Harrisonburg/Rockingham County Real Estate Issues
• Archives
October 2006
• Oct. 27, 2006 - Trends of Median Residence Selling Prices in our Area.
Trend of Median Residence Selling Prices in our Area.
I took some time yesterday and today to research in the Harrisonburg Rockingham Association of Realtors(R) Multiple Listing Service into the actual trend of Residential Selling Prices in our area. I was somewhat surprised at what I found. We have tons of inventory available, agents are "twiddling their thumbs" waiting for the floor calls that are rare, new home builders are offering substantial bonuses for signed contracts, and subdivision listing agents are offering discounts for sales closing before year end, yet look at the chart below. The median selling price for residences has trended up since January 1! Granted, there are some gyrations in the last couple months, but the majority of trend lines applied to the data still show an upward trend. We haven't seen a substantial reduction in selling prices. In Economics 101 textbooks, an increase in supply with a reduction in demand results in a reduction in selling price. But this isn't happening. My thought is that perhaps there is a "pent up demand" for homes in our area, just waiting for something to push buyers "over the top" into buying real estate, particularly homes. We have a bustling local economy. Our area's biggest employer, James Madison University, is committing to buy any available real estate within reasonable distance of the campus, including the Harrisonburg High School building and the vacant by 2010 Rockingham Memorial Hospital building. This would indicate to me JMU anticipates a large increase in enrollment. Local poultry plants are working near capacity. Local School Boards are making plans to build more schools. I am thinking that we will see a substantial upturn in the local real estate market by year end or spring at the latest. Any comments?
Roger Monger, Realtor, MBA, e-PRO
540-476-4644
mailto:Roger@Roger4Realty.com
http://www.Roger4Realty.com
Your source for Harrisonburg and Rockingham County real estate
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• Oct. 16, 2006 - My Newsletter, October 9, 2006
(This is a copy of the newsletter I send to my email prospect list.)
Roger Monger’s Real Estate Newsletter
October 9, 2006
Despite all the “Doom and Gloom” coming from the mass media about the “housing bubble” there is still good news about real estate. The current market is creating great opportunities for finding and acquiring the home of your dreams. Nationally and locally, interest rates are dropping steadily. USA Today recently had a full page ad stating just such. It said, in part:
Mortgage Rates are Dropping
Today may be the perfect time to consider the purchase of that dream home you have always wanted. Rates for 30-year fixed mortgages have dropped in 9 out of the last 10 weeks. That could save you more than $1,500 dollars a year depending on your loan amount. And, with more available properties on the market, finding just the right home has never been easier. (For the full ad, go to: http://img.realtytimes.com/rtimages/blanche/$file/realogy_usatodayad.pdf, you may need free for download Adobe Reader software to read it.)
Locally, the selection of homes and properties has never been better. We have a level of inventory that we haven’t had for years. Prices have fallen recently, but have stabilized for now. However, don’t expect them to go much lower. The employment picture in Harrisonburg and Rockingham County is very rosy. James Madison University will probably increase its enrollment substantially in the future, with an associated demand for housing for students, faculty, staff and support personnel. Business and Industry in our area is also booming, with planned gains in employment and facilities with equal demands for housing.
As you can see, now is the prime time to purchase real estate. Call or email me to work with you to take advantage of this golden opportunity that won’t last long to get into the home you’ve always wanted.
Roger Monger, Realtor, MBA, e-PRO
540-476-4644
mailto:Roger@Roger4Realty.com
http://www.Roger4Realty.com
Your source for Harrisonburg and Rockingham County real estate
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• Oct. 6, 2006 - Income Property
| A recent spreadsheet I ran on income producing property, specifically townhouses, in our market revealed some interesting facts. For my methodology, I took about a dozen townhouse offerings from our MLS and put them in a spreadsheet to examine potential cash flow and return on investment. For input, I used the price quoted in the MLS, the current rental where stated in the MLS, and the current association fees where stated in the MLS. I also used the current Harrisonburg tax rate of $0.62 per hundred dollars of assessed value with an assessed value estimated at 70% of list price. Of course, this is a generalization; some will be more, some less. I also allowed for computations based on different downpayment percentages, different interest percentages, different mortgage periods, and different percentage allowances for Repairs and Maintenance and Vacancies, I also factored in depreciation at 27.5 years and a personal tax rate of 25%. After factoring in the purchase price, several percentage downpayments, several interest rates, two months rent for R&M and vacancy, and allowing for tax savings for R&M, interest, and depreciation, I only came up with ROI's barely positive, i.e., in the 0-2 percent range. I tried changing the variables to other reasonable values with little change in results. The recent appreciation in townhome prices in our area due to housing demand has not caused a corresponding raise in rental rates. We currently have townhouses on the market in the $130K to $150K range that are renting for only $800 per month. If we consider the "down and dirty" evaluation by Market Capitalization Rates, a 10% capitalization rate makes these properties only worth $96,000! However, there are buyers in our market still buying these properties. My best guess is that they are betting on substantial raises in rental rates and/or significant appreciation in townhouse values to make the numbers work out. The former (rental rates) seems probable, but, given the current market, it may be risky to bet on the latter (price appreciation). If you email me at roger@roger4realty.com, I will email you the MS Excel Spreadsheet for the above as an attachment.
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