HarrisonburgHousingToday.com :: Market Updates, Analysis and Commentary on Harrisonburg and Rockingham County Real Estate

October 2009 Harrisonburg & Rockingham County Real Estate Market Report - Sales Steady, Prices Inch Lower

Scott Rogers — Mon, 09 Nov 2009 23:52:08 -0500

I just published my monthly market report on Harrisonburg and Rockingham County. Read on for a summary, or jump right into the report by reading it online or downloading the PDF.

Just a year ago, I was reporting that when comparing Jan–Oct 2007 to Jan–Oct 2008:

home sales had dropped 22%
the median sales price was up 1.3%
the average sales price was up 0.2%

One year later, when comparing Jan–Oct 2008 to Jan–Oct 2009, we find that::

home sales have dropped 20%
the median sales price is down 4.0%
the average sales price is down 2.6%

The first figure is troubling at first ––– home sales continue to decline, year after year after year. We saw a peak of 1,669 home sales in 2005 and we have declined drastically each year since. However, if we stretch back a bit further, we discover that in 2000 there were 829 home sales ––– not too far off of the 663 home sales we've seen so far in 2009. So while the pace of home sales is slowing drastically in the context of the recent past, we may end the year in a similar position as the beginning of this decade when homes were selling at a modest pace.

The decline in median and average sales price is also quite troubling ––– at first ––– until we put that into the context of how home values have changed in other parts of Virginia and the United States. First, though, I do understand that every homeowner wants the value of their home to increase, always, every year, without exception ––– and I don't fault you for that desire. That being said ––– home values in our nation have declined quite significantly over the past several years, and many markets in Virignia also saw those drastic declines. Yet, somehow, the Shenandoah Valley (thus far) has remained largely unscathed. We have seen a slight, slow decline in home values (as measured by median and average sales price), but home values increased 51% between 2003 and 2006 and have only declined 1.5% between 2006 and 2009.

Let me repeat that for emphasis, because it is astonishing given what has happened nearly every other housing market in the nation....

Home values in Harrisonburg and Rockingham County increased 51% between 2003 and 2006, yet have only declined 1.5% between 2006 and 2009.

What does the future hold, you might ask? I showcased a few scenarios last week which you can review here. Beyond the numbers, I believe we will continue to see small declines in home values over the next 12 months, and that over the next 6 to 18 months we will see the pace of sales start to solidify and then slowly increase.

To learn more about the details of our local housing market, review the entire October 2009 Harrisonburg & Rockingham County Real Estate Market Report: Read Report Online | Download PDF.

If you find the information in this report to be helpful....

Feel free to share it with your friends or colleagues.
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ThoughI spend a considerable amount of time analyzing our local housingmarket, the majority of my time is spent helping people like you buyand sell real estate. If you (or someone you know) will be buying orselling real estate sometime in the near future, I'd be delighted tohave the opportunity to be of service.

Have Any Questions? Contact Scott Rogers at 540-578-0102 or scott@cbfunkhouser.com

Several More Months Of An $8,000 First Time Buyer Tax Credit PLUS A New $6,500 Tax Credit For Long Time Residents Of Same Principal Residence

Scott Rogers — Thu, 05 Nov 2009 23:49:05 -0500

THE NEW TAX CREDIT IS COMING, THE NEW TAX CREDIT IS COMING!
The House has passed the bill, as has the Senate, and the President may sign it as soon as tomorrow (November 6, 2009). That's right ––– the tax credits for home buyers are continuing ––– and now they are being applied more widely.

FIRST–TIME BUYERS
You now have several more months to buy your new home ––– you don't have to close by Nov 30 / Dec 1. In fact, as long as you have the property under contract by April 30, 2010, you'll have until July 1, 2010 to close on the property. The tax credit is still $8,000 with several imitations on income, home price, etc.

LONG TIME RESIDENTS OF SAME PRINCIPLE RESIDENCE
There's something for you too! If you have owned and used the same residence as your principal residence for 5 (consecutive) years out of the last 8 years, you will likely be eligible for a $6,500 tax credit. The deadline for closing is July 1, 2010 (as long as the property is under contract by April 31, 2010.)

TIMING
One important note here on timing ––– if you're a first–time buyer, this new bill just extends your deadlines. If you're a "long time resident of same principle residence" you'll can close on your new house (and be eligible the tax credit) as soon as the bill is signed into law. That is to say that if you're a move–up (or down) buyer ready to close tomorrow (November 6th), you might want to wait another few days for the President to sign the bill. You'll enjoy an additional $6,500 net gain ––– in the form of a tax credit.

INCOME LIMITS
The new income limits are $125,000 for single buyers and $225,000 for couples.

THE ACTUAL LEGISLATION
Interested in the details of the actual bill? Click here.

Have Any Questions? Contact Scott Rogers at 540-578-0102 or scott@cbfunkhouser.com

A Typical Short Sale Time Table In Virginia

Scott Rogers — Wed, 04 Nov 2009 22:50:33 -0500

Earlier this week I attended an educational session put on by the Virginia Association of Realtors in regards to Short Sales which was very informative! I am currently representing a buyer who has a contract on a house that will be a short sale, and I am currently representing a seller whose listing will likely result in a short sale. Thus, in addition to being quite interesting, the top down overview prepared me to better represent my clients.

First, my simplified definition of a short sale is any home sale where the proceeds will not provide the sellers with enough money to pay off the mortgage(s) in full, and where the sellers can't come up with the rest of the money themselves, and where the bank agrees to release the lien against the house anyhow, even though they aren't being paid in full.

One very helpful part of our training session was an explanation of the typical foreclosure timeline (shown below) and how and when a short sale can fit in to prevent the foreclosure.

Click on the image above for a larger JPG version of the timeline, or click here for a PDF version.

As you can see, above, when a homeowner knows they are headed towards foreclosure there is often still plenty of time to attempt to arrange a short sale rather than to simply wait for the foreclosure to transpire. Yet at the same time, as the foreclosure (trustee sale) looms nearer and nearer, the possibilitiy for a short sale diminishes.

What else do you need to know about short sales and foreclosures? A LOT!

If you're selling at a loss, but have the money to pay off the balance of the loan yourself, the bank won't permit a short sale.
If you defrauded the bank when you applied for and received the mortgage (overstating income, etc) you likely won't be approved for a short sale.
Lenders usually takes 30–90 days (or more) to provide a conclusive answer on whether they will approve a short sale.
Lenders won't give you a concrete answer up front as to whether they will approve a short sale ––– once you have a contract in hand, they will examine the proposed deal and decide whether to approve it.
To be approved for a short sale by your lender you (among other things) must prove financial hardship and show that the proposed deal is generating the best possible sale price.
Short sales can provide for great opportunities for buyers, but you must be willing to be patient and work through convoluted and tedious processes.

Feel free to ask questions about short sales and foreclosures below. I will continue to examine these issues from time to time.

Have Any Questions? Contact Scott Rogers at 540-578-0102 or scott@cbfunkhouser.com

Erickson Avenue / Stone Spring Road Connector; Southeast Connector

Scott Rogers — Tue, 03 Nov 2009 22:44:17 -0500

Almost a year ago I mentioned that a new road connecting Erickson Avenue to Stone Spring Road was moving forward. Construction is now moving forward, with lots of progress starting on the Erickson Avenue end of the connector.

Below is a map showing where that will be situated (click on the map for a larger version) and this is a web site with more details.

City Portion of Erickson Avenue / Stone Spring Road Connector:

The road shown above lies in the City, but the Connector will continue into the County, all the way to Route 33 East near Boyers Road.

The map below shows an overlay of the approved map from VDOT over top of both an aerial and road view from Google Maps. Click on either for a larger view.

Rockingham County Southeast Connector (1 of 2 portions)

As far as I can tell, the County portion will cut through the new campus of Rockingham Memorial Hospital, and then cross through Boyers Road before connecting with Route 33. From what I have heard, Boyers Road will become a cul–de–sac before reaching Route 33.

Have Any Questions? Contact Scott Rogers at 540-578-0102 or scott@cbfunkhouser.com

What is, isn't, and will be (or not) in the Harrisonburg and Rockingham County real estate market

Scott Rogers — Mon, 02 Nov 2009 22:18:16 -0500

Each month I publish a real estate market report for Harrisonburg and Rockingham County, which includes this graph:

Overly simplified, you'll notice in this graph that sales are slow, but prices are steady:

Certainly better than the many markets (even in Virginia) where the pace of sales is increasing, but prices took a huge hit:

At the same time, our market could have transitioned more gracefully than it did ––– perhaps if prices had dropped a bit more, sales wouldn't have slowed down so much:

The big question now, is WHAT IS NEXT for our local real estate market. I think another big drop in sales and a significant drop in prices is likely overly pessimistic:

Yet it's also probably too optimistic to think we'll see sales pace and prices rebound overnight:

My best guess? We'll see another year of negligible changes in price, but we'll see a small increase in sales pace:

But what do YOU think??

** Of note, the 2009 bar is extrapolated from Jan–Sept 2009 sales.

Have Any Questions? Contact Scott Rogers at 540-578-0102 or scott@cbfunkhouser.com

Are Smaller Homes Faring Better Than The Overall Market In Harrisonburg and Rockingham County?

Scott Rogers — Sun, 01 Nov 2009 23:36:22 -0500

My hypothesis was that smaller homes were performing better in Harrisonburg and Rockingham County than the market at large. After all, there is a significantly greater supply of homes for sale in the higher price ranges ––– which would suggest that the real winners are the lower priced and smaller homes. Plus, the $7500 followed by $8000 tax credits were certain to bring lots of new buyers into this segment of the market....

The data, however, shows otherwise....

As shown above, the overall market experienced a 44% drop in home sales between 2005 and 2008. However....

As shown above, the market defined as homes with less than 1,500 square feet experienced a 47% drop in home sales during the same time period. Now, let's look at prices....

As shown above, median sales prices of all residential properties have decreased by 1.5% between 2006 and 2009. However....

As shown above, the market defined as homes with less than 1,500 square feet experienced a 4.5% drop in median sales price during the same time period.

How could this be?? The best explanations for this (slightly) lower performing segment of the market (1,500 SF or less) that I can offer are....

Lending guidelines have become increasingly stringent over the past few years, allowing fewer and fewer buyers to qualify for these homes.
Investors have been largely absent from our market for the past few years since home prices increased so much faster than rental rates. The smaller number of investors has likely decreased the number of sales of homes in this size range.
Between 2002 and 2005, many buyers were those who only planned to stay in the area for a year or two. They were comfortable buying because of the huge increase in home values each year that would allow them to sell again shortly after buying without taking a hit. Now, however, buyers need to plan to wait 3, 5 or 7 years before being able to sell without a loss.

So, what do you think? Is it surprising that these smaller, more affordable homes are performing (slightly) worse than the overall market?

Have Any Questions? Contact Scott Rogers at 540-578-0102 or scott@cbfunkhouser.com

Predicting Home Sales Using Online Property Views

Scott Rogers — Thu, 29 Oct 2009 23:53:12 -0400

Can we predict home sales by examining the number of properties viewed on the network of Coldwell Banker Funkhouser Realtors web sites? Possibly....

Above you'll see a graph that tracks home sales per month in tandem with the number of properties viewed each month on the Coldwell Banker Funkhouser Realtors network of web sites (my web site, the company web site, all other agent web sites).

I think there does seem to be a general correlation between the two sets of data. That being the case, we should expect to see home sales level out or decline as we move into the next few months ––– which is winter, and typically slow.

However –––– an extension and expansion of the home buyers tax credit is being considered, which, if passed, could incent more buyers to get into the market, causing an increase instead of a decrease in the number of home sales in Harrisonburg and Rockingham County.

Have Any Questions? Contact Scott Rogers at 540-578-0102 or scott@cbfunkhouser.com

Price Right From The Start, Unless You Find Great Joy In Waiting

Scott Rogers — Wed, 28 Oct 2009 22:53:34 -0400

As referenced yesterday, we're seeing quite a few price changes ––– nearly 700 so far in 2009 ––– so let's examine why they are happening, and whether they are necessary.

First, most (but not all) price changes are reductions. Price reductions happen primarily because a house isn't selling at the existing asking price, and the hope is that more interest and activity (and perhaps an offer??) will be generated by lowering the price. Put another way, a price reduction is an indication that the original asking price was too high. So.....why is it so important to get your price right from the get go? Mainly because if you don't, you're house will sit on the market until you do. That's right ––– my slightly scientific analysis (below) indicates that your house won't sell until you get the asking price set properly.

It's a long and arduous task to examine price reductions in detail via our Multiple Listing Service, so I was only able to analyze trends based on a small sample size ––– the 60 most recent home sales in Harrisonburg and Rockingham County. Here's what I found....

The 35 homes that did not reduce their asking price:

sold in 84 days (median)
sold for 97% of their asking price (median)

The 25 homes that did reduce their asking price:

sold in 196 days (median)
sold for 97% of their final asking price (median)
sold for 93% of their original asking price (median)
were reduced 6% in price by (median)

Did you catch that? Houses that sold quickly, with no price reductions, sold for 97% of their original (and final) asking price. Houses that took much longer to sell, with one or more price reductions, sold for 97% of their final asking price. From this information I conclude that the market, largely, won't respond until you get within a certain distance of the price for which your home will ultimately sell.

Thus, if a home is "worth" $200k, there would be two options:

List it for $206,000 and likely sell it in approximately 3 months, for 97% of the asking price ($200,000)
List it for $215,000, reduce it over time to $206,000, and sell it in approximately six months, for 97% of the final asking price ($200,000).

My conclusion for home sellers is that (unless you enjoy the waiting game) you ought to price your home reasonably from the start rather than starting higher (with great optimism) and then later reducing it down to where it should have been from the start.

Have Any Questions? Contact Scott Rogers at 540-578-0102 or scott@cbfunkhouser.com

Sellers Must Really Be Dropping Their Prices, Right???

Scott Rogers — Tue, 27 Oct 2009 23:05:24 -0400

Sort of....but maybe not effectively??

The chart below shows the number of price changes per year of homes that have sold for each of the past nine years. Some houses that sold may have had multiple price changes ––– these figures show the total number of price changes, counting each change on each property.

There was a sharp increase (+29%) in price changes in 2006 (compared to 2005), which would be expected because it was the first year of a reduced number of home sales. However, there was also a sharp increase (+22%) in 2005 (compared to 2005) when the market was still peaking.

Perhaps of even more interest is that the number of price reductions per year has slowly decreased over the past several years (–4% in 2007, –7% in 2008). This may be explained by the declining number of home sales, as the number of price changes shown above only accounts for price changes of listings that have sold.

This year there have been approximately 600 home sales, and roughly 200 price changes of those homes that have sold . . . but nearly 700 price changes when we include the many houses that are still on the market.

Stay tuned for more analysis of how price changes affect the sale of your house.

Have Any Questions? Contact Scott Rogers at 540-578-0102 or scott@cbfunkhouser.com

Is Harrisonburg Nearing Break Even Again On 80% LTV Investment Properties With Conservative Calculations?

Scott Rogers — Mon, 26 Oct 2009 23:34:27 -0400

Many (many, many, many) townhouses were built in Harrisonburg between 2002 and 2007. They are still being built, but not at the same pace. The principal reason for this shift in building is that home values increased faster than rental rates. As such, a smaller and smaller pool of investors are considering purchasing townhomes as income generating properties ––– though that may be changing again. Let's see how things compare when buying an income generating property in 2002 versus today.

In 2002, a new two–story townhome in the City could be purchased for roughly $100,000, and rented for approximately $725/month. Here's how the annual cash flow looks:

+ $8,338 of rental income ($725 x 11.5 months)
– $5,916 for mortgage payments (80% LTV at 6.25%)
– $750 for property management (9%) – optional
– $590 for property taxes
– $360 for property owners association dues
– $300 for repairs – likely unnecessary
– $252 for home owners insurance
Cash Flow = $170 GAIN in the first year

As you can see, this is a barely break even scenario using the conservative calculations above, though more positive cash flow was achieved by most investors by managing the properties by themselves, and because very few repairs were needed.

Fast forward to 2009, and here's how the cash flow might look on a new two–story townhome in the City that can be purchased for roughly $150,000, and rented for approximately $900/month:

+ $10,350 of rental income ($900 x 11.5 months)
– $8,172 for mortgage payments (80% LTV at 5.5%)
– $932 for property management (9%) – optional
– $885 for property taxes
– $360 for property owners association dues
– $300 for repairs – likely unnecessary
– $378 for home owners insurance
Cash Flow = $677 LOSS in the first year

As you can see, an investor would now have to bring more than 20% as a down payment to even break even in this townhome scenario. There are plenty of investors who do bring more than 20%, or who pursue other properties with better cash flow characteristics, but hopefully this is indicative of how the investment property landscape has changed over the past seven years.

But ––– perhaps some of those investors are, or should be, looking at the Harrisonburg market yet again. You see, there are quite a few townhouse owners who bought back in 2000, 2001, 2002, or 2003 who bought when townhouse prices were very low. If they haven't refinanced, or taken out a home equity line of credit (HELOC), they likely have a loan payoff significantly below what the market will bear for their townhouse. Thus ––– there are deals to be found with investment properties right now in Harrisonburg. They won't always jump out at you, as they may be listed at reasonable "market price" ––– but if the owner is motivated to sell, and they bought 7–10 years ago, they likely have quite a bit of equity with which they can negotiate.

If you are looking for an income generating property, feel free to call me (540–578–0102) or e–mail me (scott@HarrisonburgHousingToday.com) and I can assist you in determining whether we can meet your investment goals given the opportunities in today's market.

Have Any Questions? Contact Scott Rogers at 540-578-0102 or scott@cbfunkhouser.com

What Is HardiePlank Siding, And Is It Being Used In Harrisonburg?

Scott Rogers — Sun, 25 Oct 2009 21:57:58 -0400

The exterior of your home could be built with so many different materials, for example: stucco, stone, wood, brick, aluminum, concrete, steel and fiber cement. That last one, fiber cement, is a vague and mysterious siding choice also referred to as HardiePlank siding, which has been around since the 1980's.

So, what exactly is HardiePlank siding?? First, HardiePlank siding is a fiber cement, made out of sand, water, cellulose wood fibers and cement. Its source materials and design provide it with a number of unique qualities that often interest homeowners....

It resists flame spread, making it safer in the event of a fire.
It is a very durable material that resists damage from impact.
It not susceptible to rotting, or termites.
The color is baked on, so you won't have to paint for 15 years!

Many home buyers in the Shenandoah Valley have not heard of HardiePlank siding, but as soon as they come to understand how it outperforms wood and vinyl products, they become very interested!

HardiePlank comes in all sorts of colors and styles, and you'll start to see it on some newly built homes in this area, for example on the Paired Homes at The Glen at Cross Keys, on this EarthCraft home on Cottage Circle, on most of the homes at Preston Lake, and on Urban Exchange.

Have Any Questions? Contact Scott Rogers at 540-578-0102 or scott@cbfunkhouser.com

Do I Need A Building Permit To Finish My Basement?

Scott Rogers — Sat, 24 Oct 2009 22:25:01 -0400

If you are making any additions, improvements or repairs to your home you must pull a building permit, and if it involves electrical or plumbing work you'll also need to pull an electric permit and/or plumbing permit.

"But Why?" you might ask....

In the here and now, you need to pull the appropriate permits because that is what Harrisonburg and Rockingham County require of you. Also in the here and now, pulling the permits will thus require inspections, which will go a long way towards assuring that the changes made to your house are safe, per their compliance with the Building Code.

In the future ––– as in the time when you want to then sell your home ––– it is arguably very important to have pulled building permits and to have passed the inspections.

In selling your home, you are required to disclose any material adverse facts about your home. In my view, the fact that the basement was finished (or other improvements were made) without permits and inspections is a material adverse fact about the house. It's not necessarily that the house is unsafe, but the fact that parts of the home were never inspected by the locality create that possibility.

Pull the permits. Get the inspections!

Have Any Questions? Contact Scott Rogers at 540-578-0102 or scott@cbfunkhouser.com

Either The First Time Buyer Tax Credit Is Working, Or The Harrisonburg and Rockingham County Real Estate Market Is Improving, Or Both!??!

Scott Rogers — Fri, 23 Oct 2009 22:19:05 -0400

For the past three years (2006, 2007, 2008) we have seen a decline in the number of home sales in the 3rd Quarter (July, August, September) as compared to the 2nd Quarter (April, May, June). These "seasonal" declines were 8%, 8% and 1% respectively.

This year, we saw a 15% INCREASE in sales in the 3rd Quarter as compared to the 2nd Quarter. As stated, above, I have to conclude that either the First Time Buyer Tax Credit is working (creating more sales as we near the tax credit deadline), or our local real estate market is improving. Or, I suppose, both could be occuring ––– either independently, or as cause and effect.

If the tax credit is extended or expanded, I hypothesize that we'll continue to see an improving local market. If the tax credit is not extended nor expanded, we'll then perhaps be able to determine whether the 2009–Q3 home sale extravaganza was related to the tax credit, or an improving market.

Stay tuned!

Have Any Questions? Contact Scott Rogers at 540-578-0102 or scott@cbfunkhouser.com

Can A House In Harrisonburg Zoned R-1 Be Rented?

Scott Rogers — Thu, 22 Oct 2009 23:04:51 -0400

This is a relatively common question, that usually takes one of the following forms:

I own a house that is zoned R–1, am moving (into a different house, out of the area, etc) and want to know whether I can rent out the house instead of selling it.
My son/daughter attends JMU and I'd like to buy them a house to live in with their friends ––– how about that single family home (zoned R–1) over there?

So, let's see what we find out examining the Harrisonburg Zoning Ordinance. First, a summary of the R–1 zoning ordinance provides the following general guidance:

The R–1, Single–Family Residential District is intended for low–density, relatively spacious single–family residential development . . . Primary use is for single families, owner occupied dwellings can rent additional rooms, but not to more than two persons, as long as no new kitchen facilities are included. Non–owner occupied dwellings can rent to only one other person, as long as no new kitchen facilities are included. This district is the most restrictive zoning classification for occupancy.

To draw out a few points:

"intended for low–density" – Homes zoned R–1 are in areas that are intended for low–density use. Rental properties usually end up as medium to high density use (to achieve maximum cash flow) and thus are not at all the intent for R–1 zoned properties.
"owner occupied dwellings can rent additional rooms, but not to more than two persons" – If the owner of the house lives in the home, they can have two additional people renting from them, but the home cannot have a second kitchen.
"Non–owner occupied dwellings can rent to only one other person" – If the owner of the house does not live in the home, an individual or family may (the non–owner occupant/s) and one additional tenant can live in the home.
"This district is the most restrictive zoning classification for occupancy" – In other words, if you're looking for a property with more flexible use, don't look at R–1 properties.

To get back to the original questions:

If you own an R–1 home and want to rent it instead of selling it, you can do it, but we'll assume that you aren't going to be living in it yourself. That being the case, you can't rent it to any more than two people, unless it is a family and one additional tenant.
If you are a parent of a JMU student, and you own the house, your son/daughter could only have one additional roommate ––– unless your son/daughter is on the deed, in which case I believe they would be an owner occupant and could have two additional people living in the house.

In addition to zoning summary, the entire Harrisonburg Zoning Ordinance (as of June 2009) is available online. Or....for an official interpretation, you ought to call Harrisonburg's Department of Planning and Zoning at (540) 432–7700.

Have Any Questions? Contact Scott Rogers at 540-578-0102 or scott@cbfunkhouser.com

Oops! The Contract Price Is Higher/Lower Than The Appraised Value!

Scott Rogers — Tue, 20 Oct 2009 23:17:45 -0400

Most sellers want to sell "above value" and most buyers wants to buy "below value." In a balanced world, however, a seller would sell for the "actual value" of their home, and a buyer would buy for the "actual value" of the home. That's in a balanced world ––– obviously, it doesn't usually happen that way.

We get one glimpse of whether the contract price is off the mark when we learn of the appraised value through the financing process. Here's an oddity (or is it?):

If the appraised value is low (lower than contract price) the lender typically won't let the loan proceed, depending on the loan program, financing terms, etc. Thus, the buyer will typically try to re–negotiate the contract with the seller since the appraiser has concluded that the house's value is below the contract price.
If the appraised value is high (higher than contract price) the lender doesn't mind, the buyer definitely doesn't mind, and the seller usually doesn't know. The appraiser was hired by the buyer's lender, so the seller doesn't have a right to know the value of the appraisal.

Here are a few interesting repercussions from some of my most recent real estate transactions....

Rent–To–Own Prospect Wants The Best Of Both Worlds
A prospective tenant/buyer (rent–to–own) wants to negotiate purchase terms for what is essentially their option to buy a year into the future. They want to buy for the lower of the price agreed to now, and the appraised value a year from now. Wait a minute!?!?! It would seem reasonable (balanced between buyer and seller) to either both take a gamble on ups/downs of the market and agree to a price now OR both agree to use a value determined in the future by an independent appraiser. The lower of the two doesn't seem very reasonable for this prospect who is already trying to negotiate by asking for a lease–to–own when it isn't the seller's intent.

Buyer Thinks Seller Should Adjust, But Won't Do The Same
This is a bit obvious from the above referenced ways that thisappraisal process works, but it does seem to be a bit odd from theperspective of trying to achieve a balanced transaction between buyerand seller. If the appraisal comes in low, the buyer gets tore–negotiate down. So why doesn't the seller get to re–negotiatehigher if the appraisal comes in high??

Seller Agrees On Price, Then Seeing Appraisal, Refuses Repairs
I'm exaggerating this one a bit to make a point, but in a recent transaction, the lender (for some reason???) shared the appraised value with the seller's Realtor. The seller thus was told of the appraised value, which was more than $10,000 higher than the contract price. Certainly, the seller felt like they left money on the table, though the day before they had been quite thankful for the buyer and the price he was paying. As a result of knowing of the value supposedly left on the table, this seller loses much of their desire to negotiate on repairs, even making a remark about how the buyer can make repairs using the free equity inherited from the lower–than–appraisal contract price.

And while we're on the subject of appraisals, here's another strange aspect of the appraisal world ––– feel free to offer your opinions....

Wikipedia defines the "market value" as determined thorough a real estate appraisal to be:

"...the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arms–length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion."

So, wait a minute ––– read that through again ––– isn't that exactly what is evidenced in the real estate contract that is the basis for the appraisal in the first place??

Have Any Questions? Contact Scott Rogers at 540-578-0102 or scott@cbfunkhouser.com

Just In Time, The Shenandoah Valley Economy Recovers!

Scott Rogers — Mon, 19 Oct 2009 22:10:41 -0400

I discovered today that the Harrisonburg and Rockingham County economy is in recovery!

According to the data above, Harrisonburg is in "Recovery" ––– though that includes a drop in employment, a drop in housing starts, and a drop in industrial production. Data apparently wasn't available for housing prices, so I'll fill in the blank: median sales prices have decreased by 4% over the past year in Harrisonburg and Rockingham County.

So.....does this sound like recovery to you? Dr. Rosser sheds some light on a property perspective in his comment at hburgnews....

"...we are now doing better than most other places, even if it may not feel all that great. The story is correct, and that it does not feel all that great here is just a reminder of how bad it is in so many other places."

I have to agree –– we're in a lot better spot than most other areas of Virginia and the U.S., though we still have progress to make before we see those metrics increasing again.

Have Any Questions? Contact Scott Rogers at 540-578-0102 or scott@cbfunkhouser.com

How Much Will I Pay In Capital Gains Taxes When I Sell My Investment Property?

Scott Rogers — Sun, 18 Oct 2009 22:19:45 -0400

First, here's how to calculate your gain or loss on the sale of your investment property....

Selling Price – Purchase Price – Purchase Costs – Improvements – Selling Costs + Depreciation

You may have heard of short–term and long–term capital gains ––– the difference is in the timing....

If you sell an investment property within one year (including one year exactly) of purchasing it, your "short–term capital gain" will be taxed at the same level at which your ordinary income is taxed. This could be at a rate as high as 35%, but depends on your income level.

If you sell an investment property after one year of owning it, your "long–term capital gain" will be taxed at either 0% or 15%. If you (as an investor) are in the 10% or 15% income tax bracket, you will pay 0% (yes, that's right, no taxes) on your long–term capital gains. If your income tax bracket is above 15%, you will still only pay 15% tax on your long–term capital gain. This is important to note, as an investor might pay a 25% tax on their ordinary income, but can pay significantly less (only 15%) on their income (long–term capital gains) on investment properties in that year.

Of note, these tax rates (0%, 15%) only last through the end of 2010 given current legislation on the books. If they aren't extended, they will revert back to the previous tax rates of 10% and 20%.

Have Any Questions? Contact Scott Rogers at 540-578-0102 or scott@cbfunkhouser.com

Top Rockingham County Property Owners

Scott Rogers — Fri, 16 Oct 2009 22:26:41 -0400

A few days agoI provided information on the top 10 property owners in the City of Harrisonburg based on quantity of parcels owned, and total acreage owned. Today, let's take a look at the same breakdown for Rockingham County . . .

One significant note:
This analysis does not account for the variety of property owners that own property in slightly different names or under entirely different entity names.

Have Any Questions? Contact Scott Rogers at 540-578-0102 or scott@cbfunkhouser.com

A Hidden, Energy-Efficient Gem In The Peak View School District

Scott Rogers — Thu, 15 Oct 2009 23:58:38 -0400

It's hard to come by a decent sized, relatively new, sub–$300k home in the Peak View Elementary school district. This is the highest growth area of the County, and most homes being built in this school district are priced above $300k (some are way... above $300k). So, what's a buyer to do??

The home pictured above fits this bill, and is energy efficient to boot, as an EarthCraft certified home.

What on earth is an EarthCraft home, you might ask? They are homes that (in varying degrees):

are more healthy than most homes
are more comfortable than most homes
have lower utility bills than most homes
protect the environment more than most homes

This particular home, achieves these standards by incorporating the following materials, features and design standards:

Long life, low maintenance Hardie Plank fiber cement board siding
Very low building envelope leakage (< 0.25 cfm50 / square foot)
Polyurethane spray foam closed cell insulation (along with traditional fiberglass insulation)
Low–E windows (U–factor < 0.35)
Air handler and ducts located within conditioned space
Very low duct leakage (< 4% of floor area served leakage outside)
Flourescent or CFL bulbs throughout
EnergyStar bath fans, light fixtures and ceiling fans
EnergyStar dishwasher, refrigerator and clothes washer
Recycled hardwood floors and carpet
Water sense delta faucets and high efficiency shower heads
TOTO Drake high efficiency toilets
Low VOC paint Aura paint by Benjamin Moore
Permeable pavers on the sidewalk and back patio
Permeable driveway
Rain barrel for water run off

There aren't too many EarthCraft homes in this area in this price range. So if you're looking for a green, energy efficient home in Harrisonburg, be sure to check out The Cottages at Stone Spring.

Also of note, there will be six other homes built in this neighborhood. If you are interested in building your own EarthCraft home, come take a tour of this existing home, and then we can discuss other house designs, etc.

Have Any Questions? Contact Scott Rogers at 540-578-0102 or scott@cbfunkhouser.com

Top Harrisonburg Property Owners

Scott Rogers — Wed, 14 Oct 2009 22:08:52 -0400

Last week we explored who owns Harrisonburg, based on where those property owners currently live. Below are two additional slices of this data set ––– exploring the top real estate owners in the City of Harrisonburg based on the number of parcels that they own, as well as the total acreage of the parcels that they own.

The top two in each category probably won't surprise you . . .

One significant note:
I did some basic grouping for the City of Harrisonburg and JMU to combine the parcels owned by each in different variations of their names. This analysis does not, however, account for the variety of other property owners that own property in slightly different names or under entirely different entity names.

Have Any Questions? Contact Scott Rogers at 540-578-0102 or scott@cbfunkhouser.com