Kline May Realty Blog

Harrisonburg Real Estate Market Report - April 2012

Wed, 16 May 2012 12:08:00 -0400

Click here to download Market Update charts for April 2012.

The apparent real estate market recovery continued in the Harrisonburg area in April. Year to date in the Harrisonburg-Rockingham Association of REALTORS Multiple Listing Service (HRAR MLS), the sales are slightly ahead of last year, and contracts are up by better than 1/3 over last year indicating sales in May and June will exceed last year's sales. Buyer activity continues to be strong, with leading indicators such as showings and website traffic continuing to increase as the year progresses. [More]

Harrisonburg Real Estate Market Report - March 2012

Tue, 10 Apr 2012 09:57:00 -0400

Click here to download Market Update charts for March 2012.

The first quarter of 2012 finished well for the Harrisonburg/Rockingham County real estate market. For the first time since 2007, residential sales in the first quarter of the year exceeded sales in the first quarter of the prior year - a great start for 2012!

Residential sales showed a typical seasonal increase in March, with 85 sales recorded by the Harrisonburg-Rockingham Association of REALTORS® Multiple Listing Service (HRAR MLS) compared to 69 residential sales each in January and February. Buyer activity remains strong, with the number of properties "Under Contract" in the HRAR MLS (233) and the number that went Under Contract in March (126!) indicating April and May will be strong months as well. [More]

What's Important when Getting a Mortgage?

Thu, 05 Apr 2012 13:36:41 -0400

What does your loan officer and their underwriter need to know about you when you apply for a home mortgage? While there are a variety of institutions and financing programs, the basics can be boiled down to what has been called “The 4 C’s of Underwriting”- Capacity, Credit, Cash, and Collateral:

CAPACITY

CAPACITY is the analysis of comparing a borrower’s income to their proposed debt. It considers the borrower’s ability to repay the mortgage. Lenders look at two calculations (we call ratios). The first is your Housing Ratio. It simply is the percentage of your proposed total mortgage payment (principal & interest, real estate taxes, homeowner’s insurance and, if applicable, flood insurance and mortgage insurance – like PMI or the FHA MIP) divided by your monthly, pre-tax income. A solid Housing Ratio (often called the front end ratio) would be 28% or less; although, at times loans are approved at a significantly higher number. That’s because your front end ratio is looked at in conjunction with your back end ratio.

The back end ratio (referred to as your Debt Ratio) starts with that mortgage payment calculation from the Housing Ratio and adds to it your recurring debts that would show up on your credit report (auto loans, student loans, minimum credit card payments, etc.) without taking into consideration some other debts (phone bills, utility bills, cable TV). A good back ratio would be 40% or less. However, loans sometimes are granted with higher debt ratios. Understand that every application is different. Income can be impacted by overtime, night differential, bonuses, job history, unreimbursed expenses, commission, as well as other factors. Similarly, how your debts are considered can vary. Consult an experienced loan officer to determine how the underwriter will calculate your numbers.

CREDIT

CREDIT is the statistical prediction of a borrower’s future payment likelihood. By reviewing the past factors (payment history, total debt compared to total available debt, the types of monies: revolving credit vs. installment debt outstanding) a credit score is assigned each borrower which reflects the anticipated repayment. The higher your score, the lower the risk to the lender which usually results in better loan terms for the borrower. Your loan officer will look to run your credit early on to see what challenges may (or may not) present themselves.

CASH

CASH is a review of your asset picture after you close. There are really two components – cash in the deal and cash in reserves. Simply put, the bigger your down payment (the more of your own money at risk) the stronger the loan application. At the same time, the more money you have in reserve after closing the less likely you are to default. Two borrowers with the same profile as far as income ratios and credit scores have different risk levels if one has $50,000 in the bank after closing and the other has $50. There is logic here. The source of your assets will be examined. Is it savings? Was it a gift? Was it a one-time settlement/lottery victory/bonus? Discuss how much money you have and its origins with your loan officer.

COLLATERAL

COLLATERAL refers to the appraisal of your home. It considers many factors – sales of comparable homes, location of the home, size of the home, condition of the home, cost to rebuild the home, and even rental income options. Understand the lender does not want to foreclose (they aren’t in the real estate business), but they do need to have something to secure the loan against, in case of default. In today’s market, appraisers tend to be conservative in their evaluations. Appraisals are really the only one of the 4 C’s that can’t be determined ahead of time in most cases.

Each of the 4 C’s are important, but it’s really the combination of them that is key. Strong income ratios and a large down payment with strong reserves can offset some credit issues. Similarly, long and strong credit histories help higher ratios….and good credit and income can overcome lesser down payments. Talk openly and freely with your loan officer. They are on your side, working with you and your REALTOR® to get you into the home you want!

Spring has Sprung!

Thu, 22 Mar 2012 13:35:08 -0400

Here comes Spring, historically the time of year when buyers awake from the winter slumber of the holidays and snowfall, and go on their pilgrimage to look for new housing. Houses look better in Spring with green grass, blooming trees, and flowers.

Plus, buyers who find a home in the next 60 days can close after the school year ends and enjoy the summer months in their new backyards. It’s almost a rite of passage; baseball teams go to spring training, buyers go look at homes, and the birds fly back north.

But this Spring is different than those of recent memory…

Because of the mild winter we experienced here in the Shenandoah Valley buyers have been out for months – making offers and buying homes. . Buyer activity has been unusually high since early February.
Many sellers have finally come to understand that they need to have a compelling price on their home to attract buyers. The days of listing your home and negotiating down are over because there are homes on the market already priced correctly, and those are the homes that buyers are going to. The overpriced inventory doesn’t even get a chance to negotiate down.
Rates have ticked up as economic news (like unemployment numbers) has improved. That, coupled with rising mortgage insurance premiums and guarantee fees (on FHA loans) , seems to have given some sense of urgency to buyers.
The looming shadow inventory, which most certainly will keep downward pressure on home prices (when added to easier short sale approvals), has tended to encourage home sellers to be more realistic in their expectations.
The abundance of information available to consumers has further increased their need for sound advice from top-notch real estate and mortgage professionals. The cream is certainly rising to the top in those professions, with top agents in our arae reporting they are busier than they have been in years.

Low interest rates, a tremendous selection from which to choose, and the seasonality of it all makes for an exciting next 60-90 days. Our advice to anyone looking to buy or sell is that waiting to be aggressive could be a fatal mistake if you hope to find the best deal. From our experience, the best deals come when more people are competing for them…and that time is NOW!

Harrisonburg Real Estate Market Report - February 2012

Tue, 13 Mar 2012 12:50:00 -0400

Click here to download Market Update charts for February 2012.

We are making some important changes to our market report this month. First, we are adding a new infographic entitled "Months Supply of Inventory". This graphic will show, by area of the County, how many months supply of homes for sale exist at the current pace of sales. Sales over the past 12 months will be used to calculate the current pace of sales. This graphic will give an easy to read snapshot of the supply vs. demand balance throughout our area. As a rule of thumb, a 4 – 6 month supply is considered a healthy, balanced market. You will see on the graphic that all parts of the County are above that figure, but are also all below 12 months (many areas were above 12 months supply last year), which is a good trend and indicates our market is finally coming into balance. [More]

Nationally, Existing Home Sales Surged 4.3 Percent in January

Wed, 22 Feb 2012 12:27:00 -0400

For the nation as a whole, the supply of homes on the market in January was at the lowest point in nearly seven years. Total existing home sales increased 4.3% in January to a seasonally adjusted annual rate of 4.57 million.

Just as we are experiencing more activity locally, nationally there seems to be "strong gains in contract activity in recent months" which shows "buyers are responding to very favorable market conditions" said Lawrence Yun, NAR Chief Economist.

"The national average commitment rate for a 30-year, conventional, fixed-rate mortgage was a record low 3.92 percent in January, down from 3.96 percent in December; the rate was 4.76 percent in January 2011; recordkeeping began in 1971."

This information was provided by the National Association of Realtors. To read more, click here.

Harrisonburg Real Estate Market Report - January 2012

Tue, 14 Feb 2012 10:07:00 -0400

Click here to download Market Update charts for January 2012.

Although January's sales were not stellar, they were very comparable to Januaries past, as can be seen on the Closed Volume and Closed Transactions charts. January is typically one of the slowest months of the year due to the decreased buyer activity during the holiday season.

The real news in real estate locally is the activity level seems to have gone through the roof! We will begin to see the results of this activity with late February settlements, but probably won't really feel it until March and April. When we take a look at some of the leading indicators in our business like phone calls to our office, showings set up for our listings and visits to our website, we are seeing activity levels higher than our typical summertime peaks. Could it be that Buyers [More]

The Nation's Hiring Increases & Unemployment Drops

Fri, 03 Feb 2012 17:44:00 -0400

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.

What Will Happen with Home Prices in 2012?

Wed, 18 Jan 2012 14:38:52 -0400

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!

Harrisonburg Real Estate Market Report - December 2011

Fri, 13 Jan 2012 13:35:00 -0400

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. [More]

Harrisonburg Real Estate Market Report - November 2011

Thu, 08 Dec 2011 16:31:00 -0400

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 [More]

Harrisonburg Real Estate Market Report - October 2011

Tue, 08 Nov 2011 10:30:00 -0400

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. [More]

S&P Raises Ratings for the City of Harrisonburg, VA

Fri, 04 Nov 2011 00:12:00 -0400

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."

Looking for a new home? Does it have Broadband or High Speed Internet?

Tue, 18 Oct 2011 13:10:53 -0400

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.

Harrisonburg Real Estate Market Report - September 2011

Wed, 05 Oct 2011 16:21:00 -0400

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. [More]