Current State of the Market and What it Means to Buyers and Sellers

The decision to buy and sell a home is largely predicated by life events including engagements, marriages, births and growing families, job promotions and new positions as so many also have a desire to be closer to family, friends, jobs, and better schools.

But the buying and selling process also includes understanding current market conditions. That holds especially true today as rising mortgage rates have brought a welcomed slowdown to the buying frenzy we have seen for the last couple of years. We are no longer seeing a huge number of multiple bids on a property and the reduced pace has allowed buyers to have a bit more control of the process than in recent years.

Outside of rising mortgage rates, many are unaware of the current market conditions, including the continued need for more home listings, and there are several misperceptions.

Buyer demand still exists

While rising rates have taken some potential buyers out of the market, there is still ample demand. In fact, the Blue Ridge Association of Realtors reports there were 731 homes sold in the region in July, August and September, just about the same as the same time in 2018. And because rents have gone up in Winchester and Frederick County by about 20% since the start of the year, homeownership remains the goal for most. One of the reasons for this continued demand is that buyers are recognizing that a rising 30-year-fixed rate mortgage is not the only available loan. There are plenty of available options to help you get into a home. 

There is a flip side to rising mortgage rates as most buyers are not facing multiple bids today. Remember last year, and into the start of 2022, when so many homes had multiple bids? Bidding wars created higher prices. This is no longer the norm.

Home prices are stabilizing

Many believe if they sit on the sidelines, they will see home prices drop dramatically. This will likely not be the case. Instead, home prices are stabilizing. Over the last few years, we saw double-digit price annual price appreciation and home prices rose by 8% over last year at this time. But we are likely returning to more normal 3-5% annual growth rates. This means that today’s $370,000 home would likely be valued at least $381,100 a year from now. Homes are not losing value.

Prices are driven by a supply vs. demand equation. The region, which is one of the fastest growing in Virginia, still doesn’t have enough homes on the market to meet demand. In fact, we entered November with only 49 homes on the market in Winchester and 259 in Frederick County. 

Limited choice

Today’s buyer therefore has about 50% less choice than three years ago. 

This shortage of available homes began prior to March 2020 when the pandemic started. And then things got even tougher. With so many wanting to relocate here to escape urban markets, take advantage of the work-from-anywhere phenomenon and our great affordability, our supply tumbled to record lows. Thankfully, our month-supply of available homes has increased to 1.7 months from a record-low 1.1 months in June. 

But we are still a long way from a 6-month balanced market where traditionally neither the buyer nor seller has a negotiating advantage. 

But negotiating has returned

Even though we have passed the top of the market, most sellers have built up equity in their home and remain in a competitive advantage. And buyers are embracing this new market as they recognize that they “control their own destiny” a bit more. Without intense competition, they can spend more time negotiating on such things as buy downs on interest rates, ensuring home inspection repairs are made and other considerations

Knowledge is power

There is so much information available about the state of the housing market. But no one knows Winchester and Frederick County better than Coldwell Banker Premier agents. We encourage potential buyers and sellers to reach out to one of our agents and learn what is occurring locally while also gaining information about the buying, selling and mortgage process. We are happy and eager to answer your questions.