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Buyers, beware

By Eric Gorton, contributor

Nowadays, when a home priced in the $200,000-$300,000 range hits the market in Harrisonburg, you can expect a feeding frenzy. According to Scott Rogers, associate broker for Funkhouser Real Estate Group, 20 or more showings and 10 offers within a few days isn’t unusual.

 “There’s a pretty clear picture in this market of what sellers can expect and what buyers can expect,” said Rogers, author of the HarrisonburgHousingToday.com blog.

For buyers, the outlook is tough. Those who don’t make an offer quickly, and don’t exceed the asking price – sometimes by a substantial margin – probably won’t get the house.

“And they may miss out on multiple offers before they actually land the purchase of a house,” Rogers said.

Meanwhile, sellers will likely get more money more quickly than they thought.

“I think that speaks volumes to the fact that there are an extraordinary number of people who would like to buy homes in the City of Harrisonburg but that aren’t able to because there aren’t enough homes selling,” Rogers continued. “That exists somewhat on the townhouse and duplex side of things, but most significantly, it’s happening on the single-family home side of things.”

Chart from HarrisonburgHousingToday.com

In this strong sellers’ market, 416 homes sold in the city in 2020, a 3.2% increase from 2019, according to figures compiled by Harrisonburg-Rockingham Association of Realtors’ Multiple Listing Service.

The report also shows that the median selling price jumped nearly 11%, from $197,500 in 2019 to $219,000 last year, while median days on the market dropped 40%, from 10 days in 2019 to six days in 2020.

More than twice as many homes sold in Rockingham County in 2020  – something Rogers attributes to a stronger supply.

“There’s more new construction in the county that allows for upward growth in the number of homes that are selling, whereas in the city, there just aren’t as many new homes being built and there are only so many owners of existing properties that are ready and willing to sell at any given time,” he said.

While the marked rise in median sales price seen in 2020 may qualify as a surprise, Rogers said the sellers’ market has been building for the past three years. In 2018, the median sales price for homes in the city and county increased by 7%, then dipped to 5% in in 2019 and jumped to 10% last year. Between 2012 and 2017, median price increases averaged between 1%-4% annually, Rogers said.

He expects the strong sellers’ market to continue through 2021 for two reasons: low mortgage rates and strong buyer demand, some of it caused by the pandemic.

“I think working from home or doing school from home has caused a lot of people to reevaluate how well their home does or does not work for them,” he said. “It worked fine when they were at work all day and the kids were at school all day, but now that everyone’s home 95% of the time, the space doesn’t work as well.”

As for interest rates, the average rate for a 30-year mortgage was above 4% less than two years ago. A year ago it was $3.74% and now it’s 2.67%.

“Low interest rates mean that the housing payment on a $250,000 house today is the same as a maybe a $220,000 house a year ago,” Rogers said. “Buyers are quite comfortable paying higher prices for houses because when it translates into a monthly payment, it’s still quite affordable for them.”

Rogers said there has been no indication that the Fed will be making any changes to the rates in the near future.

“It’s an unusual time, a unique opportunity for sellers and a frustrating time for buyers,” Rogers said. “It’s likely going to be a question of how high are you willing to go on price because there are likely to be offers above asking price.”


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