As reported in the Daily News Record this week, the Weldon Cooper Center's population projections show that Harrisonburg has now surpassed a population of 50,000. 

There was a remarkable 2.3% population growth in the City over the past year -- certainly a good sign for the local economy and housing market.
  

The Virginia Association of Realtors has released the 4th Quarter 2011 Virginia Home Sales Report, and for the second consecutive quarter there has been an increase in the annualized pace of home sales in Virginia.

Click the image below to download the full market report as a PDF.


  

In another positive sign for Virginia's economy and thus housing market, there seem to be more people moving into Virgina than out of Virginia.

Of note, Virginia is one of only 9 states where this is the case!

Source: KCM Blog
 

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.
  

More than they ever have!  Pre-boom, buyers (and thus sellers) were negotiating an average of 2.6% on price -- that is to say that homes were selling for 97.4% of the list price.  That went as low as an average of only 0.9% of negotiating room in 2004-2005, before rising quickly to current market conditions where the average negotiations are 5.3% of the list price.



If we look closer at the data pre-boom (c2000), mid-boom (c2005) and post-boom (c2011) we find some interesting facts:

• Last year (2011) 8% of buyers paid more than full price for their homes! 
  
• Only 13% of buyers negotiated more than 10% off the list price last year.
• In 2005, almost one out of four buyers (22%) paid more than full price for their homes.
• In 2005, only 9% of buyers negotiated more than 5% off of the list price of the home they purchased.
    
  

Detached home = single family home
Attached home = duplex, townhouse, condominium

So, which property type has shown a stronger performance over the past 11 years in Harrisonburg and Rockingham County?

• Attached homes maintained their value for longer before starting to decline.
  
• Attached homes have increased more in value over the past 11 years.
• Attached homes have seen a smaller decline since their peak.

But despite all of this, I believe the detached home market will be a stronger performer over the next five years, because:

• Demand for (sales of) detached homes increased 12% in 2011.
• Demand for (sales of) attached homes decreased 17% in 2011.

 

In 2000, there were 829 home sales.  That zoomed up to 1,669 in 2005.  This past year (2011) there were 791 home sales.  Certainly, 1,669 home sales a year is not a normal pace of home sales, but is 791 home sales per year a reasonable assumption for the pace of our local housing market going forward?

To explore this issue, I have created a model showing what home sales would have been if a constant percentage of our local population bought a home each year, and I have included population increases from the past decade.



Above you'll note that in 2000, a total of 0.77% of the population purchased a home (829).  Then, for each following year, I have shown how many people would have bought a home if it continued to be 0.77% of the total population.  Per these calculations, home sales in 2011 (though improved over 2010) are still well below where they (theoretically) should be.  If 0.77% of the population bought in 2011, home sales would have been 23% higher than they were last year.



Above is a second illustration, assuming that 2011 was a normal year -- and that each year we should expect 0.97% of the population to buy a home.  In this scenario, home sales should have been 56% higher last year to have 0.97% of the population buy a home.

Regardless of the actual numbers, my conclusion based on the data above is that 791 home sales per year (as in 2011) is not the new normal for our market.  I believe the market will improve further as to the annual pace of home sales -- at least to 1,000 sales per year.
  

The housing market as a whole in Harrisonburg and Rockingham County seems to be stabilizing.  As per my market report earlier this week, sales increased by 4% in 2011, even though prices declined by 3%.

Land sales, however, are looking even better!  There is quite a bit of information packed into the graph above, but here are the main things I think are important to note:

• Land sales soared in 2004 and 2005, and stayed at respectable levels in 2006 and 2007 -- for a total of 435 sales in 4 years.  Then, sales dropped steadily between 2008 and 2010, to a low of only 27 sales in 2011.  Let's look at that again --- in all of Harrisonburg and Rockingham County, there were only 27 sales of land of an acre or more.  Wow!
  
  
• Sales of land greater than an acre almost doubled in 2011, to 49 total sales.  That is quite an increase, and it beats 2009 sales figures as well.
  
  
• Prices also rebounded -- increasing to an average of $16,355 per acre -- it is encouraging to see this rebound in pricing in tandem with the rebound in sales pace.
  

Hopefully, a year from now, we'll have seen prices of residential properties stabilize in response to the increase in their sales pace --- similar to what we have seen in land sales.  Stay tuned!
  

Friends and Colleagues --- Our local housing market has finally done it -- after a five year slide (and a 55% drop) in the pace of home sales, the tide has finally turned in 2011.  Our local real estate market showed a 4% improvement in the pace of home sales last year, even though the median sales price declined another 3%.

Jump to the PDF of my monthly market report, or keep reading for an overview.

Speeding through the finish line....



The local housing market didn't slow down for the close of 2011 -- it poured on the gas to accelerate through the finish line with a strong month of 79 home sales in December.  This was the strongest December in at least four years.  October and November could have had us worried, with sales in the 50's, but apparently the market was holding back to create an exciting photo finish in December.

The Great Reversal....



After five years of seeing fewer and fewer home sales in our local area (from 1669 in 2005 down to 758 in 2010) we finally experienced an increase in buyer activity during 2011 -- with 791 home sales.  This marks a 4% improvement in the pace of home sales.  The not-quite-as-exciting news, of course, is that the median sales price declined another 2.83% over the past year.  But certainly, we needed to see this stability (and now growth) in sales pace before we could reasonably expect to see stability in sales prices.

Hello Buyers, Good Bye Sellers....



For the past few years, there have been too many sellers in the market, and too few buyers.  2011, however, has told a different story -- one of returning stability.  Not only did home sales increase 4% in 2011, but inventory levels declined 15%.  While we still have a ways to go, both of these trends are headed in the direction of increased stability in our local real estate market.

We Won't Miss You Mr. Foreclosure....



Foreclosures (and then bank owned homes) have dragged housing markets down across the country.  Thankfully, not only did home sales increase this year in our local market (blue bars above), but foreclosures also declined (red bars above).  This 17% decline in foreclosures during 2011 shows promise for fewer bank owned homes, and greater market stability in 2012.

What else would help?  Lower interest rates?  Lower unemployment rates?



The stage is set for further stability in our local housing market during 2012 -- mortgage interest rates are at historic lows (below 4%) and our local unemployment rate is at its lowest level in over two years.

Looking Forward

After a 2005 peak, and a 2010 valley, 2011 brought a long awaited step towards stability in our local housing market as sales began to increase again.  The pace of home sales is likely to increase even further in 2012, and we just might start to see some stability in median prices --- if not in 2012, then I would imagine we would certainly see that in 2013.

For a more detailed look at the Harrisonburg and Rockingham County real estate market, download my full market report as a PDF.

And -- if you have questions about the local housing market, or if I can be of assistance to you with real estate that you own, or that you'd like to own, please be in touch.  You can reach me most easily at 540-578-0102 or scott@HarrisonburgHousingToday.com.
   

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.
  

Here is an overview of some of the more interesting, noteworthy, and/or popular stories of 2011 in the Harrisonburg and Rockingham County real estate market....

JANUARY  -  Has the real estate market finally hit bottom in Harrisonburg and Rockingham County?   "After five years of a declining residential real estate market in Harrisonburg and Rockingham County, I think we might finally be poised to see an increase in sales activity."  read more

FEBRUARY  -  Preston Lake Foreclosure Auction Results In $3.5M Sale To Wells Fargo   "The Preston Lake Trustee Sale took place today, February 3, at noon, and drew quite a crowd of Preston Lake homeowners, developers, attorneys, Realtors, and neighboring landowners.  Here's an overview of where things stand."  read more  and  more  and  more

MARCH  -  Sale of North 38 Apartment Complex Sets New Valuation of Student Housing in Harrisonburg   "An investor just bought a significant stake in the student housing market in Harrisonburg, which provides another data point upon which other student housing owners can value their investment."  read more

APRIL  -  How did Virginia fare in the housing bubble?   "Virginia is one among a handful of states that experienced a net gain in housing prices between 2000 and 2010."  read more

MAY  -  Founders Way Condos are APPROVED for FHA financing!   "As of this week, Founders Way Condos are approved for FHA financing.  These spacious condos have wonderfully open floor plans with 2 or 3 bedrooms, and start at only $149K."  read more

JUNE  -  Downtown Harrisonburg has a grocery store!   "The Friendly City Food Co-op opened this week, and it is a fantastic addition to Downtown Harrisonburg!"  read more

JULY  -  Are lower inventory levels leading to fewer home sales?   "We wondered aloud as to why it might be that we can't find them a home right now --- yet at the same time, sellers are wondering why they can't find a buyer for their home right now."  read more

AUGUST  -  Did the federal home buyer tax credit impact the pace of home sales in Harrisonburg and Rockingham County?   "The federal home buyer tax credit did not seem to have a lasting, positive impact on the local housing market."  read more

SEPTEMBER  -  Finding a rental property in or near Harrisonburg, VA   "While you can find any property listed for sale (via the MLS) all in one place, it's not quite as easy to find rental properties."  read more

OCTOBER  -  Record low interest rates spur on buyer activity   "Average 30-year fixed mortgage interest rates are now below 4.0%.  Wow!"  read more

NOVEMBER  -  HarrisonburgREO.com, your source for bank owned -- REO -- properties in Harrisonburg and Rockingham County   "If you are looking for bank owned (REO) properties in Harrisonburg and Rockingham County you can now easily find them on www.HarrisonburgREO.com."  read more

DECEMBER  -  Why am I cautiously optimistic about the future of our local housing market?   "You don't need to tell me --- I know --- home prices are still on the decline.  But here is the basis for my cautious optimism about our local housing market."  read more

The annual question for those planning (or hoping) to sell their home in the spring or summer is whether to put your house on the market the first week of the year (we'll say Jan 1) or to wait until we're approaching spring (we'll say Mar 1).

It's a double-edged sword --- while there will be more buyers several months from now.... there will also be more sellers, competing with you.

Looking at this year (2011), between January and March:

• There were 21% more buyers in March (75) than in January (62)
• There were 7% more sellers in March (832) than in January (778)

So, while there is more competition with other sellers in March, the increase in buyers is even more significant.  When comparing January to April, the change is even more extreme:

• There were 68% more buyers in April (104) than in January (62)
• There were 11% more sellers in April (865) than in January (778)

So, just when I (might) have you convinced to wait until April to put your house on the market, let me offer up this comparison:

• In January-March this year, an average of 69 buyers committed to buy properties each month.
• In April-June this year, an average of 99 buyers committed to buy properties each month.

Sure, 99 buyers per month makes your odds better than 69 buyers per month --- but it's not as if buyers are completely dormant over the next few months. 

Perhaps the best bet is to examine your house and your segment of the market more specifically.  If you don't have much competition from other sellers right now based on the size, location, price range of your house, let's get your house on the market ASAP.  If you have LOTS of competition right now with very comparable houses for sale, perhaps it makes more sense to wait for a few months.

Feel free to call me (540-578-0102) or e-mail me to discuss whether it makes sense to get your house on the market now, or to wait until March or April.
  

You don't need to tell me --- I know --- home prices are still on the decline.  But here is the basis for my cautious optimism about our local housing market....



This illustrates the trends in general housing market indicators two years ago, as compared to the trends in general housing market indicators today.  What do you think?  Do I have some basis in reality for my cautious optimism? 
 

Click here to download my full market report (27 pages, 7 MB, PDF) or read on for highlights....



November was a relatively positive month for the local housing market:

1. Home sales (barely) decreased in November (by one home sale) as compared to last November.
2. Year-to-date home sales have increased 2% over 2010 sales levels.
3. Year-to-date median sales prices have declined 4% as compared to one year ago.
4. Average days on market increased by 7%.
   

Despite several negative trends (#1, #3, #4 above) the positive trends (#2 above) is a long-term leading indicator that we are likely in the early stages of recovery for our local housing market.  After sustained increases in the long-term pace of home sales we should then start to see an eventual leveling off and increase in sales prices.



A strong surge of buyers in 2011 is leading the charge towards more stability in the local housing market.  As shown above, November 2011 was yet another strong month of contracts (76) showing a 27% increase over last November and a startling 77% increase over three Novembers ago.



Inventory levels continue to significantly decline, down 12% from a year ago.  Lower inventory levels (fewer sellers) combined with an increase in contracts (more buyers) will eventually lead to greater balance in the local housing market.



Despite the fact that our local housing market's median price has not yet stabilized, it is interesting to note that we have seen a steady improvement in median price per square foot for single family homes over the past year.  This is in sharp contrast to the steady decline seen in the four prior years.



The icing on the cake is that mortgage interest rates remain at historically low levels creating amazing opportunities for buyers.  At the end of November, the average 30-Year fixed mortgage interest rate was 3.98%. 



For an even more in-depth look at the Harrisonburg and Rockingham County real estate market, click the image above to download my full market report (27 pages, 7MB, PDF).

If you have questions about the report, or if I can be of assistance to you with real estate that you own, or that you'd like to own, please be in touch.  You can reach me most easily at 540-578-0102 or scott@HarrisonburgHousingToday.com. 
  

Each month inventory levels drop at the beginning of the month -- as quite a few listings expired on the last day of the prior month.  So it's possible that today's incredibly low inventory levels (744 properties) will climb back up by a bit over the next few days.

However, as things stand now, these are the lowest inventory levels we've seen in almost four years.  It's actually probably quite a few more months than that, but I have only been tracking inventory levels for the past 45 months. 

What does this mean?  Hope for further balance in the local housing market -- as the number of hopeful seller decreases, and the number of actual buyers increases, we'll return to a more balance market.

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!
 

How much does it cost on a monthly basis to buy the median price home in our area, assuming 80% financing?  Today, that adds up to a $791 monthly payment.  That marks a dramatic 28% decline since 2007 when the monthly payment would have been $1,094.

The decline in median sales prices over the last few years (from $195K to $175K) combined with the decline in interest rates (from 6.2% to 3.9%) has brought average monthly housing payments down to very affordable levels.

Again, the graph above (click here for a more legible PDF) shows the mortgage payment including principal, interest, taxes and insurance (PITI) assuming 80% financing at November's average 30-year interest rate, and assuming Harrisonburg's real estate tax rate ($0.59 per $100).
 

Click here to download my full market report (27 pages, 7 MB, PDF) or read on for highlights....



October was a relatively positive month for the local housing market:

1. Home sales increased 8% in October as compared to last October.
2. Year-to-date home sales increased 3% over 2010 sales levels.
3. Year-to-date median sales prices declined 3% as compared to one year earlier.
4. Average days on market increased by 8%.
   

Despite some negative trends (#3, #4 above) the positive trends (#1, #2 above) are an indication that we are likely in the early stages of recovery for our local housing market.



A strong sign of strength to come in the local housing market, October 2011 was a great month of buying activity, with 84 buyers committing to buy homes in Harrisonburg or Rockingham County.  This marks a 65% increase in buyer activity as compared to October 2010!



Trends are very slow to reveal themselves in annualized sales figures (shown above) because they are an indication of 12-month rolling averages.  That said, it seems that it may be a safe bet that home sales and home prices are on the mend when examining the graph above, which has now been showing increases in these long-term indicators for four months.



Some price ranges are recovering more quickly than others.  The graph above shows that the price ranges under $300K have been starting to see increases in sales over the past several months.  This should eventually roll over into the higher price ranges as buyers move up the price spectrum.



For an even more in-depth look at the Harrisonburg and Rockingham County real estate market, click the image above to download my full market report (27 pages, 7MB, PDF).

If you have questions about the report, or if I can be of assistance to you with real estate that you own, or that you'd like to own, please be in touch.  You can reach me most easily at 540-578-0102 or scott@HarrisonburgHousingToday.com. 
 

As we conclude 2011 and head into 2012, Virginia's housing market will likely be strengthened by low interest rates, rising residential rental rates, pent-up demand, and an improving household balance sheet based on increases in household saving habits.

Despite these tailwinds, however, a return to stability in the housing market may be slowed by employment trends, low consumer confidence, tight lending and underwriting standards and significant policy issues. Recent policy decisions or discussions that could impact Virginia's housing market include a possible elimination of the mortgage interest deduction, GSE reform, changes in FHA loan limits and a new QRM proposal (Qualified Residential Mortgage) that would require lenders to retain 5 percent of the value of the loans they originate (excluding Fannie and Freddie) unless the borrowers have a 20% down payment

  

Let's start here, with a passionate narrative from a friend and blog reader (thanks Tony!) who recently bought a home here in Harrisonburg....


Alert!  Alert!  Depending on the age of the home you are buying, it can be very important to ask for utility data.  But it's a bigger issue, as Tony reveals....

Tony raises a great perspective for us to keep in mind -- we can think (as a home buyer) that we have all of the costs nailed down and entered into our monthly budget -- but if we forget the variability of utilities, we're in trouble.  Perhaps you live in a home now that averages $150/month for heating, cooling and electricity costs.  What if you purchase a new home and that jumps up to an average of $350/month.  Perhaps you made your new budget based on $150/month?

So at first glance, it's important to ask the sellers of a house you are considering for some utility history.  But wait -- that's not even entirely helpful because they might keep the house tremendously colder or warmer than you would prefer.  Thus their heating, cooling and electricity costs could be much lower than you would experience once you move in. 

So what is the answer?  Well, Tony goes even further, with a hope and goal of putting large amounts of data to work for us....


Indeed it would be nice to have this type of data.  Imagine being able to take the utility costs for the home you own OR the home you might buy and compare them to other similar houses in terms of age and square footage.  All of a sudden you'd be able to not only estimate your own costs, but you'd also be able to know whether the home was more efficient than most, or had significant energy efficiency challenges.
 
Here's to hoping for a future where information about utility use is more easily available and more widely analyzed.