Welcome! This blog tracks the real estate market in the Central Shenandoah Valley, featuring market data and analysis, an exploration of common buying and selling questions, and candid commentary on all things real estate.
If you are interested in discussing any of the topics on this blog, or the details of your specific real estate situation, call or e-mail me!
Inventory
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Some Would Be Home Buyers Are Deciding NOT To Buy Given The CRAZY Housing Market |
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 Many buyers are feeling a bit overwhelmed by the prospect of trying to buy in the current CRAZY housing market. They find themselves asking...
If you're trying to buy a house right now and you are having some (or all) of these thoughts -- you are not alone. There are many reasons to persevere and to keep on pursuing that goal of buying a house -- and most buyers do seem to be doing that -- though there are also some buyers who are throwing in the towel. Here's how that might look...
It is times like these that I am thankful for all of the counseling classes I took while I was completing my graduate degree from JMU. So, if you think you want to buy, but are are nervous wreck because of the hectic housing market -- feel free to reach out. I'm happy to meet with you to chat about the process and the market. We can call it a home buying meeting or a counseling session -- whichever makes you feel more comfortable. ;-) | |
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How To Solve The Housing Inventory Crisis |
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 Here are the top three ways to solve our current housing inventory crisis...
No, but really. Keep reading to find out why... Let's think about it for a moment... here are how there come to be new listings for sale...
So, as you can see, all of these ways in which new listings come about are not likely (in the current market at the current time) to help us dig our way out of our local housing inventory crisis. So, what's the answer? Basically, the only way we will make meaningful progress towards addressing this crisis in housing inventory is if quite a few new homes are built! Here's hoping that area builders will be building some new homes for buyers to buy in 2021 and beyond in Harrisonburg and Rockingham County! | |
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Low Inventory Levels AND Lots Of Listings |
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 It's an interesting conundrum. Inventory levels are really (really!) low right now, but there are plenty of new listings that will come on the market this month and next month and nearly every month this year. So, how and why does this happen? Well, if there aren't many listings... ...and then a bunch of houses are listed for sale... ...but there are plenty of buyers in the market so that those new listings all go under contract quickly... ...we'll be left with... not many listings. The key factor keeping inventory levels so low right now are an abundant number of buyers in the market -- or trying to get into the market -- to buy a home. So long as that supply of buyers stayed steady and strong, we are likely to continue to see low inventory levels. So, if you are a buyer and are feeling glum about the very few choices you have today... ...be encouraged -- plenty of houses will be listed for sale in the next month or so... ...but maybe (sorry!) also be discouraged -- you will likely be competing with quite a few other buyers for each new listing. | |
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As A Home Buyer, You Have Never Had Fewer Options |
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 It's a tough time to be a home buyer. In most locations and price ranges there are VERY FEW homes for sale! As shown above, the number of homes for sale at any given time has drifted lower and lower and lower over the past 13 years to the very lowest point EVER this month with only 107 homes for sale in all of Harrisonburg and Rockingham County. This shortage of housing inventory has quite a few impacts...
Moving forward into the spring season, which will eventually happen after another 5 to 10 snow storms...
So, welcome to yet another, stronger, seller's market as we look forward to spring 2021! | |
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Why Is Unmet Home Buyer Demand So High In Harrisonburg? |
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 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...
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:
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...
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! ;-) | |
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January Housing Inventory Levels Sink To New Lows |
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 We like somethings to be low - like mortgage interest rates. But inventory levels - it really isn't ideal for them to be this low - except for sellers, I suppose. For each of the past five years, home buyers in our local market have found themselves worse off as far as having options for houses to buy in Harrisonburg and Rockingham County. Today, buyers are choosing from 117 homes for sale in the entire City and County. Ouch! Just a year ago, that was 195 homes, two years ago 269 homes, oh -- and can you imagine having 500+ homes to choose from such as back in 2016!? Here's hoping for a flurry of homes coming on the market in February and March to help meet the apparently never ending surge of buyer demand! | |
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Largest Inventory Declines In Lowest Price Ranges |
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 As will come as absolutely no surprise to anyone looking to buy a home under $200K, or even under $300K, there are far fewer options of houses on the market now as compared to two years ago. The graph above compares "beginning of the year" inventory levels today (blue bars) to two years ago (purple bars) to see how the market has shifted. As noted in gold, the lowest price ranges (under $200K, $200K - $300K) have seen over 60% declines in the number of homes on the market. It is a lot tougher to find a house to buy these days if you are hoping to buy for less than $200K, or even less than $300K. If you are planning to buy in that price range, get pre-approved, plan to see new listings the first day they come on the market, plan to make an offer immediately if it is of interest, and consider including an escalation clause to compete on price! | |
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Increasing Home Sales Despite Declining Inventory Levels |
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 Fewer homes on the market means that fewer homes are selling, right? Nope, not necessarily. As you can see above, there have been an average of 38% fewer homes on the market (at any given time) this year as compared to two years ago. But there have been 7% more home sales this year than two years ago. So what gives? Basically, these metrics can and often do change independently of each other. Number of homes for sale (inventory) is not the same as number of homes listed for sale. If 100 homes are listed for sale at the start of a month and 5,000 homes are listed for sale during that month, and all 5,000 of them go under contract by the end of that month, then there are still only 100 homes for sale -- but there were 5,000 contracts signed that month! So, if buyers are buying faster than sellers are deciding to put their homes on the market, then this dynamic (sales up, inventory down) can take place. Just because you see that inventory levels are dropping - don't assume that home sales are also declining -- home sales (and prices) are actually on the rise, despite fewer and fewer homes being on the market at any given time. | |
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Harrisonburg vs Rockingham County Inventory Levels |
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 Perhaps the City inventory levels were just so low that they didn't have far to fall? Multiple things to note here (above) regarding City vs. County inventory levels...
In theory, inventory levels might (???) start to climb a *bit* this fall, but my general sense is that there is still pent up buyer demand and inventory levels could stay this low all through the fall and winter. Sorry, buyers! :-/ | |
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When It Comes to The Local Housing Market, The Early Bird Truly Does Get The Worm |
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 I suppose we have all heard of the proverb "the early bird gets the worm" which has a pretty helpful definition on Wikipedia...
That is, indeed, where we find ourselves in the local real estate market for many properties at many price ranges. If a newly listed house in a local and price range with plenty of buyer interest is well prepared, reasonably priced and thoroughly marketed...
So, figure out how you're going to track new listings and let's make sure to go see new listings of interest as quickly as possible when the hit the market - hopefully within hours or a day, instead of within days of a week. | |
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So You Are Saying You Are Having A Hard Time Finding A Home To Buy? |
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 So - there are only 186 homes for sale in all of Harrisonburg and Rockingham County. Which, as you can see above, is much lower than the number of homes for sale for most of the past 12 years. Breaking it down a bit further by location...
...and by property type...
...and by price...
Regardless of how you break it down, there are fewer options for buyers today than there have ever been at any other point in the past 12 (plus) years. One important caveat is that the lack of inventory at any given point does not mean that there aren't as many houses selling. There have been 1300-ish home sales per year for the past few years, despite continually declining inventory levels. So, basically, homes are coming on the market - but they are going under contract VERY QUICKLY - so inventory levels have been staying low or getting lower! What does this mean for buyers?
It's not necessarily a totally fun time to buy a home right now because of these low (low!!!) inventory levels -- but it is possible to buy a home. Let me know if you'd like to chat about inventory levels in your particular segment of the local housing market. | |
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Housing Inventory Levels May Have Peaked For The Year |
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 The number of options that you have today as a buyer (hint = not many) may be the most options you'll have at any given point between now and the end of the year. As shown above, inventory levels (the number of active listings in the MLS at the end-ish of each month) climbed through the first four months of the year, but seemed to peak in April and have been declining since that time. Surprisingly, the inventory level at the end of July was lower (!!??) than in January and February! Now, certainly, there will be some new listings over the next five months of this year -- so there will be some new inventory options -- but the total inventory available at any given point is not likely to increase again until next Spring. | |
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Having Difficulty Finding Homes Under $200K? Here Is Why! |
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 The blue line shown above is showing you the change in the number of homes for sale under $200K in Harrisonburg and Rockingham County. As you can see, this segment of our housing market has offered fewer and fewer choices at any given time over the past few years. Some further explanation and caveats...
So, if you are having difficulty finding a home to buy under $200K, maybe now you can see why you are having this experience! Be ready to pounce on any new listing of interest and you better already have a pre-approval letter in hand from your lender! | |
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Inventory Changes Can Reveal Reasons For Fewer Home Sales |
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 Contract activity is slowing, a bit, and that will likely eventually lead to fewer sales -- that is to say fewer sales in 2020-YTD than in 2019-YTD. So, if we get to that point, perhaps in July 2020, what shall we conclude about the state of our local housing market if we're seeing fewer home sales this year than last? After all, we have been seeing relatively steady increases in the number of homes sales for almost 10 years now! I think inventory trends (at such a future date) will help reveal the reason for fewer home sales. If fewer home sales are accompanied by rising inventory levels... that will indicate that more sellers want to sell their homes than there are buyers who want to buy homes. That will mean that the market is softening and it will become less of a seller's market than in the past. If fewer home sales are accompanied by steady or declining inventory levels... that will indicate that fewer sellers want to sell their homes and the buyers are still there wanting to buy homes. That will mean that the market is staying strong with sustained buyer interest despite an interruption in the flow of sellers willing to sell. So -- fewer home sales could mean two very different things -- and thus far, it's seeming that it's the second scenario -- fewer sellers willing to sell despite a consistent pool of buyers ready to buy. | |
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Will Inventory Levels Be Even Lower Than Low This Spring? |
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 If you haven't heard, inventory levels have been LOW lately -- with very few homes for sale at any given time -- which can be frustrating for buyers. And it is even more frustrating and challenging for seller/buyers -- folks who need to both sell and buy at the same time. If you have to sell your home, but you aren't sure whether you can find something to buy, you'll likely wait to list your home for sale until your dream home comes on the market. This phenomenon (seller/buyers waiting to list until they find something to buy) further reduces inventory levels because the seller/buyer's homes are not listed for sale. And now, with COVID-19 causing some sellers to wait a few weeks or months to list their homes, it seems possible that we'll see even lower inventory levels than we would expect to see at this time of year. The upside for sellers who are willing to list their homes right now is that they might have less competition from other sellers who might choose to wait to list their homes for sale. The downside for buyers is that they might have to wait even longer for the "right" home to come on the market for sale. | |
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Lower Priced Market Segments See Largest Swings In Housing Inventory |
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 Not all price ranges are created equally, it seems. The hardest hit price range, perhaps unsurprisingly, is the under $200K price range -- where we have seen a 57% decline in the number of homes for sale over the past two years. Of note -- part of the problem here is increasing home values -- which prices some homes out of the "under $200K" price range. Regardless, though, buyers looking to stay under $200K for their home purchase are having an ever more difficult time doing so. The $200K - $300K market also had a sizable (26%) decline in the number of homes actively listed for sale as compared to two years ago. Both the $300K - $400K and the $400K+ price ranges only saw slight (-5%, -7%) declines in inventory levels - so not a marked difference from where inventory levels were two years ago.. | |
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It Might Be Hard To Find A Home To Buy In The City of Harrisonburg |
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 The number of homes for sale in the City of Harrisonburg keeps dropping. That's not to say that homes aren't selling -- a total of 390 homes have sold in the City of Harrisonburg during the first 353 days of the year -- putting us at a pace of around 34 home sales per month. But the number of homes available to buyers continues to decline -- now down to only 42 homes for sale! Here's a bit longer of a context....
And now -- only 42 homes for sale! If you're looking to buy a home in the City of Harrisonburg it might be difficult to find a home that is a perfect fit or you given a very limited supply of homes for sale. And when a home does come on the market that works for you, it is likely to sell quickly. | |
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Will You Take Your House Off The Market Over The Winter? |
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 In some ways, NO, you should NOT take your house off the market -- because housing inventory levels have plummeted in December. And yet, still, some folks will take their homes off the market for the winter. Our local MLS requires a house to be off the market for 90 days before the "Cumulative Days on Market" statistic resets. So, if you take your house off the market today, you could put it back on the market right around March 5, 2020 and have that statistic reset. During these 90-ish days of being off the market, we will want to talk about price, condition and marketing....
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Housing Inventory Levels Plummet in December |
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 First - a note - each data point above is for the end of the given month. Thus, the 235 homes for sale in November are at the end of November -- or, as the case may be, the very beginning of December. Now, there are a few disclaimers I could make about the above data...
Regardless of the reason or explanation, though, the current inventory levels are SUPER low! Which is terribly frustrating for buyers -- and a great opportunity for any home owner who does need to sell right now. You are not likely to have much competition from other sellers! Stay tuned later in the month when I compile my full monthly report and we'll see if inventory levels perked back up as we made our way further into December. | |
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I Would Like To Sell But Cannot Find Anything To Buy |
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 Something I am hearing with increasing frequency goes something like this...
A few thoughts and notes as it relates to this increasing common occurrence...
It can be a tough time to be a buyer -- and even more so to be a seller and buyer. I recognize that plenty of folks who want to move may just need to stay in their current home -- but let's take some time to explore that together to see if that is the only path forward. | |
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
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Commonwealth of Virginia
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