Within a week of listing her Pikesville home for sale in September, Cyndi Crowl received multiple offers over the $299,900 asking price, ultimately accepting one for $310,000.
The decision to sell the house was a no-brainer for Crowl, the chief financial officer of a Planet Fitness gym ownership group, who said the red-hot state of the Baltimore-area housing market sparked her interest in selling.
“It’s really shocking when it’s only on the market for a couple of days,” said Crowl, 38, who hopes to relocate to Pennsylvania with her wife.
Fueled by a perfect storm of conditions precipitated by the coronavirus pandemic, the Baltimore region’s housing market exhibits all the hallmarks of a classic real estate sellers' market:
A limited inventory of homes for sale prompts multiple bids shortly after a desirable property’s listing, resulting in a sale price over the asking price.
The conditions also favor some buyers, thanks to historically low mortgage interest rates borne out of the pandemic and its impact on the economy, making buying a home more affordable even if you’re borrowing more.
It’s happening nationwide as "record-low mortgage rates have improved housing affordability, bringing more buyers into the market,” said Lawrence Yun, chief economist of the National Association of Realtors, in a statement about millennial buying activity.
But current conditions could create long-term affordability problems for people who lost their jobs during the public health crisis, as well as other low-income earners — especially as limited supply drives up prices and more properties sell in bidding wars.
"We’re not seeing as many houses in the pipeline,” said Dee Dee Miller, president of Maryland Realtors. "In terms of affordable housing, there’s very little. And the sad part of that is, this is the prime opportunity to jump into the market because interest rates will never be this low again.”
Miller, an agent with Long & Foster Real Estate, said that while the pandemic accelerated the pace of buying and selling, it also slowed the more routine activities in the housing industry, perpetuating the supply-and-demand challenges.
Pandemic-induced supply disruptions and increased demand have caused the cost of lumber to skyrocket and led to a shortage of appliances nationwide. Those have delayed new construction and home improvements, exacerbating problems with the supply of homes for sale as potential sellers delay listing their houses until the work can be done.
Sidelined homeowners have helped drive down the available inventory of homes for sale. In September, the inventory of homes for sale fell to 4,813, less than half what it was a year earlier, yet 4,194 homes sold, according to data from Bright MLS, the region’s multiple listing service.
“You’re in a situation now where the inventory is really becoming an issue,” said Chris Finnegan, chief marketing and communications officer at Bright MLS.
Even though the median sales price in the Baltimore metro area has surged by about 11% since last year, Finnegan said, the region remains affordable compared with its neighbors. Across the region, the September median sales price — meaning half the homes sold for more and half for less — was $320,000.
“Baltimore still represents a really strong value,” he said. “But I don’t think it’s a secret anymore.”
Mirroring Crowl’s experience, homes in the area spent a median of just nine days on the market in September before selling, the first drop into single digits for that metric, according to Bright MLS.
Maryland’s market may have fared better than others because of its large concentration of “essential” health care employees and government workers. The state’s unemployment rate of about 6.9% in September was higher than last year but lower than the national average of 8.4%.
Those in stable financial situations also might find themselves with more pocket money than usual, said Gay Cororaton, director of housing and commercial research for the National Association of Realtors. People are eating out less and spending less on commuting to work. Fewer people went on vacations this summer. And millions of Americans qualified for $1,200 in federal stimulus money.
All told, that can make qualifying for loans easier, or even help foot a down payment, she said.
Cororaton referred to this phenomenon as a “K-shaped” recovery, a term economists use to describe different parts of the economy recovering at different magnitudes following a recession. She said people working in travel, hospitality, food service, retail and the arts will have less money to invest in real estate compared with those who maintained their incomes.
“This is for people who haven’t found themselves unemployed," Cororaton said of the housing boom.
Little can be done to remedy the inventory shortage, particularly on the entry-level end of the market, until the economy fully reopens and those who would have moved this year renew their plans to sell.
With more people cooped up at home, the pandemic also altered housing preferences, making detached, single-family residences with spare rooms even more desirable than before.
Nationally, a majority of clients are expressing interest in properties with more work-from-home space, according to a monthly survey published by the National Association of Realtors.
“A lot of people are wanting to upgrade their space,” said Arial Pegues, a real estate agent who works throughout the region. “Kids are home, maybe mom and dad are working from home, too, and maybe the house is too small. People want more leisure space: finished basements, porches screened in, backyards.”
Still, in and around Baltimore, town homes, which tend to sell for less than their detached counterparts, also are selling quickly, perhaps indicative of demand from first-time buyers.
Pegues said she advises clients to start looking at homes only after they have secured preapprovals for their mortgage loans.
“There’s no time to think about whether you’re going to put an offer in,” she said. “You have to do it the same day you see the property.”
Several Baltimore-area consumers said office and leisure space have become more valuable amid the pandemic as their priorities — and budgets — shift.
Jasmyn Hite, a secretary who works in Maryland’s Department of Human Services, said she purchased her new Coldstream-Homestead-Montebello rowhouse out of a desire for more elbow room. It took a few months before she made an offer that stuck, said Hite, 43, who moved from an apartment in Baltimore County.
“It’s going to be significantly lower, like $400 to $500 lower than what I was paying before,” she said of her monthly payment. “Even though it’s a traditional rowhome, it’s still bigger.”
Ashley Nalley, another first-time homebuyer, said she likely would have renewed her rental unit’s lease for another year if not for the pandemic.
“I kept getting positive feedback from family and friends saying, ‘If you’re able to do it, NOW’s a great time,'" said Nalley, 29, who closed on her Bel Air home in September.
Nalley said the first home she wanted went to another buyer who made an all-cash bid worth $10,000 more than her offer. Unable to compete, she kept looking and got lucky, closing on the second house she pursued.
Several real estate agents and brokers said buyers have to prepare financially for the market’s competitive climate — but can come out of the process with an affordable monthly payment.
Julia Neal, an agent with the W Home Group of Next Step Realty who handled Nalley’s purchase, said buyers should be aware of homes being priced over the appraised value, another factor that could prevent buyers who take out loans from landing their dream homes.
Still, today’s interest rates give potential homebuyers more power than ever — if they can find one.
“It’s created a frenzy,” Neal said. “Prices are driving up, but interest rates matter more. With rates where they are, you can afford so much more of a house."