It's easy to think, or say, that interest rates and home prices are the largest or main factors affecting whether sellers sell and buyers buy.

But... sometimes life events or life changes eclipse the impact of interest rates and home prices.

You are a new grandparent and you want to spend more time with your new grandbaby who lives eight hours away?  I'm not at all surprised that you plan to sell your home and move.

You have a new job opportunity with an exciting company in a city three hours away?  I'm not at all surprised that you plan to sell your home and move.

You are retiring in northern Virginia and your two kids both went to JMU and still live in Harrisonburg?  I'm not at all surprised that you plan to sell your current home and move to Harrisonburg.

There are lots and lots of life events or life changes that can cause a homeowner to all of a sudden be ready to sell... or can cause someone to all of a sudden be ready to buy.

These buyers and sellers that became such because of life events will still stop and consider interest rates and home prices... but the life event is typically what will actually cause them to decide to make a move.

 

When you think about buying your next home, think about the room or rooms in which you spend most of your time.

Some people spend most of their time in kitchen the kitchen or kitchen adjacent space.

Some people spend most of their time in the family room.

Some people spend most of their time in a sunroom.

Some people spend most of their time in a finished basement.

Some people spend most of their time in a home office.

Some people spend most of their time on a back patio or in the backyard.

Yes, and I know, most people spend time in lots of rooms... but which room is the primary room where you spend your time?

Once you have determined that number one room (or numbers one and two if you must) consider prioritizing how that space lives, feels and works when you evaluate homes you might purchase.

If you spend most of your time in the kitchen or kitchen spaces, then we shouldn't get too overly excited by the great home office and back patio that a home offers... as that is not where you spend most of your time.

Certainly, the patterns of how and where you spend most of your time might change in a new home, but make sure that the spaces in which you currently spend most of your time are going to be just as nice or nicer in your next home.

 

Wow!  I wasn't expecting this when I ran a few numbers on November home sales.

Last November... only 72 home sales.

This November... what!?!!?... 130 home sales.

More analysis of November (and year–to–date) home sales coming soon, but for now... this was a much busier November than we experienced last year.

By far.

 

Sometimes a house will have all of the spaces you're looking for (number of bedrooms, living room, family room, dining room, sunroom, office, etc., etc.) but sometimes... they will be in all the wrong places.

Yes, the home has a delightful primary bedroom suite... but it is on the upper level and you would really like for it to be on the main level.

Yes, the home has a dining room... but it is on the entirely opposite side of the house from the kitchen, which is not ideal.

Yes, the home has five bedrooms... but four of them are in the basement, and you want more main level bedrooms.

Yes, the home has both a living room and family room... but they are right next to each other, which makes it more challenging to have to groups socializing in the two spaces.

Yes, the home has a delightful office... but it is directly next to the playroom.

Yes, the home has a wonderful and renovated laundry room... but it is in the otherwise unfinished basement.

And on, and on, and on.

When we see a new listing of a house for sale we'll likely be able to discern what spaces that house will offer... but we often won't be able to determine if they are in the right places until we visit the house.

 

This is not the case for all houses, or all new listings, but... in the current market I'm often seeing two things happening...

Inventory levels are quite low right now, so plenty of buyers want to go see new listings if they are anywhere close to what a buyer might hope to purchase for their next home.  Low listing inventory results in lots of property showings.

But... home prices and mortgage interest rates are quite high right now, compared to where they have been over the past five years... so plenty of buyers who came to look at your house might decide not to make an offer.  Sometimes it just comes down to the numbers (your home price, current mortgage interest rates) and sometimes it's that the house is not "right enough" for the buyers.

So... hopefully you'll have plenty of showings of your home when it hits the market (this is likely) and hopefully you'll have lots of offers (this is less likely).

The market (buyers) responds differently to every home as it hits the market for sale, so don't take this as universal advice or insight across all price ranges, locations and property types.  For further insights on what you might experience if you list your home for sale, touch base and we can dive further into the more specific details of the sub–market for your home.

 

Only about a quarter of homes that are going under contract are doing so in three days or less.

And actually, only about half are going under contract within a week and a half... 11 days.

So, it's taking 12+ days for about half of homes to go under contract.

And it's taking 46+ days for about a quarter of homes to go under contract.

All that is to say, homes aren't going under contract quite as speedily as they were a year or two ago.

So, with some new listings – yes – you will need to make a decision (and potentially make an offer) very quickly – but not necessarily on most homes any longer.

 

Between 2016 and 2020 we were seeing around 150 to 200 new home sales per year, per the HRAR MLS.

But since 2021 we have been seeing upwards of 300 home sales per year in Harrisonburg and Rockingham County as recorded in the Harrisonburg Rockingham Association of Realtors Multiple Listing Service (HRAR MLS).

A few thoughts, notes and observations...

1.  These numbers do not include all new home sales, as some owners of lots or parcels of land hire builders to build them a home and these homes never show up as a new home sale in the HRAR MLS.

2.  Can you imagine how tight inventory levels would be in our market if these new homes had not been built?  Fewer homeowners have been willing to sell their home in recent years, but thankfully there has been an increase in the number of new homes being built.

3.  Pre–2021 the main regional / national builder in our marketplace was Evergreene Homes (Preston Lake) but since 2021 we have seen Ryan Homes and DR Horton join the mix.  These larger non–local builders have been significant contributors to these higher numbers of annual new home sales.

4.  Many new home developments are currently being built, or planned or proposed.  Higher interest rates have kept (at least temporarily) some builders and developers on the sidelines but we will still see quite a bit of new construction over the next few years.

In a growing area such as Harrisonburg and Rockingham County we will continue to see new home sales play a vital role in increasing housing options for people hoping to make this area their home.

 

The Rockingham County Planning Commission is reviewing a proposed rezoning of 6.63 acres on Port Republic Road, across from Hose Company Number 4, near the intersection of Port Republic Road and Boyers Road.

The developer is requesting that the 6.63 acre parcel that is currently zoned A–2 (General Agricultural) be rezoned to PMF (Planned Multi–Family) to allow for the construction of 68 townhome units.  The developer would seemingly plan to develop these over a two year timeframe with no more than 34 building permits being issued in any rolling 12–month period.

Here is the planned site layout...

You can download the full rezoning application and supporting documents here.

Current plans call for Planning Commission to review the request today (12/3/2024) and for the Board of Supervisors to review the request next month (1/8/2025).

 

Preparing your home to sell takes time, for most. 

Perhaps your home is neat and organized and show ready and we could take photos tomorrow to list your home for sale –– but this isn't the case for most homeowners.

There will likely be a few small projects you will want to take care of before putting your house on the market... and you will likely need to do a bit of decluttering... and you might need to remove some items from counters, cupboards, closets and more to have your home show best.

If you plan to sell your home this coming spring, but wait until spring to start on the projects –– it will likely seem overwhelming.

If you plan to sell this coming spring, to downsize, or move to a retirement community or to move to be close to the kiddos, or to get a bit more space, or for any other reason –– let's talk now about what you can be doing over the next few months to prepare your home to sell.

It will be a much more relaxing process if you start making small steps in the right direction now or soon –– rather than waiting until early spring to begin.

 

With most proposed new housing developments including apartments and townhouses these days –– and far fewer including detached homes –– some wonder whether we will continue to see fewer and fewer new detached homes built in future years.

Above you'll see how things shook out in 2023 and 2024.

Last year, 59% of new homes that were sold via the HRAR MLS were detached homes... more than half of the total.

This year, only 48% of new homes that sold via the HRAR MLS were detached homes.

I think there is a good chance that this trend –– a shift away from detached homes, towards attached homes –– will continue in new construction in this area over the next few years.

With fewer homeowners looking to sell their homes and buy another, often because of their low mortgage interest rates on their current mortgage... some such homeowners may be wondering how much it is reasonable to spend on renovating their home.

Here's one potential guideline to consider... and I'd like your feedback on it...

Consider spending no more than 15% to 20% of your home value on renovations... knowing that you will likely only increase your home value by no more than 10% by making such renovations.

Let's run a few examples...

$400K home... consider spending no more than $60K to $80K on renovations... knowing that you will likely only increase your home value by no more than $40K by doing so.

$600K home... consider spending no more than $90K to $120K on renovations... knowing that you will likely only increase your home value by no more than $60K by doing so.

Multiple thoughts run through my mind, and may run through your mind, when considering these examples...

1.  Where am I going to get $60K or $80K or $90K or $120K to make these renovations?  Yes, a good point.  These are intended to be theoretical maximum renovation budgets... but that doesn't necessarily mean you have those sort of funds on hand to make the improvements.  The renovations that many homeowners make will be bounded by their overall financial picture, more than these hypothetical guidelines.

2. Why will your home value only go up by $40K if I spend $40K to $80K?  Most renovation projects have a less than 100% return on the dollars you spend on that project.  Renovating an older kitchen into a brand new kitchen will increase your home's value, but likely by an amount that is less than the total cost of your renovation.

3.  Should I just sell my home and buy a new one instead of renovating?  Probably not.  When you consider the cost of selling, the cost of buying, the cost of moving, the cost of any improvements on the new house, and the change in mortgage payment based on current mortgage interest rates... most homeowners are better off staying and renovating rather than selling and then buying.

If you want to dial in a bit further on what your numbers could or would or should look like relative to your current home value, how much you might spend on renovations and a post renovation value, just let me know.

 

It has become increasingly difficult to purchase a detached home in the City of Harrisonburg... because there simply aren't as many sellers selling right now.

Three years ago (2021) there were 253 detached homes sales in the City.

In 2022 that dropped to 214 sales.

In 2023 that dropped to 155 sales.

Thus far in 2024, there have only been 132 detached home sales.

Why aren't more City homeowners selling their homes?

1.  Many have super low mortgage interest rates, and thus super low monthly housing costs, and wouldn't want to trade that in for much higher housing costs given current mortgage interest rates.

2.  While many homeowners have plenty of equity and sell for a very delightful sales price... they would also have to pay a rather steep price for a replacement home if they want to stay in the City.

3.  For anyone hoping to stay in the City, it's a vicious cycle... won't sell because what would I buy... which keeps my house off the market... which means there are fewer homes for anyone else to buy, etc., etc.

So, if you hope to buy a detached home in the City of Harrisonburg, you may very well have a longer wait than you'd like, you may have more competition from other buyers than you'd like, and you will probably pay a higher price than you'd like to pay.

 

For quite a while now, we've been operating in a market where nearly everything sells at or over the asking price, sometimes with multiple offers.

Thus, many buyers assume a seller will only sell for the asking price and it isn't worth making an offer below the asking price.

Sometimes this is, indeed, the case –– especially in the first few weeks that a house is on the market. At this stage, home sellers are typically still rather confident and/or hopeful that their asking price is appropriate for the market.

But after a house has been on the market for a few weeks, what's the downside of a buyer making an offer below the asking price? 

When a buyer views a house that has been on the market for a few weeks, and they don't like it enough to pay the list price... they often just move on and decide not to make an offer.

I think many buyers should, instead, consider what price they WOULD pay for the house.

If you like a house, but just not at the current offering price –– make an offer of the price you would be willing to pay for the house.  Who knows, the seller might surprise you, and might be willing to negotiate to a price that would work for them and for you!

 

I'd like to buy that house, over there...

Well, that's great, but... it's not for sale!  :–)

With some regularity, I'll be chatting with a buyer who describes what they want to buy... and we find that there is nothing on the market that matches their interests.

Sometimes we will go a step further and look to see if something similar has sold in the past year... and sometimes we will again find that nothing has sold that matches their interests.

But... this doesn't mean that the house they want to buy doesn't exist... it just means that it is not for sale and has not been for sale recently.

As you might imagine, this can be frustrating for said buyer... who really wants to buy a house like ___ or in ___ neighborhood... but finds that nobody is selling such a house or a house in such a location.

What, then, should you do if this describes your home search?  

Three main options exist...

1.  Continue to patiently (?) wait for such a home to come on the market.

2.  Compromise somewhat on the overall vision for your next home and buy something that is close to what you want, but not spot on.

3.  Start knocking on doors of homes you think you'd like to buy to see if you can talk a homeowner into selling. 

 

The most active price range for home sales in the City of Harrisonburg is... the $200K to $300K price range.

But this might be more than just what buyers are buying...

1.  The housing stock (what homes exist in the City) also impacts what is sold, and thus, what buyers can buy.

2.  The houses that homeowners in the City are willing to sell also impacts what is old, and thus, what buyers can buy.

An interesting unknown is whether home buyers would buy $500K+ or $600K+ or $700K+ homes in the City of Harrisonburg if more such homes existed.

Quarry Heights may help to answer that question as they plan to build $500K+ detached homes and $600K+ attached villas.

 

Buying a home inevitably involves making some compromises.  It is rare to find a home that fits you perfectly, that has everything that you want, and nothing that you don't.

But... there are different types of compromises you might be considering making when viewing any particular home...

1.  I like this home a lot, but I will probably want to update the flooring and do a lot of painting, and I might want to try to open up that wall between the kitchen and dining area.

2.  I absolutely love this home, and wouldn't really change anything about it, other than that I wish it didn't back up to this busy road as all we hear is road noise when we're out on the back deck.

The compromise on the first house is short term, and changeable –– you can (soon or eventually) replace flooring, paint walls, and possibly open up a wall between two rooms.

The compromise on the second house is likely long term, and unchangeable –– busy roads almost always tend to remain busy roads or to become busier roads. 

So, as you are thinking about the compromises you are making in pursuing any given home, think about whether they are aspects of the property that you can or cannot change in the future.

It is common knowledge that the winter months are the slowest when it comes to home sales –– in our local market, and beyond. 

But just how much slower are they?

The graph above shows the average number of *contracts signed* per month during the winter (Dec, Jan Feb) as compared to during the spring (Mar, Apr, May) based on the past three years of home sales in Harrisonburg and Rockingham County.

So... 

Is 100 buyers buying a month a significantly slower pace of buyers committing to buy than 142 buyers buying a month?  Yes.

Is 100 buyers buying a month still a pretty solid amount of buyers buying per month in the context of the spring market only comprising of 142 buyers buying a month?  Yes.

Is it possible that the number of buyers buying per month during the winter is artificially constrained by a lower number of sellers being willing to sell per month?  Yes.

So... if you are thinking about selling your home in the next six months... should you wait until spring?  You could, but I don't think you need to if you would rather sell and move sooner than springtime. 

There will still be plenty of buyers buying over the winter, even if it is not as many as will be buying in the spring.

 

Happy Friday morning, all! 

November is flying right along... with a rather entertaining overlap of the JMU football and basketball seasons (Go Dukes!)... plus one of my favorite holidays, Thanksgiving! 

Speaking of JMU Basketball... each month I offer a giveaway for readers of my market report.  This month I'm giving away four tickets to the JMU Men's Basketball game on Saturday, December 7 at 4:00 PM.  Click here to enter for a chance to win the tickets to cheer on the JMU Dukes!

Now, on to the latest in our local housing market.  First, some of the overall metrics...

Home sales slowed, a touch, in October 2024 with only 110 home sales as compared to 116 last October... but thus far this year we have seen 1,118 home sales, which is a 6% increase from the 1,050 seen in the same timeframe last year.  So... 6% more home sales this year than last... and how about those prices...

The median sales price in Harrisonburg and Rockingham County over the first ten months of 2024 has been $345,000 –– which is a 5% increase from the median sales price of $330,000 last year at this time.  So... 6% more home sales, and 5% higher prices... how about the speed of those sales...

Median days on market continues to (slowly) increase in 2024... which a current median of 7 days, up from 6 days a year ago, and 5 days the prior year.  So... small increases in the speed at which home sales go under contract, but 6% more home sales and 5% higher prices.

Now, let's take a quick look at only single family detached housing, which excludes townhouses, duplexes and condos...

In contrast to the market–wide 6% increase in the number of homes that are selling, we are only seeing a 2% increase in the number of detached homes that are selling.  Also of note, two years ago we had seen 941 detached home sales in Harrisonburg and Rockingham County through the end of October, whereas we are only seeing 751 such sales thus far in 2024.

When it comes to prices, we are seeing a stronger (12%) increases in the median sales price of detached homes as compared to the overall market–wide 5% increase in the median sales price.  Furthermore, the median sales price of a single family detached home has increased from $327,000 to $390,900 over the past two years.

Next up, let's take a peek just at the City of Harrisonburg...

While we are seeing increases in home sales in most portions of the market... and in the overall market... not so much in the City of Harrisonburg.  There have only been 231 home sales in the City thus far in 2024 which is a 13% decline from last year, and a 39% decline from the 376 home sales seen in the first ten months of 2022.

Meanwhile, in Rockingham County...

Mirroring the 13% decline in City sales in 2024, we are finding a 13% increase in Rockingham County home sales thus far in 2024. 

One reason we are seeing more of an increase in home sales in the County than in the City is a result of most new home developments currently being built in the County... and not the City. 

Here's a look at the number of new construction homes selling in recent years...

And as you might imagine... if we're seeing a 28% increase in new home sales in the first ten months of 2024, we probably aren't seeing much of an increase in existing home sales...

Indeed, we are seeing a tiny decline in existing home sales this year (793) compared to last year (796) though both are considerably below the 1,042 existing homes that sold two years ago in the first 10 months of 2022.

Rolling over now into some graphs, let's see what else we can learn about our local housing market through the end of October 2024...

For five of the past six months we have seen more home sales this year than last year... the one exception being October.  We could also generalize and say that the larger increases in monthly sales (larger little gold arrows) were on the first half of the past six months... while the smaller increases (smaller little gold arrows) were on the second half of the past six months. 

Looking ahead a bit on the graph above... it seems almost guaranteed that we will see more November home sales this year than last.  Last year we saw monthly home sales drop from 116 in October to 72 in November.  I don't think we will see that large of a decline this year.

When we pile up each month of the year on top of the prior months, here's what we get over the past few years...

Home sales are on the rise this year... increasing from 1,049 to 1,1118 in the first ten months of the year... BUT... that is still a significant drop from the 1,389 home sales seen in the first 10 months of 2022!  The biggest difference, as you likely know, is that we were still experiencing super low mortgage interest rates in 2022... which were no longer around in 2023 and 2024.

On this next graph I'm trying to generalize the main two shifts I have seen in 2024...

The top line is tracking median sales prices.  For several years we saw 10% per year annual increases in the median sales price... up to and including in 2023... but home prices seem to be increasing a bit more slowly in 2024... more in the neighborhood of a 5% increase instead of a 10% increase.

The other main change we have seen in 2024 is that home sales are rising again... so as to say that more homes are selling.  Through most of 2023 we saw steady declines in the number of homes that were selling, but that trend reversed itself (slowly) in 2024.

Zooming out a bit, take a look at the change in home values for detached homes in Harrisonburg and Rockingham County over the past five years...

Indeed... you are reading that correctly... the median sales price of a detached home in Harrisonburg and Rockingham County has increased by $150,000 over the past five years... for a cumulative 62% increase!

A few thoughts come to mind...

1.  Anyone who has owned the same home for the past 5+ years likely has quite a bit of equity in their home.

2.  It is a lot harder (financially) to consider buying a detached home now (median price of $391K) than it was five years ago (median price of $240K).

3.  Changes in mortgage interest rates over the past five years haven't helped buyers either –– as the average rate on a 30 year mortgage was 3.75% five years ago, and is 6.78% today.

Wowsa!

Shifting gears a bit, let's zoom back in to the here and now, to see what recent contract activity might tell us about upcoming months of home sales...

Here (above) is the other reason why I don't think we'll see a decline in November home sales this year like we did last year... there was a drastic difference in October contract activity this year compared to last.

The key thing to remember about last October is that it included the final climb to a peak average mortgage interest rate of 7.79%.  That steady climb slowed and slowed and slowed down buyer activity last October (and November) as shown by the blue line above.

Thus, even though mortgage interest rates are currently in the 6% – 6.75% range, we still saw many more buyers signing contracts to buy homes this October (138) as compared to last October (83).

I expect we will continue to see stronger contract activity in November and December of this year compared to the same months last year.

Which leads us to "pending sales" –– the number of homes that are under contract at any given time...

The red line (above) tracks how many homes are pending (under contract) per month in Harrisonburg and Rockingham County.  As you can see from all the gold arrows, we had been seeing increases in pending sales for most of the months this year... through August, when 2024 fell below 2023... but things have picked back up again significantly in September and October.

There are currently 291 homes under contract (pending) in Harrisonburg and Rockingham County as compared to only 234 a year ago at this time.

And how about those inventory levels?

Look at the difference in the trajectory of the blue and red lines above.  The blue line shows how inventory levels were steadily rising last year between July and October... in contrast to the red line that shows inventory levels mostly decreasing this year between July and October.

Now in November, we see far fewer (163) homes for sale than at the same time last year when 230 homes were listed for sale and not yet under contract.

A thread that runs through all of these charts are graphs is change in mortgage interest rates over time which is what we'll examine next...

Lots of arrows on this graph –– sorry, not sorry.  

A year ago we were seeing mortgage interest rates rise as we progressed from August (6.81%) to November (7.79%). 

We have seen an overall decline in rates over the past year (7.79% to 6.72%) but over the past month we have actually seen them start to increase a bit, rising from 6.08% at the end of September up to 6.72% at the end of October.

Mortgage interest rates significantly impact the cost of housing and have played an oversized role in the the housing market (locally and beyond) over the past few years due to how quickly they have increased.

So, if you've made it thus far, thanks for reading and for educating yourself on the state of our local housing market.  The general, recent, local, trends I am seeing in our local market include:

For much of the past few years, being optimistic and being realistic about pricing your home were one and the same.  The last similar home sold for $450K?  Let's price your home at $475K.  Three offers within days.  Yahoo!

But now, higher mortgage interest rates are pricing some buyers out of the market – which makes it ever more important for home sellers to find the balance between being optimistic and realistic when pricing their home.

The last similar home sold for $450K?  Perhaps we price your home at $449,500. 

A competing home has been on the market for 60 days priced at $455,000?  Perhaps we price your home at $445,000.

We can't just throw any price on your home and hope for the best –– we must do a careful analysis of the market, including past sales and current competing listings before determining a final pricing strategy for your home.

 

Darn those wide angle lenses.  ;–)

It's pretty a pretty common phenomenon these days... we'll go walk through a house that looked FANTASTIC online... only to find out that all (or most) of the bedrooms are TINY!

I don't really blame the seller, or the seller's agent, or the photographer... it's going to happen these days given high quality photography and wide angle lenses.

My takeaways, generally, are...

1.  It's important that we go walk through homes to get a sense of room size, house layout, where furniture will and won't fit, etc.  Viewing a house online, alone, is not enough.  

2.  Don't feel bad about taking the time to go see a house that ends up not being a great fit after we walk through... that is often the only way to get a true sense of the house.

3.  Sometimes we will be able to review room dimensions or floor plans prior to visiting a house... which might help us notice particularly small spaces... but walking through is still important.

4.  I don't think sellers need to mention how small particular rooms are... or not use a wide angle lens... but you should price your home accordingly if many buyers will disqualify themselves based on room size.