Welcome to the Charlottesville 2023 Mid-Year Market Report.
We’ve made it to the halfway point for 2023 and it’s time to look backward and forward to try and make sense of our market. If you are feeling like there are conflicting news items each week that are hard to reconcile, we agree. If you are focused on the strong labor market, rising resale inventory, and slowing price growth, you are likely projecting we will see more sales and a balancing market. But if you are reading about interest rate increases, miserably few homes on the market, and a volatile equity and bond market, you will predict a slow real estate market with potentially soft home pricing. You are probably right on both counts.
Typically, when jobs are plentiful the market responds with eager buyers. But the conflict caused by years of reduced inventory driving prices up combined with interest rates that have risen by 300 basis points over the last 18 months has negatively impacted monthly mortgage affordability. While we are seeing real wage growth, the family income is not on par with expenses. And this means slower sales.
Fewer buyers should lead to softer pricing of homes. But despite a shortage of buyers, there are still more than there are properties in many neighborhoods. So while the numbers show that sales are off by 20-25% across the region, we continue to see closing prices over asking, as the remaining buyers need housing and are willing (and able) to pay for it.
For the remainder of 2023, sellers are unlikely to see the bidding wars of the past 24 months, but their homes should be met with more favorable reception than in a typical slowing market. Prices should likely flatten as we head into the 3rd quarter, but no sign of falling prices exists yet. The interest rate market is pricing the expectation on future Fed action, and thus we expect rates to stay in the same general range. All eyes will be on inventory. Without homes to purchase, our limited buyer pool still has their hands tied.
Please find the downloadable PDF version of our full Charlottesville area Mid-Year Report here: Charlottesville 2023 Mid-Year Report