Harrisonburg & Rockingham County Real Estate Market Report ...

JANUARY 2018 Harrisonburg & Rockingham County Real Estate Market Report An analysis of real estate activity through December 31, 2017. provided courtesy of Scott P. Rogers, Funkhouser Real Estate Group

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[1] MARKET SUMMARY

HOME SALES REPORT Harrisonburg & Rockingham County # Home Sales

January 11, 2018

2014

2015

2016

2017

% Change ('16 - '17)

96

84

95

102

7.37%

Year-To-Date (Jan - Dec)

1080

1,126

1,313

1,254

-4.49%

Last 12 Months (Jan - Dec)

1,080

1,126

1,313

1,254

-4.49%

December

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Median Sales Price

7/28/2008 3:10:30

2014

2015

2016

2017

% Change ('16 - '17)

December

$178,250

$178,000

$199,900

$208,750

4.43%


$178,500

$185,000

$192,900

$198,500

2.90%


$178,500

$185,000

$192,900

$198,500

2.90%

2014

2015

2016

2017

% Change ('16 - '17)

December

65

46

65

30

-53.85%


66

54

52

33

-36.54%


66

54

52

33

-36.54%

Median Days on Market

December 2017 was a brick month of home sales in Harrisonburg and Rockingham County -- with 102 sales to finish out the year -- more than any of the prior three months of December. This brought our annual total to 1,254 home sales, which is 4% fewer home sales than seen last year -- though 11% more home sales than seen

in 2015. The median sales price in 2017 finished the year at $198,500 -- marking a 3% improvement over the past year, and the third year in a row of steady increases in sales prices. Homes also sold QUITE quickly in 2017 with a median “days on market” of 33 days -- down 37% from last year.

Published on January 11, 2018 by Scott P. Rogers, Associate Broker, Funkhouser Real Estate Group, based on data from the Harrisonburg-Rockingham Association of REALTORS (R) MLS for the period of 01/01/2000 - 12/31/2017.

[1] MARKET SUMMARY

HOME SALES REPORT :: BY AREA City of Harrisonburg

Rockingham County

# Home Sales

2016

2017

% Change

2016

2017

% Change

December

28

36

28.57%

67

66

-1.49%


441

419

-4.99%

872

835

-4.24%

. Rockingham County

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City of Harrisonburg

7/28/2008 3:10:30

Median Sales Price

2016

2017

% Change

2016

2017

% Change

December

$176,750

$216,875

22.70%

$205,000

$204,000

-0.49%


$167,000

$177,000

5.99%

$202,500

$210,000

3.70%

City of Harrisonburg

Rockingham County

Median Days on Market

2016

2017

% Change

2016

2017

% Change

December

52

25

-51.92%

69

32

-53.62%


35

23

-34.29%

62

40

-35.48%

Each year, twice as many (+/-) homes sell in the County as compared to the City, and 2017 confirmed that pattern yet again with 419 City home sales compared to 835 County home sales. The pace of sales declined 5% in the City and 4% in the County, but the median sales price increased in both areas. Prices rose a bit more quickly

in the City (6%) though to a lower median sales price of $177,000 -- as compared to the 4% rise in median prices in the County to $210,000. Homes sold more quickly in the City (median of 23 days on market) than in the County (median of 40 days on market) as has been the trend in recent years.


[2] RECENT TRENDS Harrisonburg & Rockingham County

Month-By-Month Home Sales History 175 2014 158

2015

150

149

2016

December 2017 102 Home Sales

138

2017

Single Family, Townhome & Condo Sales

152

133

134 125 117

125

101

100

93 85

75

69 67

56 50

49

69 68

72

53

58

FEB

MAR

68

110 107

111

115

108

129

126 118 106

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111 105 97

100 93

112 105 97

97

81

113

97

79

102 97

7/28/2008 3:10:30

95

84

68

25

0

JAN

APR

MAY

JUN

This year has not had the sky high monthly sales figures seen last year. As shown above, last August, September and November (all of 2016) were spectacular months of sales -- well above and beyond any previous such months in recent memory. This year, the months of August, September and November fell right in the middle of (or

JUL

AUG

SEP

OCT

NOV

DEC

above) 2014 and 2015 sales paces for those same months. We did close out the year with the best December that we have seen in several years, which helps the year of home sales round out nicely. We are likely to see relatively low (sub-80) months of home sales in January and February of 2018.



Monthly Cumulative Residential Sales 1400 1300

1,313

1200

1,218

1100

1,067

1000 900 800 700 600

832 747 685 623

0

910

920

839

817

808

743 664

734

500

383

400

400

299

308

226 146 79 40

228 154 87 41

296

2011

2012

462

100

900

497

400

200

988

592

542

300

974

618

500

1,085

697 591 466 355

1,125 1,041 962 857 760 634

1,105 1,008

282

1,254 1,152 1,055 958

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879

853

721

735

606

618

454

480

321

331

526 392

DEC

192 121 49

248 167 109 46

189 117 49

220

231

135 67

138 69

2013

2014

2015

2016

2017

This colorful graph offers another way to look at the overall sales trends for the past few years in the Harrisonburg and Rockingham County housing market. As shown above, our local housing market experienced small incremental growth between 2013 and 2015 before seeing a sharp uptick in home sales last year in

NOV OCT SEP AUG

7/28/2008 3:10:30

JUL JUN MAY APR MAR FEB JAN

2016. Through July of this year, it seemed that we would see more home sales in 2017 than in 2016 -- but we have since fallen quite behind! Slower months of home sales in this past Fall and early Winter resulted in a net loss in total home sales when comparing 2017 to 2016.



Time-Adjusted Home Sales Trends :: All Homes $198,500

$198,250

$196,125

$196,500

$194,500

$193,000

$192,700

$192,000

$190,000

$192,000

$192,000

$192,500

$190,000

$190,000

$189,000

$186,250

$185,750

$185,000

$185,000

$186,000

$186,500

$186,000

$185,000

$185,000

$185,000

$186,000

$185,000

$185,000

$185,000

$185,000

$185,000

$180,000

$179,900

$179,000

$179,700

2,000

$178,000

2,500

$195,000

# Home Sales, Median Sales Price in each 12 Month Period

$180,000

1,254

1,247

1,263

1,287

1,263

1,327

7/28/2008 3:10:30

1,325

1,324

1,323

1,316

1,315

1,313

1,302

1,268

1,244

1,212

1,205

1,187

1,164

1,156

1,143

1,143

1,125

1,138

1,134

1,127

1,148

1,145

1,128

1,122

1,119

1,107

1,093

1,078

1,276

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1,500

1,339

Stable

1,085

$200,000

$160,000

1,000 $140,000

500

0 Dec-14

$120,000

Dec-15

This graph shows a rolling 12 month trend line of the number of homes sold in the Harrisonburg and Rockingham County area, as well as the median price of the homes that sold during these time frames. Each data point shows one year’s worth of home sales, which eliminates the volatility of evaluating sales figures on a

Dec-16

$100,000 Dec-17

monthly basis. Over the past three years we saw relatively consistent increases in the annual pace of home sales up until August 2017, when the pace of sales started slowing down. The median sales price has been steadily increasing for a year and a half and is now nearing $200,000.


[3] LONG TERM TRENDS Harrisonburg & Rockingham County

Home Sales & Price Trends Single Family Homes & Townhomes

$250,000

1,800

+14%

1,000 +4%

$127,700

800

$122,588

+17%

$169,900

1,153

$149,000

1,200

+14%

1,248

-6%

+1%

+2%

+4%

1,067

+2%

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1,085

+3%

$198,500

$192,500

+4%

-4% 1,254

1,122 +3%

$150,000

+19% -10%

870

-8%

799

+4%

832

+8%

$200,000

1,309

+17%

-23%

967

+2%

$185,000

-13%

-3%

$178,000

-5%

$175,000

n/a

$172,375

+15%

$192,983

1,324

+1%

$169,900

1,400

$179,900

1,438

+14%

$185,000

-14%

1,507

$195,000

1,600

$195,100

1,669 +11%

7/28/2008 3:10:30

900

$100,000

600

400

$50,000

200

0

2002

2003

2004

2005

2006

2007

2008

2009

This graph provides an overall indicator of the state of our housing market, showing both the number of homes being sold each year since 2002 (yellow bars) as well as changes in the median sales price during the same time period (blue line). After six years in a row (2011-2016) of an increasing pace of home sales, we then saw a 4%

2010

2011

2012

2013

2014

2015

2016

2017

$0

decline in the pace of home sales in 2017. This was accompanied, however, by a 3% increase in the median sales prices, which continues the now six year (2012-2017) trend of increasing median sales prices, and we have now reached the highest annual median sales price ever seen in Harrisonburg and Rockingham County.



Home Sales & Price Trends Single Family Homes

1,400

1,000

800 $147,000

$136,000

-1%

+5%

+7%

-10%

+20%

813

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819

n/c

884

$175,000

818

7/28/2008 3:10:30

+21%

-15%

678

+1%

$225,000

978

909 798

+5%

$224,950

$214,000

$200,000

$190,000

-2%

$192,000

+6%

-12% +16%

+8%

600

+24%

880 $170,000

+3%

-6%

-11%

+16%

851

-4%

$195,000

1,024 n/a 1,025

$184,000

-6%

$195,000

-4%

$203,000

-1%

$215,000

+8%

$223,575

1,200

$226,800

$210,000

$275,000

-11%

602

-1%

595

+10%

653

+3%

672

$125,000

$75,000 400

$25,000

200

0

2002

2003

2004

2005

2006

2007

2008

2009

The single family home market in Harrisonburg and Rockingham County improved significantly between 2015 and 2016 with a 20% increase in the number of homes sold and an accompanying 7% increase in the median price of those homes. Last year proved to be a bit of a different year -- with a 10% decline to only 884 homes

2010

2011

2012

2013

2014

2015

2016

2017

-$25,000

selling in the year -- though the median sales price continued to rise, from $214,000 up 5% to $224,950. This brings us very close to the highest annual median sales price for single family homes -- which is currently the median of $226,800 seen in 2006. It only took eleven years to (almost) get back to that level.



Home Sales & Price Trends Duplexes, Townhomes & Condos

529

444

$103,100

+47%

300

+14%

302

$118,500

+5%

-6%

-15%

+10%

$108,200

400

+9%

483

+3%

-1%

$159,800

+7%

$180,000

$160,000

$140,000

450

$134,950

500

+11%

n/c

$149,500

-9%

$151,750

-3%

$151,750

+19%

$137,250

-4%

$132,750

$166,635

+2%

$140,500

+33%

+2%

$154,250

-18%

$159,545

600

$163,800

644

$160,850

700

$120,000

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-36%

289

+12%

304 -7%

268 228

-24%

204

200

-12%

+11%

254

+5%

266

+9%

7/28/2008 3:10:30

370 $100,000

331

+14%

$80,000

+27%

$60,000

179

$40,000 100 $20,000

0

2002

2003

2004

2005

2006

2007

2008

2009

Townhouse (and duplexes and condo) sales are on a roll! Last year marked the sixth year in a row that we have seen an increase in the number of these sales in Harrisonburg and Rockingham County, with 370 sales -- up 12% from last year. In even better news, the median sales price of these townhouses, duplexes and

2010

2011

2012

2013

2014

2015

2016

2017

$0

condominiums has risen 7% over the past year from $149,500 up to $159,800. We still have not returned to the peak median sales price seen in this property category between 2006 and 2008, and we are likely never (or not for a long while) to see a return to over 600 of these sales per year, as was seen in 2005.



Market Balance between Buyers and Sellers Assuming Six Months of Housing Supply is a Balanced Market

900

800

822 813 801 791 780 770 757 744 730 718 705 694 686 679 674 664 656 646 641 637 635 632 631 628 624 622 617 618 622 625 628 630 631 633 633 635 635 634 633 631 627 625 622 616 612 607 608 609 611 610 610 609 606 599 600 603 619 635 631 648 655 656 656 660 660 668 662 664 644 632 632 624 627

SELLERS

BUYERS

600

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Over Supply = Buyer's Market

500

400

7/28/2008 3:10:30

Seller's Market

A Relatively Balanced Market

397 397 401 403 401 406 407 416 422 416 425 444 432 436 447 447 462 472 477 486 496 503 509 492 507 510 502 496 482 484 491 495 491 504 515 518 521 518 527 535 543 547 560 554 565 560 559 565 560 570 570 577 581 593 592 584 578 569 556 542 530 516 505 491 476 461 446 435 423 411 401 390 379

700

SELLERS

BUYERS

300

200

Most housing market analysts consider six months of inventory (active listings) to be an indicator of a balanced market (between buyers and sellers). The “BUYERS” trend line above is illustrating how many buyers are buying in a six month period. The “SELLERS” trend line above is illustrating how many sellers are in the market

Dec-17

Oct-17

Aug-17

Jun-17

Apr-17

Feb-17

Dec-16

Oct-16

Aug-16

Jun-16

Apr-16

Feb-16

Dec-15

Oct-15

Aug-15

Jun-15

Apr-15

Feb-15

Dec-14

Oct-14

Aug-14

Jun-14

Apr-14

Feb-14

Dec-13

Oct-13

Aug-13

Jun-13

Apr-13

Feb-13

Dec-12

Oct-12

Aug-12

Jun-12

Apr-12

Feb-12

Dec-11

100

(active listings) at any given time. Over the past four years we have seen a steady increase in buyers and a declining number of sellers. In June 2016, these two trajectories crossed, and there are now many more buyers buying in a six month period than there are homes for sale -- though the pace of buying activity is slowing.



Median Price vs. Price Per SF (Single Family Homes) Median Price

Price/SF $350,000

$140

$129

$127

$127 $117

$116

$120

Median Price Per SF $113 $101

$97

$100

$87

$227K $224K

$81

$210K

$80

$103

$105

$106

$136K

$113

$215K

$203K

$214K $195K

$184K

$195K $192K $190K

$225K

7/28/2008 3:10:30

$200,000

$200K

Median Sales Price

$150,000

$147K $100,000

$40

$50,000

$20

$0

$300,000

$250,000

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$170K $60

$108

$118

2002

2003

2004

2005

2006

2007

2008

2009

In addition to monitoring home values by overall median sales prices in our market, it can be insightful to examine the median price per square foot of homes that are selling. The graph above shows the median price per square foot of all single family homes sold over the past 10+ years. The value trend captured by this graph is quite

2010

2011

2012

2013

2014

2015

2016

2017

$0

similar to the trend shown in the single family home median sales price during the same time, which validates that assumed set of changes in home values. Over the past year+ (2015 to 2016 to 2017) we have seen increases in both the median sales price as well as the median price per square foot of single family homes.



Median Price Per Square Foot by Home Size Single Family Homes

0 - 1,499 SF

1,500 - 2,500 SF

2,500+ SF

150

140

$138 $132

130

$127 $123

120

$126 logo.indd 1

$121 $117

$117

$115 $108 $104

$105

100

$106

$115

$114

$111

$111

110

7/28/2008 3:10:30

$121

$105

$104

$106

$101 $103 $96

$97

$119

$105

$107

$101

$98

90

80

2008

2009

2010

2011

2012

Price per square foot of single family homes certainly varies for many reasons, including the age, location, lot size and structural characteristics of each home sold. However, there are some similarities in homes of similar sizes. Looking at 2017 figures, this graph illustrates that the median price per square foot of larger homes

2013

2014

2015

2016

2017

(2500+ SF) is a good bit lower ($107/SF) than that of homes with less than 1500 SF ($132/SF). These values cannot be used as an absolute standard against which the value of any home can be measured, but they can provide some helpful guidance when trying to determine the value of a home.



Median List Price to Sales Price Ratio within the context of Home Sales Pace

2,000

1,750

97.8%

98.1%

99.1%

99.1%

98.9%

98.0%

98.0%

1,669

96.0%

96.0%

96.0%

97.0%

97.0%

97.0%

100.0%

1,438

1,324 1,250

98.0%

95.0%

1,507

1,500

97.0%

98.0%

1,309

1,248 1,153

1,254

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1,067 967

1,000

870 799

832

1,085

90.0%

7/28/2008 3:10:30

1,122

900

85.0%

750 80.0% 500 75.0%

250

0

2002

2003

2004

2005

2006

2007

2008

2009

This graph shows the average list price to sales price ratio (red line) over the past 15 years as compared to the overall pace of home sales. At the peak of the housing boom (2004-2006) sellers were able to obtain a median of 99% of their asking price --- up from a median of 97.7% in 2001 before the pace of home sales started

2010

2011

2012

2013

2014

2015

2016

2017

70.0%

escalating. Then, when the pace of home sales slowed (through 2010) we saw a decline in this metric to 96%, where we stayed for three years (2010, 2011, 2012). Sellers started selling for slightly more in 2013-2015 when they could obtain 97% of their list price. This increased to 98% in 2016 and held steady in 2017.



New Construction Single Family Home Sales Trends Number of Sales, Median Price Per Square Foot

200

186 200

180

$133

$149

$141

$140

$136

$129

$128

$129

150

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7/28/2008 3:10:30

109

$114

$105

80

$99

100

$130

121

120

$146

139

$137

140

137

$150

140

$144

158

160

84

82

60

41

40

45

51

100

77

54

47

50

38

20

0

2002

2003

2004

2005

2006

2007

2008

2009

New home builders experienced a steady decline in new home sales between 2005 and 2010 -- dropping 78% from a peak of 186 to 41 sales in a year. Even if we use a starting point of 2001 (not shown above; before the housing boom) we still find a 70% drop between 2001 and 2010. The number of new home sales per year has

2010

2011

2012

2013

2014

2015

2016

2017

0

not crept up much since that time -- staying between 38 and 54 new home sales per year. The past two years, however, were QUITE different. There were a total of 82 new home sales in 2016 and 77 more in 2017 -- a welcome sign for new home builders as we look ahead to 2018.


[4] BUYER ACTIVITY Harrisonburg & Rockingham County

Buyers Per Month Commiting to Buy Properties 180

158

160

141

140

133 118 109

99 86

76

80

70

63

97

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93

7/28/2008 3:10:30

87

84

82

112

111

109

108

98

100

133 132

119

118

114

137

130

128

126 120

140

87 79

74

67

63

69

67

60

40

Annual Pace: 1,331 contracts

20



Strong contract activity is typically an indicator of strong months of sales to come. Last year was a bit of a mixed bag -- we started off strong in March, April, May and June and then things slowed down into the late Summer and Fall months. We did see a bit of an increase in October, then slower contract activity in November, and

Dec-17

Nov-17

Oct-17

Sep-17

Aug-17

Jul-17

Jun-17

May-17

Apr-17

Mar-17

Feb-17

Jan-17

Dec-16

Nov-16

Oct-16

Sep-16

Aug-16

Jul-16

Jun-16

May-16

Apr-16

Mar-16

Jan-16

Feb-16

Dec-15

Nov-15

Oct-15

Sep-15

Aug-15

Jul-15

Jun-15

May-15

Apr-15

Feb-15

Mar-15

Jan-15

Dec-14

0

then a bit of a bump again in December. I believe restricted inventory levels are one of the biggest limitations on the number of homes that are going under contract. Looking ahead, we are likely to see at least one more month of rather slow contract activity, and then things could start to speed up as soon as February.


[5] INVENTORY LEVELS Harrisonburg & Rockingham County

Inventory Levels (end of month)

600

560

500

570 532 539

581 582

568

549

560 532 480 451 413

400

402 400

411

418 394 393

368

409

396 356

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7/28/2008 3:10:30

322 300

280

200

100

0

Overall sales activity is the combined effect of many would-be home buyers deciding to make an offer on a particular home -- and those decisions are not typically taken lightly. In contrast, changes in inventory levels are the effect of many homeowners deciding to list their home for sale -- which may be a significant decision, but it is not

always so. Some homes that are on the market have been listed for sale by sellers who are “testing the market” and as a result, inventory levels can shift more quickly than home sales trends. Inventory levels have been declining drastically over the past year -- and are now 32% lower than they were one year ago.



Inventory Levels by Property Type Single Family Homes

Townhomes, Duplexes, Condos

500 450

408 400

418

430

439 436

435 416

403

392 392

26% Decline in Inventory

372 343

350

318

311 312

327 327 325 320

282

300

341

329 290

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7/28/2008 3:10:30

266 234

250 200 150

152 150 147 152 151 143 139 133

125


129 108 108

100 50

95

86

94

88

84

98 74

68

69

72

66

56

46

0

This graph examines the differences in inventory levels over time when examining only single family homes as compared to attached dwellings (townhouses, duplexes, condos). The number of single family homes for sale has decreased by 26% over the past year, while the number of townhouses, duplexes and condos for sale has

decreased by a startling 52% over the past year! All we can hope is that these inventory levels will start to climb again (??) at some point -- maybe next Spring!?! There are many buyers in our local market who are anxious to buy, but not finding many properties that they would like to purchase.



Inventory Levels by Property Location City of Harrisonburg

Rockingham County

500 450

408 406 405 400

417

429 434 425 401

419 398


368 345

350

321

313 314

322

322 316

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281

300

312 313 314

7/28/2008 3:10:30

277 246

250

216

200

152 150

136 134

153 152 148 150 148 141 134 112 106

100

92

87

92

86

89

89

104 80

30% Decline in Inventory 88

85

79

76

64

50 0

Inventory levels have been falling in both the City and County over the past two years, with a 30% and 33% decline in each region, respectively. Of note -- while there are approximately twice as many home sales in the County than in the City -- there are more than three times as many homes for sale in the County than in

the City. As such, the low inventory is much more of an issue in the City right now if we look at both sellers (supply) and buyers (demand). I would like to say that we should see inventory levels start to increase again next Spring, but that does not seem to be a certainty given trends over the past year.


[6] DAYS ON MARKET Harrisonburg & Rockingham County

Days on Market Analysis of Sold Properties Residential Listings Sold in the Past 12 Months

6 - 12 months 121 10%

> 1 year 49 4%

Harrisonburg & Rockingham County

Days on Market Analysis of Active Listings Active Residential Listings

> 1 year, 27, 10% < 30 days, 40, 14%

3 - 6 months 196 16%

6 - 12 months, 47, 17%

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< 30 days, 593, 47%

30 - 59 days, 28, 10%

7/28/2008 3:10:30

60 - 89 days, 33, 12%

60 - 89 days, 105, 8% 3 - 6 months, 105, 37%

30 - 59 days, 190, 15%

Median Days On Market: 33

Median Days On Market: 123

Declining inventory levels are contributing to an overall decline in the time it takes to sell a home in Harrisonburg and Rockingham County. The current median “Days on Market” is 33 days for homes that have sold in the past year. Remarkably, 47% of homes that have sold in the past year have gone under contract within 30 days

of having hit the market. Combine that with those that went under contract during the second month on the market, and you’ll find that 62% of homes that sell go under contract within 60 days. The graph to the right, above, shows the length of time that each active listing has been on the market for sale.


[7] MARKET SEGMENTS Harrisonburg & Rockingham County

Home Sales by Price Range (Average of Past 12 Months)

$0 - $200k

$200k - $300k

$300k - $400k

$400k +

70

60

54

55

54

55

56

58

58

57

59

59

58

60

60

60

60

60

60

60

59

59

58

58 55

54

53

-10% YOY

50 logo.indd 1

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40

30

27

27

27

27

27

27

28

28

28

29

29

30

31

31

31

32

31

33

32

33

33

34

33

32

33

+9% YOY

20

10

7.4

7.7

8.3

5.4

5.4

5.5

8.4

8.3

5.7

5.9

8.5

9.3

9.6

12.8 12.4 12.3 12.0 12.3 12.5 12.0 12.4 12.6 12.3 12.1 11.8 11.9 11.5 12.3 10.3 11.3

5.3

5.6

6.1

6.1

6.3

6.3

6.1

6.2

6.0

6.1

6.4

6.2

6.6

6.8

6.8

7.1

6.6

6.4

6.1

6.4

-4% YOY +1% YOY

0

The pace of home sales in Harrisonburg and Rockingham County varies significantly based on price range. The graph above shows the average number of home sales per month (given a 12-month average) as we have passed through the past two years. Home sales have been declining over the past year in the “under $200K”

category -- though likely because of limited inventory, and fewer properties existing in this range based on increasing home values. The largest increase in pace of home sales has been in the $200K - $300K price range, where sales have increased 9% over the past year.



Inventory Levels by Price Range $0 - $200k 300

283 261 264

$200k - $300k

$300k - $400k

$400k +

274 256

250

248 234

229

221 217 202

190

200

174

182

172

190

182

157 154 153 156

143

150

100 65 50

55

69

48

66

56

76

64

176

166

78 73

75 69

80 72

75 73

82 75

77 72

71 64

136

64

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141 127

147

60 66

61 48

137 133 133 136 137 130

117 116 114

73 62

50

7/28/2008 3:10:30

74 75

125 107 82

71

85

69

99 82

132 84

131 116

113

124 121 86

81

108 79 98 63

76 65

69

63

53

98 87 58

48 37

-41% YOY -28% YOY -2% YOY -21% YOY

0

Inventory levels shift up and down seasonally, but we are also seeing differences in year-over-year trajectories in each of the four price ranges outlined above. The lowest price range (under $200K) has seen an astonishing 41% decline in inventory levels over the past year -- which is followed by a 28% decline in the $200K - $300K

price range. The only price range where inventory levels have almost held steady is the $400K+ price range, where there are only 2% fewer houses on the market today as compared to one year ago. The $300K - $400K price range has seen a 21% year over year decline in inventory levels.



Months of Housing Supply by Price Range $0 - $200k

$200k - $300k

$300k - $400k

16 14

Entire Market: 3.6 Months of Housing Supply 12-Month Average of 379 Active Listings 12-Month Average of 104 Sales/Month

14

14

13 13

13 12

13

12

11

10 9

9

8

6

6

5 4

2

9

10 8

6

5

12

12

12

12

11 10

10

10

9

9 8

8

7

8

7

6

8

6

5

6

6

6

6

5

4

4

4

4

6

-3% YOY

6 6

6

5

5

5 4

7/28/2008 3:10:30

7

6 5

12

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6 6

13

12

11

12

10

$400k +

3

4

4

4

4

2

2

3

5 4

4 5 3

5

4

4

4

4

4 2

2

2

2

2

4

2

4 2

4 3

3 2

3 2

3 2

-18% YOY -34% YOY -34% YOY

0

With so many home sales (lots of buyers) and so few homes on the market (not so many sellers), there are low levels of supply in some price ranges in our local real estate market. The graph above illustrates that while it would take 9 months to sell all of the homes currently for sale over $400K if the same number of buyers

bought each month as have been buying (on average) over the past 12 months -- it would only take two months (!!) to burn through the under $200K inventory. Many consider a six month supply to be a balance between buyers and sellers, and we aren’t anywhere close to that in any price range under $400K.


[8] LOTS AND LAND Harrisonburg & Rockingham County

Lot Sales & Median Prices less than 1 acre

$120,000

450

$99,900

408 400

$100,000

$76,500

350

$36,900

150

$32,208

200

$58,000

7/28/2008 3:10:30

$54,500

$59,650

$53,950

$54,900

$56,500

$54,500

$55,000

$56,600

247

$54,500

250

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$42,000

261

$80,000

$59,900

304 300

Stability

$40,000

111

100

$60,000

Stable-ish 85

83

75 58

64

62

63

2010

2011

2012

84

78

83 64

$20,000

50

0

2002

2003

2004

2005

2006

2007

2008

2009

With the exception of 2016, we have seen between 78 and 84 lot sales of less than an acre for each of the past five years. This is a sharp decline from the 260 - 400 lot sales seen in 2002-2005, but it is an improvement over where things were (58-63 sales) between 2009 and 2012. From a value perspective, the sales prices of these

2013

2014

2015

2016

2017

$0

“less than an acre” lots have also been rather stable -- fluctuating no further than between $54K and $60K over the past ten years. That is, of course, after a meteoric rise and then fall to/from $100K. Given the trajectory of lot sales over the last few years, I expect we’ll see something similar in 2018.



Price Distribution of Active Lot Inventory less than 1 acre

$100k + 48 listings 27%

$0 - $40k 30 listings 17%

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$40k - $60k 35 listings 19%

$80k - $100k 40 listings 22%

$60k - $80k 27 listings 15%

180 Active Lot Listings; Median List Price: $79,900

Despite the fact that only 83 lots (of less than an acre) sold in all of 2017, there are a remarkable 180 lots currently for sale. Furthermore, the median list price of lots for sale ($79,000) is considerably much higher than the 2017 median sales price of $58,000. Given last year’s 83 lot sales, if no other lots were listed for sale, it would

take just over two years to sell all of the lots currently listed for sale. As you can see above, a significant portion of the lots currently listed for sale are priced above $60,000 --- thus many sellers have offering prices higher than recent (2011-2017) median sales prices.



Land Sales & Median Price Per Acre 1 acre or more

107

$15,827

7/28/2008 3:10:30

$10,000

100

87 77

76

80

88

83 70 57

60

51

44 40

66

$5,000

73 $0

58 49

-$5,000

28 -$10,000

20

0

$20,000

$15,000

$10,000

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$15,171

$13,240

$14,981

$15,000

$15,964

$25,000

$9,932

$9,535

120

$8,333

140

$12,003

160

$15,000

$17,713

168

$13,957

180

$30,000

$20,833

$24,184

200

2002

2003

2004

2005

2006

2007

2008

2009

Parcels of land larger than one acre in Harrisonburg or Rockingham County increased in pace during 2017 to 88 land sales -- marking the highest year of sales since 2005. The median price per acre has also risen over the past year, from $10,000 to $15,827. That said, it was $15,171 two years ago -- so this is effectively not a net

2010

2011

2012

2013

2014

2015

2016

2017

-$15,000

increase in price per acre over the past two years. Of note -- some aspects of this “median price per acre” calculation are affected by which parcels actually sell in a given year. We saw an increase in buyer demand in 2017, which seems to have lead to a further increase in the median price per acre.



Price/Acre Distribution of Active Land Inventory 1 acre or more

$100k + 21 listings 11% $75k - $100k 10 listings 5%

$0 - $10k 44 listings 23%

$50k - $75k 9 listings 5% logo.indd 1

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$30k - $50k 19 listings 10%

$20k - $30k 31 listings 16%

$10k - $20k 60 listings 31%

194 Active Land Listing; Median List Price: $18,933 / Acre

Despite the fact that only 88 parcels of land (of one acre or more) sold in all of 2017, there are 194 parcels of land currently for sale. Furthermore, despite the fact that the median sales price of land is hovering around $15,000 per acre, the median list price of the 194 parcels for sale is currently $18,933 per acre. Given last year’s 88

land sales, if no other land is listed for sale, it would take just over two years to sell all of the parcels of land currently listed for sale. As you can see above, the vast majority of land listed for sale is listed at median prices per acre well above the median sales price per acre.


[9] ECONOMIC INDICATORS Harrisonburg & Rockingham County

Home Sales vs. Trustee Sales Home Sales per HRAR MLS

Recorded Trustee Deeds

1,800 1,669 1,600

1,507 1,438

1,400

1,324

1,309

1,248 1,200 1,153 1,085

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1,254

1,122

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1,013

1,000

936 864

816

794

758

800

600

400 270 200 63 0

2002

75

2003

70 2004

86

2005

93

2006

97

2007

177

118

2008

2009

The graph above is a comparison of two imprecise measures -- but the comparison can still be helpful. The blue bars show the number of home sales recorded in the HRAR MLS -- this does not include private sales that did not involve a Realtor, nor new home sales directly from a builder. The red bars show the number of recorded

2010

223

2011

252

2012

222

2013

163

2014

139

2015

136

2016

134

2017

Trustee Deeds. Some foreclosed properties then show up again as REO properties. The foreclosure rate in our local market area is trending downward, though very slowly, and the pace of home sales is increasing much more quickly.


[9] ECONOMIC INDICATORS Average 30-Year Fixed Mortgage Interest Rate Source: Freddie Mac

6.00%

3.00% Dec-14

Dec-16

3.99%

3.94%

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Dec-15

3.90%

3.83%

3.82%

3.92%

3.88%

3.95%

4.03%

4.16%

4.14%

4.19%

4.03% 3.47%

3.42%

3.50%

3.43%

3.48%

3.64%

3.48%

3.66%

3.71%

3.62%

3.79%

4.01%

3.95%

3.86%

3.76%

3.84%

3.98%

4.02%

3.87%

3.68%

3.69%

3.80%

4.00%

3.66%

4.50%

3.87%

5.00%

4.32%

5.50%

Dec-17

7/28/2008 3:10:30

Harrisonburg-Rockingham MSA

Unemployment Rate

Nov-15

As shown in the top graph above, for most of the past three years, home buyers have seen tremendously low interest rates -- almost always under 4%. After jumping up above 4% in early 2017, interest rates have been below 4% for the past eight months. The second graph above illustrates trends in the local unemployment rate

Nov-16

3.5%

3.3%

3.9%

3.5%

4.0%

4.2%

3.9% 3.3%

3.6%

3.7%

3.9%

3.6%

3.8%

4.2%

4.0%

4.2%

4.4%

4.4% 3.8%

4.1%

4.0%

3.2%

3.50% 3.00% Nov-14

4.3%

3.9%

4.1%

4.0%

4.4%

5.4%

5.0%

5.1%

5.0%

3.9%

4.00%

4.4%

4.50%

4.1%

5.00%

4.4%

5.50%

4.8%

6.00%

5.5%

Not Seasonally Adjusted

Nov-17

-- which has shown a general downward trend over the past several years. A low local unemployment rate and relatively low mortgage interest rates continue to help our local housing market remain stable and start to grow in recent years.


[10] MEET THE ANALYST / REALTOR Scott P. Rogers, Associate Broker

Questions? Contact Scott anytime.... SCOTT P. ROGERS, Associate Broker 540-578-0102 (mobile) [email protected]

Everything You Need To Know About Buying a Home BuyingAHomeInHarrisonburg.com

Local Online Real Estate Resources

Scott P. Rogers, a professional, responsive, knowledgeable, friendly Associate Broker with Funkhouser Real Estate Group, began his real estate career in 2003 and has been working hard ever since to provide exceptional service to his buyer and seller clients in Harrisonburg and Rockingham County. Since 2010, Scott has been recognized each year by the Harrisonburg/Rockingham Association of Realtors as being in the top 1% of all area Realtors. A native of Montgomery County, Maryland, Scott earned a B.A. (2000) and M.Ed. (2002) from James Madison University, providing him formal education in graphic design, management and counseling -- all of which he leverages on a daily basis to the benefit of his clients. Scott’s graphic design and web development background allows him to create and utilize high caliber technology and marketing solutions for his clients. Scott incorporates many innovative tools and technologies to serve his clients including: professional photography equipment, a quadcopter (drone), property websites for each of his listings, 3D Walk Through technology and Virtual Reality. He leads the local market in the adoption of new marketing techniques - for the latest, check out WalkThroughThisHome.com. In 2007, Scott began providing in-depth analysis and commentary on the local real estate market via his real estate blog, HarrisonburgHousingToday.com. Since that time, he created many other valuable online resources for the local community such as: HarrisonburgHousingMarket.com, HarrisonburgInvestmentProperties.com, HarrisonburgAssessments.com, HarrisonburgPropertyTransfers.com, HarrisonburgTownhouses.com, BuyingAHomeInHarrisonburg.com, SellingAHomeInHarrisonburg.com and HarrisonburgRealEstateResources.com. Scott is a member of the Shenandoah Valley Builders Association, serves on the Board of Directors for the Shenandoah Valley Children’s Choir, is the co-founder of TakeThemAMeal.com and PerfectPotluck.com, serves as a Trustee for Asbury United Methodist Church and coaches middle school volleyball. Scott and his wife, Shaena, live in Rockingham County with their two children, Luke and Emily. In his free time, Scott enjoys spending time with his family, traveling, playing volleyball and attending JMU sporting events.

Marketing Strategies for Successing Selling Your Home SellingAHomeInHarrisonburg.com Central Shenandoah Valley Property Search ScottPRogers.com Monthly Real Estate Market Reports HarrisonburgHousingMarket.com Ongoing Housing Market Analysis & Commentary HarrisonburgHousingToday.com Comprehensive Data on Single Family Home Neighborhoods HarrisonburgNeighborhoods.com

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Analysis of Real Estate Investment Options in Harrisonburg HarrisonburgInvestmentProperties.com Comprehensive Data on Area Townhouse Communities HarrisonburgTownhouses.com The Most Realistic, Immersive Way to Experience a Home WalkThroughThisHome.com Analysis of Property Assessments HarrisonburgAssessments.com Listings With Low List Prices Compared to Assessed Values BestDealsInHarrisonburg.com Most Recent Listings in Harrisonburg, Rockingham County NewListingsInHarrisonburg.com Trustee Sales in Harrisonburg & Rockingham County HarrisonburgForeclosures.com Property Transfers in Harrisonburg & Rockingham County HarrisonburgPropertyTransfers.com


7/28/2008 3:10:30