What’s up everyone
You would have to be living under a rock to have not noticed the housing market has changed in the last 6 months but how bad is it in Maryland?
The big question is -Is the Maryland housing market going to crash because right now we’re definitely feeling the correction.
In order for the Maryland Housing market to crash, we would need a huge influx of inventory at one time to come on the market, like we did in 2008.
Back then, it was all about foreclosures and short sales.
So will that happen again?
In this video, we’ll go through it all – new construction, foreclosure numbers, inventory, price reductions and see how Maryland is doing now that we are entering into the 4th quarter of 2022.
So lets dive right in
As I always say, real estate is very localized. So let’s compare the national data with the whole state of Maryland and then at the end, I’ll dive deeper into Montgomery County where I specialize.
According to the National Association of REALTORS®, Existing-home sales sagged for the sixth straight month in July.
All FOUR major U.S. regions recorded month-over-month and year-over-year sales declines.
What’s more, there have been layoffs and slower job growth in the industry, homebuilder sentiment has turned negative and buyers are canceling contracts in the face of interest rates that have jumped to the high 5 percents from below 3% a year earlier.
“We’re witnessing a housing recession in terms of declining home sales and home building,” Lawrence Yun, chief economist for the National Association of Realtors, said in a recent report.
But what does this mean for home buyers and sellers and then specifically in Maryland.
According to NAR, on a National level, Even though Sales of existing homes were down in July by 20.2% to 4.8 million properties from 6 million a year earlier, the median price last month was $403,800, up 10.8% from July 2021.
Take a look at this chart on Maryland provided by Redfin that goes back 5 years. .
In Maryland, home PRICES were up 5.8% in July compared to last year, selling for a median price of $408,100.
On average, the number of homes SOLD was down 25.2% year over year. There were 7,309 homes sold in July this year, down 9,775 homes sold in July last year.
And The median days on the market was 20 days, up 5 days year over year.
So homes SOLD are down, but actives are staying on the market longer which results in more inventory.
Lets take a look at how many homes for sale.
According to Redfin, In July 2022, there were 20,065 homes for sale in Maryland, down 15.2% year over year.
The number of newly listed homes was 8,337 and down 29.9% year over year.
The average months of supply is 2 months, the same as last year
So far, this data is not screaming crash because we need a lot more inventory to make a drastic change to a buyers market.
Lets look at foreclosures.
According to Attom, a curator of land and property data, home foreclosure filings In Maryland rose by 155.8% from 2021 to the first half of 2022.
IF we take a closer look at the Foreclosure events in Maryland according to the department of housing and community development for the first quarter of 2022, The statewide total is 1693 events.
You can take a look at the map to see how it delineates throughout the state.
Now, let’s go back to pre pandemic 2019 to see how it compares.
Looks like 5690 statewide events for the second quarter of 2019.
So even though the numbers are way up which makes sense since the foreclosure moratoriums expired, they are still below pre pandemic levels.
Let’s move onto price drops.
Back to Redfin’s data- 34.7% of homes had price drops, up from 24.0% of homes in July last year.
This could be from sellers pricing their homes too high because they have not adjusted to the changing market, or it could be that buyers are either priced out of the market due to higher interest rates or are waiting on the sidelines to see what will happen with the housing market.
One thing for sure, the increase of price drops indicates the market is cooling off and shifting towards buyers favor.
As I said at the beginning, real estate is very localized. While some areas in Maryland may look to be doing ok, others are not.
Take a look at this article from patch.com that sites 3 MD Counties Among the 50 Most At-Risk Housing Markets Nationwide, according to ATTOM, a curator of real estate data across the United States.
The rankings are based on home affordability, underwater mortgages, foreclosures and unemployment patterns in the first quarter of 2022.
Baltimore County, Charles County and Prince George’s County were listed as vulnerable counties in Maryland according to those metrics.
Let’s take a closer look at Montgomery County where I specialize. I can tell you from experience, that we still don’t have a lot of inventory to choose from.
Now, we are at the end of summer so its pretty normal around here for inventory to be down. I expect a fall market bump from Labor Day to thanksgiving.
Lets look at the numbers. According to Bright MLS, the median sales price for Montgomery County is up 9.1% year over year to $600,000.
The average sales price is up 8.3% to $733,588.
Homes for sale are down 37.4% to 1244 since last year and closed sales are down 15.5% to 3944 year over year.
We have 1.1 months supply which is down 26.7% year over year which is super low.
And to get even more specific, here is a present day market watch for Montgomery County for August 24,2022 the day I researched this video. I didn’t put any metric in the search – only Montgomery County. This covers a 3 day time period.
53 properties coming soon
49 Newly active
20 Back to active which means a contract fell through
68 with a price decrease
8 with a price increase
70 active under contract which means there are still some contingencies left – inspection appraisal etc
114 pending so no more contingencies
And 64 off market for other reasons.
Lets quickly look at a today. The amount of homes coming on the market is the same as the number of price reductions.
So what this tells me is more homes are coming on the market, more contracts are going back to active and there are more price reductions each week. BUT, there is still very little inventory.
Some more info.
30-year fixed rates dropped from 5.22% to 5.13%.
The challenging news that came out of the mortgage world last week is that mortgage demand dipped to the lowest level we’ve seen in the last 22 years.
This shouldn’t come as a surprise since our market is contracting and we have far fewer buyers in our marketplace than certainly we’ve been used to.
So what’s the bottom line?
Maryland is not immune to the housing correction – we all feel it.
Real estate is very localized so what’s happening in Baltimore is different than Montgomery County even though were only 40 minutes away.
Builder sentiment in the market for single-family homes fell into negative territory in August, as builders and buyers struggle with higher costs.
Prices have already gone down and I think they will continue to correct which is good. The market over the last 2 years has been unsustainable and we need more balance.
The biggest hurdle for buyers right now is affordability, but I don’t see a CRASH coming. There’s simply not enough inventory.
Things to look out for in my opinion, are employment numbers, foreclosure numbers and interest rates.
IF unemployment increases, the number of foreclosures increase and interest rates continue to go up, it will get worse.
But for now, I’m still hopeful that we are seeing a much needed correction to obtain a more balanced market and that’s it. Not 2008. Not a crash.
If you would like more information about where you live, send us an email and I will try and get you specific information about your area.
If you are interested in more housing market forecast videos, check out my Sunday videos where I bring you information from industry insiders.