Baltimore Real Estate Market Update: Fall 2021
Everyone’s favorite question to ask us is “how’s the market?” -- so we’re here to tell you exactly what is happening in the Baltimore real estate market!
In a nutshell, the word for the market trend in the Baltimore metro right now is “normalizing”.
The first half of 2021 was the most extreme seller’s market in history - marked by:
mass numbers of offers on most every listing (sometimes 2-4, sometimes well over 10 or 20)
buyers needing to agree to buy homes as-is (no repairs) to be the winning bid
buyers not being able to negotiate any “seller help” (closing cost subsidies from the seller)
buyers instead sometimes having to pay money towards the seller’s costs to be the winning bid (say what!?)
buyers waiving the appraisal and agreeing to buy the house even if the house appraises for far less than the contract price
buyers with great financing losing out over and over to buyers with cash
...as well as many other extreme measures including buyers or their agents bringing gifts to sellers and seller’s agents to win them over!
Eventually, extreme measures become exhausting for everyone involved, and buyer fatigue started to set in as early as May of 2021. Per our local Multiple Listing Service Bright MLS, showing traffic has been declining for 5 months in a row, which has proved to be true in The Beliveau Group’s day to day experiences. This might sound like bad news for a potential home seller, but the reality is that dynamics were so intensely pro-seller that this “slowdown” is still manifesting as a seller’s market right now.
The main driver of this ongoing seller’s market is that we are about 18 months into having an extreme shortage of listings on the market (aka “inventory”). As of September 2021, listing inventory was down 3.2% from this time one year ago, and this time one year ago we were already at an extreme inventory shortage due to the onset and uncertainty of the pandemic. The shortage has not improved - yet.
Another way to boil down inventory as it relates to demand is how many months of housing “supply” are on the market as active listings at any given time. In 2012, there was 6 months supply of housing inventory on the market, which is considered a "balanced" market (versus a straight up buyer's or seller's market).
This September, there were only 1.14 months of supply - pretty much as extreme of a seller's market as there can be, statistically. This is manifesting right now as sellers being able to get premium prices for their homes - but typically with just 1-2 offers instead of many, many offers. A significant sector of the buyer pool decided to step back this spring and summer after losing out on bidding wars over and over, and/or becoming uncomfortable with the rapid rise in pricing.
That leads us to the next question we get all the time: “Is the market in a bubble, and is it about to burst?”. Although we don’t have a crystal ball, what we can say is that most economists agree that the dynamics that caused the last market burst in 2008 are not present right now. Heavy regulation on mortgage lending that remains in place since that time has protected many buyers from ending up with predatory loans or in situations where they could not actually afford the mortgage and maintenance costs on the homes they purchased. Home prices have also continued to rise which also means that homeowners who have needed to sell have been able to do so under “regular” circumstances instead of needing to deal with a short sale or go into foreclosure.
Right now, the median sale price is up 6.2% compared to fall of 2020. For context - the median sale price in the Baltimore Metro was $235,000 in Sept 2012. This year, the median sale price was $340,200 - that's an increase of $105,200!
Most predictions for the Baltimore real estate market as well as the market nationally are that prices will continue to rise. Many macro factors are going to continue to impact development and construction on an ongoing basis (labor + material shortages and development restrictions in particular) which means inventory will remain suppressed, and therefore prices are likely to remain strong.
The argument to sell now remains strong: prices are at a premium - period. The one key is to avoid the age-old mistake of overpricing. In spite of the strength of the market, overpriced inventory will sit far longer than the market average, require 1 or more price reductions, and get far more unfavorable offer terms when buyers do engage. The need for expert real estate advice and strategy on price positioning, home condition, staging, and marketing is still a must.
The argument to buy is strong, too. Compared to earlier this year, competition is drastically lower and interest rates are still incredibly favorable. Prices are likely to continue to rise so waiting for a “bubble burst” is unlikely to be a winning strategy. Many of our clients have taken advantage of these great interest rates by acquiring second homes, properties at the beach, and investment properties. Keep in mind that we can connect you with a great realtor anywhere in the USA (and beyond) if you’re thinking of investing or buying outside Baltimore! We have a fabulous international network of top agents at our disposal through eXp Realty.
As always, if you’re wondering how all of this advice applies to your personal situation, reach out to us! We are motivated by supporting every person we come into contact with to make informed and strategic real estate decisions.
Contact The Beliveau Group today at 443.595.7535, hello@thebeliveaugroup.com, or www.thebeliveaugroup.com. And don’t forget to keep in touch with us on instagram - @beliveaugroup.
Data Source: Bright MLS Media
Note: All of this data is for the Baltimore Metro region. For insight on your specific home, neighborhood, or micro market, please reach out to us! These trends vary from area to area.