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If Or As Mortgage Interest Rates Decline, Buyers Will Likely Jump Back In Sooner Than Sellers |
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Mortgage interest rates peaked this past Fall at 7.79% and have been mostly declining since that time, to current levels of 6.74%. But, 6.74% can still feel high after interest rates were below 5% for 13 years... and below 4% for three years. As mortgage interest rates potentially continue to decline, perhaps back down to 6%, what will we see happening in the market? Will the lower mortgage interest rates spur on more home sales activity? Maybe, but perhaps not as much as you would likely expect. If / when / as mortgage interest rates move back down towards 6% -- or the low 6%'s or the high 5%'s we are likely to see more would be home buyers interested in buying. They will be able to afford higher sales prices and/or their monthly mortgage payment will be lower. But... in order for a home sale to take place... we need both a buyer AND a seller. Many homeowners (would be sellers) have mortgage interest rates below 4%. Quite a few have interest rates below 3%. Will a homeowner sell, paying off their mortgage that has a 2.75% or 3.5% rate... to then buy another home with a 6% mortgage interest rate? Somewhere between no and probably not? Will a homeowner sell, paying off their mortgage that has a 2.75% or 3.5% rate... to then buy another home with a 5.5% mortgage interest rate? Somewhere between probably not and maybe? Will a homeowner sell, paying off their mortgage that has a 2.75% or 3.5% rate... to then buy another home with a 4.99% mortgage interest rate? Maybe? I expect that as we move through 2024 and 2025, and as mortgage interest rates (likely?) continue to decline (at least somewhat) we are likely to see more buyers jumping back into the market before sellers are doing the same. Which means... that we are likely to still see a competitive market... if buyer demand rises more quickly than seller supply. | |
Planning To Buy A Home? Yes, Talk To Me, But Talk To A Lender Too! |
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If you are getting ready to buy a home -- whether your first or your last -- you will probably have plenty of questions.
If you're new to home buying, or new to the area, you'll probably have more questions than some other buyers, and that is OK! If you're getting ready to buy your fourth home and have lived in Harrisonburg for decades you might have fewer questions than some other buyers, and that is OK too! I am happy to meet with you to talk through all of this, and much more. We can do that in person, by phone, by Zoom, etc. But another important conversation to be having in parallel is with a mortgage lender. Unless you will be paying cash for your home, you'll need a loan to make your home purchase, and having a conversation with a lender sooner rather than later will serve you well. When meeting with a lender you will be...
So, if you're planning to buy a home this spring... Yes, talk to me... but talk to a lender too! Call/text me at 540-578-0102 or email me here. We can set up a time to meet and I can send you contact information for several qualified, professional and responsive local lenders. | |
How Many More Single Family Detached Homes Will Be Built In The City Of Harrisonburg? |
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Over the past year this is where single family detached homes were built, as reflected by sales in the HRAR MLS... City of Harrisonburg = 3 homes Rockingham County = 58 homes When looking at development proposals in the City of Harrisonburg here's the breakdown of property types being proposed... Apartments = 74% or 2,747 homes Townhomes or Duplexes = 21% or 771 homes Single Family Detached Homes = 6% or 206 homes So, I suppose it is reasonable to ask or wonder... how many more single family detached homes be built in the City of Harrisonburg? Perhaps the vast majority of single family homes that will ever exist in Harrisonburg have already been built? Perhaps over the next 10, 20 and 30 years, 95% or more of new housing units will be apartments, townhouses or duplexes? After all, the City will eventually run out of land for building more housing. As it currently stands, if you are going to buy a new single family home in the next few years it seems almost certain that it will be in Rockingham County, not the City of Harrisonburg. | |
Moving Beyond Photos When Evaluating Homes For Sale |
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If you're searching for a home these days one of the first things you are likely evaluating when a new listing pops is all of the photos of the house. Thankfully, many or most new listings include great photos of the house, sometimes even including aerial photos. But, the photos only take you so far. Before you even step foot into the home you can often understand the house and its layout a bit more than what the photos might allow by reviewing the floor plan, a 3D walk through or a video of the home. Not all new listings include these additional ways to understand and evaluate the house -- and when they do, this additional information is not always easily accessible on all real estate websites and apps. If you see a new listing of interest, and you like what you see in the photos, but aren't quite sure how all of the spaces in the photos fit together -- feel free to text, email or call me and I can check to see if there are floor plans, a 3D walk through or a video for the listing of interest. We will then, of course, learn the most about the house by walking through it together... but let's start by reviewing as much information as is available to us about each new listing! | |
Annual Pace Of Home Sales May Have Started To Increase Again And Median Sales Prices Just Keep On Rising |
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Happy Monday morning, friends! We're about a week away from spring -- as the seasons go -- and the spring real estate market is almost upon us as well! Furthermore, this Thursday (3.14) you'll have a chance to celebrate PI day! Each month I offer a giveaway, of sorts, for readers of my monthly market report. This month you have a chance to win a few pies (pizzas) from Bella Luna. If you find me at Bella Luna I'll likely be enjoying a Caesar Salad and The Don - their meatball pizza. Click here to enter a chance to win a $50 gift certificate to Bella Luna! And now, let's take a look at some of the most recent trends in our local real estate market, starting with how many homes have been selling of late in Harrisonburg and Rockingham County... Here's what I'm noticing in the chart above... [1] You'll see this on a graph a bit further down, but we saw slightly more home sales this February (84) than last February (75). That said, both of these months of February home sales are well below the 98 home sales we saw two February's ago in 2022. [2] Skipping down to the third highlighted line above, we have seen a 19% decline in home sales in our local market -- but in the past six months (the second highlighted line above) we have only seen a 12% decline in home sales. You'll also see this visually in a graph a bit later, but we may have seen the slowest slow of the recent slowness in our local market -- as it pertains to the number of homes that are selling. That's all (for the moment) about how many homes are selling -- but let's take a look at the prices at which these homes are selling... Feel free to peruse them all (above) but I'll just focus in on the one highlighted line. The median sales price of homes selling in Harrisonburg and Rockingham County over the past 12 months has been $332,470. This most recent annual median home sales price is 9% higher than it was a year ago when it was $304,800. So... the median sales price is definitely still increasing, quickly, though we saw quite a few months (years) when it was increasing by 10% per year. So, maybe the increase in our local median sales price is slowing, barely. We'll know more over the next 3, 6 and 12 months. And, for another potentially changing trend... how quickly homes are selling... Two items to note above... [1] I usually hesitate to focus in on just one month of data because it is hard to call anything a trend when looking at such a small data set, but, I will for the moment. Two years ago, homes that went under contract in February did so in a median of 7 days. Last year that was a median of 10 days. This February the homes that went under contract did so in a median of 17 days. So, homes took a good bit longer to sell (go under contract) this February than in recent months of February. [2] Furthermore, looking at the past six months (September through February) it is taking a median of nine days for homes to go under contract and this is up (slightly) from the median of seven days a year ago and the median of five days two years. ago. So, is it taking a bit longer for homes to go under contract now than in recent years? Yes. Does it indicate a change in the market, or something else? I'll explore this a bit more further on in this report. Next up, just a momentary pause to look at home sales only in the City of Harrisonburg... If you have been trying to buy a home in the City of Harrisonburg for the past few months you might have had a difficult time finding something to buy. As shown above, two years ago there were 99 home sales in the three month period we just finished passing through (December to February) but last year there were only 57 home sales during that timeframe and this year, only 53. This significant drop in the number of homes selling is not a result of lower buyer interest - but more so a result of fewer homeowners being willing to sell. Here's hoping -- for all the would be City home buyers -- that we start to see some homes listed for sale in the City of Harrisonburg this spring and summer! Now, on to some graphs to tell the story a bit more visually, starting with the month by month tracking of home sales in all of Harrisonburg and Rockingham County... A bit of explanation on the graph above -- the red line shows monthly home sales in 2024, the blue line shows last year (2023) and the grey line shows the average of the past four years (2020-2023) for context. Home sales this February were a good bit higher (+9) than last February -- and also higher than the average of the past four months of February. As noted above, technically we had one extra day (Feb 29) to achieve that this year, but the higher month of home sales is significant nonetheless. Given that January 2024 was a good chunk higher than last year (+18) and February 2024 also outperformed last year (+9) it should come as no surprise that the rolling trend of annual home sales seems to be taking a turn upward... Annual home sales in Harrisonburg and Rockingham County peaked at 1,727 home sales in a year back in June 2022 and since that time have been mostly declining for about 18 months. But... maybe no longer. As shown above, we have seen increases in the number of annual home sales for each of the past two months. Will this be a trend and will annual home sales continue to rise as we move through 2024 -- quite possibly. Stay tuned to find out as we continue through the year. Here's another look at the year to year of home sales trends for greater context... As shown above... the number of homes selling each year steadily increased between 2017 and 2021 from 1,260 sales/year up to 1,668 sales a year. After that time, though, we saw declines in the number of annual sales from 2021 to 2022 and again to 2023. Based on January and February data we could see an increase in 2024 -- but we are very early in the year still. The same thing can be said about considering the 2024 median sales price -- we are still early in the year. As pictured in the graph above, the median sales price in our market has steadily increased from 2017 ($198,250) all the way through last year ($330,000). When looking at this year, thus far, the increase in the median sales price has been quite a bit smaller than other recent annual gains -- but we're just two months into the year. A few more months of data will give us a clearer picture of whether sales prices are flattening out at all. I suspect that median price increases are not slowing down as much as the graph above would suggest. Now, to guess at the future a bit, here are the most recent months of contract activity... Despite more home sales in January and February this year than last, contract activity has not been telling the same story. There were fewer signed contracts this January (108) than last (116) and in February we only saw an increase of one contract between last year (93) and this year (94). If we expect to see home sales activity pick up in 2024 (over and above 2023) we'll need to start seeing more contract activity in the coming months. One slightly different take on this is looking at how many houses are under contract at the end of each month... There are currently 265 homes under contract in Harrisonburg and Rockingham per the HRAR MLS, which is well above where we were last year at this time when only 239 (blue line) homes were under contract. This trend (more pending listings) is a good sign for those hoping that we will see an increase of some sort in the number of homes that are selling in 2024. So, contract activity is a bit lower, but pending sales are quite a bit higher. Confusing. How about inventory levels, how many homes are available for sale from which buyers can select at any given moment? As shown above, inventory levels this year are much higher than in any recent year. There are currently 179 homes for sale, which is well above the 119 homes for sale a year ago. Of note, half of the homes currently for sale are new homes -- and the number of new homes for sale can fluctuate quite a bit from year to year as homes are often listed for sale before they are built. I don't (darn) have a record of how many resale homes were listed for sale a year ago, but of the 179 homes currently listed for sale, only 88 of the are resale listings. Next up, how quickly homes are (or are not) going under contract... A few things can be said about the graph above... [1] We are no longer in the era of homes going under contract at record speeds (median of 5 days) month after month after month after month. That's just not where we are right now. [2] The increase in the median days on market over the past six months might be a sign of a trend -- or it might merely be seasonality. The market might be slowing down (as far as how quickly buyers are contracting to buy homes) or we might start to see this metric increase each winter and then decline again in the spring and summer. The last time we saw the median days on market increase to 7 days (instead of 5) was last winter (Feb 2023) and we saw it again this winter. Let's see if this metric starts to decline again over the next few months. Finally, mortgage interest rates... What a range of emotions home buyers have felt over the past year and a half... Mortgage interest rates steadily rose from 6.13% in January 2023 to 7.79% in October 2023. Ugh. But then rates fell for several months from 7.79% in October 2023 down to 6.61% in December 2023. Yay. And then... they crept back upward for each of the past two months to 6.94% where they closed out at the end of February. I suspect we will continue to see mortgage interest rates between 6.5% and 7% for much of 2024 -- though perhaps they'll get down closer to 6% by the middle to end of the year. And that, folks, brings us to the end of this month's overview of trends in our local housing market. If you want more (there's more) you can check out an even fuller set of charts and graphs here. Otherwise, let's get ready for SPRING! Home buyers - you will likely see more homes listed for sale over the next few months, hopefully resulting in more and better options for just the right house for you to pursue. Touch base with your lender for an updated preapproval letter if you haven't talked to them recently, and get ready to go see new listings right away when they hit the market. Home sellers - you will likely still find a solid group of interested buyers for your home - depending on your price range and location, and even more importantly, depending on how well you prepare your home, how appropriately you price it, and how thoroughly and professionally we market it. If you are thinking about selling your current home, or finding a home to buy this spring, I'd be happy to help you understand the market and work to accomplish your goals of selling or buying. Touch base anytime so we can set up a time to chat by phone or in person. You can contact me most easily at 540-578-0102 (call/text) or by email here. Happy Pi Day, soon. Happy Spring, soon. | |
Most Homes You Consider Buying Will Not Be A Perfect Fit, So How Much Imperfection Will You Look Past? |
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I'd love to think that we will find the absolute perfect home for you -- requiring no compromises at all -- perhaps even exceeding your expectations. And certainly, that is possible. But it's not necessarily likely. Most homes that you consider will not be an absolutely perfect fit. You might wish there were a bit more space in this room, or wish that they had updated that part over there, or wish the yard was a bit larger, or wish that the floor plan was a bit more open on the main level. As such, we'll likely see multiple versions of "not quite perfect" through the process of exploring potential homes -- along with at least a few "nowhere even close to perfect" options as well. Your decision as we work through the buying (exploring) process will be to decide how much imperfect you are willing to live with -- and what type(s) of imperfection you will accept. You might decide to purchase an imperfect house that you can make more perfect later through some renovations. You might decide to purchase an imperfect house because its imperfections make it more affordable and keep you in your price range. You might decide to purchase an imperfect because it is the least imperfect one we have seen yet. This is not intended to be a downer -- "you'll never find the perfect house" -- but rather, an encouragement to think about what versions of "not quite perfect" will be acceptable to you. You don't have to decide this up front, and it may change through the course of our exploration of homes to purchase. | |
Consider The Size Of The Buyer Pool When Pricing Your Home |
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This isn't an exact science, as I'll explain below, but... When you are pricing your home, it is important to consider the size of the pool of buyers who might be considering your home. If you're selling a townhouse in the City of Harrisonburg for less than $250K that's a pretty big pool of buyers -- there were 93 such sales over the past year. If you're selling a townhouse or duplex in the Spotswood High School district for more than $500K, that's a much smaller pool of buyers -- there were only 5 such sales over the past year. If you're selling a detached home in the Turner Ashby school district for less than $400K, that's a pretty big pool of buyers -- there were 82 such sales over the past year. If you're selling a detached home in the Turner Ashby High School district for more than $700K, that's a much smaller pool of buyers -- there were only 4 such sales over the past year. So, as you consider a pricing strategy for your home, we will want to dial in on how many buyers are paying that sort of a price for your sort of a home in a given timeframe so that we have reasonable expectations related to how much interest we will have in your home and how quickly it might sell. Two significant(ish) caveats... [1] We'll be predicting future demand based on past demand which is usually a reasonable estimate, but it's quite possible that -- for example -- 40 buyers wanted to buy your sort of home over the past year, but only 25 buyers will want to do so in the coming year. [2] Sometimes a seemingly small pool of buyers is actually a supply-side constraint. When we see that only five buyers paid over $500K for an attached home in the Spotswood High School district in a year's time part of that may be a result of only five buyers wanting to buy such a property, but it is quite possible (or even likely) that it is also a result of only five sellers being willing to sell such a property during that timeframe. Regardless of the caveats, it is important to understand how many buyers will potentially be considering your home when it hits the market based on how many buyers have bought such a home over the past 6 to 12 months. | |
What Improvements Should You Make Before Selling Your Home? |
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Unfortunately, there isn't a magic answer to what improvements you should make before selling your home. I can't universally say that all homeowners should do X, Y and Z before selling their home. As with most topics I discuss with prospective home sellers, it depends... Here are a few ways to think about this topic... RETURN ON INVESTMENT Some improvements will cost more than others and some will make more of an impact than others. We can brainstorm a list of potential improvements together and then estimate the cost of each - or obtain quotes for each. With pricing in hand we can evaluate whether is is worthwhile to spend $___ to improve ___ in order to potentially sell for $___ more than you would otherwise. One other thing to keep in mind as we consider the return on the financial investment - is the time that it will take to make the improvement(s) and whether that delay is acceptable given when you want your home to hit the market for sale. COMPETING WELL If most homes in your neighborhood (or price range) have upgraded their ___ and you have not, it may make sense to make that improvement. As we look at improvements that you might make to your home, we should think about them in the context of what your competition is offering. If you haven't improved ___ and every other home that we'll be competing with once you are on the market has improved ___ then we won't compete well. YOU DON'T HAVE TO MAKE IMPROVEMENTS You may not actually want to make the improvements that we consider and discuss. You might not have the money in hand to pay for those improvements, or you might not want to delay getting your house on the market, or you might not want to deal with the logistics of making the improvements while still trying to live in your home and deal with all of life's other logistics. This approach (not making the improvements) is OK as well -- we will just need to understand or predict the impact that this decision will have on either the price at which you will be able to sell your home, or the time that it will take to sell your home, or both. | |
Rockingham County Launches Development Tracker |
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Exciting news from Kayla Yankey, a planner in the Rockingham County Department of Community Development... Rockingham County has launched a new resource to track development activity occurring throughout the County. This Development Tracker application tracks rezoning and special use permit requests under review and approved, site plans under review and approved, building permits under review, projects under construction, and recently completed building projects. The application is user-friendly and easy to navigate, providing the public with a clear vision of the County’s development pipeline. Information will be updated weekly. For development questions beyond the scope of the Development Tracker, please contact the Rockingham County Department of Community Development at 540-564-3030. This is a great resource to understand developments that have been proposed in Rockingham County. Check it out here. | |
Spring Is Coming, And Perhaps More New Listings Too |
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Spring is coming. We had to wait one extra day this year, but March will be here tomorrow. With spring officially starting in about 20 days -- many would be home buyers in Harrisonburg and Rockingham County are wondering if we will start to see more resale listings popping onto the market as or once spring begins. I suspect that... [1] Yes, we'll see more new (resale) listings hitting the market this spring (Mar, Apr, May) than we have seen over the past few months. [2] We will likely see fewer new (resale) listings this spring than last spring. [3] There will likely be fewer new (resale) listings this spring than there are buyers who would like to buy said homes. While the above may differ a bit from price range to price range or from location to location, this likely means that... BUYERS should go see new listings quickly when they hit the market and be ready to make a decision and an offer quickly if you like the house. SELLERS should be relatively optimistic that if your house is prepared well, priced appropriately and marketed thoroughly that you will likely still see it go under contract within the first few weeks, if not the first few days. I'm ready for spring! Are you? | |
Has The Value Of Your Specific Home Increased By Thirty Percent Over The Past Three Years? |
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It's a reasonable question! The median sales price in Harrisonburg and Rockingham County has increased 10% per year for each of the past three years. Combining all three of those years together, the median sales price has increased 34% over the past three years. In real numbers... the median sales price has jumped from $246,500 to $330,152 during that timeframe. So, if you owned a $246,500 home three years ago, is your home worth $330,152 today? Possibly. But quite possibly, not. The other variable hidden within median sales price trends is WHAT sells, beyond HOW MUCH it sells for. For example (just an example - not real) if only tiny houses sold three years ago and only mansions sold this year, the median sales price would increase more than we might otherwise expect. As a slightly real-er example, we have seen a steady increase in the share of new construction homes that are selling in Harrisonburg and Rockingham County over the past five years... 2019 - 13% new home sales 2020 - 15% new home sales 2021 - 19% new home sales 2022 - 26% new home sales 2023 - 26% new home sales Given that new homes are almost universally more expensive than a comparably sized resale home, an increased share of new homes selling would push the median sales price higher than it would have been simply via changes in market values. All that is to say... while the median sales price has increased over 30% during the past three years... your home might not have increased in value by 30%. The median sales price is an evaluation of the prices at which particular homes sold and is not always a reasonable substitute for overall changes in market values. | |
Instead Of Thinking About If It Is THE Right Time To Buy Or Sell, Think About If It Is YOUR Right Time |
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It's a great time to buy a home. It's a great time to sell a home. Those words are often tossed about, in a balanced market, in a strong buyer's market and in a strong seller's market. Is it always a great time to buy a home or to sell a home? How could that be possible? Forget all of that. Don't get stuck on whether it is THE right time to buy or sell a home. Instead, we ought to be focusing on whether it is YOUR right time to buy or sell a home. There are plenty of times when it is definitely the right time for you to buy a home -- and some when it is not. For example, if you don't have stability in your job or if you might want to move out of the area for a job advancement, it probably is not your right time to buy a home. There are plenty of times when it is definitely the right time for you to sell your home -- and some when it is not. For example, if you don't know where you'll go next after you sell, we certainly shouldn't be getting all geared up to sell your home. So... let's focus less on whether this, right now, is THE right time (or THE best time) to buy or sell a home. Instead... let's focus on whether this is YOUR right time. If the time is right for you to buy or sell, let's get down to it. If it's not your time, don't let the market or other influences make you think that you should be buying or selling. | |
Should You Price Your Home $10K To $20K Above Where You Hope To Sell? |
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In the current local housing market, it is not advisable to price your home $10K to $20K above the price point where you hope to sell -- with the one caveat being that it depends on the price range. If you hope to sell for $250K, I don't recommend pricing your home at $260K or $270K. If you hope to sell for $410K, I don't recommend pricing your home at $420K or $430K. I suppose if you hope to sell for $760K, might matter a bit less (maybe) if you price your home at $770K or $780K. But, back to the first premise... here's why I don't recommend a list price of $260K or $270K if you hope to sell for $250K. Let's say you price your home at $265,000 - hoping to sell for $250,000. If five buyers come to see your home in the first few days it is on the market, and they all like the house, but conclude that it is likely worth $250,000... ...they are likely to not even make an offer. After all, they may very well think they would need to offer $235,000 or $240,000 in order to hope to negotiate you down to $250,000. And when a home has been on the market for just a few days, most buyers won't make a $235K or $240K offer if the list price is $265K. So... in almost all cases, your list price should be very close (or a touch above or a touch below) the price point where you hope to sell. | |
A Slightly Smaller Downpayment Allows You To Hold Onto Reserve Funds But Does Not Keep You From Paying Ahead On Your Slightly Larger Mortgage |
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So... you're getting ready to buy a house... but you don't know how much of a downpayment you should plan to make. You have enough savings on hand to pay for your closing costs and have up to a 15% downpayment based on your purchase price. This would leave you with a bit of remaining savings, but not much. Should you... [1] Go for the 15% downpayment, financing 85% of the purchase price, and leaving you with minimal remaining savings? [2] Reduce your downpayment to 10%, financing 90% of the purchase price, and leave a bit more in savings. [3] Reduce your downpayment to 5%, financing 95% of the purchase price, and leaving a solid amount in savings. In most cases, I would recommend scenario #2 or #3. Reducing your downpayment *will* increase your monthly mortgage cost, but it will allow you to have savings on hand in the event that you need to pay some unexpected medical bills, make a major repair on your home, replace a vehicle, etc. And... you will still have the flexibility to pay more on your mortgage payment if you continue to have savings accrue and you want to pay down your mortgage more quickly. So, as you meet with a mortgage lender, don't assume that you will or you should put every last dollar of your savings into your downpayment and closing costs. Explore other possibilities that will result in a slightly larger mortgage but will allow you to still have some savings on hand in case you need them. | |
Given Current Low Inventory Levels, You May Want To Search More Broadly For Your Next Home |
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Wouldn't it be grand if every would be buyer in the current market had (10) great homes to choose from on any given day? But we just aren't seeing that right now. If you'd like to buy a townhouse or duplex in the City of Harrisonburg for less than $275K, you have... one option. If you'd like to buy a detached home in the City of Harrisonburg for less than $300K, you have... five options. If you want to buy a detached home in the Turner Ashby school district for less than $400K, you have... three options. So, if you're are starting your home search right now (or continuing it) you might have to search a bit more broadly for homes than you had first imagined. Look a bit above and below your target price range. Look at homes with one fewer bedrooms than you would prefer. Look at homes in a nearby but different school district than where you hope to buy. Expanding your home search in this way will expose you to more options, one of which might be a great house for you, and it will help you further understand current market dynamics related to pricing. I hope we can find the perfect house for you, right away, amidst lots of other super options, but given lower inventory levels, we might have to look a bit more broadly to find some options. | |
58 Townhomes, 34 Apartments Likely Coming Soon On Mt Clinton Pike Near Intersection With North Main Street |
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The 5.23 acre parcel shown above was rezoned back in December 2022 to allow for this new residential development and now the Planning Commission and City Council are reviewing and potentially approving the site plan to allow the development to move forward. The 5.23 acre property will include:
Here's the layout, zoomed in a bit... Download the full Planning Commission packet (from their meeting last week) here. | |
Especially After Recent Increases In Property Values, Home Sellers Will Be Considering More Than Just The Offer Price |
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Imagine you are a home seller... ...you purchased your home 10 years ago for $250K... ...you are ready to sell and hope it might sell for $340K... ...you list it for sale for $350K. After a few days on the market, you have three offers to consider... [1] Offer of $350K contingent on the buyer financing 80% of the purchase price. [2] Offer of $355K contingent on the buyer financing 95% of the purchase price. [3] Offer of $365K contingent on the buyer financing 97% of the purchase price and requesting a $5K closing cost credit. The first offer would get you $350K, the second $355K and the third $360K. Ignoring any other differences in the offer terms, which of these offers would you accept? Many buyers might think (or hope) that the highest offer price will win... but especially when home values have increased as much as they have over the past five years, home sellers might not always pick the highest sales price. Fictional Seller described above was hoping to sell for $340K, so all three of the offer are great -- they all results in higher prices than the goal of $340K. To pick on the third offer first, it provides for the highest sales price but the buyer has the least amount of funds to put into the transaction and is even asking the seller to pay for part of their closing costs. The artificially inflated sales price (to incorporate the closing cost credit) will mean that the property must appraise for $5K higher than it would otherwise. Furthermore, if there is an inspection contingency, this buyer seems likely to be the most concerned about any small or medium sized issues, as they do not appear to have a lot of funds to put towards the home purchase. The second offer ($355K with 95% financing) is certainly stronger than the first ($350K with 80% financing) but again, the smaller down payment can be an indication that something could go awry within the transaction to cause it not to make it to closing, such as discovering needed home repairs during the home inspection process. Thus, many sellers in this situation would end up choosing the lowest (!!) offer -- selling for $350K instead of $355K or $360K -- because of the greater certainty of the buyer successfully making it to closing given their seemingly more secure and stable financing situation. This is just one example of how home sellers these days will be comparing more than just the proposed purchase price when reviewing multiple offers -- especially if they bought their home 5+ years ago and have seen a sizable increase in their property value. | |
How Much Are Home Buyers Paying For Houses? |
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How many buyers in the past year have been able to purchase a property for less than $200K? 104 buyers... or 9% of the buyers who bought in the past year. How many buyers paid more than half a million dollars for their homes? 151 buyers... or 12% of the buyers who bought in the past year. In what price range are the largest number of buyers buying? Just over 40% of home buyers paid $300K - $400K over the past year. As you prepare to sell your home you should take time to understand the size of the pool of buyers who will be potentially interested in buying your home. | |
Almost Half Of Homes For Sale Are New Homes |
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There are SOOOO many homes for sale... 185 of them right now, compared to only 109 a year ago. But... maybe there aren't as many homes for sale as you might think!?! As shown above, almost half of the homes currently listed for sale are new homes! New Homes For Sale = 88 Resale Homes For Sale = 97 So, even before we get to any price or location limitations, if you aren't looking to buy in a new home community you will only actually have 97 homes from which to choose, not 185 homes. These new homes for sale are mostly in these neighborhoods... | |
Despite An Increase In Home Sales In January, Contract Activity Is Down, Inventory Levels Are Up, Days On Market Is Up |
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❤️ Happy Valentine's Day! ❤️ For those of you that just *love* reading my market reports each month... consider today's report my valentine to you. 🉠That said, the real estate indicators this month aren't all hearts and candy and hugs and kisses... so TBD if you'll still consider this to be a loving Valentine's Day message by the end. But first, as a peace (love?) offering... each month I provide a giveaway, of sorts, for readers of my monthly market report. This month I'm highlighting a delightful cafe / coffee shop just outside Dayton called Harvest Table. They offer great coffee beverages, a delicious array of baked goods, and a solid (all-day) breakfast and lunch menu as well! If you haven't checked out Harvest Table -- you should -- and click here to enter your name for a chance to win a $50 gift certificate use on your next visit! Now, on to the real estate data, starting with how many home sales we saw in the first month of 2024. If we start with how many homes are selling right now (see above) we'll be starting with some rather positive news. After over a year of steady declines in the number of homes selling in our area, we did see a bit of a turnaround in January 2024. A few things I am noticing above... [1] After only 76 home sales in January 2023 we saw 94 in January 2024. I wasn't expecting that we would see this 24% increase in the first month of 2024. I don't necessarily think that means we'll see a 24% increase in the number of homes selling throughout 2024 -- as this is just one month of data -- but it was a pleasant surprise to see more buyers able to buy homes this January than last January. [2] The third highlighted line (above) shows that over the past year we have seen a 21% decline in the number of homes that are selling in Harrisonburg and Rockingham County. This certainly stands in contrast to the 24% increase in January 2024... but if we want to broaden our view a touch we see (in the second highlighted line) that home sales have only declined by 3% when looking at the most recent three months (Nov-Jan) compared to the same three months a year prior. So... based on several bits of data... maybe (just maybe) we won't see another 20-ish percent decrease in the number of homes selling this year in our market... maybe we could actually see some stability in this metric, or a slight increase in the number of homes that are selling in 2024? Wait and see... only 11 more months to go. And how about those home prices... Just as we can't necessarily believe that the 24% increase in home sales in January 2024 will be a lasting trend, we also shouldn't necessarily believe that the 2% increase in the median sales price in January 2024 will be a lasting trend. As shown above, when looking at three, six or twelve months of data, the median sales price in our area has been rising by 9% - 10%. When looking at just one month of data (January 2024 vs. January 2023) we only see a 2% increase in that median sales price, but I don't think we'll see that low of an increase once we get a few more months into the year. And how about how quickly homes are selling... There are enough changes on this table (between 2023 and 2024) to give me confidence in saying that the market will almost certainly move at least a bit more slowly in 2024 than it did in 2023 (and 2022). The median "days on market" was 14 days in January 2024, which means that of the homes that sold in January, half of them took more than two weeks to go under contract. This is quite a bit slower than the median of six days last January. Also, if we zoom out a bit to look at the three month, six month and twelve month metrics, we also see higher median days on market in those timeframes as well. We started to see days on market creep up a bit in 2023 but I think we will see an even more significant increase in this "speed of sale" metric in 2024. Many homes will likely still sell very quickly in 2024, but not all homes. This next graph is a bit hard to read with only one data point for 2024, but see if you can find it... hiding on the left side, and highlighted... That highlighted "94" is showing the number of homes that sold in January 2024... which was well above the 76 home sales we saw last January (in blue) and only barely above the four year average of 2020 through 2023. Looking and thinking ahead towards the next few months the question that remains is whether home sales in 2024 will remain stronger than in 2023, or whether the monthly sales count will drift back down towards 2023 levels. I'll hit on contract activity and pending sales a bit later to allow us to think more about what the coming months might look like. And now, a look at the overall big picture trends as it relates to how many homes are selling and the prices at which they are selling... At this point you might be wondering why I warned you in the beginning of the report about some of the metrics not being entirely positive this month. Well, keep reading, but this graph (above) is still in the positive category. The blue line above tracks the number of annual home sales taking place in Harrisonburg and Rockingham County (per the HRAR MLS) when measured on a monthly basis. After 17 months of a declining pace of annual home sales, we saw the first increase in January 2024... from 1,204 home sales to 1,222 home sales. This change in direction in this trend is a result of strong January 2024 home sales compared to January 2023 home sales. If that continues in February 2024, we'll see this line continue to rise again. The top (green) line shows the median sales price over a year's time, measured each month. Clearly, the median sales price has been increasing for many (!!) months (years) now. This metric has flattened out a bit over the past two months, so stay tuned to see if the median sales price continues to increase in 2024 as quickly as it did in 2022 and 2023. Here's another look at that possible change in how quickly prices are rising... At first glance, it would seem that the rapid increases in the median sales price that we saw in 2020, 2021, 2022 and 2023 might finally be coming to an end in 2024. And, that might be true. We could see a much smaller increase in the median sales price this year. But... keep in mind that the graph above is comparing 12 months of data in 2023 to only one month in 2024. Once we have a few more months of data to consider in 2024 -- a larger data set than the 94 January home sales -- we'll be able to have a better sense of whether we will see similar or smaller increases in the median sales price in 2024. Next up, contract activity, one of the indicators of what we should expect next... I suppose I shouldn't focus too much on contract activity being slower in January 2024 than in January 2023 because it wasn't that large of a difference... a decline from 116 contracts last January to 108 contracts this January. But, after seeing a big uptick in closed sales in January 2024, I was expecting to see more contracts in January as well -- which would allow us to more confidently expect to see overall home sales activity to increase in 2024. So, with more sales in January, but fewer contracts, what will February (and March) look like in 2024? Well, here's another potential indicator... pending sales... Pending sales is a measure (a count) of how many properties are under contract (pending) at any given moment in time. A year ago there were 234 pending sales at this time, which was in line with the four year (2020-2023) average of having 233 pending sales at this time of year. But then, January 2024. At the end of January (beginning of February) we are now seeing 270 pending sales -- much more than any time recently. So, despite fewer homes going under contract in January, the total number of homes waiting to make it to closing is much higher than we might have otherwise expected. All of this points to the possibility that we will actually see an increase in the number of homes selling in 2024 as compared to 2023. Give it a few more months to see if the data keeps reinforcing that hypothesis, but I am starting to think we'll see an increase in home sales this year as compared to last year. And perhaps more homes are selling because more are available for sale? Not only are there many more (15% more) pending sales right now as compared to a year ago, there are also many more (67% more) homes for sale right now as compared to a year ago. That's actually a pretty significant (67%) increase in inventory levels in a year's time. One year ago a buyer would have been able to choose from 109 homes to give to their special someone on Valentine's Day. This year, they can choose from 182 homes for sale. If you've been hoping your loved one will give you a new home for Valentine's Day... you might be in luck, there are sooo many more options this year. If you don't get that new home along with some roses and a box of chocolates, don't let them blame it on the low housing inventory levels... Now, back to that median "days on market" metric... Way back in mid-2021 the median days on market dropped all the way down to four days... and then stayed at five days for more than a year after that. We started to see the median days on market bounce around a bit more in 2023 as we went from a market where absolutely every home seemed to sell very (very) quickly to a market where many homes still sold very quickly, but not all of them did. As we look at the increase from a median of five days on the market back in August to a median of eight days on the market today, we may just be seeing a seasonal increase that we will start to see every year... or we may be seeing the beginning of a slight slowing in the market. But... keep in mind... if the median days on market increases from five to eight days, that is not a drastically different market. It's an increase, but it's not an increase to 10 or 20 or 30 days on the market. Thus, it will be important to continue to monitor this metric over the coming months to see if 2024 is and will be a more slowly moving market than last year. Finally, how about those mortgage interest rates... One of the main causes for the decline in the number of home sales in 2023 was rising mortgage interest rates. In 2022 mortgage interest rates rose from 3.11% to 6.42%. Then as 2023 went on, they rose even further, up to a peak of 7.79%. Can you blame buyers for not wanting to buy with a mortgage interest rate above 7%... or for sellers not wanting to sell and then have to buy with an interest rate above 7%? Over the past few months we have started to see mortgage interest rates decline, back to around 6.7% by the end of January. If we continue to see declines in mortgage interest rates in 2024 that will likely encourage further buying activity, though I don't expect that they will get all the way down 6% by the end of the year. And there we have it, very much a mixed bag of market metrics this month. More home sales, fewer contracts but more pending sales, higher inventory levels, higher days on market. All of that likely adds up to 2024 being yet another interesting and not entirely predictable year in our local housing market. If you plan to buy this year - talk to a lender soon and then frequently over time to understand how changing mortgage interest rates affect your budget and monthly payment. If you plan to sell this year - prepare your home well, price it in line with recent similar home sales, and know that your home might be on the market for more than a few days. If you own a home and do not plan to sell it - this will likely be another good year for you with your home increasing in value and another year of paying down a mortgage that likely has a very low interest rate. And to each of you -- if I can be of any help to you with real estate or otherwise, don't hesitate to reach out. You can contact me most easily at 540-578-0102 (call/text) or by email here. I hope you have a wonderful Valentine's Day! XOXO -Scott | |
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
Licensed in the
Commonwealth of Virginia
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