The local housing market finished the year with low inventory, high prices, and falling demand, trends that started in 2022 and accelerated throughout 2023. “The real estate market in the Fredericksburg area saw a continuation of low inventory issues in 2023,” states 2023 FAAR President Randy Walther. “The start of the year held hope that a stable market would take hold but rising interest rates quickly changed that outlook.”
The year closed with a total sold dollar volume of $2.64 billion which represents a more than 21% decrease over the year-end $3.3 billion total for 2022. While prices were up in 2023, the pace of increases moderated with a nearly 4% year-over-year increase in median price, going from $425,600 in 2022 to $439,900 in 2023. The trend of decreasing units sold continued to accelerate last year, finishing out 2023 with 5,531 transactions compared to 7,284 units sold in 2022. This is down from a recent high in 2021 of 9,266 units sold. Stafford and Spotsylvania counties saw volume reductions that accounted for nearly all of the 1,700 fewer units sold in 2023 versus 2022, but despite falling sales, prices continued to rise in both places. Spotsylvania County posted a 2023 median price of $430,000 while Stafford County hit the $500,000 mark.
“As the year progressed, sellers were less inclined to give up a low interest rate loan if they had to assume a new loan at a higher rate,” continues Walther. “Even with higher rates, houses did not sit on the market for an extended period if they were move-in ready. A large portion of buyers brought funds to the table that allowed them to buy down a new loan or in many cases, they paid cash from the sale of a previous home.”
Days on market, the time it takes from when a listing enters the market until it receives a ratified contract and is removed from active status on the multiple listing service increased 35%, going from just 20 days in 2022 up to 27 days in 2023. However, the largest portion of homes still sold very quickly, with 2,684 homes flying off the market in 10 days or less.
December closed the year with a modest year-over-year decline in total sold volume and a modest decline in units sold. Prices saw a small increase of 2% going from $415,000 in 2022 to $425,000 in December of 2023. Orange County was a noticeable outlier in December, posting big gains in units sold and median price. Orange saw its median price increase nearly 28% last month, going from $305,000 in December of 2022 to $389,000 in December of 2023. Units sold also increased nearly 12% with 5 more homes sold this past December than in 2022.
December of 2023 also saw the number of active listings plummet nearly 20% from December of 2022, with just 660 homes on the market at the turn of the year compared to 819 last year. “Currently the ebb and flow of the real estate market has turned to a more predictable state,” comments Walther. “Buyers are seeing a drop in rates and sellers can make plans for the next phase of their lives. While the days of rock bottom rates are gone, they are now trending down again from 2023. As a result, the expectation is that 2024 will see more improvement in the market. The Fredericksburg region is growing and housing needs will remain a concern. This is especially true in the entry level market.”
Realtors® expect similar market dynamics in 2024 as would-be sellers remain on the sidelines enjoying low mortgage interest rates. Walther advises that “there is no time like the present” as prices are not expected to change significantly anytime soon. “Having a qualified partner in this transaction will result in the confidence that buyers and sellers have made the right decision,” advises Walther.