Is Williamsburg VA still a sellers market?

What do people mean when they talk about a seller’s vs a buyer’s market? The answer lies (mostly) in the law of supply and demand. Simply put, when demand outstrips supply, it’s a seller’s market. There are more buyers than there is product (homes) to buy. A seller’s market often leads to higher market values, competing offers, little or no seller concessions, lower days on market, buyers offering with less contingencies and fewer requests for repairs. In short, a seller’s market favors the seller.

Williamsburg, VA is still in a strong seller’s market as of the time I am writing this article (October of 2023). Markets are complex, but we can take a look at a couple of the bigger pieces of the puzzle to understand the current landscape.

Supply:

Compared to this time last year in James City County, the number of units available to buy remains on a decline. According to the September 2023 REIN (Real Estate Information Network) report, new listings (all property types) is down -18.84% YTD 2022-2023.

Influence of Interest Rates on Demand :

When interest rates are low, home sales increase. When interest rates are high, buyers might wait hoping that rates will fall in the near future.

However, I would argue that interest rates take a backseat to life circumstance when buying a home. The decision to buy a home is a complex one and is often initiated by life changes or milestones – getting married, a new job, a growing family, wanting to be near aging parents and downsizing are some examples. Simply put, life doesn’t wait and most buyers won’t either. They will still buy, but their money won’t go as far as it would in conditions where the interest rate is low.

Waiting for interest rates to drop can be a gamble- not a sure bet unelss you have your crystal ball handy. Below we see the average mortgage interest rates over the last 50 years. It shows that we are recently coming out of a period where interest rates were very low. These low interest rates fueled a real estate frenzy in 2020 and 2021 . Now, as the Fed has tried to get a handle on inflation, interest rates have subsequently risen. Perhaps due to the steep rise many buyers hope that there will be another correction down… but experts do not seem to agree on this.

https://www.freddiemac.com/pmms

As a side note: I find myself reflecting on the fact that, while we have experienced a steep jump in interest rates recently, when looking back at the last 50 years, we remain on the lower half of the spread. If we draw a line splitting the difference between the high of 18.39% in 1981 and the low of 2.77% in January of 2021 it would rest at 7.81%. Currently, we are below that at 7.18%.

In conclusion, it is my opinion that low inventory is the largest factor contributing to the current seller’s market in Williamsburg, VA. While rising interest rates are a factor, they do not have as strong an influence as low inventory . We can see this in the continued increase of home market values.

Until more homes become available to purchase, sellers will continue to experience favorable conditions including high market value, competing offers, little to no seller concessions, low days on market, and buyers that aren’t asking for repairs or home warranties. Read more in my next article: strategies for buying or selling in a seller’s market