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Sales Volume Slowdown

The tides continue to shift. While some market areas are still seeing hot buyer activity, homes, in general, are starting to see an uptick in days on market. The median marketing days have risen from 8 to 11 year over year (mdrealtor.org). I believe the sentiment we’re seeing on the street, based on yard signs, is that sellers are still in the mindset that homes are selling like hot cakes for exorbitant prices like we saw starting in 2021. What I mean is that, while driving through central Maryland at least, you may notice a yard sign with Broker A and 30 days later see another sign panel from Broker B. Maybe even a C if the property sits on the market more than 90 days. I don’t think the original listing agents are necessarily giving bad service or advice but rather, the sellers believe that their property isn’t selling because of the listing agent and not that the asking price is too high, buyer demand has dropped, or that there is much more inventory to choose from nowadays and Buyers are being more picky.

Home Values

Even with a slow in home sales, the average sales price for an MD home has risen 3.9% year over year to $543,801 (mdrealtor.org). I think this has a big influence from new home sales and high end homes selling as people with high income government jobs are leaving the area. The multi million dollar sales, while fewer than the average home, really bring that average number up. The median price, which is more reflective of the true market has risen 3.3% year over year to $450,000 (mdrealtor.org). In Anne Arundel County, that number is $525,000, a 4.3% rise year over year. The average marketing time of AACO homes is now at 27 days as opposed to 20 day this time last year.

External Factors

While Howard County and Baltimore County are seeing fairly substantial surges in new active listings, 54% and 49% respectively, housing inventory is still considered tight (hcar.org, Rocket Mortgage). I believe that the impending government layoffs and hiring freeze in local and Federal governments are playing a significant factor in buyer mobility. There are still doom and gloom predictions by talking heads of a recession incoming. I hear these opinions and arguments made a few times every 2 to 3 years and it’s usually a cycle that comes along with headlines like, “Worse than 2008”, “A Recession Coming that Could be Worse Than the 1920’s”, “Housing Market is Doomed, Robert Kiyosaki’s Last Warning”, “Are Teletubbies Making a Comeback this Year?”. It really doesn’t matter who’s in office at the time, these click baity titles always come screaming out of the woodwork at the creators’ most opportune moment.

The biggest catalyst for a mortgage pop and refi-pocalypse will more than likely be a lowering of the overnight borrowing rate that has been promised by the Federal Reserve. 2 rate cuts have been spoken of since last year FOMC meetings but they are being pushed back as a result of the Fed Chair’s, “wait and see” stance which some would argue is keeping American prosperity in the bull pen. The data shows that the US economy is still in a good spot but everyone is feeling the pain of a recessionary environment. I think this shows that the folks doing well fiscally are propping up the economy with their spending on an over inflated goods and services industry. Money is pouring in from overseas companies to build industrial infrastructure stateside but the tight monetary policy implemented by the Fed is keeping lending and borrowing in a choke hold. I think this helps find the cracks in the foundations but eventually, the foundations will crumble without support. When interest rates do eventually drop, inflation will re accelerate but businesses will be able to borrow, refinance debt, hire more people and this will couple with the foreign investment to spread more economic growth across the US. At the point I just mentioned, I think we will see a resurgence of home buying and people who are locked in actually feeling like they can move somewhere and eventually, this will help level out home prices. Let’s check back in on this in Q4!