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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.

As 2023 draws to a close, the Fredericksburg regional housing market is experiencing much of the same as the last few months. Prices continue to rise against a backdrop of falling demand, stubbornly low housing supply, and volatile interest rates. Total sold dollar volume fell nearly 14% in November, coming in at approximately $167.4 million in November 2023 compared to $193.5 million last year. Units sold were down nearly 13% year-over-year, with 412 homes transacted last November compared to 359 this year. Despite this, prices still rose nearly 4%, coming in at $439,900 compared to $424,715 last November.

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, was up about 7% with homes averaging 29 days on the market this November compared to 27 days last year.

Inventory continues to be a challenge with the number of active listings at the end of November at 815 compared to 974 last year. New listings were also down this month with just 384 new listings coming on the market compared to 537 last year, a nearly 30% drop. New pendings which indicates the pace of future sales remained almost static with 2 more pending sales this November compared to last year. November of 2022 saw 400 pending sales at the close of the month compared to 402 pending sales this November, a less than 1% increase.

“For the month of November, we saw falling interest rates and an increase in buyer activity,” states FAAR Board of Director Abby Fitzsimmons. “Buyers are able to negotiate a bit, especially if sellers are in a situation where they need to sell. On the listing side of things, days on market have increased but home values are holding steady due to a continuous lack of inventory. Thanksgiving begins the typical “holiday season” where the real estate market slows down. If interest rates continue on their downward slope, we will see what December will bring.”