Brooke's Bold Predictions: Mid year 2023

June 27, 2023

What's been going on with the Fredericksburg real estate market in 2023 and where is it headed? Brooke the Broker shares the data and her predictions for the rest of 2023

Video Transcript

Speaker: Brooke Miller, CEO/Team Leader, BMRE @ Long & Foster, Realtors

What has been going on in the Fredericksburg Market so far this year?

Brooke Miller: So what's been going on in our local real estate market so far this year, you've probably been hearing a lot of mixed things, but it is a really, really, really simple explanation. Number one, the number of homes that have come on the market is down 31% over last year. So that means there are 31% fewer homes available for someone to even buy. What's interesting is the number of homes that have gone under contract in the first six months of the year is down only 29% compared to last year. So that means a higher percentage of the homes that hit the market are actually going under contract. So that tells me two things. We have a steady stream of buyers that are out there and we have less inventory, so less to choose from. The number of closings has actually gone down 36% now with 31% fewer homes coming on the market to begin with and only and 36% of them actually uh selling 6 36% less actually selling. Why is there a difference of that 5%? Well, some houses just don't sell guys, some houses come on the market and they don't sell some houses come on the market and they don't sell and then they come back on the market. So they count as two instead of one. So that is why that number is different. Your home value has actually gone up from last year. So the first half of last year, January through June of last year, compared to January of June through this year, your home has gone up in value a little bit 1.8% to 2.7%. That is awesome. Now, I want to put this into perspective compared to 2019. Your average price right now is up 43 to 44% compared to the same time in 2019. Ok, so I'm ok with the 1.8% rise because we had a huge rise over the last four years. On average, your home has increased in value 11% a year over the last four years, interest rates. What's been going on with interest rates? January through June 2022 we went from 3.11% to 5.81%. It almost doubled, almost doubled in six months. It was the speed of the change that put a halt to the market, not the change itself because this year, January through June, we've gone from 6.48% to 6.67%. So it's pretty stable when interest rates are fairly stable, the demand stays stable. It's unbelievable.

How does this compare to last year?

Brooke Miller: So how does this compare to last year? Well, 31% fewer homes on the market means there is 1082 fewer homes that hit the market. 1082 houses less on the market. That means 848 fewer homes went under contract and 994 fewer homes have actually sold. And I don't know about you, but I know that there's lots of people moving into the area. So with these numbers being changed like this, yes, there are a number of buyers that have left the market because of the prices and the interest rates or one or the other. But we have a lot of people that are still moving into the area and they need to move. So compared to last year, the major difference is in the motivation of the buyer and the motivation of the seller. So the motivation of a buyer is they need to move. They are having a life change. They're getting a, a new job, they're increasing their size of their family, they're getting a divorce. There's been a death, there's been a handicap or a health issue. They need to buy and the same thing on the seller side. So the only sellers that are selling right now are folks that need to sell. They're being relocated. They need to downsize. They've gone through a family change. They have a health issue. Uh They need to um move to assisted living. There are so many reasons why they're doing it, but they only have to, the people who are selling right now are not the, oh, I'd love to get a bigger house type folks. So the motivation is what has changed.

What is causing the market to behave this way?

Brooke Miller: What's causing the market to behave this way. Well, it's a combination of fewer buyers in the market, but it's still outweighed by the number of listings that are not on the market. We are still seeing multiple offers, not in every single case and not to the extent that we saw a few years ago where some homes were getting 20 offers. Now we're seeing something like 234, sometimes just one, but that's ok. The reason why the market is behaving that way is because there are fewer buyers because of the interest rates. There are fewer buyers because home values have gone up and some people have just been priced out and there are fewer buyers because there aren't a lot of sellers as well. Sellers become buyers. Now, why are there fewer sellers again? Like I said, just before sellers are selling because they have to. So we'll see what happens in the latter part of this year when it comes to sellers.

What is my prediction for the rest of the year?

Brooke Miller: You know, sportscasters make predictions all the time. Weather forecasters make predictions all the time and in both cases, no one really holds a grudge against them if their forecast is incorrect. But I will say this, if a sportscaster gets it correct, the majority of the time, wouldn't you want them to advise you on how to position yourself if you're sport gambling or something like that? If the weather forecaster gets it right, most of the time, you're gonna trust that weather forecaster right now in my forecast, I've gotten it right most of the time. Now, I did not predict COVID. I did not predict COVID coming. I don't think anybody did. And of course, I didn't predict what happened in the real estate market as a result of that. It was a surprise to me, but the beauty of COVID and how that affected the real estate market led me down the path of doing personal research on the market every single week. So I've been able to look at the trends. I've also been doing this for 20 years and I know the natural ebb and flow of our local real estate market on a yearly basis. Let's face it. Real estate is local and real estate is seasonal at the same time. So what is my forecast for the rest of 2023? Number one inventory is slowly going up, but we're not gonna see a huge influx of properties on the market. As a matter of fact, just this last week, we had 304 houses on the market. That is the first time this entire year we've spent over 300 but the low points of this year was at 203. So we really only have 100 and one more houses on the market now. So we'll see inventory go up a little teeny bit. Uh Last year, the highest inventory we had was July um 2022 and that was 600 180 houses. Ok. So even if we double the number of homes on the market, I really don't think that's gonna have an impact, but inventory will go up because people are going to have FOMO and they're gonna know that their house is worth more and this is their opportunity to make that move. I see interest rates as being stable for the next three months. Things will go up and down just a little teeny bit. We're probably going to be in the sixes between six and seven for the next three months. And then my prediction is come October, September, October time frame, interest rates are gonna be down and they're probably gonna get below six. That's gonna bring even more buyers into the market and we're gonna have a very fast pace real estate market in the last quarter of this year. So, if you're thinking about selling this year, don't worry about timing the market perfectly because I think we're gonna have a very strong market for the rest of the year as a buyer. I recommend not putting off buying too long because you might be in competition with 56789 people if you wait until November to buy your home. Whereas if you go in July, you might have less competition.

What does this mean to you?

Brooke Miller: So what does this mean to you? Well, if you're a homeowner, congratulations, you've made an amazing investment. And one thing I've pointed out is even if you bought your house in 2020 or 2021 when the market was crazy and you felt at that time like you were giving away everything and maybe you were over paying for the home. Congratulations. Your home value has gone up about 11% every single year. So even though it was the seller's market, if you bought in those markets, hey, you did. Great. So congratulations. If you are currently looking at buying a home, make sure you have a great loan officer on your side. So, one of the things that's happening in the market right now is some of these fly by night loan companies are offering amazing too good to be true, true deals. And that's because they're about to go out of business. Stick with people that you know, stick with the referrals that you have. Stick with the loan officers that work for reputable banks, reputable mortgage companies have your finances in line, buy a home that you can afford. It will probably go up in value and you will be able to rein in the future, make smart decisions with your money, make smart decisions with saving and make a smart decision on the buy where you make your money is on the buy, not on the sell. And I know that as a real estate investor as well. Also, what does this mean to you? It means the market is such that a lot of real estate agents are leaving the business right now. A lot of people got into the business over COVID. They got into the business as a second career or something. They were excited about the market was fast paced. They thought they were doing a great job and then when the going got tough. The second half of last year, a lot of people started having second thoughts and they are not renewing their real estate license. So the actual number of real estate agents is starting to go down in the area. I want you to know that I'm here to stay guys. This is my 20th year in the business. I absolutely love what I do. I absolutely love my clients and thank you guys for supporting me so much. But I consider this a practice. I've studied the market. I know and knew where we were headed way before we got there. So when you know someone other than yourself, someone who is thinking about buying or selling in this market, please refer them to us, we know what's going on and we can help them make the best decisions for them and their goals even in the current market. Thank you so much for all of your support. I hope you guys have a great Fourth of July holiday and I will be in touch soon for a client appreciation event we'll be having in August. See you soon.

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