Are home sales increasing (too?) quickly, or just catching up?

Some folks would look at home sales over the past seven years (shown above) and comment that home sales are increasing at a very fast pace -- showing a 52% increase since 2010 -- or around 9% per year.  Of note -- this is not even including December 2016 home sales, so the rate of increase would be even a bit higher.



Others would look at home sales over the past 16 years (shown above) and comment that home sales have only had a small net increase over time -- and that the increases we have seen over the past seven years have been catching us back up to a normal amount of buyers buying in any given year.

I tend to fall into the second group. 

I believe that a "normal" (or "typical"?) number of buyers were buying in 2001/2002 -- and that we started to see the housing boom (loose lending standards, irrational buying craze) starting in 2003.  If that is the case, then we have barely seen a net increase between 2001/2002 and 2016. 

If we round this year (2016) up to 1300 home sales (to include December), and we average 2001/2002 to come up with 1112 home sales, then we have seen a 17% increase in sales over the past 14 years -- or an average of a 1.2% increase per year.

Then, let's put it in the context of population growth....

2001 Population Estimates per the Weldon Cooper Center....

• City of Harrisonburg = 41,480
• Rockingham County = 68,663
• Harrisonburg + Rockingham = 110,143

2015 Population Estimates per the Weldon Cooper Center....

• City of Harrisonburg = 53,875
• Rockingham County = 79,134
• Harrisonburg + Rockingham = 133,009

As shown above, we've seen a 20.7% increase in population in this 14 years timespan, or an average of 1.5% per year.

So, in a 14 year timespan, we've seen a 1.5% average annual increase in population as well as a 1.2% average annual increase in home sales.  That seems to be a reasonable growth in home sales -- perhaps even with some further upside potential for further increases.

As such, if we do see 1300 home sales this year, I think we are likely to see at least the same number next year.