Looking to buy a home in the area? Good luck finding one.
Homeowners in the Baltimore metropolitan area are staying put at historic levels, according to a new report from the real estate firm Bright MLS.
Last month, fewer than 2,900 homeowners in the region decided to put their homes up for sale, the report said, marking the fewest number of new listings in July for the past two decades — if not longer. July is considered a relatively hot month for residential real estate, but this July was especially cold. Compared with a year prior, new home listings fell nearly 40%.
It’s not that people don’t want to buy homes. Relatively high mortgage rates are pushing current owners to stay in their homes, which were often purchased or refinanced at historically low rates, the report said.
“They’re trapped — in a good way — by a low interest rate,” said James Baublitz, vice president of capital markets at First Home Mortgage, a Baltimore-based lender.
Baublitz said it’s no secret that inventory is tight and mortgage rates are high, and it’s leading some potential homebuyers — especially millennial renters — to decide they can’t afford a home.
That’s reflected in the Bright MLS report, which documented a nearly 20% decline in home sales compared with July 2022.
Baublitz said that’s pushed First Home
MEDIAN HOME PRICES
July 2023 compared with July 2022, according to Bright MLS:
Baltimore City: $225,000, -8.2%
Baltimore County: $341,950, +5.2%
Anne Arundel County: $475,000, +5.6%
Carroll County: $430,000, -3.9%
Harford County: $383,995, +7%
Howard County: $621,922, +15.4%
Mortgage to think more creatively. The lender has a $3,000 grant program for certain first-time and low-income homebuyers and is preparing to launch a home loan that requires just a 1% down payment. Baublitz said these programs can help renters buy into the Baltimore region, which has bucked national trends recently.
Nationally, median home prices fell as mortgage rates increased last year, dropping nearly 5% after peaking in June, according to the S&P/Case-Shiller U.S. National Home Price Index. But in the Baltimore metropolitan area — meaning Anne Arundel, Baltimore, Carroll, Harford and Howard counties, plus Baltimore City — that decrease was a blip.
According to the Bright MLS report, home prices rose again in July, climbing to $380,000, almost 3% higher than a year prior. However, that increase was not evenly spread.
In Howard County, the median sales price rose to $621,922, a 15% increase compared with July 2022. In Baltimore City, the median sales price fell to $225,000, an 8% decrease.
Shalynn Mills-Arasanmi, owner of Weichert, Realtors-Integrity Home Team in Owings Mills, said there are still bidding wars in certain wealthier areas. Home listings in Howard County, Owings Mills in Baltimore County and Roland Park in Baltimore City often draw a dozen or more offers, she said, but changes in the market are pushing some people to look elsewhere.
Prospective buyers looking in Baltimore County are now reconsidering Baltimore City, where prices are generally lower and inventory is greater, Mills-Arasanmi said.
Mills-Arasanmi said her firm is also selling more homes to investors from places like Philadelphia and Atlanta who see the lack of an inventory as an incentive to fix and flip homes in Baltimore.
“Investors are swarming from all over,” she said.
Mills-Arasanmi said many homeowners are holding on to their property for now, but she believes more owners will eventually decide to sell, bringing more parity between buyers and sellers.
But Tina Beliveau of the Beliveau Group of EXP Realty in Lutherville-Timonium thinks the housing market will be tilted toward sellers for the foreseeable future.
Even if mortgage rates decline next year, that will unleash pent-up demand from homebuyers, Beliveau said. Yes, more sellers will enter the market and everyone will enjoy lower mortgage rates, but she believes it could set off another frenzy of homebuying similar to what happened during the coronavirus pandemic.
“As soon as interest rates get better, a ton of people are going to get into the game,” she said.
Unless there’s an ambitious government policy aimed at housing creation or a major economic event, Beliveau said, the demand for homes will exceed the supply.
“I just think we’re in a new normal in America,” she said. “There’s just not enough housing to go around.”