The Washington Post reported on Friday that 243,000 jobs were added in January, a stark contrast to the 155,000 jobs that economists predicted. On top of that good news, the unemployment rate dropped to 8.3%, which is the lowest unemployment rate in three years.

While politicians continue to argue over what caused the dramatic shift in hiring, we at Kline May Realty prefer to look at this from a consumer and housing aspect. This positive news will drive consumer confidence up and help in the effort to keep our local housing market on the rise (home sales were up 3.3% in Harrisonburg and Rockingham County in 2011). As consumer confidence increases, we anticipate home sales will also increase. As home sales increase, mortgage rates will come off of their all-time lows. Because of this, we feel that this spring will be one of the best times to buy a home in the Harrisonburg and Rockingham County area.

It seems there is no shortage of opinions as to where home prices are headed in 2012. From Clear Capital’s expectation that prices will show a ‘slight uptick’ this year to Fitch’s projection that prices ‘will fall another 13 percent’, there is no consensus as to where real estate values are headed. How can there be such a disparity of opinion among industry experts? Well...prices are determined by the relationship between supply and demand and there are many unanswered questions regarding both of these components.

Questions about Demand

Will this be the year that the 5.9 million adults between the ages of 25 and 34 that are still living with their parents decide to purchase a home of their own?

With mortgage payments lower than rent payments in the majority of the country, will first time buyers finally decide it makes more financial sense to buy rather than rent?

Will the baby boomers take advantage of the great deals available and start purchasing vacation and retirement homes?

Will investors continue to purchase large quantities of distressed properties?

Will hedge funds negotiate a deal with the banks for bulk purchases of foreclosures?

Questions about Supply

Will 2012 be the year that builders again increase inventories of newly constructed homes?

Will baby boomers put their primary residences up for sale and relocate to their retirement destinations?

Will 2012 be the year that the shadow inventory of foreclosures finally makes its way to market?

If prices depreciate, it will force more homes into a negative equity situation. Will this create another surge in short sales and foreclosures?

Will the government put together a plan to convert large numbers of foreclosures into rental properties?

Bottom Line

With so many unanswered questions regarding both the demand for housing and supply of properties, it is very difficult to determine where prices will be at the end of the year. We believe the Harrisonburg area market will continue to see home prices soften through the first half of the year, possibly flattening out this summer.  From there we are hoping to see a slow, but steady return to "normal" price appreciation of 2% - 3% per year.   Beyond being a just "local" issue (as opposed to relying on national trends), your home price is heavily influenced by comparable homes sales in your neighborhood.  Talk with a Kline May Realty agent to get the facts on what's going on in your part of the City or County!  

Click here to download Market Update charts for 2011.



Something happened in the local real estate market in 2011 that had not happened since 2005 - more homes sold than in the previous year.  While the increase in activity is fairly small at 1.86%, the fact that there was an increase at all after 5 consecutive years of declining sales is very significant.  Further, the year to which we are comparing 2011 sales (2010) was  a year in which sales were artificially enhanced by the Homebuyer's Tax Credit, making the seemingly small increase in 2011 look a bit more impressive.

On a monthly basis, residential sales reported by the Harrisonburg-Rockingham Association of REALTORS Multiple Listing Service increased to 104 units in December, up from 82 units in November and 84 in October.

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Click here to download November's Market Update charts.



November, 2011 was similar to October in many ways for our local real estate market. For the month, the Harrisonburg-Rockingham Association of Realtors Multiple Listing Service (HRAR MLS) reported 82 closed residential transactions, just slightly behind October's 84 closings. Through the first 11 months of the year, total residential sales are 8 units ahead of the 2010 total at November 30. This is encouraging and gives us some hope that 2011 will be the first year since 2005 in which the HRAR MLS records more residential sales than in the previous year.

While the slowish but steady sales activity is a positive sign, prices continue to fall at an increasing rate. The average sales price of homes sold in the past 12 months dropped $1,274 in November to $187,147 and the median

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Click here to download October's Market Update charts.



Despite a drop in sales during the month of October as compared to the summer and early fall months, the local real estate market is doing better than it was at this point in 2010, as recorded by the Harrisonburg-Rockingham Association of Realtors Multiple Listing Service. The total residential sales of 84 units was a significant drop from the 100+ unit monthly totals from June – September. However, these 84 units easily surpassed October, 2010's anemic 68 units.

As we said last month, the most significant chart in this report is the Year Over Year Change in Residential Units Sold. The chart shows sales this year are 23 units ahead of last year's sales through the end of October.

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The Wall Street Journal reported earlier today that Standard & Poor's Ratings Services has "raised its ratings on Harrisonburg, Va.'s general obligation debt one notch, pointing to the stability of the city's economy and maintenance of its solid finances and reserves. The credit rater, which raised its rating one notch to double-A, said the move reflects Harrisonburg's role as a regional economic center and its growth of a diverse property tax base, among other things. The rating is two notches below triple-A, and the outlook is stable."

"We believe management will likely maintain, what we consider, its sound finances, supported by very strong reserves and formal fiscal policies," credit analyst Danielle Leonardis said. "For these reasons, we do not think the rating will change within the stable outlook's two-year period."

"Meanwhile, S&P said it believes what it considers the city's below-average income, mitigated by the presence of a large number of university students, somewhat offsets the strengths."

When you are in the market for a new home, there are a lot of determining factors involved with where you would like to live versus what your needs are. If you want peace and quiet and want to live in the countryside, you may not have access to certain services or as high of a quality of services. In today's world, that means broadband or high speed internet. For many people who have to be connected to work or have online streaming services such as Netflix and Hulu, moving to a home that has broadband capabilities is a high priority.

The state of Virginia has a new broadband map that they released this summer which allows you to check specific addresses for what type of broadband is available in the immediate area of the homes you are looking at. If you are one of the many people who relies on broadband in their daily life and you are currently looking at purchasing a new home, it would be time well spent to check out this new map that Virginia has developed. You can access the map here:

http://mapping.vita.virginia.gov/broadband

You can enter specific addresses and see what type of broadband services are available. Also, developers can use the "identify" function to see where specific lines and nodes are located and whose they are.

Click here to download September's Market Update charts.



September was a very good month for residential sales in our area, with 121 units sold through the Harrisonburg-Rockingham Association of Realtors Multiple Listing Service (HRAR MLS).  This total was the highest for any single month so far in 2011. In fact, since September sales typically decline compared to the summer market each year, the 121 homes sold in September represents the best September total since 2006 when 135 units were sold!  Does this mean the market is back to normal? No, but it is encouraging.

Also encouraging are the annual sales figures through the end of September as compared to sales in the first nine months of prior years. Our first chart, "Year Over Year Change in Residential Units Sold", shows this comparison quite dramatically.

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Kline May Company, holding company for Kline May Realty and Cottonwood Commercial Realty, has passed $100 Million in sales volume for 2011 as measured by the Harrisonburg-Rockingham Association of Realtors (HRAR). Kline May Company has reached this milestone 72 days ahead of their 2010 sales volume pace, a positive sign for both the company and our local real estate market. Keith May, owner of Kline May Company, commented "We have over 70 agents and staff who are committed to helping our residential and commercial clients by providing the best service possible. We focus on each client, and at the end of the transaction we allow every customer to evaluate us. Based on these evaluations, we have over a 98.9% client satisfaction rate for both buyers and sellers. Our success has been based upon the focus our agents give every single transaction."