Are Smaller Homes Faring Better Than The Overall Market In Harrisonburg and Rockingham County?
Scott P. Rogers
My hypothesis was that smaller homes were performing better in Harrisonburg and Rockingham County than the market at large. After all, there is a significantly greater supply of homes for sale in the higher price ranges --- which would suggest that the real winners are the lower priced and smaller homes. Plus, the $7500 followed by $8000 tax credits were certain to bring lots of new buyers into this segment of the market....
The data, however, shows otherwise....
As shown above, the overall market experienced a 44% drop in home sales between 2005 and 2008. However....
As shown above, the market defined as homes with less than 1,500 square feet experienced a 47% drop in home sales during the same time period. Now, let's look at prices....
As shown above, median sales prices of all residential properties have decreased by 1.5% between 2006 and 2009. However....
As shown above, the market defined as homes with less than 1,500 square feet experienced a 4.5% drop in median sales price during the same time period.
How could this be?? The best explanations for this (slightly) lower performing segment of the market (1,500 SF or less) that I can offer are....
The data, however, shows otherwise....
As shown above, the overall market experienced a 44% drop in home sales between 2005 and 2008. However....
As shown above, the market defined as homes with less than 1,500 square feet experienced a 47% drop in home sales during the same time period. Now, let's look at prices....
As shown above, median sales prices of all residential properties have decreased by 1.5% between 2006 and 2009. However....
As shown above, the market defined as homes with less than 1,500 square feet experienced a 4.5% drop in median sales price during the same time period.
How could this be?? The best explanations for this (slightly) lower performing segment of the market (1,500 SF or less) that I can offer are....
- Lending guidelines have become increasingly stringent over the past few years, allowing fewer and fewer buyers to qualify for these homes.
- Investors have been largely absent from our market for the past few years since home prices increased so much faster than rental rates. The smaller number of investors has likely decreased the number of sales of homes in this size range.
- Between 2002 and 2005, many buyers were those who only planned to stay in the area for a year or two. They were comfortable buying because of the huge increase in home values each year that would allow them to sell again shortly after buying without taking a hit. Now, however, buyers need to plan to wait 3, 5 or 7 years before being able to sell without a loss.
