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What Home Sales Could Have Been in Harrisonburg and Rockingham County |
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In an interesting e-mail dialogue about the current real estate market, I was offered this terrific insight... "It seems to me that houses bought and sold in a "normal" market should have some average per capita value ... the factors which affect whether people buy or sell houses should be relatively similar from year to year (people moving in for new jobs, divorces, retirements, etc.) in non bubble years." I couldn't agree more --- so let's run with that theory for a moment and see what we can learn.  The graph above shows the population for Harrisonburg and Rockingham County (source) compared to home sales per the HRAR MLS. You can see that while population has steadily increased over the past decade, home sales rose dramatically, and then fell dramatically. So....what if we took the per capita theory, and extrapolated from the year 2000....  This graph supposes that the number of home sales in 2000 compared to the total population in 2000 (0.77%) was the norm -- and then suggests what home sales would have been for each subsequent year -- still assuming they would be 0.77% of the population. You can see that home sales would have slowly increased just as the population did.  The graph above shows actual home sales (blue) compared to the theoretical 0.77% home sales --- what a difference in the peak years of 2004 through 2006! Per this theory, we're "behind" as of 2009 --- there should have been more home sales, given the population figure, and assuming that home sales will usually be 0.77% of the population.  To push the envelope a bit further, let's assume home sales should be 0.87% of the population. You see, in 2000 the per capita figure was 0.77%, but in 2001 it was 0.97%. If we split the difference, we have the graph above -- showing that last year the home sales were significantly below the norm. What does this mean for the future? If we buy into the per capita theory, then last year's home sales are not the pattern the future. We won't always have about 800-ish home sales per year, and see a steady increase from that number. Instead, we are likely going to see a return (over the next year or two) to a sales level closer to around 1,000 home sales per year, which will then steadily increase as the population grows. That is, of course, unless we see another market boom at some point in the future! Recent Articles:
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
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