2017 was a solid year for local real estate. Here in Williamsburg, closed sales finished up 2.1% for the year, with pending sales up over 8%, which indicates a strong start to 2018. Much like last year, we did not experience the typical holiday slowdown, which also bodes well for sales activity in the New Year, despite some early snow events in January. And, I must brag a little bit on our success, we outpaced the market 5 fold last year!
We are entering 2018 with less than 4 months of active inventory, and homes selling, on average, in only 39 days. That is good news for sellers who are priced properly and in good condition, or for prospective sellers who are thinking about diving into the market. Nationwide, most markets are experiencing inventory shortages, which is the single biggest factor keeping a lid on the number of sales.
The exception here is the luxury market, where sellers need to be significantly more patient – there is currently 18 months of inventory priced at $750,000 and up in Greater Williamsburg.
Prices remained remarkably steady during the past 12 months, with the median sales price in Williamsburg slightly above $300,000 for most of the year, and finishing up at $314,900.
Here is what I see in the coming 12 months:
Consumer confidence has been our biggest challenge in recent years, especially during the contentious presidential election. With that now behind us, activity levels have definitely regained momentum. Record activity in the stock market has also translated to increased real estate interest.
My expectation is that there are many sellers who have been waiting for more favorable market conditions to list – and that will continue to happen as we move toward Spring. We have seen a significant jump in new listings over the past few months, signaling that wise sellers recognize the importance of beating the competition to the Spring market.
As prices continue to climb due to the inventory shortage, consumers will realize that moves need to be made ASAP in order to take advantage of an 8 year streak of historically low rates and home values. It’s important to note that the market can shift quickly, and it will not surprise me to see a highly competitive Spring season for homes selling below $500,000.
Interest rates will begin a slow and steady climb this year.
Interest rates have been perplexing over the past 12 months. Most predicted the inevitable ascent would begin as the economy gained steam, but rates remained lower than predicted, most likely because the feds were hesitant to do anything that might inhibit the momentum of the recovery.
I believe that 2018 will be the year that interest rates incrementally increase, but the question remains by how much and how frequently. The good news is that this is a sure sign of a strengthening economy, but the bad news is that each hike raises the bar on home affordability. My prediction is that this will add some urgency to the market this year, particularly in the lower price ranges.
Prices will finally begin to show improvement in many neighborhoods.
Prices are neighborhood specific, and some areas are definitely improving faster than others. The overall Greater Williamsburg market appreciated 3% in 2017, and I expect will continue to trend toward more normal appreciation rates (5 to 6%) in 2018 and beyond.
If a home purchase is on your New Year resolution list, buy early in the year, as interest rates have a much greater impact than most realize. For instance, waiting for prices to drop 5% to save $12,500 on a $250,000 purchase may cost you an extra $225 per month in payments; if rates increase from 4% to 5.5%, then your payment increases from $1194 to $1419. For most buyers, the affordability index of monthly payments is a more critical consideration.
We were fortunate to participate in 1 out of every 6 home sales in greater Williamsburg in 2017, ensuring our position as the #1 agency in the local market. Your support and referrals are much appreciated, and we promise to deliver the extraordinary client experience that has become our hallmark!
*All stats based on Broker Metrics for WMLS, in the 23188, 23185, and 23168 zip codes- residential home sales in 2017
Psst, I’m a real estate agent.
This post was authored by local resident and REALTOR, John Womeldorf. John is known around town as Mr. Williamsburg, for both his extensive knowledge of the Williamsburg/ Hampton Roads area and his expertise helping buyers and sellers in the local real estate market.
If you are a homeowner searching for someone innovative to sell your home I would love to share my thoughts on marketing. You can read some of the stories I have written about the homes I have sold here.
Additionally, I have helped hundreds of folks find their dream home/ community and would love to help you find yours in Williamsburg, Yorktown, New Kent, VA Beach, Chesapeake, Suffolk, Isle of Wight Poquoson as well as Richmond.
You can reach me by phone at 757-254-8136 or email John@MrWilliamsburg.com
I look forward to serving your real estate needs!