Brought to you by Scott P. Rogers, Funkhouser Real Estate Group, 540-578-0102, scott@HarrisonburgHousingToday.com
Brought to you by Scott P. Rogers, Funkhouser Real Estate Group, 540-578-0102, scott@HarrisonburgHousingToday.com
Friday, February 5, 2021
Earlier this week I was chatting with some friends and clients who relocated out of Harrisonburg (out of state) nearly a decade ago. They are now looking to move back to Harrisonburg and are accurately observing that our local housing market is at a drastically different point now than it was a decade (+/-) ago when they left.
The most pressing issue at hand for them, as soon-to-be buyers in this market, is the extraordinary high level of unmet home buyer demand.
And so we pondered aloud why in the world buyer demand is so high in Harrisonburg.
Here's my overly condensed thesis...
- Harrisonburg has continued to increase in popularity as a place to live, or to relocate, or to stay as a recent grad of JMU, EMU, etc. So, more and more folks need housing, and many of them want to buy a home.
- There has been quite a bit of new construction of housing in and around Harrisonburg over the past decade but it seems that the majority of it has been student housing, apartments to rent, townhouses to rent or townhouses to buy.
- Thus, as our population has increased over the past decade, and housing has increased, the right kind of housing hasn't been created as it relates to what local residents want.
Put differently, with some make believe numbers, to illustrate the point...
2010 = population of 50,000
2020 = population of 55,000
Increased population = 5,000
5000 newly built housing options between 2010 and 2020:
- 1,500 student housing
- 1,500 non-student rentals
- 1,500 townhouses to buy
- 500 homes to buy
The problem, then, is that many more than 500 (10%) of the new population want to buy single family detached homes -- but that is not what has been built over the past decade. Further exacerbating the problem is that plenty of the already existing 50,000 population also wants to move up to a single family detached home, putting more and more pressure on that segment of the market.
So - the population is increasing and housing options are increasing, but the housing that is being created is not matching what the expanding population desires.
Why!?
Basically, it's all about profitability as a developer.
For all the ways to develop a 10 acre parcel of land, this is a rough approximation of the ranking of their potential profitability...
- Commercial
- Student housing
- Non-student apartments for rent
- Townhouses for rent
- Townhouses for sale
- Single family homes for sale
At this point, most land being developed is not being developed for single family homes because that is not the most profitable way to develop the land.
So long as student housing keeps being rented as soon as it is built, and non-student apartments keep being rented as soon as they are built, and townhouses keep being rented as soon as they are built, and townhouses for sale keep being bought before they are built -- it remains relatively unlikely that land in or close to Harrisonburg will be developed for single family homes.
I am now accepting recommendations for more cheery perspectives to write about next week. Call. Text. Email. Help! ;-)
