2015 was a very good year for local real estate. After a strong bounce back year in 2013, followed by a relatively flat 2014, this past year showed sales and pricing gains again in most segments of the market.
In greater Williamsburg, closed sales finished up an impressive 18% higher than the year before. Median sold price was up 6% to $309,000. Perhaps most importantly, showing activity was up in December – higher than we typically see during the holiday season. I believe that bodes well for kicking off the New Year with a strong start for closings.
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 3 months on average. There is currently slightly over 6 months of inventory available, 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 I see in the coming 12 months:
Sales will increase
As prices have begun the inevitable rise, consumers will soon 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.
The volatility in the world and its effect on the stock market continue to influence consumer confidence in general. Pending economic factors both nationally and locally could still definitely throw a kink in a continuing market rebound, and remain the wild card in the forecast.
Interest rates will rise
Interest rates have remained ridiculously low, with a 30 year conventional fixed rate a full percentage point below the same time last year. I even refinanced my home (again!) to capitalize on a low rate and a shorter loan term. Rates ticked up slightly last month, with many of our friends in the mortgage industry predicting a continued inevitable rise in 2016.
Because it’s an election year, you never know what will happen, and we are encouraging buyers to move ahead with their plans, and not risk the impact that higher rates have on mortgage payments.
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.
Prices will increase in most neighborhoods
Prices are neighborhood specific, and some areas are definitely improving faster than others. The overall Williamsburg market experienced a 6% overall increase in average sales price last year, which was great news for our sellers. I expect prices to continue their slow but steady upward trend in 2016.
Real estate is definitely local. We are fortunate to live in a market that did not experience the worst of the real estate roller coaster in 2008-2012, although that also means that our rebound has been less dramatic.
My forecast is for another strong real estate year in 2016!
*All stats based on the Monthly Indicator Report Provided by Williamsburg MLS, covering 2014 and 2015
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