keep starting off each year with FEWER homes for sale...  ...somehow buyers are able to buy pretty much the same number of homes for each of the past three years:
What does this mean? How can it be? Stop making my/your head hurt!? Well, basically, the inventory level DOES and DOESN'T matter. If 1,000 homes are listed for sale each month in 2019 and 1,000 go under contract and 1,000 sell -- we would have an absolutely outlandish year of sales (12,000 home sales) but inventory would have started and finished at 269 homes for sale. So -- buyers certainly have fewer choices at any given moment, but as more and more listings come on the market this Spring, they are likely to have more and more choices, though they will be competing against lots of other buyers and the properties are likely to go under contract quickly. | |
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How Much Did City Single Family Homes Increase in Value in 2018? |
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 If you own a single family home in the City of Harrisonburg, you might be wondering how much your home's value increased (or decreased) over the past year. 194 single family detached homes sold in the City of Harrisonburg in 2017 with a median sales price of $232,750 and a median price/SF of $121. 231 single family detached homes sold in the City of Harrisonburg in 2018 with a median sales price of $235,000 and a median price/SF of $122. The increase in median sales price from $232,750 to $235,000 is a 0.97% increase. The increase in median price per square foot from $121 to $122 is a 0.83% increase. So, if we round up (just by a bit) then based on changes in both the median sales price and the median price per SF, it seems that single family homes in the City of Harrisonburg increased in value by 1% in 2018. | |
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Who Is Winning In The Local Real Estate Market? |
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 Sellers are winning - rather universally. Every market metric works in their favor. Hooray if you get to be a seller in the current market! Buyers are losing - in all but a few categories. Certainly, buyers are happy to have low mortgage interest rates (cheap money) and low unemployment (you need a job to buy a house) but otherwise, all market metrics are working against buyers. Homeowners are winning - but are indifferent to most of what is going on in the market. Homeowners are certainly happy that home prices are increasing, that folks have jobs, and that not many people are losing their homes to foreclosure. As to all of the other market shenanigans - they are rather indifferent. So, again, a great time to be a seller. And if you have to be a seller AND a buyer -- perhaps it will be a wash. You'll benefit as a seller and struggle as a buyer. Welcome to the Seller's Market of 2019! | |
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The Value of Your Home Based On When You Bought It |
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 Can historical median sales prices give you some sense of your home's current market value? Perhaps so! The values in the chart above are calculated by comparing the 2018 median sales price to the median sales price in each of the past 17 years. Do remember, of course, that while this might provide a general guide to market changes over the past 18 years, every home and neighborhood is unique. Let's chat about your specific house if you want to know what it is worth in today's market. | |
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Will housing inventory levels improve next year? |
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 If you have been looking for a new home to buy all Spring and Summer and Fall of this year -- and didn't find one, which you blame on having very few homes from which to choose -- are you likely to have better luck next year? I'm guessing not. The graph above shows that inventory levels have dropped significantly over the past two years based on how many homes are on the market at the start of the main buying season, which I'm defining as April in the graph above. So -- after seeing a 20% decline in inventory levels between April 2017 and April 2018 -- are we likely to see inventory levels start increasing again in 2019? Again, I don't think so, and here's why.... To reverse this trends of declining inventory we would need one or more of the following to happen in our local market....
Again -- none of the changes above seem likely to happen at a scale that would allow inventory levels to see much, if any, of an increase next year. As such, I am expecting we'll see relatively similar inventory levels next Spring and Summer. | |
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How Many Home Sellers Pay Closing Costs For Buyers? |
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 Almost half of sellers (43.3%) pay some portion of a buyer's closing costs in the form of a credit at closing. Over the past five years, the number of sellers providing a "concession" of this sort to buyers have stayed between 40% and 50%.  Of interest -- sellers have paid more and more of a buyer's closing costs over the past five years, but that has edged back down during 2018. Why would sellers be paying more of a buyer's closing costs? It's hard to say exactly -- buyers might be asking for more money, sellers might be agreeing to provide a larger credit, or perhaps the total amount of closing costs that a buyer has to pay is increasing as well?  If, as a seller, you are paying part of a buyer's closing costs, you are most likely to be paying between $4K and $6K --- or between $2K and $4K. And again, as a seller, if you pay part of the buyer's closing costs -- you are not alone -- 43% or so of sellers do so! | |
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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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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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Hey Builders, Harrisonburg is an Increasingly Popular Place to Live, Keep Up, Please! |
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 OK -- no numbers today. Just a few thoughts that have been coming up in conversation after conversation over the past year. Inventory levels (the number of houses for sale at any given time) have been quite low when looking at the City of Harrisonburg and immediately surrounding areas. Many buyers are having a tough time finding a home to buy. Many houses are selling quickly because there are many buyers who want to buy them when they hit the market. I believe a significant reason why housing inventory levels are so low is because people are deciding they want to live in (or stay in or move to) Harrisonburg faster than builders are building new homes for them to purchase. Sometimes it is young adults who just graduated from JMU, EMU, or Bridgewater College and who want to stay in the area. Sometimes it is a local college grad moving back after having had a taste of life in the big City. Sometimes it is parents of these college grads turned Harrisonburg residents who are moving to Harrisonburg to be close to the grand kids. Whomever it happens to be -- more and more people are deciding they want Harrisonburg (or close to it) to be their home. And I believe they are deciding this at a faster rate than new homes are being built. Side note -- lots of rental housing is being built right now. This sort of helps -- people can rent if they can't find something to buy -- but it is not a viable long-term solution. So -- builders -- let's get to building some new homes, why don't we? It is time -- the home buying population is growing, and needing housing.... | |
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Approaching March, A Different Look For Our Local Housing Market |
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 This is a bit of a different look for our local housing market. Ignoring last year, there have always been between 500 and 900 homes for sale in Harrisonburg and Rockingham County when entering into March -- the very early edge of the Spring real estate market. Last year -- that number felt low -- only 402 homes on the market in early March. This year -- low doesn't even describe it -- there are only 279 homes on the market right now. There is bound to be a surge of buyers hoping to contract on homes this March, April, May and June. What will they find as they enter into our local housing market? Very few houses for sale. And lots of competition from other buyers!!! | |
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Median Price Per Square Foot Keeps On Rising |
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 In addition to watching how the median sales price changes over time, it can be quite insightful to see how the median price per square foot of sold homes changes over time. The graph above tracks the median price per square foot of single family homes (not townhouses, duplexes or condos) in Harrisonburg and Rockingham County over the past 15 years. Price per square foot increased 59% between 2002 and 2006 during the housing boom, but then fell 22% between 2006 and 2011 as the market cooled back off. Since that time, however, we have seen a slow and steady increase in this metric -- from $101/SF in 2011 to $118/SF last year -- which marks a 17% increase over the past six years. I do not expect that we will see any drastic increases in this metric in the next few years, though an increasing number of buyers (more demand) and significantly fewer sellers (less supply) does make you wonder if we will start to see more rapid increases in sales prices, and thus in price per square foot. ALSO OF NOTE -- this metric is most helpful in understanding value trends over time -- not in calculating the value of one particular property. This median price per square foot is the mid point of many very different homes -- new homes, old homes, homes with garages, homes without garages, homes with basements, homes without basements, homes with acreage, homes on small lots, etc. A median price per square foot can be more helpful in understanding the potential value (or value range) of a single property if we pull that median value based on a smaller data set of more properties more similar to the single property. | |
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Fewer and Fewer Foreclosures |
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 Well, here's a good indicator that our local housing market continues to become healthier over time -- as shown above, the number of foreclosure sales per year has continued to decline over the past several years. To put these into an even larger context:
All in all, it is a good sign for our local housing market when the number of foreclosures per year declines. It means more homeowners are able to stay in their homes, and make their mortgage payments, which is a general sign of a stronger local economy. | |
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Local Home Sales Slow, As Inventory Declines, But Prices Are Rising! |
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 Find out more about this Mountaintop Retreat on 46 acres with a cabin, hiking trails, canyon and river here. I just published my most recent monthly market report, and as usual, you can read on for an overview, download the full report as a PDF, read the entire report with commentary online, or tune in to my monthly video overview of our local housing market...  Now, let's take a closer look at some of this month's data....  As can be seen above....
Last year certainly was interesting!?! Or odd!?! Last August, September and November were OFF THE CHARTS as far as a record number of home sales for those months -- which then makes this year's sales trajectory seem as slow as mud in August, September and November. This November's sales were a good bit higher than in 2014 and 2015 -- but were solidly below November 2016.
So -- despite the fact that 2017 is hiding in the shadows of a towering year of sales in 2016 -- it is interesting to note that the 11 months of home sales thus far in 2017 (all 1,149 of them) has already surpassed the full 12 months of sales seen in 2013 (1067 sales), 2014 (1085 sales) and 2015 (1125 sales). As such -- while total home sales will likely be 5% to 6% lower this year than last -- that will still mark a solid improvement as compared to any other recent year.
After quite a few years of steady increases in buyer activity -- we are starting to see a decline. Over the past six months we have seen buyer activity taper off and start to decline. I believe this is a direct result of the drastic reductions in the availability of homes for those buyers to buy. As the number of sellers in the market at any given time has declined, eventually that also resulted in a reduction in the pace of buying activity.
Yeah, so, about those inventory levels. They are low and getting lower!?! And, realistically, when and how do we think that would or could change? In theory, inventory levels will rise this coming Spring -- except they didn't during 2017. Looking back, the end of last November was the highest inventory level we saw for the following 12 months!?! So -- hmmm -- absent any outside factors (new home construction, anyone?) it is possible that the current inventory level (322 homes for sale) could be the highest inventory level we will see for the next 12 months!?! Stop and think about that for a moment....
Somewhat interestingly, as shown above, there has been a larger (proportional) decline in inventory levels for attached properties (townhouses, duplexes, condos) than for single family detached properties. There are now only 56 townhouse/duplex/condo properties available for sale in all of Harrisonburg and Rockingham County! And finally -- one last look at some interesting trends....
As shown above, nearly half (46%) of homes that are selling (not of all that are listed) are selling (going under contract) within 30 days of hitting the market. So -- yes -- the market is moving pretty quickly in many locations and price ranges! OK -- I'll stop there for now. There is plenty more in my full market report, so feel free to download it as a PDF, read the entire report online, or watch/listen to a video overview of this month's report. And, my reminders for buyers and sellers last month still apply.... SELLERS -- even though it is a seller's market in many price ranges right now, you must still focus on price, condition and marketing. For further reading on buying or selling in this area, check out.... | |
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
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Commonwealth of Virginia
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