Harrisonburg and Rockingham County are experiencing the nationwide housing shortage, but the local market is seeing different results compared to national trends, according to Mattias Clymer, the rising vice president of the Harrisonburg-Rockingham Association of Realtors.
When there is a shortage of homes, prices tend to climb, he said.
But in the city and county, prices are rising slower than the rest of the country, despite a more pronounced shortage of homes on the market compared to the rest of the country, Clymer said.
“Despite increasing market demand, we haven’t seen prices skyrocket as some markets have,” he said. “You would think [the home prices] would rise faster, but they’re not.”
In the past six years, the housing supply in the area has dropped by 56%, he said, while nationally the housing supply dropped by 13% in the same time period.
But home prices across the country rose by 44%, while in the past year, home prices in the city and county rose by a smaller margin of 8% and 7%, respectively, according to the Harrisonburg-Rockingham Association of Realtors third quarter housing market report, which was released on Thursday and Clymer.
Bob Hill, the CEO of the Harrisonburg-Rockingham Association of Realtors, said one of the reasons people may not be rushing to buy homes regardless of prices could be the psychological effects from the 2008 housing market crash.
“I’ve kind of wondered about that myself — why aren’t [prices] rising faster,” Hill said. “It may be a lesson from the time around the 2005 to 2008 period,” Hill said.
During that time housing prices rose rapidly, he said.
“I was in the middle of that watching it and the irrational exuberance that was driving that was unnatural,” Hill said. “I think a lot of that memory is still young, and people that are buying particularly don’t want to let themselves get caught up in that.”
This year, that median price for a home in the city and county was $219,900 — an increase of nearly than $39,000, or roughly 21%, since the third quarter of 2015, when the median price was $181,000.
Data would point to the housing supply in the city and county hitting its natural bottom, Hill said.
Between April and September, the number of available homes stayed below 280 but above 265, according to the report.
Similar to unemployment, which experts argue can never reach zero, people will always be selling homes, while not everybody is always looking for homes, according to Hill.
Harrisonburg and Rockingham only have a housing supply for about two and a half months of sales, according to the local report.
“A balanced market would be about six months supply,” Clymer said.
Between the city and county, sales were up by 11%, or 38 homes, in the third quarter of 2019 compared to the third quarter of 2018, according to the third quarter report.
Most sales growth occurred in the county, were 33 more homes were sold in the third quarter of 2019 than the third quarter of 2018.
A total of 262 homes were sold over the three months in 2019, up 14% compared to 2018.
The city saw growth as well, albeit with only four more homes sold in the third quarter of 2019 compared to the third quarter of 2018.
The number of days on the market has dropped more than half since the third quarter of 2015. The average number of days on the market in Harrisonburg and Rockingham was 104, this year, it was 47.
Developers and city staff have previously said in interviews that adding a new zoning classification for homes on smaller parcels with less restrictions to city code would help increase the supply of affordable housing.
On June 25, City Council approved the R-8 small lot residential district which would allow such structures.
However, since the council approved the district type in June, no builder has taken up the option, according to city staff.
“As far as I know, no one has submitted any applications for formal review,” Rachel Drescher, the zoning administrator, said on Thursday.
Hill said this was not surprising, given the length of time required for preparing a building plan.
“It takes time to come up with a design, to get the drawings,” he said. “There may be some that thinking on it, but it’s just too new.”