This is a question that many home sellers are wondering these days in and around Harrisonburg -- and perhaps all across the nation.  Let's see why....

A real estate market is considered to be balanced (between buyers and sellers) if there are six months of supply available.  Depending on the price range, there is quite a bit of excess supply in the Harrisonburg and Rockingham County housing market:

• 11 months of supply under $200k
  
• 17 months of supply between $200k and $300k
  
• 20 months of supply between $300k and $400k
• 28 months of supply above $400k (yes, that's more than 2 years)

Many months of supply means that a small percentage of homes go under contract each month in any given price range:

• 1 of 11 homes under $200k will go under contract each month (9%)
• 1 of 17 homes between $200k and $300k will go under contract each month (6% of inventory)
• 1 of 20 homes between $300k and $400k will go under contract each month (5% of inventory)
• 1 of 28 homes above $400k will go under contract each month (4% of inventory)

Again, if your home is priced above $400k, then you have a 1 in 28 chance of selling your home each month.  Ouch!  And thus, given these long odds, the question "Is My House Overpriced" starts to have new meaning. 

It was said by some, at one point, that if your house hadn't sold in 60 days, lower the price, and repeat.  Thus, if you started at $300k, and you hadn't sold it within 60 days, you might lower it to $290k, and wait another 60 days and lower it again, etc.  Eventually, you'd reach the point where the market (buyers) would respond to your price, and you'd sell the house.

That logic might work in a balanced market, but when the market is so flooded with sellers, and so void of buyers, the logic doesn't work as well.  Homes now sometimes sit on the market for months priced well below comparable homes, and don't sell.  Will they sell if the price is lowered?  Maybe, but maybe not! 

Time on the market is quite unpredictable at this point, and price is no longer the trump card.  In many markets, if a price was lowered to a certain place, a house would definitely sell.  If it appraised at $300k, and you lowered it to $280k, it would more than likely sell.  Now, you could lower it to $260k, and it might sell, but it might not.  You could then lower it to $240k, and it might sell, but it might not. 

Thus, as you can hopefully see, the answer to the aforementioned question (Is My House Overpriced?) is very difficult to answer.  I suppose the answer is that if it has been properly marketed, and it hasn't sold, then it is probably overpriced, but even if the price is lowered, it still may not sell.  One last illustration to explore this dilemma...

Three comparable houses on your street sell for $245k, $250k and $255k.  You assume your house is worth $250k, and put it on the market for $245k to be aggressive.  It doesn't sell after four months, so we assume it is overpriced -- even though recent sales would not suggest that.  After another four months at $235k, it still hasn't sold.  Is it overpriced?  I suppose the market would say yes, even though recent comparable sales still do not agree.  If, after another four months at $215k it has still not sold, do we STILL say it is overpriced???