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
Wednesday, August 25, 2021
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.
- JMU, EMU, and Bridgewater College graduates often decide to stay in the Harrisonburg area after graduation.
- Plenty of people move to Harrisonburg from other parts of Virginia and beyond for work or to be closer to family.
- Many young-ish people (college graduates in the past 15 years) then start a family and the parents of the young-ish people become grandparents AND near or reach retirement -- causing them to consider a move to Harrisonburg.
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...
- Many builders (small and local or large and regional) became pretty skittish after the real estate boom and bust of 2003 - 2008. Thus, I believe builders were building homes at much lower than normal rates during much if not all of the past decade.
- Plenty or lots of the new "homes" being built over the past decade, in Harrisonburg, have been rentals -- usually in the form of apartments or townhouses.
- Over the past two years as market conditions (low inventory, rising prices) have clearly been screaming at builders to "build, build, build" we have seen the price of lumber and other building materials skyrocket. Thus, even over the past two years builders haven't been building as much as the market might have told them they should have.
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?
- Inventory levels are likely to stay relatively low for the next several years.
- Home prices are likely to stay where they are or increase even higher over the next several years.
- We'll start to see more and more homes being built for homebuyers over the next few years, but it will take a while (years) to get anywhere close to catching up with demand for housing.
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?
