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It Is OK To Improve Your Home Beyond The Value Range Of Your Neighborhood, But Realize That You Are Doing So, And The Potential Consequences |
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 I've written about improving your home a few times this week... Thanks, to Frank, for spurring on many of these thoughts and topics. On to one more important concept to note... It is possible to over improve your home within the context of your neighborhood. A stark example...
As you can imagine, it might be hard to sell a $425K home amidst other homes that are selling for $300K to $350K. So, yes, it is quite possible to over improve your home compared to your neighborhood. It is OK to do so -- but you should just realize, going into the renovation project, that you are doing so -- and understand that it will likely mean you will see an even lower percentage of the cost of improvements contributing towards the post-improvement value of your home. Perhaps, though, I have oversimplified all of this. If you considering making some renovations to your home -- feel free to loop me into your thought process and I'm happy to provide you with some candid feedback to help you think things through. | |
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35% Of Townhome, Duplex and Condo Sales Are New Homes! |
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 This stat (illustrated above) might surprise you. It surprised me! Thus far in 2021 there have been 379 sales of townhomes, duplexes and condos in Harrisonburg and Rockingham County as recorded in the HRAR MLS. Of those 379 sales -- 35% of them have been new home sales! I know there have been plenty of new home sales (particular of attached properties) in 2021, but I didn't think it was more than a third of all attached homes that are selling. Here are some of the spots where we have seen the most sales of new townhomes, duplexes and condos thus far in 2021...
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While You Might Not Recoup The Cost Of Remodeling Your Current Home, Maybe You Should Do It Anyway! |
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 As I pointed out yesterday... But... that's not to say that you shouldn't consider remodeling your home... and it certainly doesn't mean that you should just trade up to a nicer home rather than making those improvements to your current home. Let's explore the numbers a bit using one of yesterday's example as a starting point...
Dialing in a bit, let's imagine this is your scenario...
So, given that of your $100K spend, you would not be recouping $40K of the money -- should you just trade up to a nicer home instead? Not so fast... Your costs of trading up to a new home might actually be more expensive than the money you "lost" in doing the renovations. Here are some approximate numbers, imagining an upgrade from a $400K home to a $460K home.
So, there with some very rough estimates, you can see that we made it up to a $44,000 cost to trade up from your current $400K home to a new $460K home. So, before you get overly depressed about spending more on your home renovation than you might see in an increased home value -- just keep in mind that it might be a very reasonable path forward as compared to selling your current house and buying a new one. | |
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Basically, All Remodeling Projects Will Cost More Than They Will Add To Your Home Value |
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 Are you looking to renovate your living room, kitchen or bathroom... or replace your siding, roof, windows or deck? Are you curious about how each of these projects will affect your home value? Will spending the money on these major home renovations increase your home value by more than the cost of the renovations? Almost certainly, no. In almost all cases, you will spend more on these major home renovations than you will see in an increase in the value of your home after the renovations. According to the Remodeling 2020 Cost vs. Value Report the amount of your cost that will be recouped through an increase in value ranges from 50% to 70% for almost all of the home improvement projects they analyzed. So...
This lower than 100% return on investment on major home improvement projects often ends up being acceptable to many homeowners who are completing these home improvement projects -- because the balance of the return of the investment is their enjoyment of the utility or feel of the space that they have improved. Check out the actual numbers on each home improvement project by visiting CostVsValue.com. | |
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The Speed Of Home Sales (Days On Market) Is Likely The Best Indication Of The Mood Of The Market |
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 The number of homes that sell in a given timeframe is somewhat indicative of the strength of the local housing market - but not necessarily. The number of homes selling in a given timeframe is affected not only by how many buyers want to buy -- but also how many sellers are willing to sell. The median price of homes that sell in a given timeframe is a somewhat better indication of the strength of the local housing market - but it is somewhat slow to respond to changes in the market. Even if (when?) the market starts cooling off, we're not likely to see an immediate impact in the sales price of homes. But days on market -- how quickly homes are going under contract -- that can be an excellent indication of the mood of the local housing market. Independent of how many homes are selling and the prices at which they are selling -- if they are going under contract QUICKLY the market is strong and power is tipped towards sellers -- and if homes are taking a longer time to go under contract the market is not quite as strong and power is starting to balance out between sellers and buyers. The graph above shows the median days on market (the number of days it takes for a home to go under contract once it hits the market) measured each month by looking at the 12 months leading up to and including that month. So, for example...
Looking at the graph, we can notice a few things...
Some cynics might say -- but Scott, this is looking at a year's worth of data, so it will take months and months to see any changes that are actually happening in the here and now. This is a fair point -- if things are slowing down over the course of a month or two, it might take several more months after that for us to start to see this trend line change. I do, however, intentionally look at this data with a 12 month timeframe. Looking at it with a shorter timeframe makes the data jump up and down a bit more and makes it harder to recognize any trends that are likely to actually be sustained over time. But, for those who are curious about the most recent of recent data -- when I look at sales from the past two and a half months (7/1/2021-9/20/201) I find that the median days on market is... still five days. :-) So -- the market is strong, and buyers are moving quickly on new listings, and we're not really seeing that change yet -- but as you'd expect, I'll continue to monitor this trend over time. | |
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If Your House Is Going To Sell, There Is A Very Good Chance It Will Be Under Contract Within A Month |
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 So, you're thinking about putting your house on the market? And you're wondering how long it will take to go under contract? And how long it will take to get to closing? These days the chances are very high that your home will be under contract within 30 days and closed within 90 days -- and that's rounding up quite a bit. As shown above, 78% of homes that sold in the past year were under contract within 30 days. Technically, as per the stat at the bottom (median = five days) we can see that half of the homes that sold were under contract in five or fewer days! So, if you're wondering how the timing of your real estate transaction *might* play out, per the stats from the past year... Relatively (50%) Likely: under contract within 5 days, closed within 45 days. Very (78%) Likely: under contract within 30 days, closed within 90 days. One caveat, of course, is that your particular home, depending on it's location, price range, how well it is prepared, how well it is priced, how well it is marketed may over or under perform as compared to market norms. | |
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Be Amazed By Your Home Value And Be Content To Stay |
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 It is so darn exciting for homeowners to see how much their home has increased in value over the past few years! As noted earlier this week in my monthly market report... Home prices have been rising very steadily over the past few years, but we have seen a 10% or higher increase in the median sales price in both 2020 and thus far in 2021. Of note, here are the annual increases in the median sales price per year for the past four years, including 2021...
So, if you have owned a median priced home for the past four years you may have very well seen a $70,000 increase in your home's value in the past four years! Wow! Having $70,000 more equity in your home based on increases in market values over the past four years is amazing! But, as the conversation has gone with soooo many folks lately.... "If I sold for that price, what would I buy!?" So, in the end, many homeowners find themselves wishing that they could do something about their newfound wealth via increased equity in their home - but not finding a home that they'd like to purchase - and not really wanting to move just to move. So, my encouragement to them (maybe to you?) is to... Be Amazed By Your Home Value And Be Content To Stay | |
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Putting The Pace of August 2021 Home Sales In Context |
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 I knew August 2021 was a busy month of home sales in our local market -- Harrisonburg and Rockingham County. I didn't know HOW busy when put in the context of past years. Looking back a bit -- 10 years -- it seems that the 176 home sales that took place in August 2021 was the highest number of home sales seen in any month over the past 10 years! Runner Up = June 2021 with 174 home sales (yes, two months ago) Third Place = June 2018 with 174 home sales What, oh what, shall September... and October... bring in our local housing market!? | |
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Harrisonburg Area Home Sales Spike Again In August 2021 |
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 Happy Tuesday Morning, Friends! I hope you had a fun and relaxing weekend. My Sunday included an adventure with my daughter, about 24 of her classmates, and several other dads... hiking to Saint Mary's Falls... with many of them then jumping off a 15 foot high ledge down into a pool of water below!?! A bit nerve-wracking at first, but we didn't have any injuries, so we'll call it success. :-) You should definitely check out Saint Mary's Falls if you haven't been -- it's a 4.3 mile out and back hike only about 45 minutes from Harrisonburg!  But back to the business at hand - the very active Harrisonburg and Rockingham County real estate market! August 2021 was a busy month, and there is plenty to unpack in the latest data. Download a PDF of all of the charts and graphs here, check out this beautiful home on East Wolfe Street on the cover of this month's report, or keep reading for some insights into the latest news from our local housing market...  OK - so much to jump into (I guess I'm still thinking about the waterfall!?) right from the start... Referencing the data table above... [1] There were 176 home sales in August. 176! That's 32% more than last August. Admittedly, things slowed a bit in July -- but then sales spiked again in August! [2] We've now seen 1,065 home sales in 2021 which is 18% more than we saw last year during the same timeframe. It has been an active year! [3] Over the past 12 months we've seen 1,658 home sales recorded in Harrisonburg and Rockingham County via the MLS and that is 26% more than the prior 12 months! [4] The median sales price thus far in 2021 -- $268,580 -- is 12% higher than it was a year ago. That is a much larger than normal increase in the median sales price. [5] Homes are selling quite a bit faster this year (median of 5 days on the market) than last year (median of 11 days on the market).  Above you can take a closer look at the month by month trajectory of home sales this year. We saw 174 home sales in June -- which was well above 2020 (134) and tied with June 2018... but then home sales in July 2021 slowed to 146 sales, a small decline from the 153 sales seen in July 2020. But then, August!?! After only seeing 133 home sales last August, there were 176 this August! Where do we go from here? It's anyone's guess. September and October were extremely active for home sales last year -- could we match that pace this year? All these active months of home sales in 2021 have been piling up...  We're now more than a full month ahead of the pace of home sales last year. We've had more home sales (1,065) in the first eight months of 2021 than the number of sales (1,060) seen in the first nine months of 2020! Given the current trajectory, we are very likely to see more than 1,500 home sales in 2021 -- and it seems possible that we could get all the way up to 1,600 home sales! Here's the best "why" I can come up with at this point...  We saw a temporary decline in the pace of home sales when Covid started showing up in our lives -- in March/April of 2020. Then -- many of us started to work from home, learn from home, stay at home -- basically spending more and more time in our homes. This seems to have caused many folks to realize it was more important to have a home that worked well for them -- related to amount of space, types of spaces, etc. Home sales took off starting in late August 2020 and have been on a tear ever since. But it's not just the pace of home sales that has been increasing...  Home prices have been rising very steadily over the past few years, but we have seen a 10% or higher increase in the median sales price in both 2020 and thus far in 2021. Of note, here are the annual increases in the median sales price per year for the past four years, including 2021...
So, if you have owned a median priced home for the past four years you may have very well seen a $70,000 increase in your home's value in the past four years! What comes next?  Well, technically, things might eventually start slowing down? Last summer (June / July / August) there were 495 contracts signed for homes in Harrisonburg and Rockingham County -- compared to only 414 this summer. So, maybe we start to see a decline in closed sales in September and October? It's hard to say at this point. Clearly, the robust month of home sales in August is not an indication that things are slowing down or cooling off. :-) We are also seeing a marginal increase in available inventory...  The number of homes for sale at any given time has been declining for years -- but over the past few months the number of homes on the market at any given moment in time has increased slightly from "barely any" to "still very, very few" in Harrisonburg and Rockingham County. Keep in mind -- when 1,658 homes are selling in a year, an increase from 96 homes on the market to 129 homes on the market is not overly encouraging for new buyers. That means there is still less than a month of inventory on the market right now! Given than there aren't many homes on the market for sale -- some buyers are considering the purchase of a building lot to build a home...  Indeed, even at a time when the price of building materials is still quite high, we are seeing a lot of building lots selling. There were 108 lot sales (of less than an acre) all of last year -- and we've seen 107 such sales in the first eight months of 2021. It's not clear whether all of those buyers will really build -- or be able to build -- but low housing inventory has certainly contributed to more buyers considering building lots. And here's a big part of what has kept all of this home buying activity chugging along... cheap money...  The 30-year fixed mortgage interest rate has been below 3% for almost all of the past year. This has kept housing payments for buyers very low -- even amidst rising home prices. I've been saying for years that mortgage interest rates will certainly start rising soon. I think I have given up on that mantra now, after having been wrong year after year. Certainly, if or when rates do start to rise, that will affect monthly housing costs and housing affordability -- but higher interest rates don't necessarily seem to be on the horizon anytime soon. And now... we're already half way through September!?! We might be seeing high temperatures again this week, but hopefully it will start feeling like fall by the time we get to the first official day of fall, next week, on September 22nd. Meanwhile... If you are thinking of selling your house this fall, let's talk sooner rather than later about timing, pricing, preparations and more. If you're thinking of buying this fall, start looking now, because there aren't many houses on the market, so we'll likely need to patiently wait for the right opportunity to come along and then jump on it, quickly! If you have a question about the market, or your home, or your overall real estate plans -- don't hesitate to ask. Email me or call/text me at 540-578-0102. If you made it to the end, thanks for reading along. I hope you learned something -- and I hope you'll plan something exciting for this coming weekend -- as exciting as jumping off a 15 foot ledge into a pool of water! | |
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Your House Does Not Need To Be Photo Ready When I Visit For The First Time |
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 So, you're thinking about selling your home this fall? And we're getting ready to meet? I'm swinging by your house tomorrow morning to walk through it together and to talk about the process, the market, etc.? Don't stay up all night cleaning on my account!! There are plenty of times when I will want your house to be absolutely spotless, 100% organized, de-cluttered, picked up, minimalized (probably not a word), etc. For example...
But did you notice what is not on that list?
Some sellers feel pressure to have their house in absolutely tip top shape before we set up our first time to meet at your house to discuss your house, the market, the selling process, etc. You do not need to feel that pressure. I can look past the way that you (and most people) live everyday life - which is just not quite as 100% polished and put together as when your house is on the market. So -- if you want to get your house all the way to the point where it is ready for photos and showings before you have me over to start a conversation about your potential home sale, that is just fine -- but it is not my expectation that you do so. Talking early and often about selling (When should we list? What should we do before listing? What price expectations should we have?) can be very helpful for most home sellers. | |
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Focus Mostly On The Biggest Issues When Requesting Repairs After A Home Inspection |
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 After a home inspection, a buyer knows more about the house than when they agreed to pay $X to purchase the house. In order for them to still want to pay $X for the house, they may ask the seller to address some of the deficiencies found during the home inspection. Imagine a hypothetical scenario where the following deficiencies are found:
So - which items should the buyer ask the seller to repair? Some could say ALL of them - the buyer didn't agree to pay $X for the house with all of these large and small issues. But I'd advise most buyers to only request that the seller address a subset of those issues:
All of the other items (3-7) are minor issues that won't cost too much (in time or money) to repair after you buy the house. But why not ask the seller to repair these items?
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A Slightly Longer Look At August Contract Activity |
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 Per a question and suggestion from a reader -- I have taken a slightly longer look at August contract activity. As shown above, there was a decline in contract activity when comparing August 2020 contracts to August 2021 contracts... ...but... The number of contracts signed in August 2021 (all 142 of them) was the strongest month of August contract activity we have ever seen in any other years as far back (2007) as I can pull contract activity from the MLS. So, moving forward I will likely think of August 2020 as a Covid anomaly - and will consider August 2021 as the new high water mark against which future months of August will be compared. If you have a question about this data -- or other data I publish -- let me know. I'm always happy to dig a bit deeper to gather a slightly broader context. | |
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Home Prices May Very Well Still Increase If The Market Slows |
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 I work out at OrangeTheory, which involves high intensity group fitness classes. Sometimes when running on the treadmills the workout will involve continually increasing the incline - from 1% to 2% to 5% to 10%, sometimes all the way up to 15%, climbing an increasingly steep hill. Oh joy!?! Then, as we start lowering that incline -- from 15% to 12% to 10% to 5% and so on -- we start coming back down that hill... ...but wait. Really? No! We're not coming down a hill when we're running at a 5% or 10% incline!? We're still running up a hill! The hill might not be as steep of an incline as when it was 12% or 15% -- but it is still a hill. Just ask my fatigued legs if they feel like they are running downhill at that point!? That is also what we may very well see in our local housing market in coming months or years. We are currently seeing a 10% year over year increase in the median sales price. Will that last forever? Likely not. But if the market slows down -- will we see prices decline? Likely not. The market "slowing" will likely mean that the increases will be less steep -- just like on the treadmill. We may see a 3% to 5% increase in the median sales price, instead of a 10% increase. So, if you are waiting to buy a home until the "market slows down" you might keep in mind that a slower market won't necessarily mean lower home prices. | |
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An Early Look At Home Buying Activity In August 2021 |
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 The most up-to-date way to think about the pace of market activity is how many buyers (and thus, sellers) are signing contracts in any given month. I'll release my full market report within the next week or so, but the graph above provides an early look at the amount of contract activity that took place (contracts signed) during August 2021 within the context of the past few years. Two main thoughts...
I expect that summer/fall of 2021 will be a bit slower this year as compared to last year -- but mostly because of the odd timing of market activity in 2020. Stay tuned for my full market report later this month. | |
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Home Buyers Who Desire Home Inspections Might Not Be Able To Pursue All Homes |
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 Here's a dynamic I've observed in our local market over the past six months or so...
So -- if you are buying a house and you would only want to buy with a home inspection contingency (which is very reasonable) then you might not find success in securing a contract on a new listing with multiple offers... but once a house has been on the market for a few days or a week or two it is very likely that a seller will consider an offer with your inspection contingency - especially if they do not have any other offers at the time they receive your offer. So, reasonably cautious buyers who want do conduct a home inspection do not need to despair that they shall never be able to buy a home -- but it will likely mean that you will not be able to successfully pursue some new listings. | |
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Major Rain Events Stress Test Your House |
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 We had quite a bit of rain in the Harrisonburg area yesterday... and that can serve as a stress test for your house to see if there are any areas that need improvement. Here are some areas and items to check during or after a major rain event... Gutters - When rain is falling quickly, you can much more easily identify any fully or partially clogged gutters or downspouts, as you'll likely see water spilling out over the edge of the gutter instead of going down the gutter to the downspout. Basement - Does any moisture or water start to sneak into your basement during a heavy rainstorm? Check things out at the peak or just after the peak of a major rain event to see if your basement is taking on any moisture. If so, try to identify why it is happening where it is happening. Do gutter downspouts need to be extended? Does the slope of the ground outside of your house need to be adjusted? Roof - If your roof is 25+ years old, it's not a terrible idea to go check out your attic once a year during or just after a major rain event to see if you see any water coming in, or any damp spots on the roof decking visible from your attic. Yard or Driveway - Are there low spots in your yard that always fill up during heavy rain events? Does a part of your driveway (or a culvert on both sides of your driveway) wash out during a major storm? Are there improvements you can make before the next storm? Check out how the water is flowing during a major rain storm to make plans for making any adjustments. Where else did you see impacts on your house and/or land yesterday during our major rainstorm? | |
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Finding a Home Into Which You Can Downsize Can Be Difficult In Harrisonburg |
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 There are plenty of large-ish detached homes (2500 - 4000 SF) in Harrisonburg and Rockingham County that are occupied by a parent or parents who have raised their families in those homes but now find themselves with a family sized home without any kids living at home any longer. As you might expect, many of these homeowners would like to downsize. They don't need 3000 or 3500 SF just for themselves and the few times a year when the kids (and possibly kids' families) are back home to visit. But, sometimes downsizing is easier said than done... This homeowner would likely prefer to move into a home that is perhaps 1400 to 2200 SF, depending on how much they want to downsize, and they would likely prefer a home that won't require a lot of maintenance over the coming five to ten years and a home that has everything they need on one floor. There are only so many homes in this area that match this description, and they don't hit the market all that often -- and when they do, they usually sell quickly. Below are some of the popular downsizing destinations where buyers often find themselves in or near Harrisonburg. The links below will take you to a listing of recent sales in each area as this will show you some recent sales prices and because there aren't currently active listings in many of these locations. Popular Downsizing Neighborhoods: If you're in the situation described above, what other locations are you considering when you are looking to downsize? | |
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Townhouses in Phase 2 of The Townes at Congers Creek Now Available For Purchase |
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 The Townes at Congers Creek is a new townhouse development located in Rockingham County, across Boyers Road from Sentara RMH Medical Center. The first phase of the development included 26 townhouses, all of which are under contract or sold. A second phase of townhouses is now under development that will include 133 more townhouses in a few different styles...  view a larger plat here The three styles of townhouses will include...
You can find pricing, availability, a site plan, standard features, available upgrades and more at CongersCreek.com. The first (10) townhouses at Congers Creek hit the market yesterday and it seems likely that (5) of those will be under contract by the end of the weekend. You can also email me with any questions you might have, as I am the Realtor representing the builder/developer. | |
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Preston Lake Apartments Now Available For Lease |
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 view a larger map here After having been under construction for quite a while now, it seems that Preston Lake Apartments are now available for lease. These apartments were built by and are owned by a different developer than the developer who is building out Preston Lake. Here's an overview of the types of apartments that are available...
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I Think Harrisonburg Has Created More Homeowners and Would Be Homeowners Over The Past Decade Than Builders Have Created New Houses For Purchase |
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 This won't deal with numbers or data -- just concepts and ideas, but here's the theory... I Think Harrisonburg Has Created More Homeowners and Would Be Homeowners Over The Past Decade Than Builders Have Created New Houses For Purchase Harrisonburg, Virginia is a popular place to live.
All in all, I think Harrisonburg has had sustained population growth over the past ten or so years -- many of whom bought homes or wanted to buy homes but couldn't find anything to buy. We could dig into the census and try to pin a number on that growth it but it would be imprecise at best. Let's just call them Net New H'burg Residents. Also over the past decade, builders have built some, but not a lot of new houses for purchase...
We could dig into building permit data and try to figure out what type of properties have been built, how many have been for homeowners (not renters), etc., but this would be imprecise at best. Let's just call them New Homes For Homebuyers. Having summarized these dynamics, I think you see where I'm going. I think... Net New H'burg Residents > New Homes For Homebuyers I actually don't even think those two numbers are close. I think the number of net new Harrisonburg residents far exceeds the new homes that have been built for homebuyers. If you bought into my theory, what, then, would this mean for the future?
So, that's what I think. What do you think? Does this seem like a reasonable understanding of some of the current dynamics in the Harrisonburg housing market? | |
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
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