2016 was a solid year for the Williamsburg VA real estate market. Closed sales finished up 6.4% for the year, with pending sales up over 10% in December, which is activity higher than we typically see during the holidays. The New Year has started off with a bang, which I believe is indicative of another strong year for our market.
We are entering 2017 with only slightly over 4 months of active inventory, and homes selling, on average, in only 50 days. That is good news for sellers who are priced properly and in good condition. The exception here is the luxury market, where sellers need to be significantly more patient – there is currently 10 months of inventory priced at $750,000 and up.
Prices remained remarkably steady during the past 12 months, with the median sales price in Williamsburg Virginia hovering right around $300,000 for most of the year.
Here is what we see in the coming 12 months:
Consumer confidence has been our biggest challenge in recent years, especially during the contentious presidential election. With that behind us, activity levels have definitely regained momentum.
Our expectation is that there are many sellers who have been waiting for more favorable market conditions to list – and that should begin to happen as we move toward Spring. We saw a 30% jump in new listings in December, signaling that wise sellers recognize the importance of beating the competition to the Spring market.
As prices begin an inevitable rise, consumers will realize that moves need to be made ASAP in order to take advantage of a 7 year streak of historically low rates and home values. It’s important to note that the market can shift quickly, and the pendulum is likely to continue its swing toward lower inventory levels, creating a more competitive environment than we’ve seen in recent years.
Interest rates will begin a slow and steady climb this year. Interest rates began their inevitable ascent in the final quarter of 2016, and we are expecting at least 2 more increases in 2017, according to our friends in the mortgage industry. 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. Our prediction is that this will add some urgency to the market this year, particularly in the lower price ranges.
We recently got some great news for home buyers as FHA lowered mortgage insurance premiums, and Fannie Mae and Freddie Mac are now offering low down payment mortgage products (3%) in order to compete with their government counterparts. That, combined with underwriting restrictions which are finally beginning to ease, should encourage first time buyer activity that has been priced out of the market. Prices will finally begin to show improvement in many neighborhoods.
Prices are neighborhood specific, and some areas are definitely improving faster than others. We expect the market to continue to trend toward more normal appreciation rates in 2017 and beyond.
Our overall message here remains the same as last year: 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.
Our company was fortunate to participate in 1 out of every 6 home sales in the greater Williamsburg VA area in 2016, insuring our position as the #1 real estate brokerage 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, 23188, 23185, and 23186 residential home sales in 2016.
Are you a data geek ?. Download a 20 page report for the WIlliamsburg VA real estate statistics here
If you’re a Williamsburg or Hampton Roads VA home owner who is wondering if it might finally be time to sell, email me at John@MrWilliamsburg.com or text/ call 757 254 8136 , and I can prepare a complimentary analysis of market value for you – you just may be pleasantly surprised.
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 in the local real estate market.
You can reach me by phone at 757-254-8136 or email John@MrWilliamsburg.com
I look forward to serving your real estate needs!