Fredericksburg Area Association of Realtors gathers a panel to look back at 2023 and forward into 2024.
by Adele Uphaus
MANAGING EDITOR AND CORRESPONDENT
Last year saw monthly rents as high as $5,000 in some parts of the Fredericksburg region.
The average cost of a newly constructed, four-bedroom, 3,000-square-foot home was $750,000, and the real estate market had historically low inventory, with potential sellers deciding to stay put and wait for interest rates to drop.
These are some of the takeaways from Friday’s “Housing Outlook” panel hosted by the Fredericksburg Area Association of Realtors.
The event gathered panelists Allison Graves with Coldwell Banker Elite Commercial, Scott Hine with Union Home Mortgage, Dawn Josemans with Coldwell Banker Elite Property Management, Amy Cherry Taylor with Porch & Stable Realty, and Chris Burns with Atlantic Builders for a discussion on trends from 2023 and the outlook for 2024, moderated by Tamar Myers-Moffatt with Samson Properties.
Josemans had some of the morning’s most startling words about how high rents have soared regionally. She said that average monthly rent is $3,000 per month and that “in the $1,500 price range, there’s not very much.”
She said rents will start to come down, as landlords are having to lower their rates in order to fill units that are sitting empty. Josemans also said she’s seeing more people trying to earn rental income by renting out a room in their homes or renting several units and operating them as AirBnBs.
While the zoning in a locality may prevent this kind of activity, Josemans said she doesn’t see the localities policing their zoning ordinances. She said she expects this trend to continue in 2024.
Burns, with Atlantic Builders, said he also sees the need for diversity and adaptability in the new construction business.
“We have very diverse product offerings,” he said. “We have single-family detached houses on acreage, townhomes, duet homes (duplexes), age-restricted homes. We have had to adapt.”
Burns said Atlantic Builders is “interested in two-on-twos,” in which two two-level units are stacked on top of one another.
In response to a question, Burns said that new multifamily construction might not necessarily qualify as affordable. He said the cost of skilled labor in particular is going to continue to increase, which will affect the price-point of a new construction.
“Hopefully what we will see, however, is people start to move out of their older homes that they’ve had for 30 years,” which then become more affordable, Burns said.
Hine, with Union Mortgage, also had thoughts on affordable housing.
“Affordability is a matter of supply and demand—those two have to meet,” he said. It’s going to require more new building to meet demand, he said, but noted that he doesn’t see “an appetite” to build more.
Hine said he does expect interest rates, which have been as high as 8% recently, to drop to between 6 and 6.5%.
“For every 1% decrease in interest rates, about five million people qualify (for a mortgage loan),” he said. “That will bring pent-up demand into the market. But my fear is, we’ve gotta build. We have to push the localities on that.”
Taylor said she does expect the real estate market to pick up in 2024.
“A lot of people have been waiting (to sell their homes) and they’re getting tired of waiting,” she said. “They understand rates are not going to drop a ton.”
Graves said that she’s optimistic about the state of the commercial real estate market, which she said will grow in 2024, largely thanks to huge new data center projects that have been approved in Spotsylvania, Stafford and Culpeper.
This article has been updated to correct the average cost of a newly constructed, detached single family home.
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