In these crazy times, it's possible to "beat the market" and yet still be hurting financially...



The blue line above shows the trend in single family home prices over the past five years in Harrisonburg and Rockingham County.  As you can see, prices have declined, though only a total of 12% over the past five years.

The red line shows the purchase and sale of a single home in Harrisonburg, as experienced by some of my clients. 

You'll note that while the red line declines, it's not by anywhere near as much as the blue line.  Thus, my client's home outperformed the market --- they beat the market, and experienced a smaller decline that perhaps they should have.  How exciting, right??

But no, actually, it wasn't too exciting.  The heroic act of selling the house at a higher price than the market suggested would be possible was still painful.  My clients had financed most of their home purchase in 2007, so they actually had to bring thousands of dollars to closing in 2010 in order for the sale to proceed.

You see, it's not as simple as the purchase price minus the sales price --- you also have to factor in the closing costs on the buying side (2007) and the closing costs on the selling side (2010).

So....when the market is declining, even if it is declining slowly, it can be difficult to purchase and then sell within a short time period.  Thus, buyers and sellers should note that:

• If you're thinking about buying now, and only staying for a few years, and financing most of your purchase price -- you might find yourself in the situation described above.
• If you bought a few years ago, and financed most of your purchase price, your house's value might have performed well, and yet you'll still have trouble selling without bringing money to the closing table.

Hopefully, we'll soon return to predictable, rosier times, when home values are steadily increasing by 3% to 6% per year.  Soon, I hope, on behalf of all of my clients!

Can't obtain traditional financing?  Perhaps the owner of the house you are purchasing can finance the purchase for you!  Actually...there don't seem to be too many owner financing opportunities available.  Searching our local MLS, I'm finding five properties in Harrisonburg and Rockingham County that are advertised as having owner financing opportunities....



(1)  3318 Friedens Church Road - 3 BR, 3 BA, 2700 SF, $326k
(2)  216 Emerald Drive - 3 BR, 3.5 BA, 2581 SF, $199k
(3)  150 Inglewood Court - 3 BR, 2 BA, 1408 SF, $178k
(4)  1380 J Hunters Road - 2 BR, 2 BA, 953 SF, $57k
(5)  1372 J Hunters Road - 2 BR, 1 BA, 837 SF, $47k

In many (not all) cases, an owner that can provide owner financing either owns the property outright (no mortgage remains), or has a low balance on their mortgage that they can pay it off entirely.  Then, with no mortgage in place, they'll expect some portion of the purchase price from you as a down payment, and the rest will be repaid over a term and on a schedule negotiated between you and the owner.  Most owner financing scenarios are not 30 year arrangements, but may involve owner financing for 5 or 7 years, with a balloon payment at the end. 

To be more specific --- a $200k purchase might involve a $20k down payment, and then the $180k balance amortized over 30 years at 6% interest, but with a 5 year balloon.  This would mean that you'd pay a monthly payment of principal and interest as if the $180k loan were stretched out over 30 years, but after 5 years you would have to pay off the entire remaining balance of the loan.  Typically the balloon payoff is accomplished by refinancing the property with a traditional lender at some point prior to when the balloon payment is due.

If you own a property, and are trying to sell it, and could offer owner financing --- do it!  There aren't too many properties with this option readily available, so you might entice additional buyers if you can offer to finance their purchase.  If you're a buyer looking for owner financing, you'll probably need to approach owners (in addition to the five above) who aren't offering owner financing, to see if they can or would consider it.

There is a slowly growing area just north of Harrisonburg that you may not have heard of or visited, but there are a variety of factors that may make it a growth area over the next several to many years.



A strategic plan has been created for this North Valley Pike corridor, that suggests turning an existing section of Route 11 into a main street area, with most through traffic diverted to a new road.  For an overview with lots of helpful links, read the post on hburgnews.



A research and technology park has been established amidst this corridor on 365 acres, owned and operated by Rockingham County. 



SRI International has established a 25-acre campus in the above-referenced research and technology park, and opened the Center for Advanced Drug Research, which is a "state-of-the-art research facility for conducting systems biology research in the areas of biodefense and neglected diseases."



An attractive subdivision of single family homes is being developed in this corridor area (I am marketing this subdivision) with prices starting in the low $200,000's. 



A new elementary school was recently built on Smithland Road, not too far from this North Valley Pike corridor.  This has created new traffic flow patterns, bringing greater awareness to the north side of Harrisonburg.

While most development has taken place just southeast of Harrisonburg in the recent past, the area just north of Harrisonburg will be a key area to watch over the next 3 to 20 years.

Home sales have certainly started to bounce back in 2010...



Skeptics certainly won't believe we're making any progress until we pass June 30th and the end of the tax credit season.

Big picture thinkers will want to delve into why our market has outperformed so many others across the country..

But now let's examine what is actually selling this year:



Sales of homes priced under $300k have increased compared to last year.
Sales of homes priced above $300k, however, have declined this year.

Is it because of the tax credit?  Is it because buyers of sub-$300k homes often don't have a home to sell before buying?  Plenty of possibilities --- but so far the market is looking strong for the spring and summer!

Many thanks to Sue Robertson for highlighting this article from Housing Watch regarding multi-generational housing.  As this Housing Watch article reports....


The article is based on a study by Coldwell Banker, including the following observation....


I am definitely starting to see that trend occur, and quite a few of these buyers are ending up at The Glen at Cross Keys, where several of the floor plans work well for a multi-generational living situation.  Of note, most of these scenarios are a parent and an adult child buying together, not necessarily four generations of a family as shown in the stock photography above. 



Another house that I am currently marketing would work quite well for this as well because it has so much square footage and so many bedrooms and bathrooms:


Click here for details on 1911 Rhianon Lane, a 5 BR, 3 BA, 3600 SF home for $329,900.