The Maryland housing market presented a mixed bag of trends in August 2024, with some areas experiencing strong growth while others faced significant declines. Examining data from last month, a clear picture emerges of a dynamic market influenced by various factors.
Current Maryland Housing Market Trends
Declining Sales, Rising Prices:
A notable trend across Maryland is the decrease in the number of units sold compared to August 2023. Statewide, units sold dropped by 5.9%, with certain counties experiencing more dramatic declines. Somerset County saw the most significant drop at 51.5%, followed by Dorchester, St. Mary's, Charles, and Washington counties with declines ranging from 18% to 21.4%.
This decline in sales activity could be attributed to various factors, including rising interest rates potentially making homeownership less affordable for some buyers.
Despite the decline in sales, both average and median sales prices continued to rise across the state. The average sales price climbed by 4.4% to $499,050, while the median sales price increased by 2.4% to $425,000. This suggests a continued strong demand for housing in Maryland, even with fewer transactions taking place.
County-Specific Trends in Maryland:
The overall trends observed in Maryland are not uniform across all counties. Certain areas demonstrated unique patterns, highlighting the diverse nature of the state's housing market.
- Calvert and Queen Anne's counties bucked the statewide trend, exhibiting substantial increases in units sold. Calvert County saw a 24.1% increase, while Queen Anne's County experienced a remarkable 30.4% jump. These increases could be driven by factors such as new development, job growth, or desirable lifestyle amenities attracting buyers to these areas.
- Kent County presents an interesting case with a significant increase in median sales price (33.1%) despite a substantial drop in units sold (-29.4%). This suggests a potential shift in the type of homes being sold, with higher-priced properties dominating the market despite fewer transactions.
- Caroline County stands out with a large decrease in average sales price (-26.6%) while experiencing a slight increase in units sold (+6.5%). This could indicate a shift towards more affordable housing options becoming available in the county, attracting buyers despite the overall price decrease.
- Garrett County, despite showing a strong increase in units sold (+20.9%), experienced a decline in average sales price (-15.0%). This could suggest a greater supply of housing coming onto the market, potentially leading to more competitive pricing and a buyer's market.
Inventory and Market Balance:
The “Months of Inventory” metric provides insights into the balance between supply and demand in the housing market. A higher number of months indicates a buyer's market, with more inventory available than buyers, while a lower number suggests a seller's market, where demand outpaces supply.
Maryland as a whole maintains a relatively balanced market with 2.0 months of inventory, the same as the previous year. However, individual counties showcase a range of inventory levels. Garrett County's 6.1 months of inventory points to a buyer's market, whereas Howard County's 1.1 months signifies a seller's market.
Factors Influencing the Market:
The trends observed in the Maryland housing market are influenced by a complex interplay of factors, including:
- Interest rates: Fluctuations in interest rates directly impact affordability and buyer demand.
- Economic conditions: Job growth, wage levels, and overall economic stability play a crucial role in housing market activity.
- Inventory levels: The availability of homes for sale directly influences price trends and market competitiveness.
- Local market dynamics: Factors such as new development, desirability of location, and lifestyle amenities can drive demand in specific areas.
Maryland Housing Market Forecast 2024-2025
Is It a Buyer's or Seller's Housing Market?
Currently, the Maryland housing market exhibits characteristics of a seller's market. The average home in Maryland stays on the market for approximately 10 days, and the median sale-to-list ratio is 1.000, indicating that homes are generally selling at or near their asking price. Additionally, 47.2% of sales in August 2024 were above the list price, while only 29.9% were below. This competitive landscape, with high demand and limited inventory, favors sellers.
Will Home Prices Drop in Maryland?
The data suggests that home prices in Maryland are not expected to drop significantly in the near future. The Zillow Home Value Index (ZHVI) shows a 2.5% year-over-year increase in the average Maryland home value, reaching $420,854 in September 2024.
However, the provided forecast data indicates the potential for slight price decreases in some MSAs:
- Baltimore, MD: A modest decline is projected, with a 0.1% decrease by November 2024, reaching -1.2% by August 2025.
- California, MD: A similar trend is expected, with a 0.4% decrease by November 2024 and -1.1% by August 2025.
- Cumberland, MD: A minimal price decrease is anticipated, reaching -0.1% by August 2025.
- Easton, MD: Prices are forecast to drop by 0.5% in the next quarter and then slightly recover, reaching 0.1% by August 2025.
On the other hand, some MSAs are projected to experience price increases:
- Hagerstown, MD: A steady growth is predicted, reaching 1.4% by August 2025.
- Cambridge, MD: A more substantial increase is expected, with prices potentially rising by 0.8% by August 2025.
Can the Maryland Housing Market Crash?
Based on the available data, a housing market crash in Maryland seems unlikely. While some localized price adjustments are possible, the overall market indicators point towards continued stability and moderate growth. Factors such as steady demand, low inventory, and a resilient economy contribute to this outlook.
MSA Forecast: September 2024 – August 2025
- Baltimore, MD: A slight decline in prices is anticipated, reaching -1.2% by August 2025.
- Hagerstown, MD: A steady increase in prices is projected, with a 1.4% rise by August 2025.
- California, MD: A modest decrease is expected, reaching -1.1% by August 2025.
- Cumberland, MD: A minimal price decrease is predicted, reaching -0.1% by August 2025.
- Easton, MD: A slight price fluctuation is anticipated, with a potential 0.1% increase by August 2025.
- Cambridge, MD: A more substantial increase is expected, with prices potentially rising by 0.8% by August 2025.
Next quarter (until November 2024): Most MSAs are projected to experience either a slight decline or a minimal increase in prices. Baltimore, California, and Easton may see small decreases, while Hagerstown and Cambridge are expected to experience slight increases.
Possible Forecast for 2026
Predicting the housing market beyond a year carries inherent uncertainties. However, barring unforeseen economic shocks, the Maryland housing market is likely to continue on a path of moderate growth in 2026.
Factors that could influence this forecast include:
- Interest rate movements: Continued increases in interest rates could dampen buyer demand and potentially lead to price adjustments.
- Economic performance: A strong economy with job growth and wage increases would likely support housing demand and price stability.
- Inventory levels: A significant increase in housing supply could shift the market towards a more balanced state, potentially moderating price growth.
