Brent Finnegan -- November 9th, 2010
Local realtor Scott Rogers’ most recent report on home sales in Harrisonburg and Rockingham County indicates that local housing sales have been slow — down 21 percent in October, compared to October 2009. However, the home prices haven’t significantly dropped along with the pace of sales.
After several years of declining home sales (pace, not values) it seemed that our local market had finally turned around. Now looking back, that increase in sales pace may have been largely related to the home buyer tax credit, as the pace of sales is now on the decline yet again . . . Fewer and fewer buyers have been present in the market over the past six years (demand fell) but prices have not fallen in the way that that shift in demand would suggest. Calling all economists….how can we explain this? (read more)
I asked Barkley Rosser, a Professor of Economics at JMU, and occasional hburgnews commenter, if this sort of supply-demand disparity is out of the ordinary. Rosser says that it’s not:
Prices have fallen somewhat, if you look at the underlying report, but then we did not have that much of a bubble here, which is why they do not need to drop all that much. Charlottesville had a much bigger one than we did, as did Northern VA. It is true that people selling are often overly reluctant to lower their prices sufficiently to sell, which partly explains the lowered volume, but things are not all that out of whack here. The pattern is similar in other parts of the country, and much worse in the areas that were bubblier than here.