From the Virginia Association of Realtors this morning....



Home sales (# of sales) and median prices are both up across Virginia!

Click the image below to download the full Virginia Home Sales Report.

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A new foundation (pictured above) is going in at The Glen at Cross Keys as a result of growing local demand for new homes.  Photo by Carey Keyes.

Along with Carey Keyes and Suzanne Trow, I represent several of the main builders in the Harrisonburg area.  In the past 30 days the model home at each of these communities was sold....

• Heritage Estates (upscale 50+ community with pool, adjacent golf course)
   
  
• The Glen at Cross Keys (low maintenance paired homes on Cross Keys Road)
   
  
• Founders Way (one-level condominiums with open floor plans, upgraded finishes)
   
  
• Meadowbrook (one and two story homes in community with 29% greenspace)

Again -- the model home at each of these four communities sold in the past 30 days!  This is great news for the local new home market, and with current lower inventory levels (compared to the past few years) there is likely to be continued demand for new homes.
  

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After several years in a row of relatively similar sized classes of first year students at JMU, the first year headcount will jump up a bit this coming year, as shown above. 



Despite this jump in first year students, the overall growth trajectory will stay relatively similar to what JMU has experienced over the past several years.

These increases in enrollment will (gradually) help the over-supplied student housing market in Harrisonburg.  If you haven't heard, there are many more places for students to live than there are students.  (read up here)

These increases are also (continued) great news for the local economy, as JMU is a major economic engine for the local economy -- as both students and faculty/staff live here, work here, spend here, etc.  This is not, of course, to ignore the significant contributions made to our local economy by Bridgewater College, Eastern Mennonite University and Blue Ridge Community College.

The data for the graphs above is based on JMU's enrollment projections.  "Total On-Campus Headcount" is the number of students who are taking classes on the JMU campus.
 

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The graph above shows the average number of home sales per month (in each of four price ranges) when evaluating a 12-month time period.  For example, the last data point shows the average number of home sales per month for May 2011 - April 2012. 

As is quite evident, the recovery (in the pace of home sales) is more pronounced in the lower price ranges. 
  

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I'll give a $10 Starbucks gift card to the person who can provide the correct explanation of the graph below.  OK, I'll be fair, I don't know what the correct answer is.  :)  So, I'll give the gift card to the most believable answer.  Leave your answer as a comment below, or e-mail me (scott@HarrisonburgHousingToday.com).


   

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Yes, you heard me correctly -- there are fewer homes on the market than we have seen anytime in the past four years.



The inventory data above is current as of a few days ago when I published my monthly market report.  At that time there were 665 homes on the market --- fewer than anytime in the last four years, including any of the winter months over the past few years.

Inventory is starting to pick up a bit (678 as of this morning) but there are still fewer homes on the market than we've seen in a while.  This certainly helps sellers, as there is less competition -- though it is certainly still a buyer's market.
 

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Source:  KCM

Above you will see the state-by-state change in home prices over the past 12 months.  The majority of states (yellow, orange, red) have seen a decline in prices over the past 12 months --- but not Virginia.

Stability in the overall housing market in Virginia is a result of overall stability in Virginia's economy and job market -- both of which positively influence our local economy and housing market as well.
  

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During 2010, buyers wrote 820 contracts --- and during the same year, only 758 closings took place.  Why the difference?

Technically, some of the 2010 closings are based on 2009 contracts....and some of the 2010 contracts will be 2011 closings.  I don't suspect, however, that this timing issue significantly effected the relationship between the number of contracts and closings during 2010.

Looking back, there were 47 closings during 2010 that were under contract at least twice.  That closes the gap most of the way:  758 closings + 47 contracts that fell through (but then were contracted on again) = 805 closings.  That leaves just 15 properties (with this rough math) that were under contract but never sold.

Interestingly, 2011 was even more disproportionate....

Again, let's pretend ignore the overlap between years -- yes, I know that late 2011 contracts will close in 2012, but in theory almost all of those will be offset by late 2010 contracts that closed in 2011.

So, the math gets interesting here.....

There were 64 closings during 2011 that were under contract at least twice.  791 closings + 64 contracts that fell through (but then were contracted on again) = 855 closings.  That leaves 100 properties (as compared to 15 in 2010) that were under contract but never sold.

Again, it's rough math, here is the probability that a contract on your house would result in a closing during the past two years:

• 87% of first contracts lead to a closing in 2010.
• 76% of first contracts lead to a closing in 2011.

Don't get me wrong --- I like contracts, and houses going under contract -- however.....

• sellers must remember that some contracts will inevitably fall through
• we can't look at contract data in our market and assume that all of them will lead to closings

  

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Our local housing market remained relatively stable in January 2012, showing some indicators that we will continue the new trend we saw in 2011.  To remind you.....

In 2011, after a five year slide (and a 55% drop) in the pace of home sales, 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.



Important trends to note:

• Home sales declined slightly (by one sale) in January 2012 as compared to last January. 
  
• The median sales price increased by 18%.  (because of a small data set?)
• The average sales price declined by 1%

Inventory levels continue to decline (as shown above) with a 14% decline over the past year, and an overall 17% over the past two years.

Perhaps one month of data is too small of a data set to draw some conclusions --- otherwise we'd think our market has REALLY recovered, as the median sales price increased 11% when comparing 2011 to January 2012.

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.
   

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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.
  

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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.


  

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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
 

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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.
  

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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.
    
  

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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.

 

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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.
  

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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!
  

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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.
   

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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.
  

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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

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