is the real estate market about to tank?
We're getting a lot of questions lately about whether real estate values are going to drop, and we are here to share some on-the-ground insights with you.
The short answer is: prices aren't dropping - yet! - and they may not drop at all.
What we can confirm is that the excessive demand and competitive factors that have been the hallmark of the last 2+ years are starting to moderate. However, we are still statistically in a strong seller's market. There is still far more demand than housing supply in the Baltimore Metro market.
For an easy-to-digest 1 minute explanation on what's going on with supply, watch this IG reel where I break it down:
As of May 2022, the median home sale price is up 10% in the Baltimore Metro compared to May 2021.
Those huge gains are unlikely to continue at this rate. However, limited supply could still continue to drive prices upward at a more moderate rate.
30 year interest rates started the year in the high 2's and are currently in the low to mid 6's. Some buyers are holding off or lowering their budget due to the higher rates.
Ironically, the resulting decrease in competition and bidding wars has motivated other buyers to get more serious about buying now! These buyers see an opportunity to either avoid a bidding war altogether, or be in a "small" bidding war with just 1-2 other offers versus competing against 10, 15 or 20 other buyers.
Sellers who price their homes realistically are still selling in 1 week or less and often garnering multiple offers. The biggest mistake some sellers are making in this market climate is pricing too high and turning off any offers at all, let alone multiple offers. Because the market is cooling, pricing your home for more than recent sales is a recipe for disaster. We coach our clients to price in the “sweet spot” and it works every time.
Case in point: in the last week we put these two listings under contract by using a realistic pricing strategy, and setting up the ideal conditions for showing with staging, great photography, and expert marketing:
9 MULLINGAR COURT #202: MAYS CHAPEL CONDO
Listed in the “sweet spot” for $265,000.
2 offers received in four days on market.
Under contract at list price!
408 GALLOWAY ROAD: COCKEYSVILLE SINGLE FAMILY
Listed in the “sweet spot” for $350,000.
3 offers received in two days on market.
Under contract for $12,500 over list price!
As a point of comparison: in May we listed 10949 Nacirema Lane in Greenspring Valley.
We listed this property as part of our TBG Luxury Collection for $775,000. We received 6 offers in 4 days and closed for $860,000 at the end of last week.
As we get deeper into the summer market and navigate higher interest rates for the time being, those scenarios are a bit less likely for the foreseeable future.
That said: there is always potential for this type of outcome in any market cycle with an aggressive pricing strategy for a home in a highly sought-after area.
Hopefully this is enlightening to you and potentially reassuring if you've been seeing headlines that are more dire.
While it's possible Baltimore Metro market prices could eventually slide down from the highs we've seen in the last 12 months, it's also entirely possible that decent demand and ongoing constricted supply could mean that prices never skip a beat and continue to increase.
If you're curious why housing supply is so limited in our area and the US overall, this article that we've previously shared is a great explanation! And as always, be in touch with any and all your real estate questions!