Welcome to the Fredericksburg 2023 Mid-Year Report.
Needless to say, the 2023 real estate market has kept us on our toes thus far.
The year began with reports that higher interest rates would slow sales and level prices, but 2023 had other ideas. In the Fredericksburg and Culpeper metropolitan areas, your Nest agents are here to break down what has been happening in the real estate market.
Although fewer homes have sold, roughly $400 million less or about 1000 fewer houses, prices continue to rise. We have seen a 3% increase in prices from 2022. That, paired with an increase in days on market, points to a market still trying to find its identity. Higher interest rates combined with extremely low inventory has buyers taking more time to make decisions. Buyers are also looking for any way to eke out a win in negotiations. The longer a listing sits on the market, the more likely someone will ask for concessions, although most homes are still garnering close to 100% of list price at closing.
Buyers are not only shopping around for the better deal in prices — they are shopping loan companies, loan officers, and loan programs. With interest rates fluctuating daily, buyers are paying attention to, and searching for, ways to save money. Mortgage companies are doing their best to compete for buyer business, but read the fine print. Not all loans are created equal, and the inequalities are showing up at the closing table. Increased prices are also driving buyers further south, east, and west. Fredericksburg and Culpeper buyers are competing with Washington, D.C. buyers priced out of the D.C. market. Smaller, more rural counties are experiencing an influx of buyers, allowing these sellers to enjoy a more competitive real estate market than they have in a few years.
As we head deep into the mid-year market, the Feds appear to be poised to continue to curb inflation with several more hikes in interest rates. The Fed funding rate should top out at around 5.6% (interest rate close to 7%) before falling as we end 2023. Most banks predict interest rates will drop to between 5.6-6% by year’s end, and we will start 2024 in an even better position. If you are looking to sell or purchase real estate in the Northern Virginia, Fredericksburg, or Culpeper markets, be sure to contact your favorite Nest agent for guidance and even more market insight.
Please find the downloadable PDF version of our full Fredericksburg area Mid-Year Market Report here: Fredericksburg 2023 Mid-Year Report