Welcome! This blog tracks the real estate market in the Central Shenandoah Valley, featuring market data and analysis, an exploration of common buying and selling questions, and candid commentary on all things real estate.
If you are interested in discussing any of the topics on this blog, or the details of your specific real estate situation, call or e-mail me!
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I Would Love To Sell My Home, But Where Would I Go? |
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 I don't have a universally applicable answer to this question... but it's a question and sentiment I hear from many these days... I Would Love To Sell My Home, But Where Would I Go? Why wouldn't a homeowner want to sell? Home prices are higher than ever, buyers are entering into bidding wars to try to secure a contract, buyers are waiving inspection and/or appraisal contingencies, and on and on... It is, truly, a great time to sell your home! But... ...presumably you still need a place to live. If you're selling and then will have to buy a home, you'll be right over on the opposite side of the table -- paying a higher price than ever, entering into bidding wars, waiving inspection and/or appraisal contingencies -- all to try to secure a contract on a house to buy. As such, many of my recent conversations with folks who want to sell but need to buy is all about what they would buy. We are often much more confident that we'll be able to sell your house than we are that we will be able to find a house for you to buy. So, if you're excited about selling your home and buying a new one -- great! Let's meet soon to talk about selling your home -- but even more importantly, devising a strategy for buying your next home! | |
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Nearly 500 Buyers Secured Contracts On Homes In First Four Months of 2021 |
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 As shown above, for three of the past five years, around 430 - 440 buyers signed contracts to buy homes between January and April. Two years ago, in 2019, there was a bit more contract activity than normal with 466 buyers signing contracts to buy homes. But this year -- in 20201 -- we set new records! Nearly 500 (499) buyers (and sellers) signed contracts to buy (and sell) homes between January and April 2021. You might ask -- how is this possible -- I heard inventory levels are super low!? It actually works the other way around. It is not remarkable or mysterious that this many buyers secured contracts to buy homes despite low inventory levels... The inventory levels are so low because so many buyers secured contracts to buy homes! Buckle up - this seems bound to be a fast paced year in the local real estate market! | |
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Inventory Levels (# Of Houses For Sale) Hits New Low In Harrisonburg, Rockingham County |
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 Never have there been fewer homes for sale in Harrisonburg and Rockingham County! Indeed, there are now fewer than 100 homes on the market in all of the City and County. We have never seen that few homes on the market at the end of the month in our area. As you can imagine, this means that buyers have very, very, very few choices for what they might buy at any given time. Certainly, plenty of homes are coming on the market, but they are almost all going under contract VERY quickly, leaving inventory numbers very low. It's at this time of year that we would typically expect inventory numbers to start rising -- but not in 2021! If you're hoping to buy a home in the next few months, you should...
It's a crazy time out there! | |
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One High (or low) Sales Price Is Likely Not Enough To Justify A Pricing Strategy |
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 It's easy to accidentally focus only on one data point and to then be led astray to incorrect conclusions. "I know my planned asking price seems high... but there was that one house sold for..." Let's think about it a bit more thoroughly using the mostly fictional illustration below...
THE BUYER'S STATED PERSPECTIVE I know that your house is listed for $450K, but this one other home a few streets over sold for $350K last month, and it was a larger, so I'm not paying any more than $350K -- or maybe $375K -- for your home. THE LARGER CONTEXT Just a few items...
Furthermore, aside from all of these differences in the two houses --- the other ($350K) house is not available any longer --- and there aren't three other houses just like it that the buyer can decide to buy. In this case, by focusing on this one not-actually-that-similar sale, the buyer has put themselves in a situation where they might miss out on purchasing a great home because of how they are viewing the market based on one comparable sale. THE SELLER'S STATED PERSPECTIVE I am confident that I can sell my house for $450K. After all, my friend owned a very similar house and he just sold it in a week, with multiple offers, for $450K! THE LARGER CONTEXT Just a few items...
Again, by focusing on this one not-actually-that-similar sale, the seller has put themselves in a situation where they might miss out on selling their home because of how they are viewing the market based on one comparable sale. The Main Takeaway As a buyer or as a seller -- don't focus on just one comparable sale when deciding on a reasonable price to pay or to ask -- look for the larger context! | |
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Monthly Housing Costs Remain Level Despite Rising Prices |
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 The median sales price in Harrisonburg and Rockingham County has increased 17% since 2018 -- rising from $211,750 up to $248,700. Yet, despite buyers paying higher sales prices for homes -- the monthly mortgage payment associated with that rising purchase price has barely risen at all. If a buyer financed 80% of $211,750 back in 2018 they would have had a mortgage payment of around $1,056. If a buyer finances 80% of $247,700 today, they are likely to have a mortgage payment of around $1,061. This has, of course, been possible because mortgage interest rates have generally declined over the past few years while home sales prices were rising. So, the good news is that even if you are paying a higher price for a house today then you would have over the past few years you likely will not see a corresponding comparative increase in the monthly housing cost associated with that higher purchase price.
This won’t necessarily last forever as interest rates will at some point start to drift upwards… or even if interest rates stay where they are now, if prices continue to climb over the next few years the corresponding monthly housing costs will start to increase as well. So everybody should just buy a house now, right? Easier said than done - as a result of a tremendous amount of competition in the market. Perhaps these steady monthly housing costs due to lower mortgage interest rates are what have drastically increased the amount of buyer demand in the market? | |
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Please, Oh, Please, Will You Sell Your Rental Property? |
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 If you own a rental property in the city of Harrisonburg, perhaps a townhouse or duplex or small single-family home, perhaps you are interested in selling it? :-)
I understand, there are plenty of reasons why you would not want to do so. Your long-term strategy may be to continue to rent out that property for many years to come, and perhaps you would not want to tax liability that might arise from selling the property, but maybe you have been thinking about selling the property for the past few years. If you have had any thought at all about perhaps selling such a property, now is an excellent time to do so. There is an extreme shortage of available lower-priced homes in the City and owner occupant buyers are pursuing such properties quickly and making very competitive offers when they do come on the market. If you would like to explore the possibility of selling a property that you have been renting out for the past few years, let’s talk about timing and logistics. You will likely be selling the property at a very favorable price with very favorable contract terms and you will be helping out the backlog of owner occupied buyers who are desperate to buy a home and settle down in Harrisonburg. | |
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Strategies For Securing A Contract WITH A Home Inspection Contingency |
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 Some would-be home buyers are, reasonably, not comfortable entering into a contract to purchase a home without an inspection contingency. But...in a competitive market where there are often multiple offers, it is harder to compete as a buyer if one or several of the competing offers does not include an inspection contingency. Of note, we won't really know if competing offers do or do not have inspection contingencies, but when there are multiple competing offers in the current market, it seems that there will often be at least one without an inspection contingency. So, how can a buyer who desires an inspection contingency compete in such an environment? Here are a few ideas... 1. SHORTEN THE TIMELINE Proactively get on a home inspector's schedule so that you can include a shorter timeline in your offer for the inspection contingency to be resolved. 2. REMOVE YOUR OPTION TO TERMINATE The standard home inspection contingency gives you the option to either request repairs or terminate the contract after completing the inspection. Give the seller a bit more peace of mind that you won't just terminate the contract even if the inspection goes reasonably well by removing that second option from your inspection contingency. 3. SACRIFICE YOUR DEPOSIT Consider offering to give the contract deposit to the seller if you cannot work your way through the inspection contingency. This will show that you are committed to making the deal work and successfully getting through the inspection contingency. 4. RAISE THE STAKES If you are including an escalation clause to make your offer $1K above any other offers -- consider raising that threshold, If your escalation clause takes your offer to $276K with an inspection contingency compared to another offer at $275K without an inspection -- the seller will probably choose the offer that is $1K lower without an inspection contingency. But if your escalation clause made your offer $5K higher than other offers, the seller might decide to accept your $280K offer with an inspection contingency instead of the $275K offer without. In the end, it can be a challenging time to secure a contract on a house regardless of the contingencies you want to include -- but including an inspection contingency can make it much more challenging to be successful. If you definitely want that inspection contingency in place, consider any or all of the strategies above to increase your odds of securing a contract to buy a house. | |
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Should You Skip A Radon Test In The Current Competitive Housing Market? |
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 Radon is a colorless, odorless gas that can cause cancer -- in fact, it is the second leading cause of lung cancer after cigarette smoking! Radon quickly disperses in air, reducing its danger, but if it accumulates in a basement or other living space, it can be quite problematic. As you'll see on the map that I have included below, Rockingham County is in Zone 1 -- which means we are in an area that is likely to have high radon levels. I typically always recommend that buyers who are buying a home with a basement test for radon during the home buying process. Furthermore, sellers should expect that if a buyer discovers high radon levels that the buyer will request a radon mitigation system be installed. But we find ourselves in an unusual market right now with a tremendous amount of competition amongst buyers and often times buyers are reconsidering which contingencies to add to their offers. I have never seen a home with a high radon level where a radon mitigation system cannot cure the issue. Radon mitigation systems typically cost between $1500 and $2000 to install. Thus, in the current market, some buyers might want to consider not including a radon test contingency in their offer and not testing for radon during the home purchase transaction and instead conducting a radon test after they close on their home purchase and installing a radon mitigation system at that time if needed. Just a thought, given current market dynamics. Feel free to chat further with a radon mitigation specialist about all of this to best inform your decisions. Here's the map...  Here's some further info from the EPA about radon... Radon is a radioactive gas that comes from the natural breakdown of uranium in soil, rock and water and gets into the air you breathe. Radon typically moves up through the ground to the air above and into your home through cracks and other holes in the foundation. Radon can also enter your home through well water. Your home can trap radon inside. Learn more about radon and real estate here.
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13% More Contracts Signed This Year than Last |
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 It has been a busy few months for home buyers in Harrisonburg and Rockingham County. During the first four months of this year, 510 contracts have been signed for residential properties. This is 13% higher than the number of contracts during the first four months of last year. Some might find this increase in contract activity surprising as inventory has been extremely low all year but this statistic shows that even though there are not many homes on the market at any given time, there have enough new listings coming on the market for more buyers to contract on homes this year than last during this timeframe. If I had to guess how many offers were written in the first four months of this year versus last, here are the make-believe statistics I would come up with...
There are a tremendous amount of buyers attempting to buy homes right now which results in many of them finding themselves making offers on multiple houses before they finally are the winning buyer on a particular house. It will be interesting to see how the next few months ago but at this point I suspect we will continue to see strong contract activity through the summer of 2021. | |
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How Far Above The Asking Price Are You Willing To Go? |
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 In some long forgotten distance past era I might have asked a buyer if they thought they were willing to] pay the asking price for a house that was recently listed for sale. Now, the question is a bit different. It is more often a question of how far above the asking price you are willing to go when you make an offer. When you are competing with so many other home buyers who are also planning to make an offer it quickly becomes a question of which buyer is willing to pay the highest price for a particular property. Sometimes that top price is guided by past sales prices but more often than not in the current market buyers are deciding that they are willing to pay more than other recent buyers have paid for similar properties. Escalation clauses are being used in many if not most offers these days to allow a buyer to offer one price but commit to increasing their offer to exceed the offering price from other buyers. It is okay to get excited about a list price of a new listing but keep in mind that these days you probably won't be paying that price, you will be paying some amount above that price. Thus, start thinking early about how far above the asking price you are willing to go. | |
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The Morning Brew on whether the housing market will crash like it did in 2008 |
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 Do you read the Morning Brew? It's a daily email with top new stories in a format that is enjoyable to read. Subscribe here if you are interested. Here's an excerpt from today's Morning Brew that is applicable to the sort of things I usually share with you in this space...
Again, sign up for other great content from the Morning Brew here, and let me know if you agree with their editor's take on the future of the housing market. | |
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Buying vs Building When Hit With Low Inventory AND High Building Costs |
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 Typically, the tension between buying vs building is one of: 1. Goals 2. Money 3. Timing If you build, you can get the house you want, but you'll pay more for it and it will take a lot of time and attention. 1. Goals = Win 2. Money = Lose 3. Timing = Lose If you buy an existing home, you won't get exactly what you want, but you will pay less for the house and the process will not be a drain on your time. 1. Goals = Lose 2. Money = Win 3. Timing = Win Don't let my oversimplification of this issue fool you -- this is something that buyers can get stuck debating for months, or even years, often while looking at resale homes to try to convince themselves to buy instead building. AND -- two current market conditions are making it an even more complicated decision...
If you are stuck in this quagmire, I'd be happy to meet with you to talk through some of the pros and cons and try to help you come to a decision you'll be pleased with in the short and long term. | |
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30 Year Mortgage Interest Rates Drop Below Three Percent Again |
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 Mortgage interest rates started out at 2.65% this January and kept on rising -- all the way up to 3.18% on April 1st. But, then, they started declining again. Interest rates are now averaging at 2.97% for a 30 year fixed rate mortgage. That is well below where we were...
Today's home buyers are certainly happy to be seeing interest rates declining again, as it helps to offset the rapidly increasing prices that they find themselves paying for houses in this quickly moving and highly competitive market. | |
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34 Single Family Home and Duplex Lots Planned At Highview Estates, Just North of Harrisonburg City Line |
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 view a larger map here Per recent versions of the Rockingham County Planning Commission meeting packets, a new development is being planned for Route 42 North -- just barely outside the City of Harrisonburg, The site plan currently on file with the County is shown below, though it is likely not the final site plan. Per the County's notes it is "awaiting corrections and resubmittal." The current version of the site plan shows (18) single family home lots and (16) duplex lots -- for a total of 34 homes.  view a clearer plan here This is one of the many new residential developments in Harrisonburg and Rockingham County that are under construction or in planning phases as outlined here. | |
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29 More Townhouses Likely Coming To Vine Street |
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 view a larger map here The Harrisonburg Planning Commission recommended the approval of the rezoning of a 2.25 acre parcel on Vine Street to allow for 29 townhouses to be built as per the proposed site plan below...  view a larger site plan here This is one of the many new residential developments in Harrisonburg and Rockingham County that are under construction or in planning phases as outlined here. | |
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New Residential Developments In Harrisonburg, Rockingham County |
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 As I hear about new developments being planned or proposed or approved, I'll add them to the list below. What am I missing or forgetting? CITY OF HARRISONBURG - PLANNED / PROPOSED Two41 (Blue Ridge Drive)
Stoney Ridge (South Main Street)
Juniper Hill Commons (Keezletown Road) ROCKINGHAM COUNTY - UNDER CONSTRUCTION Congers Creek Townhomes (Boyers Road)
Congers Creek Apartments (Boyers Road)
Crescent Ridge (Taylor Spring Lane)
Bridgewater Fields (Bridgewater)
Locust Grove Village (Boyers Road)
Preston Lake Apartments (Boyers Road)
Senior Living Facility (Boyers Road)
South Peak (McGaheysville) ROCKINGHAM COUNTY - PLANNED / PROPOSED Wingate Meadows (Pleasant Valley Road)
Boyers Crossing (Boyers Road)
Stoney Ridge (South Main Street)
Crownpoint Independent Living (Apple Valley Road)
Overbrook (McGaheysville)
The Ponds of Island Ford (McGaheysville)
Highview Estates (Harpine Highway)
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54,270 SF of Self Storage Planned For Stone Spring Road |
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 view a larger version of this map here Is there a shortage of available storage units? Later this month the Rockingham County Board of Supervisors will consider a rezoning request for a proposed development on the corner of Port Republic Road and Boyers Road that includes, among other things, 91,000 SF of storage units. But wait, there's more... The site plan is currently under review by the County for a development less than a mile from this site, off of Stone Spring Road, for 54,270 SF of self storage in three buildings...  download the proposed site plan here So, there must either be an extreme need for self storage right now -- or we are potentially going to see a significant excess of available storage if both of these developments are built out. | |
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Finding Gray Areas In Inspection and Appraisal Contingencies |
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 It's a crazy market right now. There are definitely many more buyers than sellers in most segments of our local housing market. As such, buyers are having to make difficult decisions about what contingencies to include in their offers. The two prime examples are the INSPECTION and APPRAISAL contingencies. INSPECTION...
APPRAISAL...
But maybe there can be a gray area between having and not having these contingencies in your offer? INSPECTION... Perhaps your offer could be contingent on a home inspection, but...
APPRAISAL... Perhaps your offer of $300K could be contingent on an appraisal, but...
These are some basic examples of how to aim for that gray area between overtly contingent and not at all contingent. If you are buying in this market, have these conversations earlier than later to know what levels of contingencies you are comfortable having in your offer to buy any particular property. | |
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Home Sales Soar In First Quarter of 2021 in Harrisonburg, Rockingham County |
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 Happy not-really-tax-day, friends! (taxes are due May 17 this year) What a wild first three months of the year it has been thus far in the Harrisonburg and Rockingham County real estate market! Before starting to pick through the data to find some meaningful insights, here are a few general notes for you...
Now, let's dive right into the data and see what we can learn about our local housing market...  OK, some of these numbers (above) are just bonkers...
Now, then, let's take a look at a break down of detached homes (single family homes) and attached homes (duplexes, townhomes, condos)...  A few things to note when we look at this data sliced a bit differently than in the first data table... [ 1 & 3 ] While sales of detached homes increased 7% over the past year compared to the prior year, sales of attached homes increased 26% during that same timeframe. [ 2 & 4 ] The median sales price of detached homes increased 12% over the past year which is just slightly higher than the 10% increase in the median sales price of attached homes. Chopping the data up one more time by City vs. County we can note some differences as to how these two portions of our local market are performing...  The data above is just looking at where we are seeing home sales increase and by how much. Over the past year there has been a 3% increase in the number of homes selling in the City -- while there has been a 16% increase in the number of homes selling in the County. I believe this is primarily because the majority of new construction is now happening in the County -- thus those sales numbers have more of an ability to grow as compared to the City numbers where most home sales are resales. OK, next, let's visually contextualize that exciting month of March...  Indeed, March was a BUSY month of home sales in Harrisonburg and Rockingham County. While I am only showing three years of data above, the file I'm working in when I create these reports includes data all the way back to 2003 when I started in real estate. There has never, in that time, been a month of March where we have had 137 or more home sales in Harrisonburg and Rockingham County! Given contract data (we'll look at that a bit later) it seems likely that we will see another strong month of sales in April and May, which means the year is likely shaping up to be a year of a LOT of home sales. Which leads me to...  I put this graph together by stacking each month of home sales on top of the prior to see how each new year stacks up in comparison to past years. As you can see, above, this year (2021) is currently poised to be the best year ever as far as the number of properties selling in Harrisonburg and Rockingham County. So, lots of homes selling, how did we get here?  We didn't get here (1500+ home sales) without some turbulence. A year ago we had seen a slow and steady increase from 1300 sales/year up to 1350 sales/year. Then the COVID dip and then the COVID spike! Looking back, we had a five month period with far fewer home sales than we would have expected given our overall trajectory. And now, we are in the fourth month of what a much (much!) more active market than we would have expected given our overall trajectory. Now, you might find yourself saying that things have been crazy for MUCH longer than four months. Yes, you are right. The graph above is looking at a rolling 12 months of home sales, which evens out some of the peaks and valleys of home sale seasonality, but also can mean it takes longer for overall trends to appear. And yes, I know you probably didn't need a graph to tell you that a lot of homes are selling these days... but this graph made me realize that these two conflicting realities are being experienced daily in our local market...
But I digress. Lots of homes have been selling. What is to come over the next few months?  Well, based on a STRONG month of contract activity in March (143 contracts) it would seem that we'll continue to have strong months of home sales in the coming month or two. Furthermore, we're entering into what is typically one of the busiest seasons for buyers to be buying homes, so I expect contracts and closed sales to continue to stay at higher levels for the next five or six months, at least! And now, I think I mentioned (or you may have heard) that there aren't many homes for sale right now...  Yes, it is true. Even though we are seeing an ever increasing number of homes selling, we are also seeing an ever declining number of available listings. As I recently commented to a client, if we start the month with low inventory and 5,000 homes are listed for sale and 5,000 homes go under contract, we will still end the month with low inventory. As such, understand low inventory fully by remembering that...
Finally, just one more graph for your perusal...  This graph shows trends in the average 30 year fixed rate mortgage interest rate and there are a few things to note here as well...
Alright, that's all I have for you at this point. You are now up to speed on the latest news and developments in our local housing market. But if you are thinking about buying or selling sometime soon, these general market trends are only part of what you want (and need to know) as you also should dig into the market in which you are hoping to buy or sell -- whether that is best defined by price range, location, property type, etc. If I can be of help to you as you make plans to list your home for sale, or to seek a home to purchase, just let me know. I'd be happy to meet with you in person, via Zoom, or to chat by phone to help you think and talk through the possibilities. You can reach me at scott@hhtdy.com or via phone/text at 540-578-0102. Until we chat, or until I write again, here a few final tips... Sellers - Even though the market is hot, you still need to prepare your home well, price it appropriately based on historical sales data and market it thoroughly and professionally. Buyers - Get prequalified for a mortgage, start stalking new listings, go see them on the first day they hit the market, and get ready to compete in a multiple offer situation. Seller / Buyers - If you need to (or want to) sell in order to buy, this will require a bit more strategery than normal. It can be done, but we need a solid plan in place from the start. | |
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Home Values Might Escalate Even More Quickly If Homes Closed In Five Days Instead Of 45 Days |
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 Have you heard that home prices are on the rise? :-) It usually takes about 45 days for a contract to get to closing -- and if this time frame weren't so long, prices might be rising even faster! Here's why, with a few fictional houses as an example... March 1 -- The owners of 101 North South Drive list their home for sale for $325,000. March 3 -- The owners of 101 North South Drive sign a contract to sell their home after having received five offers, with some of the offers "over asking price" per the seller's agent. March 20 -- The owners of 105 North South Drive list their home for $335,000 given that they had heard of the high levels of buyer interest in their neighbor's recently listed house. March 22 -- The owners of 105 North South Drive sign a contract to sell their home after having received four offers, with some of the offers "over asking price" per the seller's agent. April 1 -- The owners of 109 North South Drive list their home for $339,000 given that they had heard of the high levels of buyer interest in two of their neighbors' recently listed house. April 3 -- The owners of 109 North South Drive sign a contract to sell their home after having received four offers, with some of the offers "over asking price" per the seller's agent. April 15 -- The sale finally goes to closing for 101 North Shore Drive revealing a sales price of... wait for it... $340,000. Wait a minute... The owners of 105 North South Drive and 109 North South Drive would have **certainly** chosen higher list prices for their homes if they had known that the five offers on 101 North South Drive resulted in a contract price of $340,000! And thus...
Which means that... If you are pricing your home based on recent closed sales with adjustments made for the time that has passed from when those homes sold -- and if you are taking into account the list price of homes that are under contract plus any anecdotal insight into those contract prices -- we might still be in a situation where our reasonable list price results in multiple offers over that list price. But, typically a seller in this situation isn't complaining to have multiple offers over their list price! :-) If you are ready to get your house on the market in the next month or two let's start talking now and start tracking home values -- both those that are sold and those that are listed for sale and then quickly go under contract! | |
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
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Commonwealth of Virginia
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