ANALYSIS - An Unsettled, Pricey Housing Market
High prices and low offerings continue on the housing front, but the more-worrying trends have to do with the overall turmoil in the U.S. economy at the moment.
By Martin Davis
EDITOR-IN-CHIEF
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Buried deep in the slide deck that Renee Haltom of the Federal Reserve Bank in Richmond presented to a Lunch & Learn event in Fredericksburg earlier this month was a look at housing starts.
Titled “House price inflation is fundamentally about low supply,” the slide reflects the rapid decline in new housing starts from just prior to the Great Recession to now.
The impact of this years-long slump in building has led to a steady drumbeat in the monthly reports issued by the Fredericksburg Area Association of Realtors. Home prices continue to climb in the face of too-few options on the market.
The report released today, however, has a more worrying note:
While prices remained high in February, total sold dollar volume decreased by about 3%, going from approximately $157 million last February to just over $152 million this year. That decrease was fueled by a nearly 9% reduction in units sold across the region, with 305 homes transacted in February of 2025 compared to 335 last year. [Emphasis added]
In short, it’s not just that housing supplies are short, but that the number of units moving has for the past year been trending downward. And this despite the fact that modestly more units are available. “[A]ctive listings,” according to the press release, “jumped nearly 21% going from 661 homes on the market at the end of February 2024 to 795 at the end of this February.”
Rising home costs and high interest rates mostly explain this. But they fail to capture the full picture of what’s happening at the moment. As Haltom noted earlier this month, the economy has a “strong baseline,” but there’s “uncertainty unfolding.”
That uncertainty is playing out on multiple levels in our region.
To be sure, the U.S. economy as a whole is in an unstable place at the moment. Stocks continued their tumble today, though whether that’s due to Trump’s “cagey response” to questions about whether there would be a recession, wrote the Wall Street Journal, or “merely a market correction” isn’t known.
What is known, according to the WSJ editors, is that “his tariffs are hurting the economy now.”
Beyond these factors, however, is growing concern locally over what will happen to government employees in our region, as well as all the contractors and support businesses that depend on the government.
FAAR Board Member Tamar Myers-Moffatt captured this uncertainty succinctly in the press release released this morning.
In February, the housing market was abuzz with uncertainty following significant announcements and changes affecting the federal workforce.”
It remains too early to know exactly how much reductions in the federal workforce will hurt our region, but that these reductions will be felt is almost certain if the Department of Government Efficiency continues to downsize the federal workforce.
Haltom pointed out in her talk that King George and Stafford have the second and fourth greatest share of civilian workers employed by the federal government.
So while every area in our locality will feel the impact of these cuts; King George and Stafford could potentially face the worst of it.
But projecting how all of this will play out is, at this moment, next to impossible.
Like everyone else, we’ll simply have to watch and see what happens.
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