Places to Live

Market Solid in Harrisonburg and Rockingham County

Reflecting a designation of “the second-fastest growing area of the Commonwealth,” the real estate market in the Valley will likely generate a fourth year of solid residential sales and steadily rising values, which has been a trend for the past several years. With residential sales exceeding 1,300 and the highest median home price ever of $228,000 at the end of last year, the expectation is to see this positive trend continuing for the near future.

Several economic factors are contributing energy to the dynamic market such as stable job growth, which is the steady bedrock for a local housing market. Mortgage interest rates remain at historic lows and home buyers and sellers should expect them to remain low through the rest of the year. On average homes are selling faster in this fast-paced market, which indicates consistent buyer demand and the shrinking availability of active listings. In fact, the declining inventory is likely the main reason that sales have not reached a higher level.

What seems to be fueling the growth in residential sales is demand at both ends of the life cycle. The region’s amenities and climate are attracting ever-more retirees taking advantage of college town activities. At the same time, more university graduates are choosing to stay and start businesses as they want to hang on to the pleasant time they have experienced. In turn, that is also attracting their parents to move to the area in order to be near grandchildren. This virtuous loop does not show any signs of lagging.

The only drag on this expanding momentum is a low inventory of homes in the lower price range of $100,000 to $250,000. Those wanting to enter the market find limited choices. Those wanting to downsize, which would free up inventory, worry they will be unable to find something to suit their needs.

This inventory concern could be alleviated by additional residential development. There are many projects in the planning stages that are slowly coming to the market. The local government planning process continues to have a pipeline of new residential developments for consideration. Opportunities exist for additional development to meet the current demand and housing style preferences of today’s home buyer.

The cost of land and development continues to increase in the region and has been a barrier to market entry for some developers. Prime residential development land is increasingly scarce, labor is more expensive and regulations are more arduous. This mixture of challenges slows the development process and ultimately makes homes less affordable. For developers who can navigate the process, a bounty of buyers eagerly awaits new housing products.

Like the residential market, the commercial sector in the Harrisonburg/Rockingham metropolitan statistical area has continued exceptional growth. One influential factor pushing this progress has been hotel development. Numerous parcels are under contract, and construction has begun on others, all following the opening of the Hotel Madison and Conference Center.

Interchange expansion south of town and other projects north, such as Shenandoah Growers, have driven industrial/warehouse progress. Local manufacturing has continued to expand, including an announcement of Merck’s $1 billion project. Retail is flourishing with interesting new restaurants and shops downtown, on East Market Street and Port Republic Road. 

The brisk pace of multifamily has not slowed with another large student housing project completed (Altitude) on Port Republic Road, and an additional non-student complex planned for Reservoir Street by Forbes Development.

Immediate commercial needs include supplementary restoration and upgrading of some property along portions of South Main Street, Route 11 North and some outlying towns. Overall, especially for well-located properties, the commercial market is very strong around the City of Harrisonburg. Values have escalated significantly; however, we expect the rapid rate of appreciation to slow over the next several years. 

The bottom line is that the real estate market for residents, businesses and investors in Harrisonburg and Rockingham County is favorable and trends indicate this outlook continuing well into the future.

Compiled by the Harrisonburg-Rockingham Association of Realtors