Home sales fall by more than 20% in metro area
Rising mortgage rates push some out of market
Fewer people are buying and selling homes in the Baltimore area as rising mortgage rates push some buyers out of the market and spook homeowners who might otherwise sell.
The real estate firm Bright MLS said pending home sales dropped nearly 24% in February compared with last year, though home prices continued to edge up. The median home price in February rose 2.8% to $329,000.
Not only are buyers reluctant to take the plunge, but “sellers are sitting out the market too in a big way and inventory still remains very low,” said Lisa Sturtevant, chief economist for Bright MLS.
Most sellers are also homebuyers, Sturtevant said, and they don’t want to lose the low monthly payment they secured in recent years, when interest rates were at historic lows. About 80% of homeowners nationally have a mortgage rate that is below 4%, she said, but if they bought a home now, their mortgage rate would be nearly 7%.
Sturtevant said there’s another reason beyond mortgage rates that fewer people are buying and selling homes right now: demographics.
“Baby boomers are staying in their homes longer,” Sturtevant said. “They’re not downsizing as early as prior generations.”
Baby boomers — generally people in their 60s and 70s — are working later in life, have adult children moving back home, or can’t find a suitable option to downsize, she said. That means fewer homes are available for Gen Xers and millennials.
And it’s translated to depressed sales. In February, just 1,981 homes sold, down 23.8% from February 2022 and marking the 15th straight month sales were down.
Tina Beliveau, who runs the Beliveau Group of EXP Realty in Lutherville-Timonium, said the slowdown in home sales is palpable in the local real estate market.
“We’ve definitely had people who think the numbers just don’t make sense right now,” Beliveau said.
Beliveau called it a “triple whammy” for first-time homebuyers, who have a mix of student debt and car payments, face rising mortgage rates and must compete for a relatively small inventory of homes,
“The bar to get into your first house is higher,” she said. “I really feel for the first-time homebuyers now more than ever.”
After years of low interest rates, some homebuyers are having trouble adjusting their expectations, Beliveau said. They are either waiting for rates to drop or waiting for home prices to drop, she said, but the truth might be that both mortgage rates and prices hold steady or even rise.
Still, there is significant variation within “micromarkets” of the Baltimore area, Beliveau said, and a home that is properly staged and priced can attract a lot of attention. A home recently listed in Severn, for instance, has had seven offers so far, she said.
This tracks with the Bright MLS data. Sturtevant said that while home prices in the city of Baltimore are softening, the suburbs are still seeing significant price increases. This is a trend among other cities and surrounding areas, not just Baltimore, she said.
Active listings did increase in advance of the spring selling season with 3,306 homes on the market in February, up 31% from a year earlier. But that still only translates to about a month’s worth of supply going into March.
Median home prices in February 2023 compared with February 2022, according to Bright MLS:
Baltimore City: $193,500, -4.2%.
Baltimore County: $300,000, +1%.
Anne Arundel County: $455,000, +7.1%.
Carroll County: $410,000, +5.9%.
Harford County: $335,000, +5.5%.
Howard County, $500,000, +14.9%.