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
Tuesday, January 4, 2022
Keep in mind as you read this that I was horrendously off target with my 2021 predictions for our local housing market. :-)
But, that being said, here's what I'm predicting and why...
As shown above, there have been big gains in the number of home sales per year over the past few years in Harrisonburg and Rockingham County.
- 2020 = 12% increase over 2019
- 2021 = 11% increase over 2020
Why, then, am I being so conservative and predicting that we'll only see a 3% increase in the amount of homes selling in this area in 2022?
- We seem likely to still be in a very low inventory environment for the next year, with the amount of homes selling being more a function of how many sellers are willing to sell more so than how many buyers are interested in buying. This inventory constraint seems likely to only let the annual pace of home sales rise so much in 2022.
- New construction - the creation of new housing inventory - is the other way we can see meaningful increases in the number of homes selling in a given year. We are continuing to see new construction in our area but not necessarily at a pace to allow for another 10% - 12% increase in the number of homes selling in our local market.
- Mortgage interest rates seem poised to increase in 2022 which may slightly slow home buyer enthusiasm as monthly mortgage payments effectively increase as a result.
The usual disclaimer applies - I am very comfortable in saying that I might be completely wrong with this prediction...
- If existing (and new?) local and regional builders continue to create new product at an ever increasing pace, there could be more homes to sell allowing for home sales to increase more than the 3% I have predicted above.
- If mortgage interest rates rise quickly that could quickly cause the housing market to cool off at least incrementally, resulting in either an increase in sales that is smaller than the 3% I predicted, or perhaps even a decline in the number of homes selling.
Now, then, where will prices be headed in 2022?
Sales prices of homes in Harrisonburg and Rockingham County increased dramatically over the past two years...
- 2020 = 10% increase over 2019
- 2021 = 10% increase over 2020
You'll note above that I am predicting a 5% increase in the median sales price over the next year. I'm actually split between two theories, and I ended up averaging them out for my prediction. :-)
- First Theory - Mortgage interest rates rise more than expected, buyer enthusiasm cools a bit, the median sales price only increases 1% - 2% in 2022.
- Second Theory - We see a third year in a row of a 10% increase in the median sales price. Buyers keep on buying, with still relatively low mortgage interest rates, and sellers keep selling for more, and more, and more.
So, which of these changes will we see this year in the median sales price? Will it be 0% or 2% or 5% or 10%?
You'll note that I am not predicting a decline in the median sales price. Some (not many) home buyers seem to be thinking or hoping or theorizing that home prices will eventually come back down if they wait long enough. That seems relatively unlikely -- so I am not including declining sales prices as one of my predictions for 2022.
Well, that about sums it up... I think we'll see 3% more home sales in 2022 at prices 5% higher than in 2021. But I'm ready to be wrong... quite wrong!
What do you think? Where will sales and prices head as we move into 2022?
