Many people have asked me how much of an affect on our market the first time buyer tax credit has had over the past year.  It's a challenging question to answer --- some first time buyers who bought this year may have bought because of the tax credit, but some (or most?) may have bought even if the tax credit didn't exist.

One way that we should be able to tell if the tax credit had a big impact is to see if there are more first time buyers in the market now as compared to last year.  Thus, I decided to examine the breakdown of sales prices during May and June 2010 (it should be a lot of first time buyers) as compared to all of last year (2009).



As you can see, above, I assumed that I would probably find a pretty big increase in the proportional number of lower priced homes selling this May and June as compared to last year. 



Above, however, you'll note that there wasn't actually much of a change at all.  About 60% of the homes sold in the last two months were priced below $200k and the same percentage of the sales from last year were below $200k.

I welcome your suggestions for other ways to slice and dice the data to get at whether the tax credit had an impact on the market.  For now, we'll say the jury is still out...

If you haven't heard the big news, our real estate company (Coldwell Banker Funkhouser Realtors) has merged with Century 21 Real Estate Unlimited.  This transition is very exciting for our company, our agents, but most of all to all of the clients of our now one brokerage company.  With our combined strength, we will be able to provide even better services to our clients.

The combined company will operate as Coldwell Banker Funkhouser Realtors, with approximately 95 licensees, and is the largest residential real estate company in the central Shenandoah Valley -- both in sales volume and sales transactions.


The full press release follows....

Real Estate Firm Merger Offers New Opportunities In Today's Market
June 30, 2010

Two Local Firms Merge To Provide Clients & Associates State-Of-The-Art Real Estate Services

For the last two years, Joe Funkhouser, President of Coldwell Banker Funkhouser Realtors, has carefully analyzed the real estate industry in the new economy and came to one conclusion: today's real estate firm must be large enough to provide more tools and services to clients and associates.  Joe looked for opportunities to make this happen and began conversations with Philip Constable, broker and owner of Century 21 Real Estate Unlimited.  "I have always had great respect for Philip and the team of associates he built at Century 21," said Funkhouser.

After being approached by Joe,  Philip Constable did his own research to see what local firms would be the best fit if he decided to merge his company.  "I talked with several Brokers and realized the firm which had the closest structure and business philosophy of ours was Coldwell Banker Funkhouser Realtors," said Constable.

This business philosophy is founded on Integrity, Honesty, Professionalism and Knowledge. "Our company is founded on principles that we expect each associate to carry forward in our service to clients and customers," said Joe Funkhouser.  "I believe our business philosophy and the emphasis we put on equipping our associates with proven tools, education and management support is our advantage in today's market".

The thought of a merger between the two firms began last year and was focused on how to provide better service to associates and clients, "Joe and I met many times over the last year to formulate a merger that would bring our two firms together under one roof and create not only the largest real estate firm in the region but also the most professionally trained associates and the firm with the best cutting edge technology in the industry," said Philip Constable who will now serve as Associate Broker and a Sales Manager of Coldwell Banker Funkhouser Realtors.

Some of the many tools available to associates include websites, virtual tours, social media, graphic design assistance, marketing consultants and a strong management team of industry leaders.  "Our company is here to support our associates.  Whether it is a question about building a successful marketing plan or the effects of new laws on our business,we are here to make our associates successful in helping clients," said Joe Funkhouser, who has served as Chairman of the Virginia Real Estate Board and Vice President of the National Association of REALTORS®.

Over the past 12 months, the combined companies have represented clients in the sale of 662 properties totaling $127,845,895 in sales volume.   The firm will now have 95 full service licensees, making it the largest residential real estate firm in the region.  "The size of our firm is a great advantage to our associates and our clients.  When someone chooses to work with our real estate firm they are not hiring just one of our associates, they are working with a team of real estate professionals dedicated to their real estate needs," said Funkhouser.

Along with its sister company, Coldwell Banker Commercial Funkhouser Realtors, Coldwell Banker Funkhouser Realtors provides services in Residential and Commercial Brokerage, Residential and Commercial Property Management, Farms and Land Brokerage and  Property Appraisal.  The company was founded in 1975 by Joe Funkhouser and currently has locations in Harrisonburg and Woodstock offering services in Augusta, Rockingham, Page & Shenandoah counties.

For more information about Coldwell Banker Funkhouser Realtors, visit www.cbfunkhouser.com or call (540) 434-2400.
 

For each of the past four years, fewer and fewer home buyers have purchased homes in Harrisonburg and Rockingham County.  The annual rate of home sales has declined from 1,669 in 2005 down to 816 in 2009 – a decline of more than 50%.   Even though the first five months of 2010 indicate that sales activity may finally be starting to increase again, it is still a buyer's market.  There are far more sellers needing, hoping or wanting to sell than there are buyers who need, hope or want to buy.

In many senses, this is great news for buyers – there are fewer buyers to compete with, and more houses to choose from.  Add to that the amazingly low interest rates and you'll see why today's home buyer is excited to be in the market to buy.  But despite this excitement, most buyers want to make sure they are making a wise investment.  In years past, just about any home would do – when the overall market was increasing by 15% to 20% per year, just about any home would see great appreciation.  Now, however, prices are holding relatively stable, so it becomes more important which house a buyer chooses.  As you look at which particular house you choose, one perspective to consider is how you'll do when you re-sell the house you are buying.

Some homes currently for sale need updating – hardwood floors to be refinished, a roof to be replaced, wallpaper to be removed, or a driveway to be re-surfaced.  These homes that are need of some updates can be a good opportunity for buyers – if the seller is pricing based on these imminent costs.  An even better opportunity, however, is a home where brand new value can be added through your improvements.  If you sand and stain the hardwood floors, you will have added value through improving the look and ambiance of the home – but you had hardwood floors before your work, and you still do.  If you replace the roof, you will have added value through lower roof maintenance for the next buyer – but you had a roof before your work, and you still do.  As you look at homes as a buyer you should not only look for updates that you might choose to or need to make, but also totally new areas where you can create space to add value.  Homes with unfinished bonus rooms or unfinished basements offer lots of potential for adding brand new value.  The layout of some homes invites the addition of a deck or screened porch – both of which add brand new value – or perhaps an existing porch can be converted into a sunroom.  When you're just refinishing the existing spaces, you usually aren't changing the functional space offered to the next buyer – but if there is an easy way to add more functional spaces, this can offer you many options during your time of homeownership, and when you re-sell.

A second perspective to consider when buying in a buyer's market is the "timeless value" or quality found in a home you are considering.  Look for appropriately sized rooms, the types of rooms that you use on a daily basis, and the quality of construction and craftsmanship that means your home will still look great in 5, 10 or 15 years.  In this case, it's not just about buying the biggest house, or the house with the biggest yard.  Some 2,000 square foot homes have layouts that won't fit most people's lifestyles, where an 1,800 square foot home down the street might be perfectly designed for comfortable daily use.  In her very well read book, The Not So Big House, Sarah Susanka encourages us to think differently about the layout of a house:

"It's time for a different kind of house.  A house that is more than square footage; a house that is Not So Big, where each room is used every day.  A house with a floorplan inspired by our informal lifestyle instead of the way our grandparents lived.  A house for the future that embraces a few well-work concepts from the past.  A house that expresses our values and our personalities.  It's time for the Not So Big House."

Saranka points out that it's not all about quantity in a house, but about quality – quality in design and materials.

Finally, it is very important to consider location and neighborhood, when buying a home in a buyer's market.  A home can be beautiful, well designed, and desirable to all – but if it is located on a busy road, or in the far corner of the county, or on a street where most homes are old and poorly maintained, the future value of the home suddenly changes.  Buying an older home, or one that needs work, can be a much better opportunity for you, as you have more control over the changes to the value of your home.  You'll likely never reduce the traffic count on the road in front of your house, you'll never make city and employment growth stretch all the way out to your corner of the county, and you won't spend your free time fixing up the other ten houses on your block.  

With many more homes for sale than buyers to buy them, and with amazingly low interest rates, and with fewer buyers to compete with when negotiating a deal with a seller, it can be a very exciting time to buy a home.  When you do so, it is important to consider how well the home will fit your needs, but it is also wise to consider how the home you are considering will fare when you need to sell in 5, 10 or 15 years down the road.

(The Short Answer:  No!)  As reported by hburgnews a developer from Glen Allen is moving forward with a developing a community for 1,500 college students.  Paul Riner astutely points out (WHSV) that it might be five to ten years before enough students exist at JMU for the community to be fully utilized.

Is there really too much student housing already built?

• In Fall 2007, there were approximately 17,428 students at JMU.  
  
• In a few months (Fall 2010), there are projected to be 18,484 students at JMU. 
  
• This three year increase of 1,056 students has been paired with an the construction of 3,473 off campus beds.

Where are these 3,473 new campus living options?

• 422 in a new JMU residence hall
• 332 at Charleston Townes
• 96 at Sunchase
• 816 at North 38
• 188 at Campus View Condos
• 274 at 865 East
• 1,220 at Copper Beech
• 125 at Urban Exchange

Why was this enormous number of student housing properties built over the past three years? 

A few years ago, Harrisonburg created an incentive (with good intentions) for student housing developers to build now, now, now.  Much of the land in the City that was annexed several decades ago was zoned R-3, which allowed (until recently) a property owner to build student housing (in the form of three-story apartment buildings) without asking for permission.  Much of this R-3 land was adjacent to single family home neighborhoods, and thus Harrisonburg took this "use by right" out of the R-3 zoning classification.  R-3 property owners were left with a three year window of time in which they could build this higher density housing (student housing) without asking for permission -- and thus the construction began!


Finally, here are some fun quotes out of the Daily News Record article of July 25, 2007:

"... James Madison University recently announced plans to increase enrollment by 4,100 students by 2013." 

Total growth will probably end up being around 1,900 students.

"With the influx, we are going to need housing. We are going to need housing quickly." 

Well, we have that new housing now -- but it turns out we don't need much of it!

I had heard from several of my clients this week that interest rates were VERY low --- but I didn't know they were the lowest EVER!  Current rates are the lowest on record, according to BankRate.com and others. 

Of note, I two of my clients locked in this week at 4.375% and 4.5% --- wow!

How do these incredibly low interest rates affect you?

• If you have an interest rate above 5.5%, it might be worthwhile considering a refinance.
• If you are buying anytime in the next six months, now may be a considerably more favorable time to buy rather than later.

Let's examine how an increase in rates (as compared to a current 4.5% rate) would affect a monthly payment. 



Put another way --- if you were buying a new townhome this week, could it be helpful to have an extra $1,600 in your pocket?  Or an extra $2,700 in your pocket?  Buying now, with low rates, can save you that much (annually) as compared to your costs if rates start to increase.

Data Sources: Harrisonburg/Rockingham Association of Realtors MLS, Rockingham County Circuit Court Clerk's Office (Thanks Chaz & April!)

Many have asked me how foreclosures are affecting our local real estate market.  Absent hard data on the number of foreclosures in Harrisonburg and Rockingham County, I have always mentioned that there aren't an overwhelming number of foreclosures --- and certainly not enough to make a huge difference in home values.

Now, I have the data, thanks Chaz & April at the Clerk's Office . . .

What can be seen here is that the percentage of the home sales that are foreclosures has certainly been on the rise over the past several years.  However, despite this being based on hard data, there is still a bit of fuzzy math....

The "Sales" includes all home sales as recorded in the HRAR MLS.  This includes most foreclosures, because most such properties end up being bank owned properties that are then listed (and sold) by Realtors via the MLS.  However, if only 127 of the 177 foreclosures ended up in the MLS as sales, then the true number of total sales for 2009 would have been 866 sales, making foreclosures 20.4% of the market as opposed to 21.7% of the market.

This year (2010) and next year will be important to watch as we see how many home sales we'll have, and how many foreclosures will exist in the market.  I predict that home sales will level off this year (and thus, stop declining), but that foreclosures will increase over last year.

There are a LOT of homes on the market in the $300k - $400k price range, and I have recently been showing a lot of them to buyers.  I will then have follow up calls from the Realtors representing the sellers, wondering how things went.  Some of the houses are priced more competitively than others, and those sellers (and their Realtors) are often confused and frustrated when my buyer clients aren't ready to make an offer on their home.

Why aren't buyers necessarily jumping at the "best-priced" house on the block?  The main conclusion I have come to is that the layout of the house seems to be a significant trump card above all other factors. 

• A house can offer a compelling cost per square foot, be in immaculate condition, on a beautiful lot --- but if a family spends lots of time preparing for and enjoying family meals --- and the house has a small kitchen and small dining room --- the house probably won't work.
• A couple looking for a three bedroom house can find one in a great neighborhood, with many compelling features, but if the main living spaces are chopped up, and the couple wants an open and airy feel -- no go.
• A house might be priced at the lowest possible price in a neighborhood, and might boast more square footage than all of the neighboring homes --- but if the prospective buyers are looking for privacy in the backyard --- and the house is on a bare lot with no trees and an immediate view of all close neighbors --- the buyers will keep on looking.

The good news here is that even though there are a LOT of homes on the market, YOUR home might offer the perfect layout for a home buyer that has been waiting in the wings patiently viewing each new listing as it comes on the market.

The bad news is that if the layout or floor plan of your house is unpalatable to most buyers, your home may languish on the market.

Back in 2002-2006, just about any home would sell (regardless of the layout) because there were very few choices in homes.  Now that buyers have so many choices, they are often quite specific in wanting a layout in a home that works well for their day to day needs.

June has been a busy month in the local real estate market --- or at least on my end --- as a LOT of buyers close on their purchases of homes in and around Harrisonburg.  Quite a few of these buyers are first time buyers, who will receive an $8,000 tax credit when they file their taxes early next year. 

But the opportunity for this $8,000 tax credit has passed now --- the deadline to have a house under contract was April 30th, and the closing deadline is June 30th (though it may be extended).  So....what now?

The big question that remains is whether this was either:

• bringing buyers into the market who wouldn't have otherwise bought
• bringing buyers into the market earlier than they would have bought

If either, or both, of those were occurring, then slower times could be ahead. 

I've had this conversation with many people lately --- now that this whole tax credit has come and gone, can the real estate market stand on its own?  Will things slow back down again? 

The big picture is this -- fewer and fewer homes have been selling for quite a few years now:

• Only 1,438 homes in 2006 (a 14% decline from 2005)
• Only 1,248 homes in 2007 (a 13% decline from 2006)
• Only 936 homes in 2008 (a 25% decline from 2007)
• Only 816 homes in 2009 (a 13% decline from 2008)

But this year looks different!  Year to date 2010 versus year to date 2009 shows an impressive 10% increase!  That's a 23% swing in momentum, given the 13% decline from 2008 to 2009.  Certainly, home sales in the first part of 2010 could have been falsely inflated because of the tax credit --- but will the bottom really fall out of the market so much that we see another 10% - 15% decline in home sales when considering all of 2010?

I have made lots of predictions about the real estate market over the past five years, and most of them have been wrong.  I did not think we would continue to see the number of home sales fall as much as they have. 

In 2008, I thought for sure we'd see 2007 volume.  In 2009, I thought for sure we'd see 2008 volume.  So.....here I go again:

I predict that we will see 800 home sales in 2010.  That would show only a 2% decline since 2009 --- and would be a turn in right direction from the multiple years of double digit declines in sales volume.

But, as the image above alludes to, there is somewhat of an awkward pause now, as we see what the second half of 2010 has to hold.  I am thankful that the tax credit brought buyers into the market --- it helped to sell properties for many homeowners that really needed (or really wanted) to sell.  I am now hopeful as we move forward, that our local real estate market will continue to recover and strengthen through the balance of 2010.

Click here to view my full June 2010 Harrisonburg & Rockingham County Real Estate Market Report.

Exciting Fact #1 --- May 2010 home sales declined 5% as compared to May 2009, but year-to-date sales (January through May) are up 10% over last January through May.




Exciting Fact #2 --- After three and a half years of steadily declining home sales (quantity, not prices), we have now seen stabilization or increases in home sales for over six months.




Not-So-Exciting Fact #3 --- Sales volume has declined sharply for four years now (red line), and median home values have declined gradually for two years (green line).  Despite early positive indicators for the past several months, we're not out of the woods yet.




Other tidbits that you'll discover in my June 2010 Harrisonburg & Rockingham County Real Estate Market Report include:

• Average days on market is down in May 2010.
• Inventory levels have hit a new high.
• Land sales (1+ acres) are soooo slow this year.

Click the image below to read the full report...

Intrigued by a post over at RealCentralVA exploring the number of contracts for single family homes for each of the 10 past months of May in Charlottesville and Albemarle County, I thought I'd see how Harrisonburg and Rockingham County are performing compared to our neighbors over the mountain.

Reading Jim Duncan's article, you'll note that the number of buyers signing contracts for single family homes has decreased for the past several years.  Here is an overlay of Harrisonburg / Rockingham data with Charlottesville / Albemarle data....



Again, the data above is showing the number of contracts that were signed in the month of May (for the past five years) on single family homes in Harrisonburg and Rockingham County as compared to Charlottesville and Albemarle County.

To make it a bit clearer....



As you can see, the number of home sales (contracts in this case) has continued to decline for the past several months of May in the Charlottesville area, but those same measures have started to level off and increase here in Harrisonburg and Rockingham County.

Take a look at the graph below to see how buyer momentum is shifting in our market.  Do note, of course, that this is people looking at properties online, which is not the same as buyers committing to buy properties.


   click the image above for a higher resolution PDF

It will take several more months to know whether the Harrisonburg and Rockingham County real estate market really has turned the corner towards recovery, but the graph above shows yet another indicator that we may be headed in the right direction!

There are a LOT of homes for sale right now....995 residential properties in Harrisonburg and Rockingham County as I type.  BUT.... the current levels aren't too much higher than we've seen during the past two spring/summer seasons!


   Click the graph above to view a higher resolution PDF.

Peak Inventory Levels:

• Current inventory = 995 residential properties
• June 2008 inventory = 956 residential properties
• April/June 2009 inventory = 932 residential properties

I suppose we might see even higher inventory levels as we move into June (CAN WE HIT 1,000???) --- but that still isn't too much higher than recently past years.

If you're a buyer....what is your experience of the current inventory?

• Are there way too many houses to choose from right now?
• Can you still not find that perfect home despite many choices?

For the visual learners amongst us, here's a new take on the mix of homes for sale based on their price range, and the demand for such homes....



This (hopefully fun and self-explanatory) graph is based on inventory levels as of May 10, 2010, and average home sales per month from May 2009 through April 2010.

Questions?  Clarifications?

Home sales have certainly started to bounce back in 2010...



Skeptics certainly won't believe we're making any progress until we pass June 30th and the end of the tax credit season.

Big picture thinkers will want to delve into why our market has outperformed so many others across the country..

But now let's examine what is actually selling this year:



Sales of homes priced under $300k have increased compared to last year.
Sales of homes priced above $300k, however, have declined this year.

Is it because of the tax credit?  Is it because buyers of sub-$300k homes often don't have a home to sell before buying?  Plenty of possibilities --- but so far the market is looking strong for the spring and summer!

As reported in detail at hburgnews, a new student housing complex is one step closer to being built on South Main Street.  The 60 acre tract is proposed to feature 466 apartments for college students --- but wait, certainly the developer would first be examining the state of the current student housing market --- right??

Let's take a quick look at what has happened over the past several years in Harrisonburg's student housing market:

In Fall 2007, there was a relatively even balance between JMU students living off campus, and housing available for said students.  There were 11,654 students, and approximately the same number of "beds" (bedrooms in apartments, etc) available for those students.

Between Fall 2007 and Fall 2009 the the number of off campus students increased by 382 students.  But.... there were 3,313 new beds for these students!  This huge increase in housing included new complexes (Charleston Townes, North 38, Campus View Condos, 865 East, Copper Beach, Urban Exchange) and additions to current complexes (Sunchase, new JMU residence hall).  This left an off campus vacancy of roughly 20% --- with 12,036 off campus students compared to 14,967 off campus beds for students. 

While growth is still occurring at JMU, it is quite slow because of state budget cuts for higher education.  Thus, the vacancy rate for Fall 2010 will likely only decline to 18.5%, and per my projections, by the time we get to Fall 2013, there will still be an off campus vacancy rate of 15% --- with 13,090 off campus students compared to 15,387 off campus beds for students.

But it seems that a company out of Glen Allen, VA is ready to jump into this exciting student housing market, add help pump that vacancy rate up even higher.  This new community will bring 466 apartments, described as 1, 2 and 4 bedroom apartments, laid out per the site plan below.



Let's assume 1/3 of the apartments are 1 bedroom, 1/3 are 2 bedrooms, and 1/3 have 4 bedrooms.  This equates to roughly 1,087 new beds for students.  They'd like to have them finished for Fall 2011, which means we'll have 12,588 off campus students available to fill 16,286 off campus beds, shooting us up to 23% off campus vacancy.

But the best part yet --- where will this student housing be located?  Next to JMU campus?  In the midst of other student housing? No and No.  This complex is quite a distance from JMU.



Again, read more at hburgnews, as there are a few detailed comments on that site that explain some of the history of the property.

SUMMARY:  Student housing vacancy in Harrisonburg currently hovers around 20%.  A developer is planning to build, likely increasing the vacancy rate to 23%.  If I were the developer, I would not develop it as a student housing complex in this community at this time.

What are your thoughts?  Questions?

Some reports indicate that Americans lost over $1,000,000,000,000 (one trillion dollars) in home values in the last three months of 2009.  When looking at the sum of the last several years, the figures are even more staggering – declining home values across the United States have resulted in trillions of dollars of losses for American homeowners.  Yet during this same time period, homes values in Harrisonburg and Rockingham County have only been marginally affected.  In fact, it wasn't until 2009 that this area saw any significant decline in median sales price, and then it was only a 5% decline.  So why and how, in this time of rapidly declining home values, have homes in the central Shenandoah Valley held their value?

First, while Harrisonburg and Rockingham County did see a sharp increase in home prices (51% increase in median home value between 2003 and 2006), our median sales price started out quite low ($127,700 in 2003) and only increased to $192,983 in 2006.  Median sales prices in many other metropolitan areas increased to much higher levels leading to borrowers stretching pursuing riskier mortgages for their purchases. 

In such areas with significant increases in home values, many homeowners took on risky mortgage programs such as variable rate mortgages, interest only mortgages, or mortgages with a teaser rate.  Those with 30-year fixed rate mortgages knew what to expect of their housing payment and likely were able to continue to pay their mortgages after buying several years ago, but those with these higher risk mortgages often had trouble keeping up with their mortgages and were foreclosed upon.  Variable rate mortgages have been somewhat problematic, but not to a great degree because interest rates have remained relatively low for the last several years.  Interest only mortgages have proven to be quite dangerous, because the homeowners has not been paying down any principal on their mortgage, and thus does not build up an equity in their home absent any appreciation in the market.  Mortgages with teaser rates provided for a very low rate (1%, 2%) for a short time period in order to qualify a home purchaser.   These teaser rate mortgages would then reset to a much higher rate after several years, then putting the homeowner in financial duress, unable to make their mortgage programs

Since home values didn't go too drastically in this area, home buyers did not (in large number) feel pressured to obtain risky mortgages with variable or escalating future housing payments.  As a result, we have seen a very low number of foreclosures in the central Shenandoah Valley.  I have heard, anecdotally that earlier in 2009 over half of the homes on the market in the Winchester area were "bank owned" homes --- homes that had been foreclosed upon.  This high, high number of foreclosures lead to rapid decreases in home values, as banks quickly reduced the prices at which they would sell their inventory in order to get these homes off their books.  Thus while high foreclosure rates in other metropolitan areas lead to declining home values, the very low foreclosure rate in Harrisonburg and Rockingham County has lead to relatively stable home values.

The Harrisonburg and Rockingham County market has also been greatly protected by its diverse and stable local economy.  We have not seen significant losses of jobs over the past five years, which could have put large numbers of homeowners in a position where they had to sell their homes rapidly because they were unemployed, or because they were moving to another area to find work.  Our economy includes jobs from many sectors, and is largely supported by the colleges in universities in our midst.  It also helps that we have always had very low unemployment rates as compared to most every other metropolitan area in the country.

Since 2005, the pace of home sales has declined drastically, with only 813 home sales in 2009 compared to 1,669 home sales in 2005.  The law of supply and demand would suggest that such a large reduction in demand (a 51% decrease) would certainly lead to a drastic decrease in home values.  Yet, in the same time frame (2005-2009), the median home price has shown a net increase from $169,900 to $186,300 (a 10% increase).  While we have seen a 5% decrease in home values between 2008 and 2009, our local housing market continues to be amazingly resilient, without any significant shift in home values.

While we can't point one particular factor that has protected home values in the central Shenandoah Valley, it is highly related to the relatively slow and small increase in home values, the conservative mortgage programs used by home buyers, our low foreclosure rate, and our stable local economy.

Earlier this week I posted my monthly market report for Harrisonburg and Rockingham County and I pointed out that there were several indicators that suggested we might be seeing an end to the local real estate downturn.  Several of you were quite skeptical -- attributing any short-term positive indicators to the tax credit.  A few clarifications before I get to some statistics:

1. The number of local home sales has declined quite significantly for the past five years.  Prices have declined relatively slowly during that same time period.  From my perspective, a local housing market recovery will take place when we first start to see more home sales than in the past, and after that we'll see stabilizing and then increasing prices.
   
2. I am NOT sure that we really are seeing a definite and lasting change towards the better in our local housing market.  BUT....several key indicators in my market report indicate that we might be.
3. It's really o.k. if you are skeptical --- in fact, it's what keeps me on my toes!
   

The main point of contention that I have heard relative to my report is that though there were a LOT of contracts written in March and April, that this was likely almost entirely because of the April 30th deadline to sign a contract in order to receive the $6,500 or $8,000 tax credit.  So.....if the skeptics are correct, we should see a significant drop in contracts being signed in May, right??

First let's look at signed contracts per month:

• March 2010 = 95 contracts
• April 2010 = 121 contracts
• May 1 - 13, 2010 = 46 contracts
  Extrapolating, that will likely be 106 contracts for the month!

Next, let's compare this May to last May:

• May 1 - 13, 2009 = 29 contracts
• May 1 - 13, 2010 = 46 contracts

Finally, remember that my tentative optimism is not just based on March and April 2010. 



Each data point in the graph above shows the number of sales in a twelve month period.  It often takes months for a trend to appear using this metric, but it seems pretty clear to me that over the past six months (which includes data from the last 18 months) we have seen a significantly different trend than we saw between 2006 and 2009.

What do you think?  Still skeptical?

I have been waiting a long time to have tangible, factual, good news to share about a recovery of the Harrisonburg and Rockingham County housing market.  I think that time is coming, and here's why ---

April 2010 home sales increased 62% compared to April 2009!  (see graph below)




Long term home sales indicators continue to show stabilization and growth!  (see graph below)



Home buyers committed to buy homes in record numbers in March and April 2010!  (see graph below)



Learn more about our local housing market by clicking the image below to read my full market report.

Lots of people who are renting have thought about buying . . . and lots of people who are thinking of buying wonder whether they should keep renting.  Here's a highly interactive calculator to help you compare your options, thanks to the New York Times.



Using this online calculator, you can enter in all sorts of variables including all of your up front and ongoing costs for buying as well as renting.  The resulting graph shows you how long it would take for it to have been worthwhile to have bought instead of renting.

The illustration above is with a $160,000 townhome purchase, compared to renting the same townhome for $950 per month.  With a 5% interest rate on a 97.5% mortgage, it would take four years to be worthwhile to buy --- if home values were increasing at 1% per year.  In the first three years, your annual costs would be higher for having bought.  Starting in the fourth year, your annual costs would be LOWER for having bought.

Longer term normalized price increases per year range from 3% to 4%.  With 3% per year increases in home values, you start having annual savings each year after only two years.

If you are wondering whether you should rent or buy a home, feel free to use this handy calculator, or schedule a time to meet with me and I can help you explore the pros and cons of each option.

Perhaps it was the tax credit.  Perhaps our local housing market is starting to recover.  Perhaps it is a bit of both!

In April 2010, an astounding 121 contracts were ratified on residential properties in Harrisonburg and Rockingham County.  This is the highest number of contracts in a single month since March 2007!

Despite the contract deadline having passed for the tax credit, I believe we will still continue to see strong sales as we move through the summer.