Frederick Real Estate Market Trends

Frederick County Real Estate Market Update

Provided by Chris Highland  ~ April 2022

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As the spring real estate market in Frederick is here, we saw a slight decrease in the number of sales compared to last April. The inventory of homes for sale is dismally low…about the same as last year at this time.

The market had cooled off a little in the winter…which is typical. We are seeing that buyers are fatigued by multiple offers and high competition, as well as experiencing the lack of inventory. Interest rates have climbed, a discouragement for many buyers. April has been active, but lower inventory doesn’t promise much more in the way of choices for buyers.

Read: Post Pandemic Real Estate Trends

That’s just a glimpse of what is happening in the real estate market. Let’s look at the details…

Total volume in sales in April was a bit less than last year, just 1% lower. Number of units sold was down 11% from last year. We’re seeing a little cooling off of the demand…just a bit.

Being affiliated with a brokerage with agents all over the state, we’re hearing similar stories. The overall number of homes on the market has been very low. *See Maryland market statistics below.

FHA Raised Loan Limits

Before we get into the market statistics: The FHFA (Federal Housing Finance Agency) has raised the 2022 conforming loan limits across the US to match the rising home values we’ve seen in the last year. The FHA sets a ceiling and floor each year for the loan limits based on median home prices. The new ceiling of $970,800 is 18% higher than the $822,375 from last year.

The limit for Frederick County and Montgomery County in 2022 is $970,800. Howard, Carroll, Anne Arundel, Baltimore and Washington Counties conforming loan limits will be $647,200.

Mortgage Interest Rates are on the Rise in 2022

The (national) average rate on a 30-year fixed-rate mortgage has been steadily increasing… The average rate on a 30-year fixed mortgage is 5.48%, according to Bankrate.com, while the average rate on a 15-year mortgage is 4.84%. On a 30-year jumbo mortgage, the average rate is 5.36%, and the average rate on a 5/1 ARM is 3.85%.

Demand for homes is falling, but homes are still selling fast as the buyers who remain rush to beat rapidly rising mortgage rates. 76% of the homes that sold in April went under contract in less than 10 days!

Real Estate Market Trends in April in Frederick Md

Prices are up… the inventory is down, as well as the time it takes to sell a home!

The Median Home Sales Price: $450,000, up 16% from last April. We’ve seen an increase in both townhouse sales and single-family sales prices.

• Average Single-Family Sales Price: $574,500, up 15% from last year at this time.
• 222 single-family homes sold, down 21% from last year’s number.
• Average Attached Home Sales Price: $396,100, up 19% from last year.
• 205 townhouses and condos sold, up 4% from last year’s number.
• Altogether 427 homes sold, down 11% from last year. 76 of these were new construction homes.

A healthy demand combined with a very low inventory…slightly more than 325 (up from 244 last month) homes were on the market on an average day in April, less than 1% fewer than last year.

Keep in mind that a “normal” inventory is between 1300 and 1400 homes on the market. This low inventory has created a strong seller’s market for a couple of years.

**As of today, May 18, there are currently 418 homes listed for sale or coming soon in Frederick County. The breakdown is 294 existing homes, and 124 new construction homes. Though this inventory is very low, it is on the rise, which will help balance out the market, especially as demand slows.

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Detailed Market Statistics for Frederick County

Average Days on Market (DOM) the time it takes to get a home under contract is: 10 DAYS , the same as last year at this time, much less than the 5 year average of 25 days.

Tight inventory, homes selling fast!

Title companies and lenders have been doing a stellar job of moving quickly and providing safe alternatives to the usual lending and settlement procedures.

New Listings in April: There were 620 new listings during the month, 18% decrease from 2021, 76% of listings went under contract in less than 10 days!

There are 804 homes under contract, making their way to closing, 26% less than last year. 

Number of Homes Under Contract: There were 466 new contracts (homes that went under contract during the month) 18% less than last year. This will reflect in the number of closings next month.

even though we’re seeing a slowing in demand…we still can refer to a homeowner’s favorite formula: 

Higher demand than inventory = price acceleration…

Guidelines for the real estate market due to COVID:

Regardless of the current health scare, people still have reasons to sell their homes and to buy a home…they get a new job, they need more space, they’re moving out of the area. Life goes on.

If you are in the market right now, the National Association of Realtors® has published articles that give great advice to home buyers and home sellers during this time. Please practice reasonable and common sense precautions:

Buyers touring a home:

• It may go without saying, but if anyone in your family is not feeling well, do not go to see homes.
• Drive your own car to showings.
• As you tour a home, don’t touch things you don’t have to. This means pretty much anything except door handles.
• Wear booties if they are not provided at the home.
• Use hand sanitizer after you leave a home.
• Keep a six-foot distance from others,  including your Realtor®. We won’t take it personally!

Sellers:

• If a family member is not feeling well, do not have showings.
• Provide hand sanitizer at your entry.
• Even though we’re being encouraged to stay home as much as possible, it is still a good idea to be absent when your home is being shown. This gives buyers the freedom to look and discuss the home with each other and their agent.
• To continue practicing social distancing, simply drive to a nearby park, or pick up something you need from a drive-through. The current weather is even amenable to hanging out in your backyard, or taking a walk through your neighborhood.
• Leave cabinets, doors, or anything you want buyers to see open, so they don’t need to touch the knobs or doors.
• Have all lights on and blinds and curtains open.
• Wipe down all surfaces with a bleach or alcohol cleaner before your home is to be shown. Then again after the showing is over.
• Wipe down door handles…before and after the showing.
• Keep fabric booties at the front door for buyers to wear. This is a good idea any time. Have a box or basket of clean booties, and a box or basket for dirty ones. Then you can simply dispose of the dirty ones.

Reasonable and healthy steps will protect you and your family whether you are a buyer or a seller. **Please consult the CDC Website: Coronavirus Disease 2019 for advice and the latest information.

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What Are Contingencies?

Why is DOM an important statistic? 

Find Out What Your Home May Be Worth

Frederick has been a Bifurcated Real Estate Market…But that is changing…

Sellers got 104% of the original list price on average, higher than last year (103%). Appraisers are saying we can expect a slowing of these accelerated values, but still a healthy increase…expect to see 8% – 10% increases in values.

Keep in mind: 

• In some price ranges, in some areas of Frederick County, there is naturally a higher demand and the market is more competitive for buyers. Some neighborhoods, like Urbana, Middletown, New Market, Mt. Airy, and a few neighborhoods in the city of Frederick, are in high demand and sell much quicker. We are seeing multiple offers on homes that are in great condition and priced to sell.
• Homes in the $300,000 range, are in demand and have seen a 20% – 25% increase in value over the year. Less appreciation, 15% on average, for homes in the highest price ranges. But the good news is that homes above $800,000 have been selling again, after a few years of stagnation.
• There is less than a 1 month absorption rate for homes in the upper price ranges ( it took an average of 28 days to sell in this price range), compared to 10 days for homes in the lower price ranges.
• Homes selling over $800,000 got on average 107% of original listing price.

What are the best neighborhoods in Frederick County?

In any market, but especially in a fast-moving seller’s market, buyers must be prepared before they find a home. You must be pre-approved by a reputable local lender. Most sellers will not entertain offers from a buyer who has not been pre-approved.

If you have a house to sell, you need to get it on the market first, before you make an offer. Better yet, have your home under contract if you want to win in a multiple offer situation. Some people even find that having their home sold and having a temporary living set up gives them the greatest advantage if they are buying in a highly competitive price range.

What’s Notable for Buyers:

• The majority of homes sold were in the $300,000 to $399,000 range. (higher competition for buyers) The largest number of listings are in the $400,000 to 499,000 price range (higher competition for sellers)
• Although rates are starting to rise, as predicted, to help slowdown inflation. These are still historically low rates, compared with the 40 year average, which is 7%.

As we see home values continue to rise at a fast pace this year, first time buyers would do well to get in as soon as they can…to take advantage of the increased equity they will receive, although it is a difficult market for first time buyers, given the increased competition and lower inventory. But we are starting to see changes.

Think of it this way, the elevator is going up… getting on the elevator now will be more advantageous than getting on the elevator next year or any time in the future. Buyers who bought last year have already seen appreciation as betwee1 15 and 20 percent, depending on location and price range.

As prices increase, your buying power decreases. Lower Interest rates make up for that by allowing buyers to “buy more” for a lower rate. (Eventually, they cannot go any lower…but today’s rates are still incredible!)

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Luxury Homes in Frederick County:

• The number of luxury buyers in Frederick County is quite lower than other price ranges. But, they are there, albeit in fewer numbers, looking for their dream home. (As values continue to soar, we may have to reconsider the threshold for “luxury”)
• There were 38 homes listed above $800,000, with 25 that sold in April in that price range.  (Roughly 65% of the luxury inventory sold last month, which is a big improvement over a few years ago…while in the overall inventory, homes sold last month were roughly 140% of the number of the average number of homes on the market) 😲
• 14 homes sold between $800,000 and 1 million.
• 11 homes sold between 1 and 2.5 million.
• 0 homes sold between 2.5 and 5 million. There is currently no homes on the market in this price range.
• The average time on the market for the luxury homes was 28* days, The average sold price to original list price was 107% (this includes new homes, which skews the numbers…existing homes sold for 105% of original list price) *see below.

Separating out the new homes in the luxury market helps us see deeper into the trends:

• *Several sold in less than 10 days…One home took 239 days to sell, so that seriously skewed the statistics.
• 3 new homes sold between $800K and $1 M.
• Several new homes sold in 0 days, so that also skews the averages…but that’s often the way new homes are reported.
• That brings the time on market to 30 days, for homes that were not new construction, in this price range.
• Existing homes sold for 105% of list price.
• *New homes sold for 120% of list price. Separating out the new from existing homes shows the “extra” features that people choose over list price when building a new home.

What’s Notable for Frederick Sellers:

• All indications are that buyers have been slowing down (slightly) as the weather turned colder…but the increased activity that typically comes with a spring market here in Central Maryland has already begun.
• …with an inventory that is very low, prices are still on the rise. When demand is high and inventory is low…it’s a great time to sell, especially if sellers have been unsuccessful in the past.
• Homes in great condition and priced well for the market are going under contract in days, and fetching top dollar.

What’s My Frederick Home Worth?

Where Will Prices Go?

The Federal Housing Finance Agency noted a 19%-plus gain in home prices at one point in 2021. Across 2022, experts have predicted anywhere from a 6% to 10% increase—less than half that increase at most.

That doesn’t mean prices will drop. The increase will eventually slow to resemble more of a normal market.

“Home price growth will slow,” says Robert Dietz, chief economist and senior vice president for economics and housing policy at NAHB. “We are not forecasting price declines in 2022 on a national level, but the pace of price growth will slow closer to the rate of inflation as some buyers are priced out of the market.”

*Recent Maryland Real Estate Statistics

Real estate market across Maryland

April 2022 Market Statistics provided by Bright/MRIS (Mid-Atlantic Regional Information System – A Bright MLS)

These statistics are not guaranteed but are considered accurate. 

Contact Chris Highland to see homes for sale in Frederick Md. We are here to help you navigate through this currently challenging market.

301-401-5119

Broker:  888-860-7369

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