2014 was an interesting year in local real estate. After a strong bounce back year in 2013, this past year was relatively flat for much of the year, after a slow start in January. Here in greater Williamsburg, closed sales for single-family, detached homes finished down about 11.5% lower than last year. Closings took an unprecedented dip in July and August, which accounted for the majority of the year over year deficit. The good news is that the average sold price was actually up just slightly to $329,100. Activity was also up in November and December – higher than we typically see during the holiday season.
The market is still definitely favoring sellers who are positioned properly – those who are aggressively priced and in move-in condition are selling in less than 2 months on average. There is currently 7 months of inventory available in the greater Williamsburg market, which underscores the importance of being sensitive to the competition – both in terms of price and condition. This is particularly true in the luxury market, where market time is always longer.
Here is what my broker Liz Moore foresees in the coming 12 months:
“Consumer confidence continues to be our biggest challenge as the economy struggles to regain momentum. Activity levels over the past few months suggest that there is definitely a pent-up demand on the buyer side. My expectation is that there is also a segment of sellers who have been waiting for more favorable market conditions to list – and that should begin to happen as we move toward spring. We are already seeing heightened listing activity in January.
As prices begin the inevitable rise, consumers will realize that moves need to be made ASAP in order to take advantage of a 6-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.
However, pending economic factors such as the proposed reduction of 4200 troops at Fort Eustis and current world events could definitely throw a kink in a market rebound, and remain the wild card in the forecast. Weather can also be an issue, and a snowy or Icy winter can hold a lid on the sales start to the year.
Interest rates are a big question mark this year. Interest rates are crazy low again, with a 30 year conventional fixed rate a full percentage point below the same time last year. Our friends in the mortgage industry have different takes on the likelihood of a rate hike in 2015: some predict an increase for the 3rd quarter of this year, subject of course to a continuing improvement in the economy. Others feel that they will remain low for at least another year.
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 was priced out of the market last year.
Prices will finally begin to show improvement in many neighborhoods. Prices are neighborhood specific, and some areas are definitely improving faster than others resulting in less than a 1% overall increase in average sales price. I expect the market to continue to trend toward more normal appreciation rates in 2015.
My 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.”
If you know someone who is thinking about moving or buying or selling a home in the Williamsburg area, and would appreciate the professional level of service and personal attention that I provide, I’d love to help them. Just have them call or email me. I will be happy to follow-up and take care of their real estate needs.
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Rolf Kramer, REALTOR®, ABR, SRES, e-PRO 757-564-4455 Licensed in Virginia with Liz Moore and Associates, 5350 Discovery Park Blvd, Williamsburg, VA 23188 Williamsburg has become a Mecca for retirees over the past dozen years because of its history, charm, vacation amenities, proximity to major cities and airports, and affordable cost of living. Check out www.retiringinwilliamsburg.com for information about the Williamsburg community, lifestyles available, and search for homes for sale.