Despite the housing shortage, 2019 saw the most homes sold in the area since 2006 –– at the height of the housing bubble, according to data from the Harrisonburg-Rockingham Association of Realtors.
Last year, 1,321 homes were sold in the city and county, which is still lower than 2006’s 1,438 homes sold, according to Bob Hill, CEO of the association.
In 2018, 1,306 homes were sold in Harrisonburg and Rockingham County.
The housing supply tends to drop during the winter and rises back up in the spring, Hill said. However, data show that did not happen, notably, in the city and county during 2019.
Between October 2018 and December 2018, the number of homes for sale dropped from 317 to 269. Normally, more homes would come on the market during summer, as in previous trends.
But in 2019, the number of available homes, measured at the end of the month, never reached more than 280 — even during the normally hot sales time of summer.
There were only 277 homes for sale at the end of May and only 267 at the end of June — fewer than in December 2018.
There was a drop of nearly 75 available homes between October 2019 and December 2019, as the year ended with only 195 — of which 35 were in the city.
“We’re almost at an inventory crisis,” said Jeremy Litwiller, the president of the Harrisonburg-Rockingham Association of Realtors and a Realtor with Kline May Realty and Cottonwood Commercial.
Litwiller said some of the data he has seen is alarming, especially since he said there is no “imminent fix.”
“I believe we’re down to one month of inventory right now in Harrisonburg, which is unprecedented,” he said.
The nation is going through a shortage of homes available under $200,000 for a variety of reasons, including higher costs for labor and development.
The more homes that are available not only helps first time buyers, it also helps those looking to buy a larger home, due to an increased family size for instance, or those who are older and looking to downsize, Litwiller said.
This rhythm also helps both buyers and sellers, he said.
“We need inventory to allow the cycle to do what it does,” Litwiller said. “And the cycle is a little bit frozen right now because nobody wants to sell because nobody knows if they’ll be able to buy.”
Despite the shortage, home prices are growing at a “healthy rate” of around 5%, according to Renee Whitmore, the previous president of the Harrisonburg-Rockingham Association of Realtors and a Realtor with Old Dominion Realty.
The average median sales price in 2019 grew by 5.19% to $223,000 from $212,000 in 2018.
“What’s interesting is even with the low inventory, it hasn’t pushed the prices up astronomically,” Hill said. “You would think with supply and demand, people would be willing to pay higher and higher prices.”
But there are several factors that could be keeping prices in check, said Whitmore, including appraisers keeping prices in check.
“Having those appraisers in place is really helping to keep it a healthy level of growth instead of an unhealthy level,” she said.
Home prices were growing by sometimes up to 10% annually in the years leading up to the housing crash in 2008, according to Hill.
“Back in that big bubble, there was a lot of pressure from lenders, particularly, and from the buyers too, to push the appraisers to higher and higher values,” Hill said. “I think the appraisers learned their lesson from that time, and they’re not willing to overvalue the homes. So, that might be holding the prices.”
The average days on the market in 2019 dropped to 18, a reduction of 28%, from 2018’s 25 in the city and county.
“I’m seeing more buyers compromising on certain criteria, whether it is location or a school district or whether it’s a garage,” she said. “They’re being a little less picky about what they’re purchasing.”
Litwiller said Realtors, business and real estate developers, the city, and other stakeholders are working together to try to find a way to increase the supply of housing.
“The whole process needs to be fed, and we’re running out of food,” Litwiller said.
Whitmore said that if the economy remains strong, Harrisonburg and Rockingham could even beat 2019’s home sale levels in 2020.
However, she said it was unclear whether the supply would increase as the year progresses.
“It’s been a great year for real estate sale numbers here locally, even given the difficulty in finding homes for buyers to purchase,” Whitmore said. “I can only imagine what those numbers would’ve looked like if we’d had the inventory.”