Home Sales Prices on the Rise in Maryland
A recent survey indicates that America’s optimism regarding the housing market’s recovery has improved significantly. According to Fannie Mae’s September 2012 National Housing Survey, a monthly poll of 1,000 homeowners and renters, more respondents expect home prices to rise in the next year (37 percent) and the share anticipating declining home prices is down to 11 percent. It is worth noting that such attitudes tend to become self-fulfilling prophecies. People are generally willing to pay more for an asset that they expect to appreciate in value. Importantly, 19 percent of those surveyed say now is a good time to sell, the highest level since the survey began in June 2010. More buyers and sellers translates into a more active market, and that’s good for realtors, title companies and of course, the buyers and sellers themselves.
Already, that renewed confidence working in conjunction with record low or near-record low mortgage rates is having an impact. According to the National Association of Realtors, national existing home sales rose 7.8 percent to a seasonally adjusted annual rate of 4.82 million in August, up from 4.47 million in July. The number of existing home sales is now 9.3 percent higher than year-ago levels. The national median existing home price for all housing types was $187,400 in August, up 9.5 percent from one year ago.
Maryland’s housing market is also improving. According to data supplied by MRIS and the Coastal Association of Realtors, home sales rose 3.5 percent in July on a year-over-year basis, 9.6 percent in August and 6.1 percent in September. Average and median prices have expanded in Maryland for seven consecutive months through September. Statewide, average sales prices were up 6.1 percent since September 2011 while median prices increased 6.8 percent.
Many economists believe that the housing market bottomed toward the end of 2011. This year has been one of improvement, as low mortgage rates, ongoing job creation and growing confidence have ushered forth welcome market dynamics. Unit sales and prices are up and forward looking indicators are also promising. Pending sales in Maryland were up on a year-over-year basis in both August and September. Statewide, pending units were up from 4,986 in September 2011 to 5,609 in September 2012, an improvement of 12 percent. Increasingly, realtors can credibly claim that the best time to buy is now and that if prospective buyers wait too long, they may miss out on highly advantageous mortgage rates and will end up paying more for the dream.
They may also have fewer choices from which to select. The active inventory of unsold homes in Maryland continues to decline. In September 2011, months of inventory stood at 8.5 months. One year later, inventory had dropped to 6 months, which means that market equilibrium has been achieved at last. Presently, seven Maryland jurisdictions have months of inventory below this level. Based on pending sales, inventory is likely to continue to fall, increasing prospects for additional home price appreciation.
Anirban Basu is Chairman & CEO of Sage Policy Group, Inc., an economic and policy consulting firm in Baltimore, Maryland. Basu is one of the Mid-Atlantic region's most recognizable economists, in part because of his consulting work on behalf of numerous clients, including prominent developers, bankers, brokerage houses, energy suppliers and law firms. On behalf of government agencies and non-profit organizations, Basu has written several high-profile economic development strategies, including co-authoring Baltimore City's economic growth strategy. His opinions do not necessarily reflect the opinions and beliefs of 1st Mariner Bank.