July is typically a hot month for home sales, but rising interest rates and fears of inflation and an economic slowdown threw cold water over the Baltimore region’s once-scorching housing market.
Fewer homes sold last month than in any July since 2014, according to data released Thursday by the real estate company Bright MLS. The number of new listings is dropping, while the number of active listings is growing, indicating that the frenetic pace of homebuying that occurred during the coronavirus pandemic has ended.
Lisa Sturtevant, an economist for Bright MLS, called July an “inflection point” and said the Baltimore region appears to be returning to a more normal, pre-pandemic housing market.
Mortgage interest rates have risen over the past few months, adding to the cost of buying a home and pushing many prospective homebuyers out of the market, but Sturtevant said there are other factors at play. When mortgage rates temporarily dipped last week, there was no corresponding bump in homebuying activity, Sturtevant said, which means inflation and economic uncertainty are probably scaring away some homebuyers.
The number of homes sold in July plunged to 3,411, down 24.5% from July 2021. Pending sales were likewise down 23.5%.
Yet home prices, meanwhile, continue to rise in the Baltimore area, hitting a median of $368,450, a 5.3% increase compared with this time last year. Sturtevant thinks that won’t change — even as the long-suppressed inventory of homes for sale starts to grow.
“The level of supply we’ve got in the Baltimore area is tighter, frankly, than any of our mid-Atlantic markets,” Sturtevant said.
A healthy housing market has enough inventory to satisfy demand for 4 to 6 months, but the Baltimore region has little more than a month’s worth of inventory.
“We will continue to see prices rise overall, but just at a much slower pace than we’ve seen over the last two years,” predicted Sturtevant, noting however that some isolated areas may see price drops.
Median sales prices rose across the region in July, even as the number of sales dropped compared with a year earlier:
- in Anne Arundel County, prices rose 4.7% to $450,000, but closings fell 25.4% to 863;
- in Baltimore City, prices rose 7.1% to $245,000, but closings fell 18.2% to 766;
- in Baltimore County, prices rose 6.6% to $325,000, but closings fell 29.3% to 863;
- in Carroll County, prices rose 11.9% to $447,500, but closings fell 14.9% to 212;
- in Harford County, prices rose 8.8% to 359,000, but closings fell 20% to 333;
- in Howard County, prices rose 3.6% to $538,920, but closings fell 30.4% to 374.
James Weiskerger of the W Home Group in Timonium isn’t so sure prices will keep rising. He’s been watching inventory “stacking up” recently and expects home prices could slip and eventually stabilize.
“I do think that the current trend of appreciation is kind of a mirage,” Weiskerger said.
He noted that four months ago in Mays Chapel, a community near Timonium, there was just one town home for sale. Now, there’s nine or 10 on the market, Weiskerger said.
Weiskerger said the housing market in the Baltimore region is returning to a healthier equilibrium compared with the frenzied pace of the past two years. Clients were bidding $100,000 over the asking price and still losing out on homes, he recalled, but homebuyers now are regaining their foothold in negotiations.
Tina Beliveau of eXp Realty in Timonium said homebuyers are no longer buying houses “as is” and some are even submitting repair requests — another sign that the stratospheric competition for homes is coming back down to earth.
“Things you could be sloppy about in March, you cannot be sloppy about,” Beliveau said, like cleaning and weeding.
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Beliveau is seeing a pullback in the area, particularly in Baltimore.
“It’s more pronounced in the city than the county,” she said. “In the city, we are seeing that days on market are ticking up faster than the county.”
In Baltimore, the median days on the market rose to 12, while across the region, homes were on the market for a median of seven days last month, just one more day than July last year.
Still, aggressive pricing can still generate a lot of competition. Beliveau said her firm recently advertised a home in the neighborhood of Canton for $285,000. It got six offers in four days and ended up selling above the asking price, she said.
“I never had bidding wars for my city listings like that before,” Beliveau said.
With the limited amount of inventory in the area, Beliveau said, sellers still have the upper hand, though it’s not quite as one-sided.
“It’s a seller’s market with a splash of uncertainty in the mix that is creating a little more buyer leverage,” she said.