Key Housing Market Trends

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Some Highlights

• If you’re considering buying or selling a home, you’ll want to know what’s happening in the housing market.
• Housing inventory is still very low, prices are climbing back up, and homes are selling fast when priced right.
• If you want more information about our local area and what the trends mean for your plans to buy or sell, let’s connect.

Homebuyers Are Still More Active Than Usual

Even though the housing market is no longer experiencing the frenzy that was so characteristic of the last couple of years, it doesn’t mean today’s market is at a standstill. In actuality, buyer traffic is still strong today.

The ShowingTime Showing Index is a measure of how much buyers are touring homes. The graph below uses that index to illustrate buyer activity trends over time to help put today into the proper perspective.

It shows there’s seasonality in real estate. If you look at the last normal years in the market (shown in gray), there was a consistent pattern as buyer activity peaked in the first half of each year (during the peak homebuying season in the spring) and slowed as each year came to a close.

When the pandemic hit in March of 2020, that trend was disrupted as the market responded to the resulting uncertainty (shown in blue in the middle). From there, we entered the ‘unicorn’ years of housing (shown in pink). This is when mortgage rates were record-low and buyer demand was sky high. Similar seasonal trends still existed even during that time, just at much higher levels.

Now, let’s look at 2023. Traffic is down from the previous month and it’s also lower than the peaks we saw in the ‘unicorn’ years. But what’s happening isn’t a steep drop off in demand – it’s a slow return toward more normal seasonality. As the ShowingTime report explains:

“Showing traffic declined about 10% in May . . . This follows a typical seasonal pattern – disrupted by the pandemic but now beginning to return . . .”

And, to highlight this isn’t a drastic decline, let’s zoom in. Here’s a graph using just the May data for the last five years. It shows just how strong buyer demand still is.

What Does That Mean for You?

Buyers are still out there touring homes. They’re more active than they were in May 2022 (when sticker shock over higher mortgage rates started to set in) and certainly more than they were in the last normal years. So, remember, buyer activity is still strong. And it could actually be even stronger if it wasn’t constrained by the limited supply of homes for sale. According to U.S. News:

“Housing markets have cooled slightly, but demand hasn’t disappeared, and in many places remains strong largely due to the shortage of homes on the market.”

Bottom Line

Don’t lose sight of just how active the market still is today. If your house isn’t on the market, it’s not getting in front of all those buyers who are looking to make a purchase right now. Let’s connect to start the process.

How To Know If You’re Ready to Buy a Home

If you’re trying to decide if you’re ready to buy a home, there’s probably a lot on your mind. You’re thinking about your finances, today’s mortgage rates and home prices, the limited supply of homes for sale, and more. And, you’re juggling how all of those things will impact the choice you’ll make.

While housing market conditions are definitely a factor in your decision, your own life and your finances may be even more important. As an article from NerdWallet says:

“Housing market trends give important context. But whether this is a good time to buy a house also depends on your financial situation, life goals and readiness to become a homeowner.”

Instead of trying to time the market, it may help to focus on what you can control. Here are a few questions that can give you clarity on whether you’re ready to make your move.

1. Do You Have a Stable Job?

One thing to consider is how stable you feel your employment is. Buying a home is a big purchase, and you’re going to sign a home loan stating you’re going to pay that loan back. That can feel like a big obligation. Knowing you have a reliable job and income coming in can help put your mind at ease. As NerdWallet explains:

“A mortgage is a big commitment . . . Wait until your employment is stable before thinking about buying a house.”

2. Have You Figured Out What You Can Afford?

To make sure you have a good idea of what you’ll need to save and what you can expect to spend on your monthly payment, talk to a trusted lender. They’ll be able to tell you about the pre-approval process and what you can borrow, current mortgage rates and approximate monthly payments, closing costs to anticipate, what percent of the purchase price of the home you’ll need for a down payment, and more.

The best part is you may find out you’re closer to your goals than you realized. You don’t need to put 20% down.  Down payments start at 3.5% and in Anne Arundel, Howard and Prince Georges's counties there are downpayment assistance programs that pay some or all of your downpayment for you.  We even have programs to pay off your student loans within your mortgage.

“A 20% down payment on a home is great, but . . . Many mortgages require no more than 3% to 5% of the purchase price as a down payment. Plus, there are loans and grants that may help cover these costs. Search for down payment assistance in your area, and discuss your results with your mortgage lender . . .”

3. How Long Do You Plan to Live There?

Another important thing to think about is how long you plan to stay put. It takes time to build equity in your home through paying down your loan and home price appreciation. If you plan to move too soon, you may not recoup your investment. For example, if you’re looking to sell and move again in a year, it might not make sense to buy right now. As a recent article from CNET says:

“Buying a home is a good idea if you’re planning to stay put for at least three years. Home values typically increase between 2% and 5% annually, so you could end up paying more in closing costs than you’d earn in proceeds if you sell after only a year or two.”

So, think about your future. If you plan to transfer to a new city with the upcoming promotion you’re working toward or you anticipate your loved ones will need you to move closer to take care of them, that’s something to factor in.

Above all else, the most important question to answer is: do you have a team of real estate professionals in place? If not, finding a trusted local agent and a lender is a good first step.

Bottom Line

If you’re trying to decide if you’re ready to buy a home, these questions can help. But ultimately, your best and more reliable resource is the help of trusted real estate professionals.

Housing Market Forecast for the Rest of 2023

Some Highlights

• Want to know what experts say will happen in the rest of 2023? Home prices are already appreciating again in many areas. The average of the expert forecasts shows positive price growth.
• Where mortgage rates go for the rest of the year will depend on inflation. Based on historical trends, rates are likely to ease as inflation continues to cool.
• Even though low inventory continues to be a challenge, experts project 5 million homes will still sell this year. That pace should pick up if rates come down.

Here’s the scoop on home prices nationally versus locally in Maryland

The National Association of Realtors recently released an updated Existing Home Sales Report. In that report they use median sale prices which can be deceiving to the true market trends and here's why. 

The median sales price is based on the middle point of all sales, regardless of the type of home sold, i.e. single family, townhouse, or condo.  So if, for example, you’re in a neighborhood where single family homes, townhomes and condos are all purchase options, like Anne Arundel County’s Piney Orchard neighborhood, and the majority of sales for the period being measured were condos (typically the least expensive housing type) with a few townhomes and single families mixed in, that is going to make it look like neighborhood prices are falling when in actuality, it’s just a reflection of the majority type of home that sold.  Your single family or townhome did not lose value.

What we really need to look at, and what most reporting agencies use is the repeat sales prices which, in the Maryland real estate market, are showing a clear upward trend on home values.

It’s also important to note that NAR stats are not local.  They are just an indicator of trends nationwide.  You really need to focus on your neighborhood home values and we can help you do that with a complete homeowner dashboard where you can not only get a real-time value for your home, but track your equity, view neighborhood trends, and more.

And while the national reports show a decrease of 1.7% in home values overall, in the Maryland suburbs we’re showing a 1.7% increase in the average sales price, and in Anne Arundel county MD we’ve got a 2.69% increase in home prices so far this year. 

It’s all local, which is why it’s important you choose an agent that really understands the Maryland market to represent you on your home sale or purchase.  Let's connect!

You hear a lot about down payments when you're buying a home (unless you're using a VA loan), but nobody seems to talk about closing costs which are a component of the home purchase process in Anne Arundel County and the Fort Meade MD real estate market.

Before you start looking at homes you'll want to know what closing costs are, how much they are for your home purchase price range and who pays them.  

What Are Closing Costs?

Closing costs are expenses and fees related to the purchase and settlement of your home loan.  They are payments for the professionals handling the settlement of your real estate loan including , your appraiser and surveyor, lender fees, attorney fees, title insurance which is optional but recommended as it protects your investment with insurance against any claims to your title that may come to light after the sale, title review to make sure you are purchasing a property with a clear title, state and local transfer taxes, and more as detailed below.  I've used a home purchase price of $680,000 for my example here and highlighted each expense that makes up your total closing costs of $13,934.  These fees vary by location and home price and those shown below are specific to Anne Arundel County, MD. These are buyer expenses that are not included in your financing and must be paid by the buyer, or seller, or a combination of both on or before the date of your settlement.

A special thank you to Pete O'Donnell at Main Street Home Loans for providing the information below.  You can reach Pete anytime for financing questions at (410) 299-2043 or visit him on line to complete a loan application from the comfort of your own home.

If you have questions about title services and fees we highly recommend Rachel Forame at Turnkey Title, LLC to answer all of your questions and to handle the settlement of your home.

Who Pays For Closing Costs?

Well, for the past few years it was almost unheard of for sellers to pay buyer closing costs due to the high demand for homes and low inventory.  However, as of Spring 2023 we are seeing closing cost assistance popping back up again in real estate transactions with as many as 40% of recent transactions having some amount of seller closing help. You'll want to work with a pro who understands what's going on in your real estate market right now to know when and if closing cost help is an option for your offer. 

Using a round number of $14,000 for the total closing costs needed on a $680,000 real estate purchase in Anne Arundel county, you could ask the seller to pay all, half, or another amount of your choosing. Or, if you've saved up enough money to cover these costs, you can make your offer more competitive by paying all closing costs yourself.  This is sometime necessary on the hottest homes to make you competitive.  But, like everything else in real estate offers, the terms of your offer are determined by you with the expert guidance of your trusted real estate agent.

Bottom Line

When it comes to buying a home, it’s important to understand all of the financial components of your purchase including closing costs. Connect with The Roskelly Team and we'll guide you through the homebuying process with ease!