the baltimore real estate market: 2022 recap and 2023 projections
Every new year, I aim to send a helpful recap on what happened last year in the Baltimore Metro real estate market, along with my projections for the year to come.
It's mind-boggling to realize that we have now been in a “pandemic real estate climate” for 3 years now.
What has become clear is that the issue that seemed potentially short term (a lack of housing supply that will surely “open up" soon) is lingering beyond all expectations.
Regardless of what headlines you might have seen about the market weakening, the bottom line is this: we are still experiencing a massive shortage of homes in Baltimore for buyers! If you have been thinking about selling your home in the Baltimore metro area, please get in touch with us, we can likely make a great match for you!
In this longer than normal blog post (you've been warned - enjoy!), I'm going to walk you through the key things to know about what's going on in our market as it relates to home values, interest rates, home seller dynamics, and home buyer dynamics.
WHAT YOU NEED TO KNOW:
Home values rose 6.7% in 2022 compared to 2021.
The average home in the Baltimore Metro sold for $412,000, compared to $386,000 just a year prior.
For more historical context, the average home in the Baltimore Metro sold for $276,000 ten years ago!
What's the takeaway here?
In my humble opinion: it's wise to buy a home as soon as you can comfortably afford it, and plan to hold it for at least 5-10 years. This is a winning formula!
The key is to hold long enough to see significant gains, like the above example.
This is great news for longtime homeowners and their equity position.
CLICK HERE TO CHECK YOUR HOME'S VALUE NOW.
WHAT YOU NEED TO KNOW
We kicked off January of last year with 30 year mortgage interest rates averaging 3.25%.
Rates peaked around 7% in October - and we saw a corresponding drop in buyer activity, home showings, and new contracts for a while.
Rates have been gradually dropping since then.
As of today, the 30 year conventional fixed rate sits right around 6%, and many buyers are getting back in the game now in hopes of beating another (extremely likely) spring rush.
The consensus in the mortgage industry is that interest rates will likely drop lower and lower into the 5's throughout this year, but it's unlikely we'll see rates in the 4% range during 2023.
CONTACT US TO GET A RATE QUOTE FOR A PURCHASE OF REFINANCE.
WHAT YOU NEED TO KNOW
Sellers were still the winner in 2022... although everything's relative!
Compared to 2021 and 2022, sellers were slightly less "in charge", but still wielded most of the leverage in the buyer-seller power dynamic.
We continued to have many bidding wars on our listings, and buyers often agreed to the most attractive terms (as is deals, appraisal waivers, accommodating rent-backs and unusual timelines, etc.).
However, as the market weakened in the second half of the year (mostly due to rising interest rates), we saw the return of picky buyers (boy, we sure didn't miss 10-15 item long inspection repair punchlists!) and skittish buyers (fearful of the market conditions, we saw more instances of lower offers and cold feet once under contract).
Our expectation is to continue to see a gradual increase in home values this year. This will vary by area, house type, and house condition.
Our prediction is a 1-3% value increase by the end of 2023.
Our recommendations for potential 2023 sellers are the following:
Schedule a consultation with us as soon as you're thinking about a potential move. We'll review your equity position and what opportunities likely lay ahead for you at various points in 2023 depending on whether you plan to coordinate a purchase with the sale of your home, or not.
Be wary of over-improvements. We regularly hear from homeowners who have made incorrect assumptions about what changes will add value to their homes. Call or email us for advice before significant investments as they relate to resale!
CLICK HERE TO BOOK A CALL WITH US TO DISCUSS SELLING IN 2023.
WHAT YOU NEED TO KNOW
What did it feel like to be a buyer in 2022?
In two words: slightly easier.
In general, our buyers were in less bidding wars in 2022 than 2020 and 2021 (although there were still plenty).
We more often negotiated prices, inspection repairs, and closing subsidies from sellers, which was a relief!
The biggest pinch was the dynamic of continued rising home values and significantly increased interest rates.
In 2023, it's really important for buyers to work closely with us from day one to clarify how interest rates will impact their mortgage payment.
We are rooting for lower rates as the year progresses (and as inflation hopefully continues to come under control).
That said, one likely reality to reckon with is the fact that if interest rates do continue to decrease, it's also likely that buyer demand will pick right up, and we'll see corresponding increases in housing demand and housing prices.
Therefore, our recommendations for 2023 buyers are the following:
Partner with us early in the process to review your budget and criteria so we can plan accordingly for various interest rate and buyer demand scenarios.
Tap into one of our fantastic local lenders so that together, we can track interest rates and capitalize on rate drops quickly.
Cash and savings are king. The more you can pack away for your own closing costs and a stronger down payment, the better of a position you'll be in to make the best of today's market dynamics.
CLICK HERE TO BOOK A CALL WITH US TO DISCUSS BUYING IN 2023.