Monthly Market Analysis
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Fewer Homes Are Selling, Though Prices Keep Rising, And Now Inventory Levels Are Rising Too!? |
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 Happy Thursday morning, friends in and around Harrisonburg and beyond! After I process all the data... and create all of the charts and graphs... and doodle on them to notate trends... I then go back and review it all again in order to write the headline of my monthly market report. As it turns out, this month's headline ended up being pretty similar to last month. Fewer home sales... higher sales prices... but also... higher inventory levels. We are definitely seeing some shifts in our local market, though it is not yet clear how significant of an impact those changes will have. But we'll get to all of that real estate data... First, whether you are a teacher, a student, a professor, a school administrator, a staff member at a local college, or a parent, I hope your school year has had a great start. On our end, Luke has started his first semester of classes at Wake Forest and Emily is a few weeks into 10th grade. It has been a fun but busy start to the year, and we're looking forward to visiting with Luke at WFU Family Weekend soon! Secondly, a few listings of potential interest to you... 9926 Goods Mill Road - A modern farmette on 3.3 acres with awesome mountain views in the Spotswood High School district for $575,000. 3986 Dixie Ridge Road - A spacious four (or five) bedroom home with the primary bedroom suite on the main level for $475,000. 3211 Charleston Boulevard - A like-new, upscale townhouse in Preston Lake with a two-car garage with access to many community amenities for $375,000 Congers Creek Townhomes - Three-level, new construction townhomes across Boyers Road from Sentara RMH Medical Center for $306,900 and up. And thirdly, each month I offer a giveaway, of sorts, for readers of this market report, highlighting some of my favorite places, things or events in Harrisonburg. Recent highlights have included Merge Coffee, Jimmy Madison's and Red Wing Roots tickets. This month I am giving away a $50 gift certificate to a delicious local restaurant, Taste of Thai. I'm writing this report on Wednesday evening... you'll get it Thursday morning... and my writing this evening is powered by one of my go to dishes at Taste of Thai... Massaman Curry. Are you a fan of Taste of Thai as well? Click here to enter to win a $50 gift certificate! And now... on to the data, and charts and graphs...  This first data table above shows much of what we've seen for the past year or so now... [1] We're seeing fewer home sales now than we were a year ago. In the first eight months of this year (Jan-Aug) we've seen 24% fewer home sales than in 2022. If we look only at the summer months (Jun-Aug) we see a slightly larger 30% drop in the number of homes selling. [2] The median sales price continues to rise... it's up 10% in the first eight months of this year (Jan-Aug) as compared to the same timeframe in 2022. [3] Homes are still going under contract rather quickly with a median days on market of six days, which is just a smidge ahead of last year's median of five days. As alluded to above, the summer months were a good bit slower this year than last...  The three lines shown above are as follows... Red = This Year Blue = Last Year Grey = Average of Past Four Years As such, home sales in the summer (+/-) of 2023 were well below the average of the past few years, and even farther below last summer. We saw 102 home sales in August 2023... which is slightly less than we saw in... January 2022. That's actually sort of surprising... a summer month that we would expect to be rather active was slower than a winter month that we would expect to be rather slow. High mortgage interest rates -- we'll get to those below -- likely play a significant role in slowing down the number of homes that are being sold and purchased these days. Now, putting the lower and lower number of home sales in context...  We have seen the number of home sales in a 12 month period drop from about 1700 home sales (summer 2021 through summer 2022) down to only 1300 home sales. But... looking back a bit further, this just takes us back to... where things were at the start of or just before the pandemic. So... yes, we're seeing significantly fewer home sales right now... compared to the significantly higher number of home sales seen in 2020, 2021 and 2022... which were likely high points fueled by low mortgage interest rates and lots of buyers rethinking what they needed in a home during the pandemic and thereafter. And yes, despite the rapid increase (1300 to 1700) and then rapid decrease (1700 to 1300) in home sales, we've seen home prices steadily march on along, upward, during the entirety of the past three years. Looking back a bit further than three years puts the change in median sales price in an even wilder context...  Not too long ago (2017) the median sales price in Harrisonburg Rockingham County was just below $200K. This year (2023) that median sales price is now above $300K. That $100K(+) jump over the course of six years has significantly changed what it looks like to be a first time buyer (or a move up buyer) in our local market. Certainly, the higher mortgage interest rates we have seen in 2023 (and 2022) haven't helped either. The combination of higher sales prices and much higher mortgage interest rates have resulted in much, much higher housing payments for buyers in today's market. Looking for a trend that is heading in two different directions at once? Here's one...  We are currently seeing a downturn (blue bars) in the number of existing homes selling in Harrisonburg and Rockingham County... while at the same time seeing an increase (green bars) in the number of new homes selling in our market. Higher mortgage interest rates are causing many homeowners to have no interest in selling... which is resulting in fewer existing homes being on the market for sale. Thankfully, there are builders helping to add housing stock in our area, resulting in more new homes selling over the past few years. Shifting gears a bit to the here and now... the freshest data to watch for the most recent trends is contract activity...  Last month we saw an increase in contract activity... with 130 homes going under contract, compared to only 114 in the same month last year. It seemed that maybe we would see a sustained surge of buyer activity. But... maybe not. With only 112 contracts signed in August 2023, it seems that the surge of contract activity in July 2023 was an anomaly, and we will still see smaller numbers of contracts being signed in 2023. Darn. And here's the most interesting graph of them all, in my opinion...  Over the past two months we have seen a significant shift in inventory levels -- the number of homes available for sale in Harrisonburg and Rockingham County. For most of this year (red line) we have seen even fewer homes for sale than last year (blue line) but that all changed in July 2023. Over the past two months we have seen inventory levels build up beyond (above) where they have been for the past several years. These higher inventory levels are resulting in... [1] Buyers have slightly more choices of homes to go view. [2] Homes sometimes staying on the market a bit longer than before. [3] Many sellers seeing fewer showings than they expected. [4] Plenty of homes not going under contract in the first few weeks. Will higher inventory levels eventually translate into a higher number of home sales, bringing inventory levels back down? Maybe. Will higher inventory levels eventually lead to some sellers being more flexible on price, and a leveling out of the median sales price, or even a decline in the median sales price? Maybe. I'll continue to monitor inventory levels with interest as higher inventory levels can start to make it a slightly more favorable market for buyers than it has been for the past few years. As already mentioned in this report, despite higher inventory levels, we're still seeing prices rise... and most (50%+) homes are still going under contract quite quickly...  Just to translate the graph above into words... over the past six months the median "days on market" of homes that have sold was five days. Of note... that only measures the median days on market for sold homes... not those that are still on the market for sale. Furthermore, this is just a median -- it's not saying that all homes are going under contract in five or less days. As per how a "median" calculation works... 50% of homes are going under contract in five or fewer days... and 50% are going under contract in five or more days. And finally... I have mentioned higher mortgage interest rates so many times in this market report that you're probably wondering how high they are...  They are QUITE high... higher than they have been in many years... higher than they have been in several decades. It seems quite possible that mortgage interest rates will edge back down below 7% in the coming months... but I'm guessing we'll see mortgage interest rates above 6% for the next year or two. These higher mortgage interest rates significantly affect housing costs for buyers making a decision to buy in today's market. If mortgage interest rates were lower, we would likely see more sellers being willing to sell, and more buyers able to and interested in buying. And just like that, we've breezed our way through all of the charts and graphs I have for you today. My advice to buyers and sellers is relatively similar to recent months gone by, but I'll reiterate it here... Home Buyers -- You might be able to wait a day (or even two) to go see a new listing now, but don't assume that many or most will be there three or four days after they hit the market. Plenty of homes are still going under contract very quickly, particularly those in more desirable price ranges, locations, etc. Talk to a mortgage lender to understand your potential housing costs and get going to see some new listings as they hit the market. Home Sellers -- All homes won't go under contract within five days. Your home might be on the market for a few weeks or even a few months depending on it's condition, location, price range and other attributes that are appealing to either a wide or narrow pool of buyers. Price your home competitively, prepare it well for the market and market it thoroughly and professionally and you should still have success in securing a contract with a buyer -- but it won't necessarily happen overnight like it seemingly always was over the past few years. If you have a real estate question... reach out anytime. It's never too early to have an initial chat about your possible plans to buy, sell or move. I'm happy to provide feedback and input to help you think some things through and make a plan for your housing transition when you're ready to do so. You can reach me most easily at 540-578-0102 (call/text) or by email here. | |
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Fewer Home Sales, But Prices Are Rising!? More Contracts But Inventory Levels Are Rising!? |
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 Happy Monday afternoon to you, friends! This monthly market report is one of some enigmas, some contradictions, some puzzlement. Some of these will be familiar, some new, some unrelated to real estate... [1] How can it be that we are seeing fewer home sales, but higher prices!? [2] So, contract activity is increasing, but inventory levels are also rising!? [3] How can I feel so young, yet have a son heading off to college this Friday!? :-)  Indeed, Luke heads off to Wake Forest University this Friday! We are tremendously excited for this next step in his life and educational journey, but we will miss him and his friends greatly as they head off in new directions. Swiveling quickly back to real estate before I spend too much time thinking about the aforementioned major life transition (!!) I'll point you towards a few of my current listings that might be of interest... 9926 Goods Mill Road - A spacious home / farmette on 3.3 acres with wonderful mountain views in the Spotswood High School district. $585,000. 150 Autumn Bluff Drive - A like-new, upscale, custom-built, single-level home in Autumn Breeze on a large corner lot. $445,000. 1210 King Edwards Way - A four bedroom home in the City with an attached two car garage and a large back deck. $389,500. 3211 Charleston Boulevard - An upscale townhouse in Preston Lake with a two-car garage with access to many amenities. $375,000 Congers Creek Townhomes - Three-level, new construction townhomes across Boyers Road from Sentara RMH Medical Center. $306,900 and up. And finally, before we get to the real estate data... Each month I offer a giveaway, of sorts, for readers of this market report, highlighting some of my favorite places, things or events in Harrisonburg. Recent highlights have included Jimmy Madison's, Red Wing Roots tickets and The Little Grill. Now, then, on to the data. You can likely skim this chart of data rather quickly to get a sense of what I'm going to say...  Regardless of the timeframe outlined above... [1] We are seeing fewer homes selling now than in the recent past in Harrisonburg and Rockingham County. Year to date (Jan-Jul) we have seen a 23% drop in the number of homes selling as compared to last year. [2] We are seeing higher and higher sales prices in Harrisonburg and Rockingham County. Year to date (Jan-Jul) we are seeing a median sales price that is 11% higher than a year ago. Here's a month-by-month visualization of those slower sales we're seeing this year...  The grey line above shows the average number of home sales per month between 2019 and 2022. You'll note that a typical trend is to see more and more home sales (closings) as we move from April through June before starting to see things decline a bit in July. The blue line above shows last year, when April, May and June were well above where we might have expected them to be. Then, there's this year... the red line. We just haven't seen the typical boost in home sales during April, May and June that we would usually expect to see. In fact, July was the third month in a row of between 110 and 120 home sales. So, this year is not a typical year. We are experiencing a much lower spring and summer in the local real estate market. Why, you might ask? Likely because of mortgage interest rates -- which are quite a bit higher than over the past few years -- and because there aren't as many homeowners selling their homes. Stacking all of those months on top of each other, you can see how this year compares to previous years, thus far...  Clearly, this year seems unlikely to come anywhere near the level of sales seen over the past few years (2021 and 2022) and we're likely to finish out the year with fewer home sales than in 2019 and 2020 as well. Here's an illustration of that puzzling increase in sales prices and decline in the number of homes selling...  This is, as some of you would undoubtedly point out, both puzzling... and not. Typically, if demand decreases, sales decrease, and prices decrease. But despite fewer home sales (as shown above) we are not seeing prices decline. Which means... we are not seeing a net overall decrease in demand... but rather... a decrease in supply. So long as home prices keep climbing, I think the decrease in the number of home sales can be almost entirely attributed to fewer sellers selling. Given fewer homeowners being willing to sell, we're likely going to need new construction homes to fill in the gap to help meet buyer demand...  Overall, over the past few years, we have seen new home sales (green bars above) increasing. After only 219 new home sales in 2020, that climbed to 405 in 2022... leading to one in four (26%) homes selling being new homes. We are still seeing similar (75% / 25%) numbers this year. During that same timeframe (2020-2022) we saw a decline in existing home sales... from 1,276 existing home sales in 2020 down to 1,159 existing home sales in 2022. I expect we will see even fewer existing home sales in 2023 based on data from the first seven months of this year. Now, here comes a surprise this month...  Last year we saw a month after month decline in contract activity as we moved from May through July. This year we started to follow that same trend as we saw fewer home sales in June that in May. But, then, July. Contract activity was quite a bit higher than I expected it would be in July 2023. In fact, this was the month with the largest number of contracts signed thus far in 2023. And yet, two other indicators keep me scratching by head a bit...  Despite that uptick in contracts being signed in July 2023... the number of pending (under contract) homes followed its normal seasonal trend of declining slightly between May and July. There are (as shown above) 252 homes under contract in Harrisonburg and Rockingham County right now... which is lower than a month ago (261) and lower than a year ago (297). Furthermore...  Despite lots of homes going under contract in July... inventory levels jumped up quite a bit (131 to 177) in a single month's time. This brings current inventory levels to the highest point that we have seen anytime in the past year. I'll take a closer look at some of these overall trends in the coming days to try to dial in whether there is another story to be told and understood. For now, it's clear that there are quite a few more listings on the market now than anytime of late. Moving through the next few months, it will be interesting to watch... [1] Will inventory levels bounce back downward after buyers have a chance to contract on some of these new listings? [2] Will we see more price reductions on listings as sellers have slightly more competition from other sellers in some price ranges and with some property types? [3] Will we see homes staying on the market longer than they have in the past? I don't know that we need to instantly jump to any conclusions about this increase in inventory levels, but the data over the next few months will help color in the picture of whether we are seeing any sort of a transition in our local housing market. Speaking of median days on the market... is it starting to rise?  Mmmm... nope. Most homes (at least half of them) are still going under contract very quickly (in six days or less) in Harrisonburg and Rockingham County. This metric will continue to be helpful to gauge whether buyer enthusiasm is slowing at all in the local market. What could slow buyer enthusiasm, you ask? How about those mortgage interest rates!?  Don't look too far back on the chart above or you'll note that 2.8% mortgage interest rate two years ago. Wow! Even if we ignore the first year (first half) on the chart above, we still see a significant increase in mortgage interest rates over the past year... from 5.3% to 6.8%. We still aren't seeing any relief in sight with mortgage interest rates. Yet. I am hopeful that we move through the remainder of 2023 we'll start to see mortgage interest rates settle down a bit... but I'm guessing they will almost certainly stay above 6%. So, given all of the data above, what should you be thinking about if you are a home buyer, seller or owner? Home Buyers -- Many new listings are still seeing plenty of action... so you very likely may still find yourself in a competitive offer situation... but not always. Understand how current mortgage interest rates affect your potential monthly mortgage payment... and get out there quickly to see new listings. Home Sellers -- You might talk to friends who saw their home go under contract within three days with multiple offers. You might talk to other friends who have had their home on the market for three or four weeks without an offer. Both of those market realities currently exist... and it varies based on price range, property type, location, and many other factors. We need to take a close look at your corner of the local real estate market to devise a reasonable and realistic pricing and marketing strategy for selling your home in a timeframe that suits your needs. Homeowners -- Enjoy your ever increasing home value. If you're talking to a friend who is trying to buy a home, don't mention your mortgage rate, or how glad you are that you already own a home. ;-) And... that's all for today. I hope that the remaining days or weeks of your summer break (if you had one) are enjoyable, and that the start to the school year goes well for you if you are a parent, teacher or administrator. As always, feel free to reach out to me if I can be of any assistance to you as you make plans to buy or sell. You can reach me most easily at 540-578-0102 (call/text) or by email here. | |
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Far Fewer Homes Are Selling, But Sales Prices Keep Rising |
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 Happy Friday Morning, Friends! As per the headline above, far fewer homes are selling this year, but sales prices keep rising. But before we dive into it... First, if you're looking for a spacious four bedroom home in a neighborhood in the Spotswood High School district, be sure to check out 350 Confederacy Drive...  This beautiful, well maintained house in Battlefield Estates has had many updates over the past few years and is currently listed for sale. Find out more at 350ConfederacyDrive.com. Second, I hope you have had a fun first half to your summer. The weeks are flying by and before you know it, we'll be thinking about and planning for the coming school year. I was out of town for a few days last week for some fun on the water...  I have always loved water skiing but in recent years I have become the boat driver so it was great to have Luke drive this year so I could ski again. It was a fun and relaxing time away with family, and I hope you find time to have fun this summer as well... whether at the lake, at the beach, or right here in the beautiful Shenandoah Valley. Third, and finally before we get to the market data, each month I offer a giveaway, of sorts, for readers of this market report, highlighting some of my favorite places, things or events in Harrisonburg. Recent highlights have included Red Wing Roots tickets, The Little Grill, and Cuban Burger. This month I am giving away a $50 gift certificate to Jimmy Madison's... located in downtown Harrisonburg. If you find me at Jimmy Madison's, I'll be enjoying one of many favorite items from their fantastic menu... but always with a side of their delicious Jimmy Sprouts -- Caramelized Brussels Sprouts with sweet pecans, candied bacon and honey thyme vinaigrette. I'm getting hungry just talking about them! Click here to enter to win the $50 gift certificate to Jimmy Madison's. Now, on to the data...  As shown above... [1] There were only 113 home sales in June 2023, which was a 40% decline from last June. We'll see this visually in a graph in a bit. [2] We've seen 603 home sales in the first half of the year which is a 24% decline from the first half of last year. This is the "far fewer homes are selling" part of my market report. [3] If we stretch back a full year (12 months) we will find 1,374 home sales -- a 20% decline from the 1,727 home sales seen in the 12 months before that. So, regardless of how you slice or dice the data, fewer homes are selling in Harrisonburg and Rockingham County this year than last. But... [4] The median sales price in June 2023 ($344,990) was 15% higher than last year when it was $299,622. [5] The median sales price in the first half of 2023 ($330,000) was 10% higher than the first half of 2022 when it was $299,000. [6] The median sales price over the past 12 months ($315,000) was 10% higher than in the in the 12 months before that when it was $286,000. As such, regardless of how you look at it, the median sales price is still on the rise in Harrisonburg and Rockingham County, despite far fewer homes selling. Here's a visual of the drop off in the number of homes selling...  The blue line above shows the number of homes selling per month last year -- compared to the red line which shows this year's home sales. As is quite evident, the number of homes selling has been far lower this year than last, particularly over the past few months -- April, May and June. The grey line above shows the average number of home sales per month based on the past four years (2019-2022) of data. When looking at all three lines together it becomes clear that home sales last year were significantly above historical averages and home sales this year are now (particularly in May and June) significantly below historical averages. As I'll continue to discuss throughout this report... this decline in the number of homes selling is (perhaps obviously) both a result of fewer sellers selling and fewer buyers buying. We need both a seller and a buyer for a home sale to take place. As we'll see in later graphs, inventory levels remain low -- so it seems likely that the main constraint on home sales is the number of sellers selling... not a limit on the number of buyers who would like to buy. But before we get to inventory levels, let's look at a slightly longer historical perspective...  The blue line above shows the number of home sales per year, updated each month. This snapshot looks back to late 2020 (in the thick of Covid) when home sales were surging upwards, from 1,365 annual sales all the way up to 1,727 annual sales. But over the past year we have seen annual sales steadily drop... all the way back down to 1,375 sales per year... about the same place as where we were in the early months of the pandemic. If the pandemic (and low mortgage interest rates, and lots of people working from home) drove the number of annual home sales up over the course of two years... it was immediately followed by much higher mortgage interest rates driving the number of annual home sales down over the course of the most recent year. When the number of home sales in our market was surging in 2020, 2021 and 2022 it certainly made sense that home prices were rising steadily, as shown in the green line above. But over the past year, even as the number of homes selling has declined, and even with higher mortgage interest rates, we have continued to see home prices keep on rising. This (ever higher prices) is an indication (along with continued low inventory levels) that the limitation of the number of homes selling is almost certainly primarily a supply side issue -- not enough sellers being willing to sell. To put rising home prices in context... take a look at this change in the median sales price in our local market over the past four years...  The median sales price in Harrisonburg and Rockingham County has increased by more than $100,000 over the past four years. Wow! Four years ago your purchase of a median priced home would have had you spending $223,000 -- and today you'd be spending $330,000. This is certainly wonderful news if you have owned a home over the past four years -- or if you bought a home four years ago -- and less exciting news if you do not own a home and/or have been trying to buy a home for any or all of the past four years. It is important to note that these figures are not adjusted for inflation. I'll take a look at that separately, hopefully soon, as we have seen significant changes in what a dollar buys you over the past few years -- not just with houses, but across the majority of the economy. As should come as no surprise, the precursor to fewer home sales is... fewer contracts being signed...  As to the point I made earlier, the blue line above (last year's monthly contracts) was certainly above the historical average (grey line) but this year's trajectory of monthly contracts (red line) is well (well!) below historical averages. Looking ahead to home sales for the rest of the summer and into fall, we are likely to see continued to declines in home sales based on continued low levels of contracts being signed. As mentioned previously, one of the main reasons why we are seeing fewer home selling... is because there are fewer sellers selling...  Over the past four years (grey line above) we have seen an average of 180 to 190 homes for sale as we have rolled through March, April, May and June. This year (red line above) we have seen between 116 and 136 homes for sale during those same months. Inventory levels are remaining low despite far fewer home sales. This is the data point (alongside continued increases in the median sales price) that seems to rather clearly confirm that the decline in home sales is almost entirely related to fewer sellers selling -- and not fewer buyers wanting to buy. Across many (though not all) price ranges and property types, home buyers keep snatching up most new listings that come on the market -- which is keeping inventory levels quite low. How quickly are those new listings getting snatched up, you might ask? That is most readily measured via the "days on market" metric...  The graph above tracks the median "days on market" metric -- looking at six months of data at a time. As such, the most recent data point of a median of six days on the market is based on January 2023 through June 2023 home sales. After dropping, dropping, dropping to a median of only four days on the market in mid-2021, we saw a steady report of a median of five days on the market all the way through the end of 2022. But then, it seemed that things might be changing as the median days on market crept up to eight days on the market in early 2023. But... maybe not, after all... as median days on market has shifted back down to only six days over the past few months. If we ever see a significant shift in market balance -- with more sellers trying to sell than there are buyers to buy -- we are likely see that reflected in this median days on market metric. As is likely evident from the graph above, we're not seeing that type of market shift right now, despite far fewer homes selling this year than last. Finally, how about those mortgage interest rates. :-/  Please only looking briefly (and wistfully) at that 3.02% rate from two years ago... and then focus more on the past year. We have seen relatively volatile mortgage interest rates over the past year -- starting at 5.7%, ending at 6.7%, drifting as high as 7.1% and as low as 6.1%. It seems likely that we will continue to see mortgage interest rates over 6% for the balance of 2023... though home buyers would certainly love to see that be closer to the 6.31% seen in January rather than the 6.7% at the end of June or the 6.96% seen this week. Having sifted through all of the data above, what does it all mean for current home sellers and would be home buyers? Home sellers are likely to still do quite well in the current market, as the median sales price keeps rising and inventory levels (your competition) remain quite low. Home buyers are likely to continue to have difficulty securing a contract on a home as we move through 2023 due to fewer sellers selling, homes still going under contract very quickly, and likely competition from other buyers for many new listings. If you are planning to sell your home, or buy a home, in the coming months I would be happy to chat with you about how your segment of the local housing market (based on location property type and/or price) is performing as it compares to the overall market. Feel free to reach out to me if I can be of any assistance to you as you make plans to buy or sell. You can reach me most easily at 540-578-0102 (call/text) or by email here. Until next month, I hope you find some time to disconnect and enjoy the summer season with your family, friends and loved ones... and if you need me to drive the boat while you water ski... just let me know... ;-) | |
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Homes Still Selling Quickly, At Record High Prices, Despite Decline In Total Home Sales |
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 Happy Monday morning, friends! They say summer doesn't start until June 21st, but the 85 degree temps yesterday certainly felt like summer. Regardless of the formal start of the season of summer, most students have finished out their school year now, which also certainly makes it feel like summer. One such student who finished up his school year is this guy, below. Luke has now officially graduated from high school! :-) We are delighted for his accomplishment of this major milestone, and are excited for all that lies ahead. And yes, Emily also finished up 9th grade! These kids they sure do grow up quickly!  Looking for a new (to you) house this summer? Look no further than this brand new listing (just listed this morning) in the City of Harrisonburg...  Find out more about this spacious four bedroom City home on a large lot by visiting 3121HorseshoeLane.com. And finally, one last item of business before we get into the real estate data. Each month I offer a giveaway, of sorts, for readers of this market report, highlighting some of my favorite places, things or events in Harrisonburg. Recent highlights have included The Little Grill, Cuban Burger and Taste of India.  This super relaxing and family friendly music festival from June 23 - 25 at Natural Chimneys Park in Mt Solon features wonderful music (on multiple stages throughout the weekend), great food, lots of activities (hiking, biking, running, yoga, kids events), and all around great fun with family and friends. Have you considered going to Red Wing but haven't been yet? Maybe this summer is the time for you to make it one of your favorite family traditions. I am looking forward to being there with my family and I'm hoping you'll join in on the fun... from June 23rd through 25th. If you're interested in going to Red Wing but don't have tickets... I'm giving away a pair of three-day general admission tickets. Click here to enter to win the tickets... I'll pick a winner later this week. Now, on to the real estate data...  As mentioned in the headline, and as shown above, we're seeing far fewer home sales this year than last... [1] This past May (last month) we saw 112 home sales in Harrisonburg and Rockingham County, which marks a 25% decline from last May. [2] When looking at the first five months of this year, there has been a 20% decline in home sales compared to last year during the same (Jan-May) timeframe. [3] When looking at a full year of data (June - May) the number of homes selling in our area has declined 16%. A year ago we were seeing an annual pace of 1,714 home sales... and that metric has now declined to an annual pace of 1,445 home sales! But... fewer home sales has not resulted in lower sales prices...  As home sales have started to decline, some folks speculated that prices would also start to decline. That hasn't been the case, and I believe it's because the decline in sales is a supply side issue, not a demand side issue. There seem to be plenty of buyers still wanting to buy... but fewer sellers willing to sell. We need both a buyer and seller in order for a home sale to happen... so fewer sellers results in fewer home sales... but the continued ready supply of buyers is keeping competition fierce for most new listings, which is causing home prices to keep on rising. As shown above, the median sales price thus far in 2023 ($325,000) is 9% higher than it was a year ago ($298,400) and when we look at 12 months of data (June - May) we also see a 9% increase in the median sales price over the past year. I should point out that each month I prepare many more charges and graphs than make it into this report. You can also view those over at HarrisonburgHousingMarket.com including this month's charts and graphs here. One of the data subsets I dive into in the extra charts and graphs at the link above is the breakdown of new home sales vs. existing home sales...  As shown above, when we look at the past 12 months we see slightly different trajectories when it comes to new vs. resale homes... [1] There have been 2% more new home sales over the past 12 months as compared to the previous 12 months. [2] There have been 21% fewer existing home sales over the past 12 months as compared to the previous 12 months. Certainly, when we look at other timeframes above, we see declines in sales activity of both new and existing home sales, but it's worth nothing that a significant cause of fewer home sales in our market... is a lower number of homeowners who are willing to sell their existing (resale) homes. Why, might you ask? Mortgage interest rates are likely a key piece of the puzzle. Most homeowners have current mortgage interest rates under 5%, and many under 4%... compared to current mortgage interest rates that are above 6%. As such, the difference in mortgage payments is quite significant for a homeowner who would sell their home and pay off a mortgage with an interest rate under 4% (for example) to then take out a mortgage with an interest rate above 6%. I expect we will continue to see lower numbers of homeowners willing to sell their homes throughout the remainder of 2023. Getting into some visuals now, here's how slow May was...  After a 17% decline in April home sales (149 to 123) we then saw a 25% decline in May sales (149 to 112) which is almost certainly going to result in an even larger decline in June home sales... since there were a LOT of sales in June last year. As I have already mentioned, sales prices keep on climbing, so a decline in the number of homes selling isn't really a concern for home sellers, or homeowners, but it is not as exciting of news for would-be home buyers. We are likely to continue to see fewer home sales throughout the remainder of 2023 in Harrisonburg and Rockingham County... and it will be a result of fewer homeowners being willing to sell... not a result of fewer would be home buyers being interested in buying. Here's another visual of the general trends we're seeing in our local housing market right now...  We're still seeing a general increase in the number of homes selling per year if we compared pre-pandemic (early 2020 and prior) and post-pandemic (2023) but we've seen a steady decline in annual home sales over the past year, from 1,714 sales/year to 1,445 sales/year. So, after a steady increase in home sales during the pandemic (largely brought on by the pandemic - with super low mortgage interest rates and everybody needing their home to serve more functions than before) we have now seen a steady decrease in home sales as the pandemic has come to a close. We're returning to where we were pre-pandemic as far as how many homes are selling a year... with the home sales trendline being dragged down by a limited number of home sellers being willing to sell. There seem to still be plenty of buyers ready and willing and able to buy. With continued high levels of demand, but lower levels of supply, we have continued to see steady increases in sales prices as shown by the top line. That trendline (rising prices) seems unlikely to change course significantly anytime in the near future. But even if we aren't likely to see home prices stop rising, or to see them decline, perhaps we'll see a slight tapering off of the surge in sales prices?  In the last full year before the pandemic (2019) we saw a 5% increase in the median sales price in Harrisonburg and Rockingham County. Then, we saw three years of double digit increases in the median sales price with a 10%, 10% and 11% increase in 2020, 2021 and 2022. Thus far in 2023, we are seeing a slightly smaller increase in that median sales price, with an 8% increase through the end of May. Of note... sales prices are not declining... they are just increasing slightly more slowly than they have over the past three years. Stay tuned to see how this metric does or does not continue to change as we move through the next few months. Looking ahead, though, contract activity is our best indication of what we are likely to see in the way of closed home sales over the next few months...  As you can see, we have now closed out the fourth month in a row of significantly lower levels of contract activity in Harrisonburg and Rockingham County. The red line is measuring contracts signed per month this year, and the blue line shows the same months last year. As such, we are likely to continue to see lower levels of closed sales over the next few months, given lower numbers of contracts being signed. And finally, here's a visual of the supply side of the market...  Despite 20% fewer home sales this year... inventory levels are lower than they were a year ago. The red line above shows inventory levels this year, compared to last year in blue. If we were seeing a shift in the market, with demand softening, we would start to see inventory levels increasing. We're just not seeing that. As such, the 20% decline in home sales seems almost certainly to be a result of an insufficient number of homes being available for buyers to buy. Now, for all the stats folks out there, here's the statistic that could be the most misleading...  We have seen a 40% increase in the time it takes for a house to go under contract in Harrisonburg and Rockingham County! Gasp! Oh my! But wait... that just means that it is taking seven days for a house to go under contract... instead of five days? Yes, that is correct. The 40% increase in the median days on market is an increase from five to seven days. Ask just about any would-be buyer and they will report that this doesn't measurably change how quickly they need to act on seeing and pursuing new listings. And another interesting phenomenon in our current market, mortgage interest rates...  Despite fewer homes selling... sales prices keep rising. Despite higher mortgage interest rates... sales prices keep rising. Two years ago the average mortgage interest rate was around 3%. A year ago that had risen to 5%. Now, it is bouncing around between 6% and 7%. And yet, buyers keep buying, and they are paying ever higher prices for the homes they are purchasing. As you can imagine, that means that mortgage payments are higher than ever for today's home buyers -- as a result of both higher sales prices and higher mortgage interest rates -- but these higher rates haven't seemed to have impacted buyer interest enough to then impact sales prices. So, given all of the data above, what does this mean for you? If you are planning to sell... you'll likely still have plenty of interest from buyers, you're likely to sell at a very favorable price, and your home is still likely to be under contract within a week. If you are hoping to buy... you'll need to see homes quickly when they come on the market, you will still have stiff competition from other buyers, and you should talk to a lender to understand mortgage payments based on current mortgage interest rates. If you own a home and aren't planning to sell... lucky you. Home values keep on increasing, and you likely have a low or low-ish mortgage interest rate. I hope this overview of the latest trends in our local housing market has been informative and helpful, especially if you are gearing up to buy or sell soon. Feel free to reach out to me if I can be of any assistance to you as you make those plans. You can reach me most easily at 540-578-0102 (call/text) or by email here. Until next month, I hope you enjoy the start to summer, and perhaps I'll see you at Red Wing! | |
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Median Sales Price Up 10% In 2023 Despite 19% Decline In Home Sales |
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 Happy Tuesday morning, friends! We are now -- wait for it -- more than a third of the way through 2023!? How can it be!? And how's the market you might ask? Fewer homes are selling this year, but at higher prices than last year!? Again, how can it be!? -- This whirlwind of a start to 2023 has involved a rather busy few months in the Rogers household -- with a soon-to-be-graduating high school senior (Luke) attending a Junior-Senior banquet and playing in his last few baseball games, and an ever-speedier ninth grader (Emily) running (and jumping) in multiple events on the track team. Whatever is keeping you busy and running all around town this Spring, I hope it is just as fun and fulfilling as it has been for Shaena and I to see our kids growing up over these recent years. Time surely does fly by quickly! -- But, back to real estate. Below I'll delve into all the juicy details of the latest happenings in our local housing market... after I make you hungry... Each month I offer a giveaway, of sorts, for readers of this market report, highlighting some of my favorite places, things or events in Harrisonburg. Recent highlights have included Cuban Burger, Taste of India and A Bowl of Good. -- OK, now, I'm really getting to the real estate. Jumping right in to where my headline began... home sales (not prices) are declining, rather significantly in Harrisonburg and Rockingham County right now...  As shown above... [1] There were 17% fewer home sales in April 2023... which I suppose isn't too much of a surprise given several other recent months of slower home sales. [2] Looking at the year thus far (Jan - Apr) home sales have declined 19%. During the first four months of 2022 we saw 461 home sales in Harrisonburg and Rockingham County while there have only been 374 home sales thus far in 2023. Generally, there are two reasons why home sales decline: [1] Fewer buyers want to buy. [2] Fewer sellers want to sell. In our local market, the 19% decline in home sales seems to be almost entirely a result of fewer sellers wanting to sell. I come to this conclusion based on continued low inventory levels, which we'll get to in a bit. Despite the 19% decline in the number of homes that are selling, as the headline referenced, we're still seeing home prices rise in Harrisonburg and Rockingham County...  Indeed, when analyzing multiple different timeframes, we are consistently seeing increases in the median sales price in our local area... [1] The median sales price over the past 12 months ($306,160) is 9% higher than it was in the previous 12 months ($279,900). [2] Looking just at the first four months of the year, the median sales price is 10% higher this year ($324,985) than last ($295,490). Will home prices keep rising forever? I can make no promises, but generally speaking, so long as demand (buyers wanting to buy) continues to exceed supply (sellers wanting to sell) we are likely to continue to see prices rise. Will home prices keep rising at a rate of 10% per year? This seems less likely, especially given higher mortgage interest rates right now... though I've been saying this for at least six months now, and thus far, home prices are still rising at about 10% per year. One metric that is running slightly contrary to most others is the time that it takes for a home to go under contract once listed for sale. We have actually seen a slight increase in this "median days on market" statistic over the past year...  I suppose the "gotcha" headline would be that it is taking homes 40% longer to go under contract now as compared to a year ago. :-) But... this was a change from a median of five days to a median of seven days... and seven days is still mighty speedy. I should also note that this slight (two day) slow down is not much consolation to would-be home buyers who are frustrated by how quickly the market is moving right now. Pausing for a moment, as you may or may not know, I compile a bunch of data that is not highlighted in this monthly market narrative. You can find lots of other data tables and graphs over here. Pulling from the variety of other charts and graphs that I generate each month, let's take a peek at one subset of our overall market... home sales within the City of Harrisonburg.  Home sales actually declined *even more* in Harrisonburg than in the market as a whole. The entire market (City + County) has seen a 19% decline in home sales in the first four months of the year... but the City alone has seen a 25% decline. If you're hoping to buy a home in the City of Harrisonburg, it's a tough time to do so based on very limited inventory of homes offered for sale. Now, moving past these charts, to some graphs, for the visual learners amongst us...  Follow the red line on the graph above to see each month of 2023 home sales in Harrisonburg and Rockingham County and you'll find that it is lower than each month on the blue line, which represents home sales last year. March 2023 came close to March 2022 (101 vs. 113) but the gap widened again in April (123 vs. 149) and I am expecting we'll continue to see slower home sales (fewer home sales) for most or all of 2023. I'll talk more about mortgage interest rates further down in this report, but it's worth noting that higher mortgage interest rates seem to be limiting the number of home sales that we're seeing right now -- but it might be stopping just as many sellers from selling as it is stopping buyers from buying. Many homeowners aren't all that interested in selling their homes with mortgages in place with a three-point-something interest rate, to then be replaced by a new mortgage at a six-point-something interest rate. I can't blame them. This is only one of the factors limiting the number of homes that are selling, but I don't think we should overlook its impact. So long as mortgage interest rates stay high, we are likely to continue to see a lower number of home sales this year as compared to last year. Moving on to the opposing trends of price and pace of home sales...  Many assumed that if home sales started to decline (they definitely have) that home prices would be sure to follow. Not so. It seems that the combination of continued strong levels of buyer demand, paired with a smaller number of sellers willing to sell, has resulted in fewer home sales, but higher prices. Over the past year we have seen 1,480 home sales in Harrisonburg and Rockingham County. Back the clock up a year and we were seeing 1,687 home sales a year. That's a rather significant change in the pace of home sales activity in our local market. Over the past year the median sales price has been $306,160 in Harrisonburg and Rockingham County. A year ago, the median sales price was only $279,900. This is, again, a rather significant change, though in the opposite direction (up) that we're seeing when it comes to the number of homes selling (down). Looking at the change in median sales prices a bit differently, here's a startling change over a relatively short timeframe...  If you bought a median priced home four years ago, that home may very well be worth $100,000 more today!?! Now, before you get too excited about this newly discovered six figure pile of equity in your home, keep in mind that these numbers ($223K in 2019 to $325K in 2023) are simply showing overall market-wide trends. Some homes certainly have appreciated by $100K over the past four years -- but not all homes. That said, almost universally, homeowners have been shocked to see how much their home value has increased over the past four years! Now, let's try to guess at where things might go from here over the next few months...  This first graph is showing the number of contracts being signed per month, as compared to previous graphs that showed the number of home sales taking place each month. Over the past two months we have seen 242 contracts signed for buyers to buy (and sellers to sell) in Harrisonburg and Rockingham County. This is quite a decline compared to last year when we saw 337 contracts signed during the same timeframe. Bottom line... this spring (red line) has just not been as active of a "spring market" as last year (blue line)... and it also hasn't kept pace with recent historical trends (grey line). These lower contract numbers have lead to fewer properties being under contract and waiting to get to closing...  One year ago, there were 416 properties under contract just waiting to get to closing. Now, that "pending sales" figure is only at 275. This is the clearest predictor we can get as to the slower months of home sales that seem to be headed our way in May and June. With such a significant decline in contracts signed, and with a much lower number of properties being under contract, are we seeing ever higher inventory levels of homes available for sale?  Mostly, no. Over the past four years (2019-2022) the average number of homes for sale at this time of year (early May) has been 183 homes. Today, that number is 129 homes for sale. So, despite fewer sales and fewer contracts, we are still seeing inventory levels that are well below where inventory levels have been over the past few years. That said, for the first time this month we are seeing the inventory level of homes for sale (129) sneaking past (just barely) the number of homes for sale (127) a year ago. Is this significantly? Give it another month or so to see how things shake out. Keep in mind that to continue this trend (more homes for sale in 2023 than in 2022) we'd have to see inventory levels climb above 152 homes for sale over the next month. Stay tuned. Earlier I mentioned that homes are taking an extra day or two to go under contract right now, as compared to a year ago...  Indeed, after about a year of the median "days on market" statistic hovering right at five days... we have now seen the pace at which homes go under contract slowing, slightly, over the past five months. If I had to hypothesize as to why this number has risen (barely) I would guess it is related to higher mortgage interest rates. I am seeing three things happen when new listings hit the market right now... [1] Slightly fewer showings than we would have seen a year ago. [2] Fewer offers than we would have seen a year ago. [3] Many buyers needing to take a day or two to run numbers with their mortgage lender before making a decision about making an offer. The speed at which homes are going under contract certainly varies quite a bit based on the price range, location and property type -- but as shown above -- it is taking an extra two days (ish) for homes to go under contract right now. This is slightly slower than in 2022, but drastically faster than just about anytime prior to 2021. Finally, mortgage interest rates, which have been mentioned (and blamed) throughout this report...  After multiple years of mortgage interest rates below 4%, we saw them climb quickly through the 5% range (within six months!) and they have stayed above 6% since that time. We are now entering the ninth month of most buyers likely buying homes with mortgage interest rates above 6%. These higher mortgage interest rates, combined with higher sales prices, are significantly increasing the monthly housing cost for any would-be home buyer considering a purchase in 2023. Will mortgage interest rates edge back down below 6%? I think there's a chance they will later in 2023, but it is certainly not... certain. ;-) So... given all of this data, given all of these trends, where does this leave us? Home buyers should still be prepared to go see new listings quickly when they hit the market, and must have their lender on speed dial to confirm a potential mortgage payment given ever changing mortgage interest rates. Depending on the popularity of the home you will be buying, we may very well still be competing with multiple other offers and considering which contingencies you might be willing to omit from your offer. You'll be buying in a challenging market for buyers -- with limited inventory and increasing prices. Buying a home in 2023 is definitely still possible, but it will require patience and perseverance. Home sellers are still in good (great) shape with lots of buyer demand in many or most price ranges... but home sellers should *not* assume that they will definitely have multiple offers, over asking price, with limited contingencies. That might be the situation you find yourself in (hooray!) but if you only have one offer, at the asking price, with some "normal" contingencies - I'll encourage you to still be excited. Pricing your home appropriately, preparing it thoroughly and marketing it professionally are just as important as ever in 2023. That's all for today, friends. I hope you now consider yourself a bit more informed about our local housing market, and a bit hungrier for a delicious meal at The Little Grill. ;-) The next month or so is a busy time for many of us with school years ending, summer beginning, and many other changes. Even as the days inevitably seem to start moving by more quickly than ever, I hope you are able find the time to slow down and meaningfully connect with the people who are important in your life. Send a friend, family member, neighbor or colleague a quick text to check in - or give them a call just to say hello. Make the time to make those connections, and I'm confident you will be glad that you did so. As always, please reach out anytime if I can be of help to you -- with real estate or otherwise. You can reach me most easily at 540-578-0102 (call/text) or by email here. | |
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Home Prices Still On The Rise Despite Fewer Home Sales In 2023 |
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 Happy Thursday afternoon, friends! The spring real estate market is upon us -- though it looks and feels a bit different than it did over the past few years. Read on for stories of fewer home sales, rising prices and stubbornly low inventory levels. Speaking of spring... if you're looking for a home with landscaping that really pops each March, check out this beautiful, four bedroom, brick home over on Meadowlark Drive that came on the market earlier this week...  On a personal note, can you spot any proud parents of a soon-to-be high school graduate in the photo below? :-) Wow, the past 18-ish years have flown by quickly. Luke will be graduating in early June and Shaena and I couldn't be more proud of this guy!  << Insert Here: Quick transition to some other topic so I can stop thinking about how old I must be if my son is about to be a high school graduate!?! >> OK, then... Each month I offer a giveaway, of sorts, for readers of this market report, highlighting some of my favorite places, things or events in Harrisonburg. Recent highlights have included Taste of India, A Bowl of Good and a Steel Wheels concert. This month... I'm giving away a $50 gift card to one of my favorite lunch (or dinner) spots downtown... Cuban Burger! I almost always order the Cuban Chop Chop with Chicken, but everything on their menu seems likely to be delicious! Click here to enter for a chance to win the $50 gift card! And now... let's move on along to the most recent data on our local real estate market. First, let's see what "fewer home sales" looks like right now...  A few observations related to the chart above... [1] While the number of home sales taking place this March was 11% lower than a year ago -- that's not quite as much of a drop as we see when we look at the past three months (-21%) or the past six months (-25%). So, maybe things are picking back up -- a bit -- here in March? Maybe? [2] There have been 1,501 home sales over the past year in Harrisonburg and Rockingham County which is a 9% drop from the previous 12 months when there were 1,658 home sales. This drop of 157 home sales for the year seems almost certainly to be a one-sided supply side issue -- not enough sellers selling. You'll note later on in this report that inventory levels haven't risen by 157 homes (due to buyers not wanting to buy) so the constraint on the number of home sales is almost certainly directly tied to how many sellers want to or are willing to sell. But despite fewer homes selling, home prices keep on rising...  Yes, we could pick on the one red number on the chart above -- showing a 1% decline in the median sales price between March 2022 and March 2023 -- but the small sample size (of one month of data) means that this is not necessarily a meaningful indicator of an actual downward trend. This is made even more evident by the 10% - 11% increases in the median sales price when looking at three, six and 12 months of data in the chart above. Perhaps more importantly, yes, we're still seeing double digit annual increases in the median sales price in Harrisonburg and Rockingham County. One year ago the median sales price was $276,200. It has risen 10% over the past year, cleared $300K, and is now at $304,900. Just to refresh one's memory on what "median" signifies -- it means that half of the homes that are selling are priced at or above $304,900 and half are at or below $304,900. Prices just keep on rising! Buyers who are frustrated that they can't wait even just a day to make a decision about an offer on a hot new listing might be encouraged by these next stats...  There has been an ever so slight (ok, technically 20%) increase in the median days on market stat over the past year. A year ago homes were going under contract after a median of five days... and now that has risen to... six days. Yes, I know, that one day might not seem that significant -- but if we look at just the past three months we'll note that the median days on market has jumped up to eight days! So, some new listings are lasting an extra day (or three) on the market before they're going under contract. So, the market is slowing down... barely. It will be interesting to see if this metric continues to rise, falls again, or stays at about the same level as we move into and through the spring market. Now, as to what is actually selling, there are some interesting trends to be noted between existing homes and new homes. I have highlighted the numbers below that I think deserve attention. Here's the existing home sales data...  ...and here's the new home sales data...  So, while the overall market has seen a 9% decline in home sales over the past year... [1] There has been a 15% decline in existing home sales. [2] There has been a 12% increase in new home sales. If you want to buy a home that is of the property type, size, price and location of one of our area's new home communities -- these trends work in your favor. If you want to buy an existing home (not a new home) in an established neighborhood -- these trends aren't all that exciting. There haven't been 9% fewer homes to buy over the past year -- there have been 15% fewer homes to buy!?! Now, circling back to the monthly data...  March was... not as slow as January and February!?! ;-) We saw significantly fewer home sales this past January and February as compared to the same month last year. January sales were 27% below the prior year. February sales were 24% below the prior year. March sales were only... 10% below the prior year! So, I suppose that's a bit encouraging... we're starting to see a slight increase in monthly home sales... though yes, we're definitely still well behind 2022. And for anyone who likes a good participation trophy...  ... First Quarter Home Sales In 2023 came in at... 4th Place... oh, out of five contestants! Indeed, the 249 home sales we have seen in the first quarter of 2023 was fewer than we saw in 2020, 2021 and 2022. We are slightly ahead of the first quarter of 2019, though, so there's that... Looking at the big picture of our market over the past few years, in visual form...  There are two main things to note in the graph above... [1] Home prices have been increasing at a much faster pace than is historically normal. We're in the third year in a row of double digit (per year) increases in the median sales price in our area. [2] After a two year boom in the number of homes selling (due to Covid and super low interest rates) we are now almost a year into a steady decline in annual home sales (from 1,727 per year to 1,502 per year) mostly related to rising mortgage interest rates. Now, let's look ahead by looking behind...  Home sales this month are most directly influenced by contracts last month. So, how did things go in the March market? Lots of sellers listing their homes for sale? Lots of buyers contracting to buy homes? Well... not really. [1] Contract activity declined 26% in February 2023 compared to February 2022. [2] Contract activity declined 37% in March 2023 compared to March 2023. So, yeah, the spring market (sooo many listings, sooo many contracts) doesn't quite seem to be showing up this year like it did last year. Maybe the buyers (and much more importantly, the sellers) will start showing up in April? Unsurprisingly, several slow months of signed contracts brings on a lower than ever number of pending sales in Harrisonburg and Rockingham County...  There are 256 homes currently under contract in Harrisonburg and Rockingham County. One year ago there were 398 (!!!) homes under contract. Over the past four years we've seen an average of 293 homes under contract at this time of year. So, yeah, based on the low number of pending sales right now, we are likely to see at least another month or two (or more!?) of slow(er) months of home sales. Why have there been so few homes going under contract? Are the listings pouring onto the market and buyers are just deciding not to buy? If that were the case, we'd see inventory levels starting to climb, so, let's take a look...  In fact, no, inventory levels are not rising. They are staying stubbornly low. There are 116 homes on the market right now (for sale, not under contract) in Harrisonburg and Rockingham County. This is compared to 135 being on the market a year ago at this time... and an average of 185 being on the market over the past four years at this time of year. So, buyers seem to not be buying because... there's nothing to buy. Or, at least, there's less to buy. Plenty of homes (-9% year over year) are still selling, but this decline in sales activity seems to still be entirely related to sellers not selling, and not related to buyers not buying. And yet, despite inventory levels staying super low, we are actually seeing a slightly change in how quickly homes are going under contract...  Over the past six months the "median days on market" has been eight days in Harrisonburg and Rockingham County. That means that half of the homes that have sold were under contract within eight days of hitting the market and half were under contract in eight or greater days. The change here is a slight increase from five days up to eight days over the past few months. We were seeing a median days on market of six days or less for almost two straight years (April 2021 - January 2023) but that is starting to drift upwards a bit. So, (some) listings are lasting an extra day or two (or three) on the market right now -- though these days on the market levels are still well below long term historical norms. Maybe it's taking buyers an extra day or two to make an offer because they have to keep checking in with their lender because rates are constantly jumping up and down from week to week and month to month?  Rates dropped in March, after rising in February, after dropping in January -- you get the picture. We're currently seeing mortgage interest rates that are definitely and absolutely not the best we've seen in the past year -- but that also are a good bit below the worst that we've seen in the past year. Where mortgage interest rates go from here is anyone's guess -- but I'm thinking they will continue to fluctuate on a weekly and monthly basis for much of 2023. OK! That was a lot of data, and charts and graphs, oh my! If you made it all the way to the end, thanks for reading and I hope you are feeling more informed than ever as to the latest trends in our local housing market. If you're thinking about selling your home this spring or summer -- all of the would-be buyers of Harrisonburg and Rockingham County would REALLY like you to decide to do so. ;-) Let me know if you'd like to set up a time to walk through your home together to talk about preparations, pricing, timing, etc. If you're hoping to buy a home this spring or summer -- I'd be delighted to be in your corner helping you navigate this rapidly moving, competitive market. Let's chat about what you're hoping to buy, get you connected to a local lender to become pre-approved, and then let's try not to develop a twitch as we keep checking for new listings again, again, again and again. That's all for today, folks. I hope the balance of your month of April goes well and that you aren't struggling too much with the seasonal allergies that seem to affect so many of us at this time of year. I think the beauty of the blooming flowers and trees generally outweigh the not-so-exciting allergy symptoms that I'm currently working through. Be in touch anytime if I can be of help to you -- with real estate or otherwise. You can reach me most easily at 540-578-0102 (call/text) or by email here. P.S. If you want even more charts and graphs than I have included above, you'll find them here. | |
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Fewer Home Sellers, Thus Fewer Home Buyers, But Ever Higher Sales Prices In Early 2023 |
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 Happy Tuesday morning, friends! Indeed, February flew by quickly -- such a short month ;-) -- and now we're headed into what is typically a very busy spring in our local real estate market. Read on for an overview of everything happening right now in our local market... but first... a local highlight and an opportunity for you to be a winner! :-)  Each month I offer a giveaway, of sorts, for readers of this market report, highlighting some of my favorite places, things or events in Harrisonburg. Recent highlights have included A Bowl of Good, a Steel Wheels concert, and Grilled Cheese Mania. This month... I'm giving away a $50 gift card to another of my favorite local restaurants, Taste of India. My go to order is the Chicken Tikka Masala, but you will find an extensive menu of unique and flavorful dishes at Taste of India, located on University Blvd. Click here to enter for a chance to win the $50 gift card! And now, let's move on along to the most recent data on our local real estate market...  As per my headline, there are definitely fewer buyers buying homes right now, but I am fairly confident that it is a result of fewer sellers selling homes right now - as inventory levels are not rising. As shown above... [1] There were 28% fewer home sales this February (71) compared to last February (98) in Harrisonburg and Rockingham County. [2] Looking at the past three months (Dec, Jan, Feb) there was an even larger drop off in home sales... with a 34% decline from last year (346 home sales) to this year (230 home sales). [3] If we look back at an entire year of sales we will only find an 11% decline in home sales (from 1,687 sales to 1,509 sales) indicating that the majority of the slow down is in the more recent months. [4] Despite these decreases in the number of homes that are selling... home prices keep rising! The median sales price during the past three months (when the number of sales was 34% lower than last year) was $309,205... which is 8% higher than the median sales price one year ago of $285,750. [5] Looking back at the entire year again, the median sales price over the past 12 months was $304,485 which is 11% higher than in the 12 months before that when it was $274,000. [6] The number of days it takes for a home to go under contract is -- maybe, possibly -- on the rise. This (most recent) December through February homes went under contract with a median "days on market" of nine days... which is (50%) higher than the median of six days a year ago during those same three months. So, fewer homes are selling, slightly slower, but at ever higher prices!?! Now, let's look at the number of home sales January and February compared to past norms for these months...  The red line above is the current year -- 2023 -- and you can see that the number of home sales in January and February is quite a bit lower than... [1] The number of home sales last January and February -- shown in blue. [2] The average number of home sales in each month over the past four years -- shown in grey. So, there have been fewer home sales this January and February than in other recent years. Thus, what comes next? I expect we will continue to see lower number of home sales per month as we move through March, April and May 2023 as compared to last year and as compared to the average of the past four years. Let's put the declining number of home sales in a bit of a historical context...  The annual pace of home sales peaked at 1,374 home sales back in March 2020 after declines in monthly home sales in early 2020 due to the start of the COVID-19 pandemic. The annual pace of home sales slowed for a few months... but bottomed out at 1,302 home sales per year just three months later. Then, the annual pace of home sales started climbing, and climbing, and climbing. Two years ago, homes were selling at an annual pace of 1,520 home sales per year in Harrisonburg and Rockingham County. Then, annual home sales accelerated all the way up to 1,727 home sales per year in in June 2022 -- before they started declining again. Now, as we close out February 2023, the annual pace of home sales (1,509) has returned to the same approximate place that we were in two years ago. I expect that this annual pace of home sales will continue to decline over the next six months. But, yes, sales prices keep on rising, as shown with a green line above. The annualized median sales price seems intent on continuing to rise, month after month. It has now risen from $222,150 to $304,485 in just three years! But, perhaps the increase in the median sales price is... slowing?  If you stare intently at the green line above, you'll see the slope changing a bit, which perhaps is an indicator that the rate of price increases is slowing. Maybe. 2020 increase in median sales price = 9.8% 2021 increase in median sales price = 10.2% 2022 increase in median sales price = 11.1% 2023 increase in median sales price = 6% Don't read this too quickly... home prices are not declining... but the pace at which home prices are increasing... might be slowing. Or, then again, maybe not. We are only working with two months of data for 2023. Stay tuned over the next few months to see how the 2023 median sales price adjusts as we move further through the year. Now, to predict where home sales might go next, let's look at contract activity...  After a decent month of contract activity in January (116 this year compared to 110 last year) we saw a marked decline in contract activity in February. The 93 contracts that were signed in February 2023 was significantly lower than the 125 contracts signed last February, and also well below the four year average of 107 contracts in a typical February. Thus, it is unlikely that we'll start to see an increase in home sales in March, given the decline in contracts signed in February. Furthermore, the number of pending sales (homes under contract) also declined in February...  There are currently 239 homes under contract (pending) in Harrisonburg and Rockingham County which is quite a bit lower than a year ago (blue line) when there were 318 homes under contract... and is also lower than the four year average of 241 homes typically being under contract at this time of year. All of these different metrics are all showing the ways in which our market is cooling off -- as it pertains to the *number* of homes that are selling -- not as it relates to the value of homes in our area. Circling back to my headline this month... I think the cause of fewer home sales is mainly due to fewer sellers selling, which is resulting in fewer buyers buying, because...  Inventory levels are lower than ever. There are currently 119 homes for sale (not under contract) in Harrisonburg and Rockingham County which is even lower than the inventory levels a year ago at this time of the year (131 for sale) and significantly lower than the four year average of 173 homes for sale at this time of year. If fewer buyers were buying... and just as many sellers wanted to sell... we would start to see inventory levels increasing. Fewer home sales, combined with ever lower home sales, is a very good indicator that the decline in the number of home sales is a result of fewer sellers being willing to sell -- more so than a result of fewer buyers wanting to buy. All that said, there is one trend in our local market that runs at least a bit counter to all of the other trends...  The median "days on market" figure has started to trend upwards over the past few months. For over a year, the median number of days it took for a home to go under contract was only five days. That has now drifted slightly upward to seven days. This means something... but maybe not much. Homes are going under contract *slightly* more slowly now than they were over the past few years. It is now taking them (as per the median calculation) about seven days to go under contract, instead of only five days. I'll continue to monitor this over the coming months to see if this trend continues when we get into the thick of the spring market. And one last graph... that looks like it had one too many cups of coffee this morning with all of its jittering all over the place...  Mortgage interest rates have been all over the place over the past year. A year ago the average 30 year mortgage interest rate was 4%, and now it's 6.5%. But during the past year we have seen multiple months of increases and some decreases. It's hard to say what will happen next with mortgage interest rates. Perhaps the only reasonable prediction is that rates will go up and go down in the next six months. ;-) So... if you're looking to buy or sell a house in Harrisonburg or Rockingham County this spring, what should you conclude based on all of the data above? If you will be selling... [1] The market is still very favorable for home sellers. [2] Home prices have never been higher. [3] Half (or more) of homes that well are still going under contract in a week or less. [4] Diligent preparations, proper pricing and thorough marketing will likely still result in a speedy and favorable home sale for most sellers of most homes in most price ranges and locations. If you will be buying... [1] The market is still very competitive in most price ranges and for most property types. [2] It is still important to be pre-approved and to go see homes within the first day or two that they are on the market. [3] There will likely be fewer options for buying this year than last as fewer home sellers are seeming willing to sell. There's plenty more that we can discuss about your particular scenario if you are thinking of selling or buying, so feel free to reach out (call or text me at 540-578-0102 or email me here) if you'd like to chat or find a time to meet. If you're not quite ready to sell or buy yet, but have questions about the market or the process, I'd also be delighted to hear from you. Touch base anytime. That's all for today, folks. I hope that March treats you well and that you enjoy the suspense of not knowing whether we'll get that surprise March snowfall that we sometimes see in the Valley. ;-) Regardless of whether we get some snow or not, I hope you enjoy the changing of the seasons as we move through March. It is certainly a beautiful time in the Shenandoah Valley! P.S. If you want even more charts and graphs than I have included above, you'll find them here. | |
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Home Sales Still Slowing, Home Prices Still Rising, In Harrisonburg, Rockingham County |
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 Happy Friday morning, friends! We're about halfway through February, so it's time to take a moment to look back and see what we can learn about our local real estate market based on January's data. Thanks for joining me as I break things down so that we can all better understand the data and trends.  I hope you have had a fun start to your year. Some fun on our end included a quick extended weekend trip to the beach for Shaena, Luke, Emily and I a few weeks ago. I was reminded anew of the value of disconnecting (at least partially) from work for a bit, and spending time with loved ones. Whether it is the beach, the mountains, a long walk on an unusually warm February day, or relaxing on your back porch, I hope you find some time to disconnect from the busyness of life and spend time with those who you love in the coming days or weeks.  Before I get into the market data, I also want to encourage you to check out my featured listing of the month, a newly renovated in downtown Harrisonburg pictured above and located at 142 Broad Street. Find out all about it at 142BroadStreet.com. Finally, a fun giveaway, just for you...  Each month I offer a giveaway, of sorts, for readers of this market report, highlighting some of my favorite places, things or events in Harrisonburg. Recent highlights have included a Steel Wheels concert, Grilled Cheese Mania, and Walkabout Outfitter. This month... I'm giving away a $50 gift card to one of my favorite local restaurants, A Bowl of Good. If you haven't checked out A Bowl of Good yourself, make plans to do so - they have a delicious menu of comfort foods and many items with an international flair. Click here to enter for a chance to win the $50 gift card! And now, let's move on along to the most recent data on our local real estate market...  Looking first at the overall home sales data above, I'm noting a few things of interest... [1] Home sales are still slowing. We saw a 28% decline in home sales this January, with only 75 home sales as compared to 104 last January. When we stretch the window out a bit further to three months (November through January) we see an even larger, 35% decline in the number of homes selling in Harrisonburg and Rockingham County. [2] When we look at a full year of data (February through January) we see a smaller, 8%, decline in the number of homes selling in our market, though this may become a larger decline as we continue through the year. [3] Despite fewer homes selling, home prices keep on rising! The median sales price has risen 11% over the past year, and even if you narrow the focus down to the past three months (when home sales were slower) the median sales price was 10% higher than during the same three months one year prior. So, home sales are definitely slowing, but home prices are definitely still rising. Now let's start to slide into some graphs to further understand these most recent trends...  The 75 home sales seen in January 2023 (the red "75" above) marked a significant decline from last year's 104 January home sales. If we look back a bit further, and average out the number of January home sales between 2019 and 2022 we find an average of 94 home sales in January... and we also fell short of that bar in January 2023. Where do we go from here? Interestingly, we usually see a decline in home sales between January and February... so will we see fewer than 75 home sales in February 2023? Or will we see a reversal of that trend and see more than 75 home sales this month? Stay tuned! Here's a visual reminder of how much things have changed over the past two years...  A little less than two years ago, the median sales price in Harrisonburg and Rockingham County was only $250,000. Now, less than two years later, it has just surpassed $300,000! But yet, despite the steady increases in the price of homes in our area, we have seen significant ups and downs relative to how many homes are selling. As per the blue line above, we flew past 1,500 home sales a year about two years ago -- saw that annual pace of home sales climb all the way up to 1,727 home sales per year -- before declining even more rapidly to the current annual pace of 1,535 home sales per year. What does the rest of 2023 have in store for us? I'm predicting that we'll see continued (slower) increases in the median sales price -- and continued (slower) decreases in the number of homes selling in Harrisonburg and Rockingham County. One interesting dynamic to watch in 2023 seems to be the mix between new home sales and existing home sales...  For each of the past four years we have seen an increase in the share of new home sales in Harrisonburg and Rockingham County. Back in 2018, only 11% of the homes that sold were new homes -- but last year (2022) that rose all the way up to 26% of home sales being new homes. With only one month of data thus far it is probably too early to draw any significant conclusions yet about 2023, but in January 33% of the homes that sold were new homes. To get some glimpse of what the next few months might look like for how many homes are selling, we can take a peek at contract activity...  And... surprise! :-) Despite lower than expected home sales activity in January... we saw higher than expected contract activity! Over the past four years (2019-2022) we have seen an average of 106 contracts per month signed in January. Last January (2022) we saw 110 contracts signed. This January that monthly contract figure rose to 116, making it a busier January (for contract signing) than we might have otherwise expected. It's possible that declines in mortgage interest rates (referenced again later on) helped spur on some of that January contract activity. Another interesting trend to watch is the number of pending sales at any given time...  A "pending sale" is a house that is under contract, waiting to get to closing to become a home sale. One year ago there were 271 pending sales in Harrisonburg and Rockingham County. Today there are only 234 pending sales -- which is lower than where we were last year -- but is higher than the average January pending sales figure over the past four years. So, to roughly extrapolate from the past two data sets, home sales in 2023 seem likely to be lower than in 2022, but higher than the average of the past few years. But to be clear, in order for homes to sell, they need to be for sale...  Some folks might observe a decline in sales activity and assume that inventory levels are starting to climb -- with sellers wanting to sell but buyers not wanting to buy. That is not what we are currently observing in the Harrisonburg and Rockingham County real estate market. Fewer sales may very well be equally caused by fewer buyers buying AND fewer sellers selling. There are currently 109 homes on the market for sale (not under contract) which is slightly less than a year ago (115) and much (!) much less than the average over the past four years of 172 homes being listed for sale at this time of year. The big questions for just about every buyer is whether we will start to see meaningful increases in inventory levels as we move into the spring months. Buyers should be encouraged to know that we typically see lots of new listings hitting the market in March, April and May -- but if there are still lots of buyers waiting in the wings for those new listings we may not see inventory levels rise all that much. Lots of new listings plus lots of new contracts will still equate to rather low inventory levels. I mentioned earlier that a slightly higher than expected number of contracts in January might have been related to mortgage interest rates. Take a look at why I'm guessing that might have been the case...  It has been a wild and crazy year with mortgage interest rates. Just a year ago, interest rates were below 4%, then climbed all the way up above 7% and have now decline back towards 6%. Those highest months of interest rates in September, October, November and December almost certainly contributed to the much slower (-35%) months of home sales in November, December and January. The decline over the past three months may have contributed to the increase in contract activity in January 2023. Where will mortgage interest rates be headed in 2023? Probably not above 7%. Probably not below 5%. Probably not anywhere for more than a few weeks in a row. Does that help? Probably not. ;-) Given all of the market data above, when I look ahead to the remainder of 2023, I believe the following will likely be true: [1] We will see fewer home sales than in 2022. [2] Home prices will likely be higher than in 2022. [3] Inventory levels will likely remain low most or all year. [4] The decline in the number of existing home sales will likely be larger than the decline in the total number of existing and new home sales. [5] Mortgage interest rates will likely close out the year lower than where they started the year. As you look ahead to 2023... do you hope to buy a home... or do you plan to sell your current home? If you are thinking about heading down either path, let's find a time to connect soon to talk about your hopes and plans and dreams and how they will be best accomplished amidst the market trends outlined above. Feel free to reach out to start that conversation by emailing me or texting or calling me at 540-578-0102. If you don't plan to buy or sell a home this year, but want to learn more about our local housing market... [1] You can review even more charts and graphs with further analysis of our local housing market here. [2] I publish a variety of articles about the market, new housing developments, and more over on my blog several times a week here. And that's a wrap, folks! I hope you have a wonderful Friday and weekend ahead. Please be in touch if I can be of any help to you -- with real estate or otherwise! | |
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Home Sales Slowed Considerably In Late 2022 But Home Prices Kept On Rising |
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 Happy Thursday afternoon, friends! And... Happy New Year! It's hard to believe the New Year is upon us. Actually.. we're already more than halfway through January at this point. What a whirlwind. I hope you had a delightful finish to 2022. I capped off the year with a slightly warmer than anticipated New Years Eve Glow Run, another fantastic community running event put on by VA Momentum. Below is a photo just prior to the start of the race... after which it became progressively darker and our glow bracelets and necklaces were lighting up the hilly course at Heritage Oaks Golf Course...  Two other items of business before we get into the real estate data... First, take a few minutes to check out my featured home of the month... 3078 Preston Lake Blvd...  This beautiful cottage home with a finished basement is located in the Preston Lake community with a clubhouse, pool, walking paths and playground, all just minutes from Sentara RMH, JMU, Merck and Coors! You can check out the house here or walk through it here. Finally, each month I offer a giveaway, of sorts, for readers of this market report, highlighting some of my favorite places, things or events in Harrisonburg. Recent highlights have included Grilled Cheese Mania, Walkabout Outfitter and Bella Gelato. And this month...  This month it's back to music... I'm giving away a pair of tickets to see The Steel Wheels and Sierra Hull at JMU's Wilson Hall on February 11th! Read all about the event, and the artists, here - and if you're interested in a pair of free tickets, enter to win them here. :-) Now, onward to the latest data on our local housing market! First, how many homes have been selling lately...  There's a lot to note in the graph above, and some of these numbers informed the headline for this article... [1] There were only 83 home sales in December 2022... compared to 144 in December 2021. That's a rather surprising 42% decline in home sales for the month of December. [2] When we pile in a few more months (October and November) we see that there were 28% fewer home sales in the fourth quarter of 2022 than in the fourth quarter of 2021. [3] Finally, when looking at the full year of 2022... there were 7% fewer home sales than in 2021. After several years of rapidly increasing numbers of home sales, it seems that higher mortgage interest rates finally slowed down buyer activity... though not very significantly until the very end of 2022. But yet, despite slowing sales, home prices did what!?  Home prices... kept on rising! [1] Starting from the bottom of the chart (above) this time we see that there was an 11% increase in the median sales price when comparing all of 2021 to all of 2022. That's a rather significant increase in the median sales price and it follows on after two preceding years of 10% increases in the median sales price. Needless to say, homes have become quite a bit more expensive over the past several years. [2] The median sales price in December 2022 was 3% higher than in December 2021. This could be an indication that we'll start to see a slow down in the rate at which home prices are increasing... or, as is more likely, it may be lower than the longer term trend (+11%) because it is a smaller data set of only the homes that sold in a single month. So... was it just December when we were seeing slowing home sales?  The decline in home sales was certainly significant in December... but if you track that red line (2022) back to November and compare it to the blue line (2021) you'll see that the slow down started before December rolled around. The graph above (and many of the graphs in this month's report) are in a slightly different format than in past months. I spent some time going through to revamp my monthly market analysis process to hopefully make the resulting graphs and analysis even more helpful and pertinent for all of us as we see how 2023 unfolds. As such, the graph above is showing the current (just finished) year of 2022 with a red line -- and the previous year of 2021 with a blue line -- and the grey line is showing a longer term trend calculated by averaging 2018 through 2021. Next up, let's look at monthly cumulative home sales...  The graph above provides another illustration of the fact that 2022 was keeping pace with 2021 all the way through the end of October... and then November and December fell short. This resulted in the second strongest recent year of home sales in Harrisonburg and Rockingham County. Indeed... there were 7% fewer home sales in 2022 than in 2021... but there were well more than in 2019 and 2020! Next, let's look at general long term trends over the past few years...  The top green line is showing the median sales price of all homes selling in Harrisonburg and Rockingham County... measured monthly by looking at the median of the previous 12 months. In tiny letters underneath someone (ok, me) wrote "can't stop, won't stop, can't stop, won't stop" -- but, I should definitely, definitely clarify that -- yes -- the median sales price could stop increasing. It didn't do so anytime in the past three (plus) years as illustrated above, but as they say, past performance is not a guarantee of future results. The bottom blue line (above) is a monthly check-in on the annual pace of home sales. During Covid the annual rate of home sales in our area shot up from around 1,300 sales per year all the way up to 1,700 sales per year... but as mortgage interest rates rose during 2022, eventually the annual pace of home sales started to decline again. Where did we finish out 2022, you might ask, within the context of the past few years?  We ended up seeing 7% fewer home sales in 2022 than in 2021 -- though there were 5% more home sales in 2022 than in 2020. So, again, this past year was the second best year of home sales in recent times. You can see again here (in the graph above) that the median sales price has been aggressively climbing for multiple years. Five years ago (in 2017) the median sales price was $198,250... and it closed out 2022 just shy of $300K with a median of $299,912. This marks an 11% increase in the median sales price in 2022 after a 10% increase in both 2020 and 2021. Wow! This next one might surprise you. It surprised me, at least for a moment...  The 7% decline in home sales in 2021 was actually a much larger decline if we focus in on resale homes. There was actually a 14% decline in resale homes during 2022! We only ended up seeing a 7% decline in overall market activity because of the sale of new homes. We saw a 24% increase in new home sales in 2022. As a result (and as circled above) the balance between new home sales and existing home sales continues to shift with over a quarter of all home sales (26%) being new homes in 2022. I think there is a decent chance this ratio will be similar in 2023, or that we might see even more new home sales as plenty of homeowners will sit tight and enjoy their super low mortgage interest rate rather than selling their home. What comes next, I wonder...  The graph above tracks how many contracts are signed (by buyers and sellers) each month... and here you can see that the slow down actually started halfway through 2022. Each month of contract activity in the second half of 2022 (red line above) was lower than the corresponding month in the second half of 2021 (blue line above) though the gap became much more pronounced in the last three months of the year. Interestingly, if we look at the typical November to December trend in contract activity per the grey line (four year average) we see that it is typical to see about 74 contracts in December... and December 2022 was only slightly below that with 67 contracts. Here's a new graph that provides a bit more insight into how many contracts are out there waiting to get to closing...  The graph above shows the number of properties that are pending (under contract) at the end of any given month. If you look at the second half of 2021 (blue line) you can see there were anywhere from 260 to 321 contracts pending from month to month. As we moved our way through 2022 the number of pending sales sank lower and lower... below that previous low of 260 all the way down to 189 pending sales at the end of the year. This graph (and the prior graph) would indicate that we will likely see a relatively slow month of closed sales in January and February. But again, looking a bit further back for context... the 189 pending sales at the end of 2022 is... just a smidgen below where we might have otherwise expected to be in a month of December. The anomaly here, it would seem, was the end of 2021 when things were still bonkers in the local real estate market due to super low mortgage interest rates among other factors. And how about those inventory levels -- they must be moving up given slower sales, right?  Well... maybe not. We closed out the year with 127 homes on the market in Harrisonburg and Rockingham County. Yes... this is a higher inventory level than one year prior when there were only 119 homes on the market... but it's not that much higher. Furthermore, even though the inventory levels in 2022 (red line above) were higher than in 2021 (blue line) they were still well below (!!!) the average of 2018 through 2021. These are still times over very low inventory... much to any home buyer's dismay. Oh, and how quickly are homes selling now? Slower, probably, right?  Not so much. The graph above shows the median days on market -- how quickly properties go under contract after being listed for sale -- within a six month timeframe. For over a year this metric stayed right at five days... so as to say that half of homes were under contract within five days and half took longer than five days. That has risen to... six days now. Clearly, not a significant shift, but perhaps we will see it shift further as we move forward. Of note, the median days on market two years ago was seven days... but that was after dropping steadily from double digits the summer prior. Interest rates, interest rates, all you talk about is interest rates...  Well, yes, that's true. I have talked a lot about mortgage interest rates this month (and over the past year) because they have been rising, quickly. A year ago (as shown above) the average mortgage interest rate (on a 30 year fixed rate mortgage) was only 3.11%. We closed out 2022 with an average of 6.42%. Thankfully, these rates have continued to decline a bit further in the first few weeks of 2023... but the cost of financing a home purchase is still MUCH higher now than it was a year ago. And yes... these higher mortgage interest rates directly contributed to the slow down in home sales in the second half of 2022. Well folks, that's all for today. I hope the analysis above provides you with a bit more insight into all that has transpired in our local housing market in 2022... and a few thoughts as to where things might be headed in 2023. If you are thinking about selling or buying a home in 2023, I would be happy to assist you with that process. Yes, I spend a good bit of time analyzing our local housing market to educate our local community -- but the majority of my time is spent helping individual home sellers and home buyers. Feel free to reach out to start that conversation by emailing me or texting or calling me at 540-578-0102. I'll provide another update in about a month -- looking back at the first full month of 2023. Until then, I hope you and your family stay healthy and enjoy (???) the constant fluctuations between winter and spring temperatures we seem to be experiencing this year. ;-) Happy New Year! P.S. You can review a few more charts and graphs with further analysis of our local housing market through the close of December 2022 here. | |
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Home Sales Slow In November 2022, But Prices Keep On Rising |
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 Happy Tuesday morning, friends! Winter is upon us. The holidays are upon us. I hope you have been enjoying the variety of Christmas light displays in and around Harrisonburg. Shaena and I, with several other family members, greatly enjoyed visiting the "Winter Wander" light display at the Boar's Head Resort in Charlottesville a few nights ago. Next time maybe we'll have to dine there or stay over as it was quite lovely! Check out the lights at Winter Wander yourself between now and January 7th...  Before we move onto the real estate data we're all waiting for, each month I offer a giveaway, of sorts, for readers of this market report, highlighting some of my favorite places (or things) in Harrisonburg. Recent highlights have included Walkabout Outfitter, Bella Gelato and the JMU Forbes Center. This month, I encourage you to go check out Grilled Cheese Mania on Main Street in Harrisonburg. If you find me at GCM, you'll likely find me enjoying the Triple Lindy with a side of Miss Tess' Tomato Mac. :-) Click here to enter to win a $50 gift certificate to Grilled Cheese Mania! Finally, take a few minutes to check out this month's featured home... a spacious, remodeled farmhouse on an acre in the Turner Ashby district with some excellent outdoor amenities located at 3667 Dry Hollow Road! Now, let's take a look at the latest data in our local real estate market...  Let's drive right into a few of the main metrics of our local housing market outlined above... [1] Home sales slowed considerably this November compared to last November... declining 35% from 138 sales to 90 sales. You'll see a clearer (and more startling) visual of that shortly. [2] This significant decline in the number of home sales in November 2022 resulted in an overall 3.5% decline in 2022 home sales as compared to 2021 home sales when viewing the first 11 months of the year. [3] But yet... the median sales price in our area keeps on rising, up 11.3% from a year ago to $299,900 when looking at the first 11 months of 2022. [4] Furthermore, homes are (as a whole) still selling just as quickly... with a consistent median of five days on the market thus far in 2022, which matches the speed of home sales a year ago. Now, that startling visual of the November 2022 dip in home sales...  Lots to note regarding the graph above... [1] We saw slower (fewer) home sales in each of the four months leading up to November. This was not altogether surprising, as mortgage interest rates have been steadily rising throughout 2022. [2] Home sales really (!!!) slowed down in November 2022... dipping down to 90 home sales as compared to 138 in the same month last year. [3] The 90 home sales this November is not actually that different than the 93 seen back in November 2019. [4] The past two years (2020 and 2021) may very well be anomalies given that they were during the Covid induced overheating of the local real estate market. If we look at the five Novembers prior to 2020 (thus, 2015-2019) we'll find an average of 94 home sales in November. So... home sales dropped significantly in November 2022. That's somewhat surprising, as it finishes off a long, multi-year, run of a super exuberant local housing market. It's also not that surprising, given rising mortgage interest rates, and given what usually happens in November if we're not in Covid times. As we'll see below, the temporary (crazy) boom in home sales brought on by Covid and super low mortgage interest rates may be coming to an end...  Prior to Covid (2020-2021) we had been seeing a relatively consistent 1300-ish home sales per year. Then, the market went crazy during 2020 and 2021 and home sales approached 1500 sales in a year, and then almost reached 1700 sales in a year. That string of two record breaking years in a row... won't continue in 2022. All the way up through September 2022, it was seeming that we'd have yet another record breaking year this year. But 2022 fell slightly behind in October, and even further behind in November. Looking ahead, it seems likely that 2022 will end up being the second strongest year of home sales ever in Harrisonburg and Rockingham County... just behind 2021. Looking at things from a slightly longer term perspective, we can see yet again how the local real estate market is slowing a bit after having peaked in 2021/2022...  A year and a half ago (ish) we were seeing home sales at an annual pace of 1,617 sales per year... back in July 2021... which included sales from August 2020 through July 2021. Now, we're seeing home sales at an annual pace of 1,620 sales per year... which includes sales from December 2021 through November 2022. So, the market has retreated a bit... with fewer sales per year now than we've seen for the past year and a half-ish. This was highly predictable given rather dramatic increases in mortgage interest rates. It is somewhat surprising, however, that the decline in annual sales has been as small as it has been given how much mortgage interest rates have increased. The pace of annual sales peaked at 1,726 sales... and we have only seen a 6% decline from that peak... to 1,620 sales per year. Now, then, given that home sales are slowing, we're almost certainly seeing inventory levels rising, right?  I'll make this point a few more times as we continue through these graphs, but here's your first visual showing that even if the market is starting to transition a bit, it's not doing it very rapidly. Yes, home sales are slowing. The graph above shows how many buyers are buying in a six month timeframe. We have seen a decline over the past year from 833 buyers buying every six months down to 810 buyers buying. So, yes, the pace of buyers committing to buy is certainly slowing. But... we're not seeing as much of an increase in sellers selling (inventory levels) as we might otherwise expect. We've seen an increase over the past year from 115 homes for sale up to 138 homes for sale, but that's still a notable net decline in inventory from two years ago and three years ago. So, is it a slightly less strong seller's market now? Yes. Is it still a strong seller's market now? Yes. Now, looking at contract activity for a moment, to predict where things might be headed from here...  As becomes evident with my handwritten note on the graph above... contract activity this October and November was MUCH slower than last October and November! After a combined total of 297 contracts being signed during that two month period last year... we have seen only 166 contracts signed this October and November, which is a 44% decline! Again, first, not a total surprise. Buyers are a bit less excited to sign contracts to buy homes with interest rates of 6% to 7% (this Oct/Nov) as compared to when interest rates are 2.5% to 3.5% (last Oct/Nov). Second, these lower contract numbers have started to result in lower sales numbers and that is likely to roll into December sales and January sales. Finally, it's important to remember that past two winters (2020, 2021) were a bit abnormal given Covid (lots of buyers wanting to buy a house) and super low interest rates (lots of buyers qualifying to buy a house) and this winter we seem to be returning to what was previously a typical seasonal trend of fewer contracts and sales during winter months. Now, then, back to inventory... certainly it must be rising, given fewer closed sales and fewer contracts being signed, right?  And... nope! Inventory levels rose through much of 2022... but have now been declining for the past four months... as is relatively normal for the fall into winter timeframe. Furthermore, inventory levels are still lower now than they were two years ago. This coming spring will be interesting, depending on how mortgage interest rates look at that time. It's typical to see lower inventory levels in the winter, and that makes the lower contract numbers less consequential. Lots of folks choose to sell in the spring and summer, and if we have lower contract numbers at that time, then we could see inventory levels starting to measurably increase. Driving this point home one more time...  The graph above shows inventory levels by property type. Inventory levels of attached homes (townhomes, duplexes, condos) have stayed relatively consistently between 25 and 40 over the past year and a half. Inventory levels of detached homes were rising between June 2021 and June 2022... but then have declined for the past four months. So, as my notes point out... higher mortgage interest rates did indeed lead to slower sales... but slower sales are not necessarily leading to higher inventory levels. Come spring, we may have new insights as to a potential new trajectory of the market if more sellers want to sell and this lower number of buyers are willing to buy. This next graph has become a bit more complex since I last referenced it...  First, conceptually, the timeframe in which homes are going under contract (days on market) is often an excellent indicator of the tone of the local market. As such, for some time I have been tracking the "median days on market" for homes that are selling in Harrisonburg and Rockingham County. The annual median days on market (blue line above) fell to five days (!) back in July 2021 and has remained at that level ever since. As the market has started to feel like it might be transitioning, or as we have though that maybe the market would have to be transitioning, several of you insightful and intelligent readers have asked if this "median days on market" trend looks different if we weren't looking at an entire year of data at a time. Basically asking the question... well, if the median days on market is five days over the past year... certainly it must be (might be?) higher if we looked only at the last few months, right? The new lines on this graph above address this inquiry. The gold/yellow line evaluates median days on market in a six month timeframe... and the red line shows this same metric in a three month timeframe. All that to say... even if we narrow our scope all the way down to the past three months... the median days on market has only risen to... six days instead of five. Half (or more) of the homes that have sold in the past three months were under contract within six days of being listed for sale. If (when?) the market transitions further, we will likely start to see this metric (median days on market) start to trend higher... but we're not seeing it yet. One of the main market impacting factors that I mentioned multiple times throughout this report is the change in mortgage interest rates over the past year...  A year ago buyers enjoyed mortgage interest rates right around 3%. Today... rates are twice as high... with an average rate of 6.58% for a 30 year fixed mortgage interest rate as of the end of November. Rates have actually trended down a bit further since that time... with a current average of 6.33% that is not yet shown on the graph above. Will significantly higher mortgage interest rates cause some buyers to not be able to buy? Yes. Will significantly higher mortgage interest rates cause some buyers to not want to buy? Yes. Will significantly higher mortgage interest rates cause a significant (10% or more?) decline in the number of buyers buying homes in our local housing market? Thus far, it seems not. And there you have it... the latest trends in our local housing market as we roll into the last two(ish) weeks of 2022. [1] We're starting to see fewer home sales... though the "fewer" is compared to a "higher" time that we might later conclude was well outside the norm for our local market. [2] We're still seeing higher and higher sales prices in our local market despite (non-cash) buyers financing their home purchase at some of the highest mortgage interest rates we've seen in over 10 years. [3] Despite slightly less buyer activity, inventory levels are remaining stable and may be starting to return to historical seasonal trends of fewer homes on the market in the winter and inventory levels rising again in the spring and summer. As we near the end of 2022, some of you may be considering the sale of your home (or the purchase of a new one) in 2023. If so, we should start chatting sooner rather than later about how all of these market trends potentially impact your plans and the timing of those plans. Feel free to reach out to start that conversation by emailing me or texting or calling me at 540-578-0102. I'll provide another update after the first of the year. Until then, I hope you enjoy the remainder of what is one of my favorite months of the year. December includes Shaena's and my anniversary, Shaena's birthday, and Christmas! Celebrations all month long. ;-) I hope you have an enjoyable, peaceful, fulfilling remainder of 2022 -- and that you find opportunities to spend time with the people you love during this holiday season! | |
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Slightly Fewer Homes Are Selling At Ever Higher Prices |
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 Happy Monday morning, friends! What a delightfully warm fall we had this year! I hope you have taken advantage of the beautiful weather and explored some of the many outdoor adventures the Shenandoah Valley offers us. Late last month, Shaena and I, with several other family members, enjoyed a 30 mile bike ride on the Greenbrier River Trail in West Virginia and took in many beautiful sights along the way. I highly recommend it as a day trip!  Before we get to latest happenings in our local real estate market, each month I offer a giveaway, of sorts, for readers of this market report, highlighting some of my favorite places (or things) in Harrisonburg. Recent highlights have included Bella Gelato, the JMU Forbes Center and the Harrisonburg Half Marathon. This month, I encourage you to go check out Walkabout Outfitter in downtown Harrisonburg where you will find plenty of awesome gear and apparel for your next outdoor adventure! As a bonus, click here to enter to win a $50 gift certificate to Walkabout Outfitter! Also, take a few minutes to check out this month's featured home... a spacious, five bedroom home in Highland Park located at 3658 Traveler Road! Now, then, let's dig into the data. I'll preface it by saying that the trends you might read regarding significant changes in housing markets across the country don't necessarily seem to be showing up in our local housing market at this time. Read on to see what that means from the latest available data...  A few things stand out to me as I look at the latest overall numbers in our local housing market above... [1] We saw fewer home sales in October of this year (147) compared to last year (166) which marked an 11% decline in monthly sales activity. [2] This decline in October sales piles onto January through September sales to show a tiny decline in home sales (-0.43%) when looking at the first ten months of this year compared to the first ten months of last year. [3] Homes are still selling for quite a bit more now than they were last year. The median sales price of homes sold thus far in 2022 has been $299,900 -- up 11.5% from last year when the median sales price was $269,000. [4] Homes are still selling (as a whole) just as fast now as they were last year. The current median days on market is five days... just as it was a year ago at this time. This means that half (or more) of homes that sell are under contract within five days of being listed for sale. So... a slower than expected October, but otherwise still quite a strong year of home sales activity. That theme will continue as we work our way through the rest of the data, with only a few exceptions. It is interesting to note the slight difference in performance of detached single family homes compared to attached homes, which includes duplexes, townhouses and condos...  [1&2] Detached single family home sales are shown in the first two green tables above and you'll note that there were just about the same number of sales this year (939) as last year (937) and that the median sales price has increased 13% over the past year. [3&4] In contrast, we have seen a slightly decline (-2%) in attached home sales over the past year and the increase in the median sales price (+8%) is slightly lower than that of single family homes. So, the "detached" portion of our local housing market has outperformed the "attached" portion of the market, but not significantly. Looking at the last few months graphically, it seems the lower month of home sales in October was actually... the fourth month in a row of fewer sales...  During each of the past four months (Jul, Aug, Sep, Oct) we have seen fewer home sales this year than during the same month last year. Looking ahead, it seems very likely that we will see fewer home sales in November and December as well, especially once we consider the number of contracts signed (or not signed) in October. Read on for more on that... Here, then, for the first month in quite a few years, I am reporting that the pace of home sales (the number selling) is declining... ever so slightly...  Don't get me wrong, it's been exciting to report each and every month for the past few years that there have been more, and more, and more home sales. But perhaps this rapid increase in the number of homes selling could not go on forever. This year and last are now relatively even when looking at the first ten months of the year, but 2022 is falling slightly behind. At this point, I am predicting that we'll see 2022 fall a bit further behind as we finish out the year. But despite fewer sales, prices are...  Yes, indeed, home prices are still rising. The orange line above shows the number of homes selling in a year's time. The last four months of declines in the annual pace of sales is a result of those four months of fewer sales shown in the previous graph. We have now seen a decline from a peak of 1,726 sales per year down to 1,667 sales per year. But despite fewer sales... home prices keep on climbing! The median sales price of homes sold in Harrisonburg and Rockingham County over the past year has now risen to $295,000. As one of my past clients once pointed out... most homeowners don't care how many homes are selling... they care about the prices of those homes that are selling. So, from an overall market perspective, things are still looking rather bright in the local housing market as prices seem to still be on the rise, even if we are seeing slightly fewer home sales. Another trend that is interwoven into this equation is housing inventory... how many homes are on the market for sale at any given point...  Over the past several years we have seen extremely low inventory levels at any given point in time. Plenty of homes have been listed for sale, but they have gone under contract very quickly given very strong buyer demand in almost all price ranges and locations. During much of 2022 we started to see an increase in the number of homes listed for sale...rising to 163 homes for sale in July... compared to only 129 the previous July. So, yes, the market seems to be transitioning a bit... perhaps we won't see super low inventory levels forever. But despite signs of a slowly transitioning market during the spring and summer of 2022, we are now seeing a normal seasonal decline in inventory levels as we work our way into the fall. The place where the rubber meets the road is when we combine buyer activity (demand) and housing inventory (supply) to see what balance does or does not exist in the market...  As shown above, we may be starting to see a slight, modest, tiny transition in the balance of the market. We are starting to see buying activity slow... slightly. We are also starting to see inventory levels rise... slightly. Do keep in mind, though, that this is likely a transition from an extremely strong seller's market to a very strong seller's market. There is still very strong demand in the market for most properties at most price points and in most locations. To get anywhere close to being a balanced market we would need to see much more significant declines in buyers who want to buy homes and much more significant increases in sellers who want to sell homes. I'm realizing now that my preceding paragraph might now seem like it was leading up to this next graph. Digest the next graph... don't fall off of your chair... and then keep reading below...  Somewhat surprising, right? There was a significant, large, drastic, huge decline in contracts being signed this October as compared to last October. Why? What happened? Does this mean the market is turning on a dime? Is buyer demand dropping off a cliff overnight? I'd point out a few things... [1] Mortgage interest rates did jump up again, significantly, in September and October - which likely played at least some role in slowing down buyer enthusiasm. Which, side note, was the intended effect -- or at least an understood side effect -- of the interest rate hikes. [2] If we're surprised by the low number of contracts signed this October we should probably be equally (or even more) surprised by the ridiculously high number of contracts signed last October. Last October was the peak of contract signing in all of 2021, which is odd -- that doesn't usually happen in October. All that is to say, the number of contracts signed in October (94) leads me to believe that we will see slightly slower months of home sales in November and December, but it does not cause me to conclude that the market changed drastically sometime in October. Clearly, though, only time will prove me right, wrong, mostly right or mostly wrong. ;-) So... with this big (but perhaps temporary) decline in contracts being signed... and with the slight decline in homes selling... it's probably safe to say that homes are not going under contract as quickly, right?  Ummmmm... nope! The "median days on market" metric continues to hover at five days on the market. Homes are still going under contract very quickly. To be clear, this data point above is looking at home sales over the past 12 months to arrive at this "five days" metric. You might then wonder if we would start to see higher "days on market" results if we looked only at the past six months, or three months or one month. Let's take a look... Median Days On Market Past 12 Months = 5 days Past 6 Months = 5 days Past 3 Months = 6 days Past Month = 6 days So, yes, it's taking... one extra day for homes to go under contract. ;-) Now, for our monthly opportunity to point the finger of blame...  Why oh why are home sales slowing down? Why is contract activity slowing down? What in the world could be causing these changes? ;-) Well, could it be higher mortgage interest rates? We started the year with interest rates below 4% and then proceeded to fly past 4%, 5%, 6% and now 7%. Home buyers will keep on buying as prices rise 10% (or more) per year when mortgage interest rates are between 2% and 4%... but when mortgage interest rates get to 6% or 7% that can start to impact buyer decision making... either because they can no longer afford the monthly mortgage payment... or because they don't want the higher monthly mortgage payment associated with current mortgage interest rates. Just as a bit of context (that is sure to make me sound old) back when Shaena and I bought our first home (a townhouse in Beacon Hill in 2003) our mortgage interest rate was... 6.25%. So, these mortgage interest rates of 6% or 7% aren't absolutely crazy from a long-term context, but after experiencing abnormally low mortgage interest rates for years, and years, and years... a 6% or 7% rate certainly sounds and feels high! Now then, where does all of this leave us? Lots of homes are still selling... rather quickly... at higher prices than ever before... but buyer activity is slowing a bit... at least partially related to high mortgage interest rates. Thus, my advice is as follows, depending on where you fit into our local market... SELLERS - Consider selling sooner rather than later in case mortgage interest rates keep climbing, or in case prices start to level out. BUYERS - Consult with an experienced lender to understand your best mortgage options to make sure you are buying at a reasonable and comfortable price point. HOMEOWNERS - Enjoy your (likely) low mortgage interest rate, and your still-increasing home value. If you're considering buying or selling yet this year... or in early 2023... let's chat sooner rather than later to formulate a game plan. The first step? Email me or text/call me at 540-578-0102. I'll provide another market update next month, but between now and then I hope you have a wonderful Thanksgiving and that you are able to let those dear to you know how thankful you are that they are a part of your life. Happy Thanksgiving! | |
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Harrisonburg Area Home Sales Slowing Slightly But Prices Keep Rising |
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 Happy Thursday afternoon, friends! Fall is upon us... with cool mornings and evenings, but often still reaching pleasant afternoon temperatures... and beautiful colors on trees throughout the Valley! Fall is my favorite season for the reasons above, and because it's volleyball season. My daughter plays JV volleyball and I coach middle school volleyball, both of which bring a lot of fun, excitement and joy to my life each fall. I hope that your fall, likewise, is full of fun, excitement and joy! Before we get to real estate... Each month I offer a giveaway, of sorts, for readers of this market report, highlighting some of my favorite places (or things) in Harrisonburg. Recent highlights have included Black Sheep Coffee and the Harrisonburg Half Marathon and the JMU Forbes Center. I'm bouncing back to another of my favorite spots to grab a cup of coffee... Bella Gelato, located on West Water Street in downtown Harrisonburg where you can enjoy delicious gelato that is made by hand on site, plus a pastry case of baked goods, and an espresso and coffee bar where you'll often find me ordering a caramel latte. Interested in checking out Bella Gelato? Click here to enter to win a $50 gift card to Bella Gelato! ...and this month's featured home is... The beautifully renovated home on the cover of this month's market report is located on the corner of Franklin Street and Myers Avenue, just a short walk from the many restaurants and shopping destinations in downtown Harrisonburg... such as Bella Gelato. ;-) Check out 400 Franklin Street here. ...and now, the real estate market update... First, before we get to the numbers, let's start with the big picture...it feels like the local housing market is changing or transitioning in some ways. Mortgage interest rates have increased drastically over the past six months and that seems to be impacting the amount of buyer activity and enthusiasm in our local market. Most sellers are experiencing fewer showings and fewer offers in the first week or two of their homes being on the market. But yet, we are still seeing relative stability in the number of homes selling in this area, combined with continued increases in the prices for which homes are selling.  As shown above... [1] Home sales were 7% slower this September than last, with 140 home sales this year compared to 150 home sales last year. [2] Thus far this year we have seen 1,234 home sales in Harrisonburg and Rockingham County, which is 1% more than we saw in the first nine months of last year. [3] The median sales price has increased 11% over the past year in Harrisonburg and Rockingham County, from $269K to $300K. [4] Homes are still selling very quickly, with a median days on market of only five days. More on this later. So if things feel slow lately, how are things still stable? Good question... see below for a month by month breakdown...  As shown above, we saw much higher numbers of home sales this year during April, May and June, followed by lower numbers of home sales this year during July, August and September. So, we had a very strong second quarter of the year, followed by somewhat weaker third quarter. What, then, will the fourth quarter of the year show? Given that mortgage interest rates keep creeping up higher and higher, I am anticipating that the fourth quarter of this year will show fewer home sales than the fourth quarter of 2021... which would then lead to an overall decline in the number of home sales between 2021 and 2022... if my guess is correct... and I make plenty of guesses that are not correct. ;-) The following graph helps put this year in an even more helpful context...  Two few observations about this "stacked up" graph above... [1] Yes, 2022 is still slightly ahead of 2021 through September... but we the gap is much narrower than it was a few months ago. [2] Even if we don't see 1,673 home sales in 2022 to match last year's total count, it seems very likely that we will still eclipse both 2019 and 2022. The following two trends seem to be running counter to each other, at least thus far...  The orange line above shows the number of homes selling on an annual basis in Harrisonburg and Rockingham County. The number of annual sales was climbing quickly through the end of 2021 but has mostly leveled off since the start of 2022. It seems unlikely that the annual pace of home sales will start increasing again anytime soon. The green line above shows the median sales price of homes selling in a 12-month period. As you can see, sales prices keep on rising. The median sales price over the past 12 months has been $292K... which is about $26K higher than the median sales price of $266K just a year ago. Moving forward, I expect we'll see home sales (green line) stay level or decline somewhat... while sales prices (orange line) will likely keep rising or possibly level out a bit. Changes in home prices over time are pretty wild if we scoot back a bit and look at a multi-year picture...  If only everyone had bought a median priced home ($198K) five years ago... then everyone would own a home that is now potentially worth $100,000 more, given the current median sales price of $299,837 in Harrisonburg and Rockingham County. This is a drastic shift in sales prices over a relatively short timeframe, meaning that... [1] Housing is more expensive for anyone who does not currently own a home. [2] Anyone who has owned a home during this time likely saw a significant increase in their home value and net worth. I am simultaneously thrilled for all of my past clients who have bought homes and are feeling good about these trends... and depressed for all of my clients who have not been able to purchase a home and are now faced with much higher purchase prices (and interest rates) in today's market. But back to that leveling off thing...  This graph shows that home sales (blue line) are starting to level off and inventory levels (green line) are starting to stabilize and increase a bit. If there continue to be slightly fewer buyers in the market, and slightly more sellers in the market, then... [1] Home buyers might have a slightly easier time securing a contract on a home they hope to purchase. [2] We might see a slightly smaller increase in the price of homes over time. Read that twice, please. I'm not currently anticipating a decline in prices, but rather, a slightly smaller increase in prices. I don't hit on this every month, but it can be helpful to realize that we have seen a pretty good sized increase in the number of new homes being built and sold in this area...  This graph is showing the number of new detached home sales per year in Harrisonburg and Rockingham County. This does not include attached home sales... which would would be duplexes or condos. After averaging 83 new home sales per year between 2018 and 2020, we saw a significant increase in 2021 to 144 new homes... and thus far in 2022, that is a total of 163 new home sales. Many, but not all, of these new detached home sales have been in Ryan Homes communities. It will be interesting to see how new home sales and resale homes track over the next few years especially within the context of higher mortgage interest rates. Now, a peek into the near future...  In each of the past five months (purple arrows) we have seen fewer contracts signed than were signed in the same month last year. This probably doesn't surprise anyone who has been paying attention to changes in mortgage interest rates. Ever higher interest rates have changed the potential mortgage payment for buyers, which is definitely impacting how many potential buyers are capable of buying or interested in buying. Multiple (five) months of lower levels of contract activity means that we will continue to see lower levels of closed sales over the next few months... which is why I expect we'll see a slower fourth quarter of home sales this year as compared to last year. And after years of saying inventory levels are down, now we see that...  Inventory levels are actually rising a bit. When looking at two years ago compared to one year ago we see about a 20% decline in inventory levels. When looking at one year ago compared to today we see about a 20% increase in inventory levels. Today's inventory levels are still *very* low compared to historical norms, but buyers today seem happy to have slightly more choices of homes for sale, or to see homes sticking around on the market for slightly longer before going under contract. Though... about that time on market trend...  Over the past 12 months, the median number of days it took for homes to go under contract once listed for sale was... five days! We first hit that low (low!) level of a median of five days back in July 2021, and we have been hanging out at that same level ever since. Interestingly, I suspected that if I looked at a shorter, more recent, timeframe that I would find that it is taking homes longer to go under contract. With that theory in mind, I looked at the median days on market over the last 30 days and it was... still five days. So, the market (overall) seems to still be moving very quickly with half of new listings that go under contract doing so in five or fewer days. And finally, a visual to show you how quickly mortgage interests have been rising...  A year ago, mortgage interest rates were right around 3%. Six months ago, mortgage interest rates were right around 4.7%. Now, today, they are all the way up to 6.7%. As you might imagine, this increase in mortgage interest rates significantly affects a buyer's mortgage payment - and potentially their ability to purchase the home they might hope to purchase. So where does all of this leave us? Despite what may be going on in other real estate markets around the state or the country, here's what seems to be true in our local market at this moment in time... [1] Contract activity and home sales has slowed in the second half of 2022, though the highly active first half of 2022 is still keeping us on track with 2021 thus far. [2] Higher mortgage interest rates are affecting buyer behavior which is often resulting in fewer showings and fewer offers. [3] Despite the points mentioned above, homes are still going under contract very quickly and home prices keep on rising. As you look ahead to the remainder of fall, and into the winter months, if you're thinking about buying a home, or selling a home, we should chat about how things are going in your segment of our local market as it relates to the property type, price, size, location and age of your home. I'll check in on the market again in about a month, but until then, enjoy your fall days, and best of luck to anyone else running in the Harrisonburg Half Marathon this Saturday! | |
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Home Prices Keep Rising in Harrisonburg, Rockingham County Despite Slightly Fewer Home Sales |
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 Greetings, and Happy Tuesday morning, friends! Would you believe it if I told you we're 70% of the way through 2022!? It's hard to believe, I know, but indeed, we only have about 30% of the year to go. Would you believe it if I told you I am now old enough to be the dad of an adult!? It's hard to believe, I know, but Luke recently celebrated his 18th birthday. Shaena and I are tremendously proud of the man he is and is becoming and we're excited to see what is in store for him in the coming years. Happy 18th, Luke! :-)  This Month's Featured Home... The upscale rowhouse on the cover of this month's market report is one of the original lakefront rowhouses at Preston Lake, and you can find out more about this beautiful property by visiting 3313PrestonShoreDrive.com. Another of My Favorite Places... Each month I offer a giveaway, of sorts, for readers of this market report, highlighting some of my favorite places (or things) in Harrisonburg. Recent highlights have included Village Juice & Kitchen, Black Sheep Coffee and the Harrisonburg Half Marathon. This month I'm highlighting the JMU Forbes Center for the Performing Arts which is the premier destination for arts in the Shenandoah Valley with countless top notch musical, dance and theatrical performances each year. Have you been to a show at the Forbes Center? Would you like to? I'm giving away a pair of tickets to what is bound to be a hilarious show at the Forbes Center... "Whose Live Anyway?" featuring current cast members of the Emmy-nominated television show "Whose Line Is It Anyway?" for 90 minutes of hilarious improvised comedy and song. The show is on Friday, September 30 at 8:00 PM. Enter here for a chance to win this pair of tickets. And now, let's take a look at the latest news from our local real estate market...  First off, let's get right to it... we saw significantly fewer home sales this August as compared to last August. We've been in "always more, every month more" mode for so long when it comes to home sales that it might seem jarring to see a 19% drop in August home sales, but it is important to realize that we couldn't necessarily always see more and more home sales forever and ever. We have seen an extraordinarily high amount of home sales activity over the past two years. Those home sales levels may have been inflated beyond the norm, so we may see a downward shift in the number of homes selling per year as we finish out 2022 and enter 2023. This isn't a catastrophe and it does not necessarily mean we will see any adjustments in home values and sales price in this area. In fact, in the "this is not a catastrophe" category, when we move beyond #1 above, where we see a 19% decline in August home sales, we'll also find... [2] The pace of home sales during the first eight months of this year are still slightly (0.65%) ahead of last year during those same eight months. Though, if home sales activity continues to be a bit slower through the rest of 2022, we should expect the annual pace of sales in 2022 to eventually fall behind 2021 levels. [3] The median sales price this year in Harrisonburg and Rockingham County ($298,950) is 11% higher than it was last year during the same first eight months of the year when it was $269,000. [4] When looking at a full year of data (September through August) we find that there has been a 9% increase in the median sales price over the past year, from $264,900 up to $289,900. [5] Homes are still selling just as fast as last year... with a median "days on market" of five days. So, while the number of homes selling might be slipping a bit compared to last year, prices are still rising, and homes are still selling very quickly. Now, let's break things up a bit by detached homes (green) and attached homes (orange) below...  This chart pull a few things out that provide some helpful comparisons... [1] There have been slightly more detached home sales this year (734) as compared to last year (722) for a total increase of 1.66%. This has been accompanied by a year-to-date increase of 12.59% in the median sales price of those detached homes. [2] There has been a slight decline in the number of attached home sales this year (348) as compared to last year (353) for a total decrease of 1.42%. This has been accompanied by a larger, 12.13%, increase in the median sales price of those attached homes. So... we're seeing a slight uptick in single family home sales and a slight downturn in townhouse / duplex / condo sales... though the median prices of both property types are increasing. Finally, slicing and dicing the data one more time to compare the City and County, here's what we find...  Here's what pops out to me in the chart above, when looking at a full year (Sep - Aug) of data... The pace of home sales has slowed a bit (-3%) in the City (#1) while the pace of County home sales (#2) has increased slightly (+2%). The median sales price has increased by double digits (+11%) in the City (#3) while the median sales price in the County (#4) has increased by a slightly lower amount (8.3%). So, again, lots of home sales at high prices in the City and County... but the pace of sales is slightly more robust in the County, and price increases are slightly higher in the City. Now, the summer that makes you say: Nice! Yikes! Hmmm...  It was a wild summer in the Harrisonburg and Rockingham County real estate market... JUNE = NICE! We saw an incredible number of home sales in June 2022. The 188 home sales this past June was the highest single month of home sales in many, many years! JULY = YIKES! After sky high home sales in June, we saw the slowest month of July home sales in at least three years. July 2022 home sales weren't drastically lower than the previous few years but it was surprising (yikes!) to go from the "best June in 3+ years" to the "worst July in 3 years." AUGUST = HMMM... Home sales this past month were markedly lower than last August, with a 19% decline from 184 home sales to 149 home sales. But... home sales this August were still higher than in August 2019 and 2020. So... were home sales surprisingly slow this August? Or do they just look slow compared to a surprisingly active month last August? At this point it can be helpful to stack all of those months of home sales on top of eachother to look at things from a broader perspective...  Here you can more clearly see that 2022 year-to-date home sales are barely sticking in the race with 2021. Yes, we have seen slightly more home sales thus far in 2022 than in 2021 (and than in the previous few years) but we're barely ahead now. It seems quite likely that the year-to-date pace of home sales will fall behind as we get through September and October of 2022, especially when we examine contract activity below. So, if you haven't picked up on it yet, it seems the rapid growth in the number of home sales we have been experiencing lately might be starting to... level off...  During the height of Covid (2020-21) we saw an ever-increasing number of home sales on an annual basis, seemingly due in large part to the size and shape of "home" being more important than ever as people were spending more time at home during the pandemic... and because of historically low interest rates. Now, however, many of life's patterns (actually going to work, actually going to school) seem to be returning... and mortgage interest rates (if you haven't heard!?) are quite a bit higher than they were a year ago. So, it seems very unlikely that we will continue to see rapid growth in the annual pace of home sales like we saw between August 2020 and August 2021, and it seems more likely that we will see a leveling off, or even a slight slowdown, in the number of homes selling in Harrisonburg and Rockingham County each year. All of this, though, is related to the orange line above... the number of homes selling. Quietly, in the background, the median sales price (green line) just keeps on rising, and rising. The unknown, at this point, is whether we will see home prices start to level out at all. Thus far, they are continuing to rise quite rapidly. Speaking of rising prices, here's a graph that will put these price increases in context pretty quickly...  In just four years (2018-2022) the median sales price of a single family home in Harrisonburg and Rockingham County has increased by almost $100,000... from $228,000 to $326,500! What a great time to have owned a home... and what a tough time to buy one now if you haven't owned a home for the past few years to be a part of a joyful ride up the roller coaster of home values. Here's another graph that provides further evidence of the likelihood that we will continue to see the market slow down when it comes to the number of homes selling...  I've drawn the arrows above to show where I think things have been going and are going... Top Arrow = slight, slow, decrease in the number of buyers buying Bottom Arrow = slight, slow, increase in the number of sellers selling as it relates to active inventory at any given time So, indeed, the market may be transitioning a bit. A few fewer buyers are buying and a few more sellers are selling. These dynamics are turning our market, ever so slightly, towards a slightly less strong seller's market. But, yes, still a strong seller's market. Several times in this synopsis I have spoken about home sales slowing and referenced that I anticipate a further slowdown in the next few months. Here's why...  The graph above is showing us contract activity per month in Harrisonburg and Rockingham County... counting how many homes go under contract each month. Last summer (the first set of 1, 2, 3) there were 143, 156 and 155 contracts signed for a total of 454 contracts. This summer (the second set of 1, 2, 30) there were 135, 114 and 135 contracts signed for a total of 384 contracts signed. So, indeed, fewer contracts for several months in a row has already started to translate into fewer home sales, and will continue to do so for at least another month or two in the future. With slightly fewer buyers buying are we seeing inventory levels starting to rise? Slightly...  A year ago there were 129 homes on the market for sale at this time... and that has risen, slightly, to 147 homes for sale. So, yes, we are seeing somewhat of an overall increase in the number of homes for sale... but not by that much. And... from a shorter term perspective, inventory levels are currently trending down as they usually do as we move from summer into fall. Finally, one last graph for a bit of AHHHHH and GRRR...  From the end of last summer (Aug 2021) through early 2022 we saw a rapid increase in mortgage interest rates. They rose from less than 3% up to over 5% in only eight months. Ahhhhh!!! Over the past few months, mortgage interest rates have shown they might not get all the way to 6%, but they haven't made their way back down to, or below 5%. Grrr... Comparably higher mortgage interest rates (as compared to the past few years) continue to have an impact on how many buyers are able to, or are willing to, buy a home right now... and it doesn't seem that these higher interest rates will be leaving us as quickly as they showed up. So... in summary... [1] The pace of home sales seem to be slowing, slightly, though 2022 is still ahead of 2021 at this point. [2] Contract activity is slowing, slightly, which means closed sales will also continue to slow. [3] Home prices continue to rise rapidly. [4] Inventory levels are rising, slightly. [5] Mortgage interest rates are still quite high. If you're thinking about buying a home, or selling a home, let's talk about how things are going in your segment of the market as it relates to the price, size, location and age of your home. The first step? Email me or text/call me at 540-578-0102. I'll check in on the market in about a month, but until then, enjoy the slightly shorter, cooler days ahead! | |
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Harrisonburg Housing Market Still Showing Strength Despite Some Signs Of Slowing |
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 Happy Thursday afternoon, friends! As any student or teacher will tell you, summer is almost over! 😢 I hope that you and your family had a wonderful summer and that you had at least one opportunity to sneak away... to the beach, the lake, a tropical island, a music festival, a rural AirBNB, a national forest, a campsite or a new city! One of my favorite spots to sneak away is Deep Creek Lake, MD...  But getting back to business... The beautiful house on the cover of this month's market report is located at 3161 Henry Grant Hill in Preston Lake and you can find out more about this spacious home here. Each month I have a giveaway, of sorts, for readers of this market report. This month's giveaway requires a special sort of market report reader... one who also likes to run... a lot. I enjoy running and frequently participate in races put on by VA Momentum, and thus I was excited to hear they are putting on a half marathon this fall. So... this month, you can enter for a chance to win a free registration to the Harrisonburg Half Marathon, to be held on October 15, 2022! Find out more about the half marathon here. Enter to win the free race registration here. Email me and tell me I'm crazy for thinking you'd run a half marathon here. 😉 And now, after all that, let's dig in and see what is happening in our local housing market...  As noted in my headline above, there are some signs that our local real estate market might be slowing down a bit. This very well may mean, though, that it slows down from going 90 MPH in a 60 MPH zone to going 75 MPH in a 60 MPH zone. The latest numbers, as shown above, indicate that... [1] July home sales were slower (140) than last July. We'll see this again on a graph in a moment. [2] Thus far this year we have seen 932 home sales, which is 4.6% more than last year. We had a record number of home sales last year, so a further increase this year is... record breaking. [3] The median sales price in July was 5% higher than last July. [4] When looking at the first seven months of the year, the median sales price has risen 11.7% in Harrisonburg and Rockingham County. So... most of these indicators are quite positive, rosy, exuberant, except the slight slow down in July. This is seen a bit more clearly here...  Above, you'll note that in June 2022 we had an astronomical 188 home sales... higher than any of the past three months of June. But, then, July. In July 2022 we only saw 140 home sales, which is less than any of the past three months of July. Some might point out that looking at a single month of housing data, in a small-ish housing market, can make you think something is happening, when nothing is happening. I agree that can happen. If we smash the two months together, we find that there have been 328 home sales this June and July... compared to 322 home sales last June and July. So... maybe things are "just fine" right now, and maybe things are starting to slow, slightly.  As shown above, if things are starting to slow... they're only just starting to do so, and they're doing so verrrrry slowly. The 932 home sales seen thus far in 2022 is more than we have seen in the first seven months of any of the prior four years. Perhaps when we get another month or two into the year we will see things level out a bit in 2022?  Slicing and dicing the data once more, this graph (above) measures (each month) the number of sales in a 12 month period as shown with an orange line, and the 12-month median sales price (measured each month) shown with the green line. As you can see at the end of the orange line, it's possible that the overall pace of home sales is slowing a bit... but then again, maybe not. We'll need to watch this for a few more months to know for sure. Speaking of the future, our most reliable indicator of future sales is... current contracts...  This one surprised me a bit. We usually see around 150 to 160 contracts signed in any given month of July. But... not this July. There were only 114 contracts signed in July 2022, which is much lower than usual, and likely means we will see a lower than usual month of closed sales in August and/or September. This falls to the category of "things that make you say hmmmm...." and this will definitely be a trend we will need to continue to monitor. Somewhat fewer buyers signing contracts might mean that inventory levels would rise a bit...  Indeed, we are starting to see inventory levels creep up a bit. There are now 163 homes for sale in Harrisonburg and Rockingham County, which is a bit more than the 129 we saw at this time a year ago. It is important to note, though that these "slightly higher" inventory levels are really still VERY, VERY low. Many or most buyers in most price ranges and locations still have very few options of homes to buy right now. So, yes, inventory levels are creeping up a bit, but don't think that's necessarily giving buyers more choices... or giving buyers more leverage... at least not at this point. So... a few fewer sales... fewer contracts... slightly higher inventory levels... that probably means that homes aren't selling as quickly, right!? Well...  Looking at the 12 months of home sales prior to July 2021 (a year ago) the median "days on market" for those sales was only five days. That metric has remained constant for 13 months now... and today, when looking backwards by a year, the median "days on market" is still just five days. Narrowing the focus even more, to just the 114 properties that went under contract in July 2022, we might expect to see a higher "days on market" -- and we do -- but only barely. The median days on market during July 2022 was... six days. So, homes are still going under contract very, very quickly! Finally, maybe this (below) is a contributing factor to the slight slow down over the past 30 to 45 days?  A year ago, the mortgage interest rate was 2.8%. Six months ago it was 3.55%. During June and July it was as high as 5.81%, though it has started to decline now. It is quite possible that these higher mortgage rates have caused some buyers to not be able to buy any longer... or that it has at least partially dampened their enthusiasm. So, there you have it, friends. The housing market in Harrisonburg and Rockingham County is still showing great signs of strength with more sales than ever, at higher prices than ever. But... we might be seeing a slight slow down in home sales (from record high levels) and we might be seeing a slight increase in inventory levels (from record low levels). We'll have to give it a few more months to see how things continue to develop in the local market to know for sure. Until then... If selling a home is on your mind, let's talk sooner rather than later. Before you know it, we'll be halfway through fall and headed into winter. If you are planning to buy a home soon, let's start watching for new listings of interest and going to see them quickly when they hit the market. If I can be of any help with the above (selling, buying) please call/text me at 540-578-0102 or email me here so we can talk about working together to navigate your way through the ever changing Harrisonburg real estate market. | |
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Harrisonburg Housing Market Still Speeding Right Along |
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 Happy Tuesday morning, friends! The starting and ending point of summer likely varies for many of us, but it seems like we're somewhere around the middle of summer. Gasp! As such, I hope the first half (or so) of the summer has treated you well, and that you still have some fun, adventures and relaxation in the works for the second half of summer. Before we get to the real estate news of the day, I'll mention that Red Wing was *fantastic* this year...  I enjoyed seeing many of you out at Natural Chimneys over that long (but not quite long enough) weekend and I hope the rest of you will consider checking it out next year! Sign up for Red Wing Updates here. Next, I should mention that the beautiful home on the cover of my market report is on the market, for sale, as of this morning! Find out more about 390 Callaway Circle here. Finally, if you're looking for a good cup of coffee (or a caramel latte) one of my favorite coffee spots in the 'burg is Black Sheep Coffee, tucked away over on West Bruce Street. Interested in checking out Black Sheep Coffee? I'm giving away a $50 gift certificate, which you can enter to win here! And now, let's spend a few minutes together exploring the latest news and happenings in our local housing market...  Right off the bat, we get to some rather fascinating updates just checking out the very basic metrics of our local market. As referenced in the tiny red numbers above... [1] A normal June might have around 135 or 145 home sales. Last June (2021) we saw an impressive 175 home sales. I did not think we would clear that high bar this June. But... we did. There were an astonishing 184 home sales in June 2022! [2] The median sales price in the first half of this year was $299,000! That is almost 15% higher than it was in the first half of last year, when it was $260,600. Even with *much* higher mortgage interest rates, homes keep selling at higher and higher prices! [3] Homes are still selling fassssssssst! The median days on the market in Harrisonburg and Rockingham County during the first six months of 2022 was... only five days, just as fast as when we look at the entire past 12 months of data. So... lots of sales, prices that are higher than ever, and homes are going under contract faster than ever. Hmmmm... things don't seem to really be slowing down thus far in 2022!? This fast moving market has been one contributor to the steady increases in home prices seen over the past two years. Take a look at these increases...  [1] The median sales price of detached homes was only $250,000 just two years ago... but over the past two years that median sales price has risen to $310,000! [2] The median sales price of attached homes (townhomes, duplexes, condos) was only $180,400 just two years ago... but over the past two years that median sales prices has risen to $240,000! Homeowners have been delighted with these increases. Sellers have also been big fans. Buyers... not so much. It can be tough for buyers to get excited about paying a *much* higher price alongside their *much* higher mortgage interest rate... but buyers still seem to be moving forward full steam with their home purchases thus far in 2022. Those home buyers are moving along so steadily that we're breaking (tying) some records...  Over the past ten years, the most home sales we have seen in a month has been 184 home sales... which took place last year, in August. Well, what do you know!? This June (last month) we saw... 184 home sales! Looking ahead, what should we expect for July? The past three months of July have been tightly clustered around that 145 - 155 range, so I'm going to play it safe and guess we'll see right around that many home sales in July 2022. Perhaps 150 on the nose!? As I have mentioned to many of you, I fully expected (and still expect) that we'll see a bit of a slow down in home sales activity in 2022 due to higher mortgage interest rates... but... the data just isn't agreeing with me thus far...  As shown above, the 787 home sales we've seen in the first half of 2022 exceed the number of home sales in the first half of each of the past three years! If I didn't know better, I'd think mortgage interest rates must be *lower* than ever in 2022 to spur on so much buyer activity!? But, no, not so much. More on that later. Looking at these big picture trends in a slightly different way, it's astonishing to see three years in a row of double digit growth in the median sales price in our market...  How much did our area's median sales price increase in 2020? 10% How much did our area's median sales price increase in 2021? 10% How much has our area's median sales price increased thus far in 2022? 11% It's been an astonishing few years in our local market to see home values escalating so quickly... without any signs of slowing down. But... to try to reel us back in a bit from cloud nine...  It's hard not to look at the graph above and think that things could be, might be, possibly be changing... [BLUE] The top, blue, line shows the number of buyers buying in a six month period as evaluated over the past four years. This metric has been steadily marching upward over the past two years... but... it seems that the number of buyers buying might be flattening out a bit. Again, not that the amount of buyers buying is decreasing, but buyer activity might not be continuing to increase as quickly as it has for most of the past two years. [GREEN] The bottom, green, line shows the numbers of sellers selling at any given time... the inventory levels at the end(ish) of each month. For most of the past four (plus) years we have seen fewer and fewer (and fewer and fewer) homes on the market, due largely to excessive amounts of buyer demand. But... over the past six months... we're starting to see some modest flattening out of inventory levels in our local area. Inventory levels seem to be steadying themselves. Bear in mind that it is still definitely a strong (strong!) seller's market, but we might be starting to see some early signs that the market might be slowing down a touch... perhaps cooling off from a strong-strong-strong seller's market to a strong-strong seller's market!? Changing gears, slightly, here's an interesting trend to make sure that we recognize...  After typically only seeing around 70 - 90 new (detached) home sales per year, we saw a remarkably high 144 such sales last year... and this year we seem to be on track to see around 180 new detached home sales in Harrisonburg and Rockingham County. These recent, steady increases in the number of new homes selling in our market is doing two things... one, allowing the overall number of home sales to increase without relying just on resale homes as inventory... and allowing the median sales price in our market to keep climbing, given that new homes are typically more expensive than resale homes. OK, shifting back to the overall sales market, here's a look at recent months of contract activity... measured by when contracts are signed...  Looking at the highlighted months... [2022] We have seen 630 signed contracts in the past four months. [2021] In the same months last year, we saw 620 signed contracts. So, yes, even with *much* higher mortgage interest rates, we are seeing more buyers sign contracts to buy homes now as compared to a year ago. Is this surprising? Yes, relative to interest rates. No, relative to what seems to be a significant number of buyers who wanted to buy homes in this area in the past two years who have not yet been able to do so. In other words, demand exceeds supply. There are still lots of buyers who want to buy... even if the interest rates are higher than they were previously and higher than they would prefer. So, demand is high. How about supply? Well...  It is possible that our local housing supply is increasing, slightly. After multiple years of constantly declining inventory levels, we now seem to be seeing inventory levels increasing a bit. Sadly, these *slightly* higher inventory levels aren't evenly spread across all property types, locations and prices... so many buyers will still find inventory levels to be *quite* low in their segment of our local market. Because inventory levels are still so low in most segments of the market, we are still seeing homes selling just as quickly has they have for the past year...  As shown above, the pace at which homes go under contract once listed (days on market) declined steadily through 2020 and 2021 until it seemed to bottom out at a median of five days on the market. That is to say that half of homes go under contract in five or fewer days... and half go under contract in five or more days. This metric hit a median of five days on the market back in July 2021 and has stayed there ever since. If or when the market starts to slow, soften or cool, we'll start to see this metric drift upward again. Finally, that one topic that isn't quite as exciting to talk about... mortgage interest rates...  Just six months ago... the average mortgage interest rate for a 30 year fixed rate mortgage was... 3.55%. Now, it has risen all the way up to 5.7% as of the end of June. This drastically affects the monthly payment for buyers in today's market as compared to just six (or twelve, etc.) months ago. I don't think we'll see interest rates rise above 6% but it is definitely possible. If there is one thing that could cool off our local housing market, it's this "cost of money" in the form of the mortgage interest rates. But, again, it hasn't happened yet despite drastic changes in interest rates. And here we find ourselves again, at the close of what seems to be another red hot month of real estate activity in Harrisonburg and Rockingham County. By the headlines... [1] More and more home sales are selling! [2] Homes are selling at higher and higher prices! [3] Homes are selling as fast as ever! [4] Inventory levels are increasing, slightly, in some pockets of the market. [5] Mortgage interest rates are higher than they have been in years! What will we see over the next few months in our local real estate market? Most likely, more of the same... but we won't know for sure until those next few months pass... and I'll pause each month to check the numbers and share some thoughts with you so that we can all have a good sense of where we have been, where we are and where we might be going next. Speaking of next... If you are planning to SELL a house in the next few months, sooner is likely better than later, and I'd be delighted to chat with you about how we might work together. If you are planning to BUY a home in the next few months, you ought to check in with your lender sooner rather than later to get proper expectations of your potential mortgage payments within the context of rising mortgage interest rates... and yes, I'd be delighted to help you with buying as well. Be in touch at any point if I can be of any help to you or your family or friends. You can call/text me at 540-578-0102 or email me here. Until next month... may your summer be as relaxing as this crazy real estate market can be stressful! ;-) | |
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Harrisonburg Area Housing Market Reaches New Heights |
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 Happy Friday morning, friends... and Happy Summer! If you have school age kids, or college age young adults, I hope the school year finished out well and that they (and you) are ready to relax a bit over the summer. Luke just finished 11th grade and is gearing up for his senior year (gasp!) and Emily finished out middle school and will be in 9th grade in the fall. Here they are in the obligatory "last day of school" photo...  Transitions it seems, are upon us. School is ending and summer is beginning. Cooler spring days are being replaced by hot and humid summer days. And... as some folks seem to be wondering these days... are we seeing a transition in our local housing market? I don't think any of us will really know the answer to that question for another six to twelve months when we can look back and reflect on what happened in the second half of 2022, but here are some things that seem to be true... [1] Mortgage Interest Rates Are Rising [2] Some Home Buyers Are Getting Priced Out Of the Market [3] The Stock Market Is Not Doing So Well [4] Inflation Is Upon Us ...and yet, with all of these transitions taking place, this month you'll learn that... [1] More homes sold in the past 12 months than ever before in any 12 month period in Harrisonburg and Rockingham County. [2] The median sales price in the past 12 months is the highest it has ever been. So, is our local housing market transitioning? Is it cooling? Is it leveling off? Is it settling down? Maybe it is and the data doesn't show it yet? Maybe it will eventually? Maybe there are some early signs that it might soon? We'll explore the data together below, but I'm not finding many, if any, signs that our local housing market is undergoing significant changes. But first... My Favorite Spots... Each month in this space I highlight one of my favorite spots to enjoy a meal, a cup of coffee, or an experience. This month, I'd encourage you to check out Village Juice & Kitchen on West Bruce Street in downtown Harrisonburg where you'll find delicious smoothies, smoothie bowls, salad and grain bowls, juices and so much more! My favorite smoothies (so far) are Mint Chip and Mocha Nana. Explore the menu at Village Juice & Kitchen, on me, by entering to win a $50 gift certificate here. I'll pick a winner in about a week. Download All The Charts & Graphs... Now... let's take a look at the data together...  Looking at all of the numbers above, a few things jump out to me... [1] Looking only at the first five months of this year (Jan-May) we have seen a 4.75% increase in the number of homes selling in Harrisonburg and Rockingham County. [2] Looking at a slightly longer timeframe, the past 12 months, the increase in the number of home sales has been over 7%. [3] The median price of homes sold thus far in 2022 has been $297,450... almost 19% higher than a year ago when it was only $250,000! [4] Looking at a full year of data, the median sales price in Harrisonburg and Rockingham County over the past year was $285,000... which is 14% higher than a year ago when it was $250,000. This is a significant increase in home sales prices over a single year. Can we break it down any further to understand why these prices are going up so much?  At least one observation that can be made is that change in prices are happening a bit differently when looking at detached homes compared to attached homes... [1] The median sales price of a detached, single family home, is now up to $311,000 in Harrisonburg and Rockingham County, over 12% higher than a year ago. ...but... [2] The median sales price attached homes (townhomes, duplexes, condos) has increased 21% over the past year to $238,285! This much larger increase in the median sales price of attached homes seems likely to be a result both of townhomes selling at higher prices... and most newly built townhouses being larger and more expensive than townhomes as a whole. Beyond property type (detached vs. attached) can we find any other differences in changes in property values? Why yes, we can...  Above you'll note that... [1] The median sales price of homes sold in the City of Harrisonburg over the past year has increased 5% to $231,100. ...while... [2] The median sales price of homes sold in Rockingham County has increased over 13% during the past year. Again, this may be at least partially a result of what happens to be selling... with many newer, larger, more expensive homes being built in the County right now... which causes the median sales price (of what has sold) in the County to increase. Now, looking visually at how this year has played out on a month by month basis...  After a comparatively strong month of home sales in April 2022 (well above previous months of April) we saw a slight decline in monthly home sales from 146 sales in April to only 139 in May. Looking ahead, it's anyone's guess as to what exactly will happen in June. It seems somewhat unlikely that we'll exceed the shockingly strong 175 home sales seen last June... but perhaps we'll be in the 160 range, or maybe right around 140 again (like this month) or could we have the slowest June in the past three years? Stay tuned to find out. Sorting the data out and stacking it up a bit differently, you'll notice that 2022 is looking pretty solid...  Those circled brown numbers might look pretty similar, but one is 569 and one is 596... so we have seen more home sales in the first five months of 2022 than we saw in the first five months of last year, and of the year before that, and the year before that! We're still on track to meet or exceed the 1,673 home sales seen last year, though we are certainly experiencing some headwinds now with rising mortgage interest rates. If our local housing market does slow down a bit, when will it happen, or when will we see it? In June? July? Again, illustrating the story of the market that has not yet slowed down...  Two "highest ever" or "most ever" data points above... [1] The median sales price of $285,000 over the past 12 months is the highest such median sales price we have ever seen in Harrisonburg and Rockingham County. [2] The 1,700 home sales seen in Harrisonburg and Rockingham County in the past 12 months is the most, ever, that we've seen in that timeframe in our local market. So, yes, there are plenty of reasons why our local market could be slowing down, or might eventually slow down, but thus far the data doesn't seem to be showing it. If or when the data does show it, I'll be sure to point it out. There are a few possible leading indicators below...  I suppose I could take the title and numbers off of the graph above and we could imagine it to be a graph of any variety of things these days... the cost of health care, the cost of higher education, the cost of gas, the cost of groceries, but in this case... it's the cost of housing. The median sales price just keeps... on... going... up! This might be the third year in a row where we will see a 10% increase in the median sales price in our local market! OK... now... to "cool our jets" a bit, as my mom used to say...  While it's still quite a bit higher than May 2020... only 158 contracts were signed for properties in May 2022, down a bit from the 166 that were signed a year ago in May 2021. Furthermore, over the past year there have been 1,694 contracts signed... compared to only 1,673 in the prior year. So... as a possible early, early, early leading indicator that the market might be slowing, slightly... contract activity might be getting close to leveling off. Right now, it's still on the rise... more homes went under contract in the past year than the previous year... but they're getting close to being even. And another indicator that we might be seeing a transition in the market...  Inventory levels, as shown above, are starting to creep up, a bit in our local market. The market bottomed out with fewer than 100 homes for sale a year ago... but now we're up to 152 homes for sale in Harrisonburg and Rockingham County. Admittedly, many of these options are new homes in a handful of communities that will only appeal to some pockets of the buying public (based on size, price or location) but regardless of what the options are that are for sale... there are more options for sale now than there were a year ago. There are, clearly, still well fewer options now than two years ago or earlier, but inventory levels are no longer declining... and they seem to actually be increasing! But, despite a possible leveling off of contract activity... and despite inventory levels creeping up a bit... most homes seem to be selling just as fast as ever...  As shown above, the median "days on market" for homes sold in Harrisonburg and Rockingham County fell all the way down to five days about a year ago... and has been there ever since. Two years ago, the median was over two weeks, but we're just not in those times any longer. If the market does slow, we should see it taking an extra day or two (or 7 or 10) for homes to go under contract... but that is not yet happening in our local market. Finally, how about those mortgage interest rates?  Towards the end of last year, mortgage interest rates were as low as 3% but have since risen to 5%, and in the past few weeks (not shown on this graph) they have risen even higher... now exceeding 5.5%. Your mortgage payments will, clearly, be higher if you buy a house this year as compared to if you had bought a house last year. These higher mortgage interest rates could (should?) decrease the demand for housing... which might cause the real estate market to slow down or cool off a bit. Again, we haven't seen it yet. And with that, I'll draw this to a close. In summary... [1] More homes are selling on an annual basis than have ever sold before. [2] Homes are selling at higher prices than ever before. [3] Rising mortgage interest rates could cause our local housing market to slow down or cool off. [4] We don't yet seem to be seeing any slowing down or cooling off. [5] Even though we aren't seeing it yet, that doesn't mean it won't happen. Is a five point summary condensed enough to be considered a summary? Hopefully so. BUYERS: Check in with your lender to update your expectations as to mortgage payments. If you'd like to buy a home soon, let's chat about what to expect related to contingencies, competing offers and escalation clauses. SELLERS: You should probably get your house on the market sooner rather than later to hedge against interest rates rising even further, causing some portion of would be buyers to not be able to afford your home any longer. If you're planning to get your house on the market this summer or fall, let's talk sooner rather than later to discuss timing, pricing and more. If I can be of any assistance to you, feel free to call or text me at 540-578-0102 or email me here. | |
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Home Sales Steady in 2022, Prices Still Rising Quickly! |
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 Happy Thursday morning, friends! It's definitely spring in the Valley (cool mornings, warmer afternoons, lots of rain, lots of sun) and spring is a busy time for many! Busy times in the Rogers household these days include college visits with Luke, baseball games for Luke and track meets for Emily...  Whatever has you running around this spring, I hope you are enjoying all that this season in the Shenandoah Valley has to offer and are finding opportunities to spend time outdoors (ok, or indoors!?) with family and friends. Before I get started on this month's market report, a few notes.. My Favorite Spots... Each month in this space I highlight one of my favorite spots to enjoy a meal, a cup of coffee, or as with this month, an experience. One of my favorite summer experiences is heading down to Natural Chimneys Park in Mt Solon for great music in the great outdoors at the Red Wing Roots Music Festival... a super relaxing and family friendly music festival featuring 40+ musical artists on five stages over three days, with great food, and activities for all, including camping, fun runs, bike rides, yoga, dancing and much more! Have you considered going to Red Wing but perhaps haven't been yet? Maybe this summer is the time for you to make it one of your favorite family traditions. I am looking forward to being there with my family and I'm hoping you'll join in on the fun... from June 24th through 26th. If you're interested in going to Red Wing, and haven't purchased your tickets yet, I'm giving away a pair of three-day general admission tickets. Click here to enter! I'll pick a winner in about a week. If you don't win, you still better come to Red Wing... and you can buy tickets here. Download All The Charts & Graphs... Looking for ALL the numbers and charts and graphs? Download a full PDF of my market report here. Now, then, let's take a look through some of the graphs together to see what we can learn...  Above you'll find many of the main market metrics I'm evaluating each month and there is plenty to note this month, with my notes below lining up with the numbers above... [1] We saw quite a few more sales this April than last April.. After only 120 last April, there was a 17.5% increase this April. As you may recall, March home sales were a bit slow this year, which caused some to wonder if the market was cooling off. Well, maybe it's not ready to cool off yet because April sales were hot, hot, hot! [2] Looking back at the first four months of the year there have been 450 home sales, compared to 447 sales during the same timeframe last year. Thus, home sales activity is tracking very similarly to how things looked a year ago. [3] If we broaden our view a bit more, to a 12-month window, we'll find that there have been 1,675 home sales over the past 12 months... compared to only 1,572 in the 12 months prior to that. Thus annual home sales activity has increased 6.55% over the past year. [4] The changes in sales prices over the past year is still somewhat staggering. The median price in the first four months of 2022 is 18.6% higher than it was in the first four months of 2021! [5] Again looking at a longer timeframe, the median sales price over the past 12 months has been 12% higher than during the 12 months before that. Sales prices are increasing quickly in our area! [6] Homes are selling faster, and faster, and faster yet. The median days on market over the past year has been five days, which is 29% faster than the seven day median in the 12 months before that. Wow! So, about the same number of homes are selling as last year... but at much higher prices... and more quickly! These quickly rising prices have caused to market metrics to pop over major (psychological) thresholds over the past 12 months...  [1] A year ago, the median sales price of a detached home was under $300K... at only $276K... and now it has risen above $300K to $309K. That is to say that half of detached homes that are selling in Harrisonburg and Rockingham County are priced at or over $309K. [2] A year ago, the median sales price of attached homes was under $200K... at only $196K... and now it has risen above $200K to $235K. That is to say that half of the attached homes that are selling in Harrisonburg and Rockingham County are priced at or over $235K. The times, they are a changing! Prices keep rising! Diving back into the details a bit, April was another surprisingly strong month of home sales...  The 98 home sales seen in February 2022 was a surprising jolt of energy for the early 2022 housing market, but then things cooled off a bit in March... or so it seemed. Come April, the buyers were back, and the monthly market activity was once again surprising... with 141 home sales, well above the monthly sales in April of each of the past three years. That extra burst of home sales in April caught 2022 back up with 2021...  Year-to-date home sales through the end of March 2022 (dark red bar) had fallen a bit behind where things were a year ago at the end of March 2021. But, then, enter April 2022. A strong month of home sales in 2022 pushed this year back ahead of last year when looking at the first four months of the year. Repeating the 1,672 home sales seen last year still seems like a might feat for 2022, but it is still seeming quite possible after four months of sales activity. Of interest, as it relates to home sales activity, it does seem that we have come to the end of the line of ever increasing numbers of home sales in our area...  From the start of Covid in mid-2020 to the end of 2021, we saw a rapid increase in the number of homes selling on an annual basis with that figure steadily increasing from 1,300-ish to 1,650-ish. Now, over the past nine months, we have seen the annual pace of home sales largely holding steady around 1,650 to 1,675 home sales per year. It seems unlikely that we will see another strong increase in the annual pace of sales, but it seems equally unlikely that we will see a rapid decline in the number of home sales in Harrisonburg and Rockingham County. Bouncing back to prices... which keep soaring higher and higher...  Here's a tidbit for you to share with a friend, relative or neighbor the next time you are talking about the crazy local real estate market... The median price of a single family (detached) home has increased by over $100,000 over the past... five years! That's rather astonishing. Just five years ago, the median price of a single family home was only $225K... and now it is up to $335K! Starting to look ahead now, let's examine contract activity...  Contract activity (as shown above) is a funny thing. In theory, it measures when buyers made decisions to buy homes... but in times of low inventory (as in, now) contract activity has just as much to do with when sellers are ready to put their homes on the market. Few sellers selling = few buyers buying. No sellers selling = no buyers buying. That said, a year ago (in April 2021) there were 151 contracts signed on homes in Harrisonburg and Rockingham County and in the month that just concluded (April 2022) we saw... 150 contracts signed. So, despite the monthly ups and downs that always do occur, we still seem to be pretty much on track in 2022 with how things were progressing in 2021. Looking ahead, it seems likely that we'll see around 140 to 160 contracts per month over the next four to six months. Now then, about those sellers and whether they are ready to sell...  After quite a few years of inventory levels tumbling downward, it seems that things may have finally leveled off at an equilibrium of around 130 homes for sale in Harrisonburg and Rockingham County. This is only somewhat of a relief... it's great that inventory levels aren't dropping further, but these current inventory levels still aren't doing buyers any favors. In many or most price ranges and neighborhoods there is nothing or next to nothing available for sale at any given time. For buyers to feel like things are improving, at all, we'd need to start to see a bit more inventory staying on the market at any given time. We're not there yet. Going hand in hand with very low inventory levels is the speed at which homes are going under contract...  Indeed, as noted above, if your home has been on the market for more than a month... and is still not under contract.... hmmm.... Right now, 82% of homes (that sell) are under contract within 30 days, and 91% are under contract within 60 days! The market is moving quickly, so if your house isn't moving quickly then you should have a chat with your Realtor to understand why. This next metric also looks at median days on the market, and I think it will be the first metric to start shifting if or when the market starts to soften a bit...  Over the past 12 months, the median "days on market" has been five days... and the market has been moving that quickly for almost a year now... since last July. At some point we will likely see the speed of the market start to slow down a bit... and that will be OK! If the median days on market of sold listings crept back up to seven days, or even (gasp!) ten days... the market would likely still (!!) be tipped in favor of sellers. But, despite talk of possible softening or deceleration of the market... it doesn't seem to be happening yet. And here is why some are thinking the pace of housing market activity could start to slow down a bit...  After quite a few years below 4% (and even below 3%) the average mortgage interest rate has quickly risen over the past seven months... from right at 3% to just over 5%! This can make a significant difference in the monthly payment that buyers will have to pay on their mortgage... so it has a good chance of impacting the amount of buyer interest in various houses at various price points. We haven't seen an overall market slowdown yet as a result of these rising rates, but it seems quite possible that if interest rates continue to rise we will see buyer enthusiasm dampen a bit. And with that... we reach the end of my monthly ramblings about the state of the local housing market. I hope the graphs above and my reflections herein have helped you have more clarity on the current happenings in our local housing market. Before signing off, a few reminders... [1] Make plans to attend the Red Wing Roots Music Festival this year. You won't regret it! Enter to win a free pair of three-day general admission tickets here. [2] If you are planning to sell your home, or move, or buy a home, this spring or summer, let's chat. I can swing by your house or we can start with a brief conversation by phone or email. Call or text me at 540-578-0102 or email me here. That's it! I hope the balance of your month of May goes well. Touch base anytime if I can be of any help to you or your family, friends or co-workers or colleagues... with real estate or otherwise. | |
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Home Sales Slow Slightly, Prices Still Climbing Quickly! |
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 Happy Tuesday morning, friends! I hope you are enjoying the warmer weather this week, and perhaps some sporting events! We have a baseball player and a runner here in our house and the warmer weather this week is a welcome change for these outdoor sports.  Whether you're watching baseball games, track meets or soccer games these days, I hope your kids are enjoying the sport and their teammates, and you are not freezing in the stands. :-) Before I get started on this month's market report, a few quick notes... Check Out Vito's Italian Kitchen... Each month in this space I highlight one of my favorite spots to enjoy a meal, or a cup of coffee, or maybe a few other surprises in the coming months. This month, it's Vito's Italian Kitchen... a familiar and favorite restaurant on Port Republic Road in Harrisonburg. If you find me enjoying a meal at Vito's, it will likely be their calzone... or of late, I have been partaking of their delicious Coconut Chicken & Fruit salad. If you haven't visited Vito's lately, do so, this week! And... maybe next week you can go back for free! I'm giving away a $50 gift certificate to Vito's... just for fun! Enter your name and email address here and I'll pick a winner in about a week. :-) Congrats to Michael S. who won the Magpie gift card last month! Featured Property... Are you tired of bidding on house after house and not having the seller select your offer? Maybe you should build your next house instead of buying one? ;-) The photo on the cover of this month's market report is a beautiful, flat building lot in McGaheysville, currently offered for sale... and ready for you to build your next home! Find out more here. Download All The Graphs... Finally, for those of you who like to download all the graphs and examine every data point, you can grab those here. Now, then, onto your data fix for the month...  First off, yes, it's really true... after month after month of "more sales" and then "more sales" and then "more sales" -- this month there are a few indicators that are showing "fewer sales" instead. Don't panic. Read the entire market overview below for some analysis, context and commentary. In the chart above you'll note that... [1] There were 24% fewer sales this March than last March. A knee jerk reaction here might be "oh, I knew it, interest rates went up and home sales declined" but keep in mind that buyers that closed on their purchases in March likely contracted on those homes in January and February, before much of the increase in interest rates. A better indicator of whether interest rates are having an effect on buyer activity will be... buyer activity... signed contracts... and we'll get to that a bit further down in the report. The data might surprise you. ;-) [2] That 24% comparative deficit in March contributed to a first quarter of home sales in 2022 that included 6% fewer home sales than the first quarter of last year. [3] Despite a slightly (6%) slower first quarter of the year for home sales, the prices of those homes keeps on increasing. The median sales price in the first quarter of 2022 was $294,400... which is 18% higher than it was in the first quarter of last year. As I do from time to time, let's look at the trends in detached home sales (in green below) compared to attached home sales (in orange below) which includes duplexes, townhouses and condos...  As shown above... [1] We've seen 1,104 detached home sales over the past year... which is 3% more than seen in the 12 months before that. [3] Comparatively, though, the number of attached home sales has increased much more over the past year. We've seen 546 attached home sales in the past 12 months, which is 15% more than in the 12 months before that! And how about prices... [2] The median sales price of a detached home in Harrisonburg and Rockingham County has increased 9% over the past year, to a nice (or not nice, if you're buying) round $300,000. [3] Prices of attached homes has increased at an even faster rate, with an 18% increase over the past year to a median sales price of $230,250! Here's one of my favorite graphs each month, showing monthly sales in our area...  So, plenty going on in the graph above. January 2022 was what we might have expected -- right in the middle of the pack as compared to past months of January. February sales were surprisingly high, easily exceeding previous months of February. But March, hmmm, not as exciting as we might have hoped. Why weren't there more buyers in March? Some of them might have bought in February. But more likely... home buyers didn't buy (close on a purchase) in March because there weren't enough home sellers listing their homes for sale in January and February. Fewer homes available to purchase means... fewer homes will be purchased. All that said, we are certainly seeing a significant shift in mortgage interest rates right now, and that may also affect buyer (and seller) behavior moving forward. It will be helpful to see what happens over the next three to six months to better understand the overall trends in our local housing market... which is a statement that is probably always true. The next six months of data will be the best indicator of what is going on right now. :-) Next up, stack 'em up...  Here's where we'll be able to keep good track of cumulative trends as we go through the year. The first three months of home sales this year (307) is slightly lower than those same three months last year... but higher than the two years before that. Will enough home sales pile on in April to make up that deficit? One indicator that might point to a yes or no will be contract activity in March. Keep reading... Slicing and dicing the data again, we end up reviewing our basic understanding of landforms...  OK, let's see how you did at geography... before you read the captions above... the green line is or is not a plateau? And how about the orange line? Indeed, the green line is definitely not a plateau... sales prices keep on climbing, higher and higher and higher again. But the orange line... might be (?) a plateau? The number of homes selling a year in Harrisonburg and Rockingham County dipped down to around 1300/year in mid 2020 at the start of the pandemic, but then accelerated well past 1600/year by the fourth quarter of 2021. Over the past eight months, however, we have been seeing a relatively steady number of home sales per year. So, lots of home sales, but that number is no longer increasing, at least for now. So, will we see annual home sales ever (even for a month) rise to 1700 sales per year? Maybe not, given the past eight months of hanging out in the 1650 - 1690 range. And below is one more sign of a possible change in a trend in our local housing market...  As can be generally observed above, the number of buyers buying has been flattening out over the past six to nine months -- and the number of sellers selling (inventory levels) have been stabilizing (at a really, really low point) during that same time period. So, is something changing in our local real estate market? Maybe? We probably shouldn't and wouldn't conclude that the balance in the market is shifting unless we see a measurable decline in buyer activity AND a corresponding increase in availability in homes offered for sale. Which brings us right back around to needing to remember that in order for a high level of buyer activity to be sustained.... we also need to see a sustained high level of seller activity. No houses to buy... no houses will be bought. But before anyone starts thinking that the balance in the market is changing, let's take a look at how negotiations are going these days...  Indeed, buyers and sellers in today's market will tell you that there is very little negotiating happening on price... unless you consider going well above the list price as negotiating. I listed three homes for sale last week... we had three offers on one, three offers on the second, and seven offers on the third. All are selling for more than the list price. So, even if buyer activity in the overall market is declining slightly, that might be simply a result of fewer sellers selling... because the competition for each singular listing is still quite fierce. So, no, Buyer Bruno, we certainly don't talk about negotiating. Nice try, though. OK, this next graph is what I've alluded to a few times earlier...  Yowzers! Contract activity was STRONG in March 2022! After a somewhat slow start to the year as far as buyer and sellers signing contracts to buy and sell... things took off in March! There were 187 contracts signed during March 2022, which was well above the 160 seen last March! And yes, as I alluded to a few times, this probably means we're going to see a rather strong month of closed sales in April. If that, indeed, happens, the slower month of March sales will then have quickly become a distant memory. Stay tuned. Maybe more buyers are buying (in March) because more sellers were willing to sell...  After many, many months of fewer and fewer homes for sale at any given time, we're finally seeing that metric staying stable and increasing ever so slightly. Maybe this is a win for buyers... at least inventory levels didn't drop any further? Whatever we can do to encourage home buyers in this market, let's do it, because it can be a discouraging time to try to buy a home right now! Below is another picture of why it can be discouraging to try to buy right now... and I guess this one is a reverse plateau...oops, a valley!?  This chart is measuring the annual trend of how long it takes for homes to go under contract once they are listed for sale. That very last data point of "5" means that over the past 12 months the median "days on market" was five days. So, half of the homes that sold went under contract in five or fewer days. So, so fast! This makes it somewhat more difficult to be a thoughtful, intentional, deliberate home buyer, because you are going to need to make a decision quickly!! And one last graph, that even shocked my Apple Pencil as I doodled on this month's graphs for you...  Yes, you are seeing that correctly. You can gasp as well if you'd like. Over the past two months, the average mortgage interest rate has risen from 3.55% to 4.67%. That was fast!?! For years now, I have incorrectly predicted that mortgage interest rates would really start to increase soon. As we entered 2022 it became clear that the time had really could when we would see rates start to increase... but I certainly wasn't expecting it to happen this quickly. Will rates push past 5% as we continue through the year? Will they stabilize between 4.5% and 5%? Any buyers who is hoping to buy in 2022 is carefully watching these rates as it relates to their potential monthly housing costs. OK! That brings us to the end of this month's recap of our local housing market. As you can see, there is a lot going on... home sales are slowing a bit, prices keep climbing, contracts are stronger than ever, interest rates are soaring... so much to watch as we move into the hustle and bustle of the spring market! Finally, some action items for you... [1] Go enjoy a meal at Vito's Italian Kitchen and take a friend, family member, or neighbor with you! [2] Are you preparing to sell your home this spring? Let's set up a time for me to swing by your house to walk through together and talk about house preparations, the market, the process and timing. Email me or call/text me at 540-578-0102 to get that process started. [3] Ready to buy? It can be done! Let's chat about what you hope to buy, and I can connect you with a few of my favorite lenders if you need some recommendations. Signing off now... reach out anytime if you need anything... and if you have a family member, friend, colleague or neighbor that is looking to buy or sell soon, feel free to send them my way. I'd be happy to help. | |
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Home Sales Rise Again, Along With Prices, In February 2022 |
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 Happy Friday Morning, and for many of you, Happy (end of) Spring Break! I hope your week has gone well, whether you had a break or not. I was able to skip town for part of this week down to Virginia Beach where I was delighted to experience several beautiful sunrises like this one on Monday...  There sure is something relaxing about being near the water... and if the water (and air) were warmer, it probably would have been quite relaxing to be in the water as well! :-) Before I dive into this month's charts and graphs, a few quick notes... Check Out Magpie Diner... Each month in this space I'll be highlighting one of my favorite spots in the 'burg, or surrounding, where I enjoy dining, having a cup of coffee, etc. This month... it's Magpie Diner... a breakfast and lunch restaurant with a diner-inspired menu. If I'm at Magpie, I'll likely be having the french toast of the week with some scrambled eggs and a side of bacon. Yum! Have you checked out Magpie? If not, I highly recommend that you do so sometime this month. To make it even more fun, I'm giving away a $50 gift card to Magpie Diner. Enter your name/email here and I'll pick a winner in about a week. :-) Featured Home... The beautiful home pictured above is a custom built, single level home with amazing views from the top of Crossroads Farm. Check out additional photos and all of the details of this home by visiting 750FrederickRoad.com. Download All The Graphs... Some of you prefer to download the full slide deck of charts and graphs. You can do so here. Now, let's move on to the market data...  As shown above, things started getting busier in February... [1] There have been 199 home sales in Harrisonburg and Rockingham County thus far in 2022... which is a 5.85% increase from the same timeframe last year. [2] When looking at the past 12 months there have been 1,680 home sales in our local market, which is an even larger (10.53%) increase over the prior 12 months. [3] These increase in the quantity of home sales have been accompanied by an 11% increase in the median sales price over the past year. The median sales price of all homes sold in Harrisonburg and Rockingham County increased from $247,900 up to $274,227 in the last year alone! [4] If you thought homes couldn't sell any faster... you (and I) were wrong. The median "days on market" for Harrisonburg and Rockingham County has fallen 29% over the past year... from a median of seven days to a median of five days! But, despite these strong increases across the board... not all property types have seen the same changes over the past year...  As shown above, the "attached" portion of the local market (townhomes, duplexes and condos) have seen a bigger boom over the past year than detached (single family) homes... [1] We have seen 8% more detached home sales in Harrisonburg and Rockingham County over the past year as compared to the prior year, while... [3] We have seen a much larger 17% increase in attached home sales during that same time. [2] The median sales price of detached homes has increased 9% over the past year, while... [4] The median sales price of attached homes has increased by 18% in a single year! So, it has certainly been a good time to sell (and a tough time to buy) a townhouse or duplex lately! Looking at the monthly "play by play" we can see that things started to get a bit spicy in February...  As you might notice, above, the 104 home sales we saw this January fell right in the middle of the pack for what we might have expected in a January. But... February was different. We saw 95 home sales this February which was well and above any other recent month of January. Where do we go from here? We'll know within the next few weeks as we finish out March. Will we be able to surpass last March's very, very active month with 139 home sales? Will we fall somewhere between March 2020 and March 2021? Stay tuned to find out. I know we're only two months into the year, but...  Yes, again, we are setting new records. In 2020, the 163 home sales see in January and February was the fastest start in many years. Then in 2021, I said the same about January and February with 188 home sales. And yet, here we are again, with 199 home sales in the first two months of the year, we seem poised to see another fast paced and highly active year in our local real estate market! Someone asked me recently if Covid had been a real drag on the local housing market. Yes, I said, for a few months...  You'll notice on the graph above that Covid did seem to drag down the annual pace of home sales in early 2020... between April 2020 and September 2020. But then as we kept moving through fall 2020, and then into and through 2021, things just wouldn't let up. We saw month after month (with only a few exceptions) of stronger and stronger home sales. What caused this? At least some of it was, really, Covid. The place and space we call home became even more critical during the pandemic, and many folks found themselves living in homes that didn't work that well when all of a sudden they were working from home or had kids learning from home. So, "home" became even more important than ever -- causing plenty of homeowners to move to a new home. That, plus super low interest rates (to try to stabilize the economy), plus less discretionary spending, plus stimulus funds, all put more money in the bank accounts of would-be buyers, allowing many of them to jump on into the real estate market. Finally, an increasing number of people found themselves able to work from home... causing some folks to relocate to the Shenandoah Valley to work from a much more beautiful and relaxing place than they may have lived previously. As we continue to work our way through this pandemic that might eventually be considered an endemic, will we eventually see a flattening out or a decline in the pace of home sales in Harrisonburg and Rockingham County? I'm not convinced that we will. Alongside all of the factors referenced above, the overall population growth in this area persists based on employers expanding, local college graduates staying in the area, parents of local college graduates retiring to the area, and much more. I think it is relatively likely we will continue to see a similarly active local housing market over the next few years. OK... tangent over... back to the numbers. ;-)  This graph is showing the overall trends in home sales (quantity) and median prices over the past few years. I included it this month to draw out the magnitude of the raw data... we have seen the median sales price increase $62,000 over the past three years! That's great news for sellers, and for homeowners, but certainly is not very welcomed news for home buyers who have not yet bought a home. We saw a 10% increase in the median sales price in 2020 and 2021. I'm not thinking the increase will be as large in 2022, but I do think the median sales price will increase yet again this year.  And where might the market be going from here, you might ask? Well... with a very strong month of contract activity in February (see above) it seems very likely that we'll see a strong month of closed sales in March. So, yes, we're about to enter the busiest time of the year... between March and August. Get ready!  If you are hoping to buy a home soon, you might look at the graph above and get depressed by the low inventory levels. But... scroll back up to the previous graph for a moment and look at all of the contracts we usually see signed between March and August. Those buyers signing contracts (one could be you!) are almost all buyers signing contracts on homes that are listed for sale between March and August. So, while inventory levels at any given moment are not likely to increase over the next six months... there are almost positively going to be lots (and lots) of options of houses for you to buy over the next six months... or at least options of houses for which you can compete against lots of other eager home buyers. :-/  Indeed, the competition is fierce... and the market is moving quickly! The median "days on market" is five days right now... which means you need to go try to see any new listing of interest within the first day or two of when it hits the market for sale -- and you need to be ready to make an offer shortly thereafter if you are interested in buying that exciting new listing. Eventually we might (should?) see this metric start to increase a bit as the market slows... but we are definitely and assuredly not there yet.  Lastly, how about those interest rates? If there is one external factor that has the highest likelihood of affecting home buying activity in 2022... it is rising mortgage interest rates. Just six months ago, the average mortgage interest rate on a 30 year mortgage was 2.87%... and it has risen more than a full percentage point in the past six months to 3.89% at the end of March. As such, not only are today's home buyers paying a higher purchase price for nearly any home that they might purchase -- but their monthly mortgage payment will also be higher now (than it has been in recent months and years) because of rising interest rates. It seems likely that these rates will either level out near 4% or continue to rise even a bit above 4% as we continue through 2022. OK! That makes it to the end of this month's recap of our local housing market. A few reminders for you... [1] Go eat at Magpie Diner. You're certain to love it! :-) [2] Looking to buy soon? Email me so we can chat about what you'd like to buy, and talk to a lender ASAP. Let me know if you'd like some recommendations. [3] Planning to sell soon? Let's meet to talk about your house, any needed improvements or preparations, pricing, timing, the market and more. Email me to set up a time to meet to talk. That's all for now. Be in touch anytime (email me or call/text 540-578-0102) if I can be of help to you or your family, friends, neighbors or colleagues. Hope to talk to you soon! | |
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Slightly Fewer Home Sales, Much Higher Sales Prices In January 2022 |
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 Happy Snowy Monday Morning! This is my favorite kind of snow... beautiful everywhere... but not sticking to the road...  I hope you stayed warm inside yesterday and that enjoyed the Super Bowl last night. Hopefully your favorite team won... or you enjoyed the commercials... or you enjoyed the half time performance... or you enjoyed spending time with family and friends while partaking in all of the above!? It seems like the year just started, but we're already one eight of the way through the year! Before we get started, two quick links of interest... [1] The beautiful home featured on the cover of this month's market report is located at 471 Flower Drive at the base of Massanutten Resort is and currently for sale. [2] You can download all of the graphs and charts from my monthly report here. Now, onto the data...  We're only looking at data for one month - and the slowest month of the year, so it's hard to draw many conclusions thus far, but here are a few things I am noticing... [1] There were slightly fewer home sales this year (103) than last year (106) during the month of January. [2] The median sales price over the past 12 months was $272,000 which is nearly 11% higher than the median sales price of $246,000 during the 12 months before that. [3] Homes are currently selling (going under contract) very quickly with a median of five days on the market - which is a 37.5% decline from the eight day pace a year ago. It is likely helpful to put this January in the context of other months of January, and other months, generally...  As you can now see, the 103 home sales this January landed right between the 100 sales in January 2020 and the 106 sales in January 2022. So, it was a typical January based on the past few years - though well above the 65 home sales seen in January 2019. Furthermore, we should likely expect to see sales drop in February as they have each of the past two years. January tends to be the second slowest month of the year for home sales with February leading the pack. Once we then head into March we should start to see a steady increase in the monthly pace of home sales. Now, a historical observation that I hadn't noticed until now...  This is one of the graphs I show you most months that allows us to look at how monthly home sales each year are stacking up compared to prior years. It seems the local housing market in 2020 was on par with 2019 all the way through August 2020 -- and then, the pace of home sales took off in the last four months of 2020, and have been accelerating ever since that time! But... maybe the pace of sales is leveling off a bit?  As you can see, the annual pace of home sales accelerated quickly from 1,300 sales per year up to 1,600 sales per year between mid 2020 and mid 2021. Over the past six months, however, the annual pace of home sales seems to have stabilized right around 1,650 sales per year. It will be interesting to see whether this trend continues as we continue through 2022. Now, then, looking at contract activity - which typically precedes the closing of a home sales by 30 to 60 days...  Two things to note about contract activity... [1] Last January we saw 133 buyers and sellers sign contracts to buy and sell houses in Harrisonburg and Rockingham County. This January, only 110 contracts were signed. This means that we will likely see a bit of a drop off in closed sales come February. [2] Looking back at last February and March we should note that we will likely also see a decline in contract activity between January and February before we see a large increase in March. So, expect a continued "slower" pace of market activity for at least the next few weeks before things potentially start accelerating in early or mid March. Another story line to be watching in 2022 is what happens with inventory levels...  Inventory levels have been declining for several years, most notably above through all of 2020. But during 2021, inventory levels remained relatively stable, and did not decline further. Maybe because they can't? There will always be some homes on the market as I don't think we'll get down to only five or ten or twenty five homes for sale. The floor, in this case, might be right around 100 homes for sale. It will be interesting to see whether we continue to see a range of around 95 to 130 homes for sale all year this year like we did last year. Part of the reason why inventory levels don't seem to be able to increase is because homes are going under contract so quickly...  As shown above, 81% of homes that sold in the past year went under contract within 30 days of being listed for sale. Going a bit further, we also see that half of the homes that sold last year went under contract within only FIVE days of being listed for sale given the median of five days on the market. With homes going under contract so quickly, it is not surprising that inventory levels did not manage to increase much through 2021. Here, then, is another visualization of the speed at which homes are going under contract...  As you can see, two years ago the median days on market was 18 days. That median days on market figure then speedily declined through summer 2021 when it hit just five days on the market. Since that time, it has leveled off at five days on the market, calling into question whether it could actually get any faster. As we continue through 2022 I will be monitoring this trend to see if the market seems to be slowing at all. Thus far, it is not. And, yet another story line to be following in 2022...  The average 30 year mortgage interest rate hit an all time low in late 2020 of 2.65%. Average rates closed out 2021 just above 3%, but have now climbed, within a month, to above 3.5% and they have continued to climb during February 2022. As rates increase, a buyer's mortgage payment increases depending on how much of a purchase price they are financing. At some point, rising interest rates will affect housing affordability -- for some buyers buying some houses. We will have to continue to observe this trend through 2022 to see if rising interest rates seem to be affecting the local housing market. So, as described above, there are plenty of possible developing trends in our local housing market. Stay tuned through 2022 to see if the market can and will stay just as strong in 2022 as it was in 2021. If so, it will continue to be a thrilling time for home sellers, and a bit of a challenging time for home buyers. If you are planning to buy a home, or sell a home, in 2022 let's connect soon to start talking about the process, the market and your goals and timing. Just reach out by email, phone or text (540-578-0102) and we can set up a time to meet. Until next time, enjoy the beautiful snow while it lasts -- it looks like temperatures will be starting to warm up come Wednesday! P.S. Happy Valentine's Day! | |
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Scott Rogers
Funkhouser Real
Estate Group
540-578-0102
scott@funkhousergroup.com
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