Frederick Real Estate Market Trends

Frederick County Real Estate Market Update

Provided by Chris Highland  ~ December 2023

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Winter is here in full force this year in Frederick and Central Maryland. The winter real estate market has turned from a seller’s market to more of a balanced market. Rising interest rates have definitely cooled off what was the hottest market we’ve seen in more than a decade (2021 to the first half of 2022).

We are seeing a decrease in the number of sales compared to last year at this time. The overall volume has also decreased from last year (down 26%). We are seeing a mixed bag when it comes to prices. Some sellers are having price reductions, some are seeing multiple offers.

We’ve never seen this strange kind of market before, with mixed signals…it is definitely more complicated than anything a quick glance can tell us.

Interest rates have climbed, a discouragement for some buyers. As the FED has promised, rising rates are a reality. We are seeing the results in a less frenzied market. December has been less active, which is normal for the holidays, but homes are still selling in days…23 days on average.

Read: Post Pandemic Real Estate Trends

Number of units sold in November was down 27% from last year. We’re seeing a cooling off of the demand as rates are pricing some out of their previous price points.

Being affiliated with a brokerage with agents all over the state, we’re hearing similar stories. *See Maryland market statistics below.

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

FHA Raises Loan Limits

Before we get into the market statistics, one important announcement: The FHFA (Federal Housing Finance Agency) has raised the 2023 conforming loan limits across the US to match the rising home values we’ve seen in the last year. The FHA (Federal Housing Administration) sets a ceiling and floor each year for the loan limits based on median home prices.

The 2023 FHA loan limits enable buyers looking for a mortgage backed by the Federal Housing Administration (FHA) to borrow up to $472,030 for a single-family home in most parts of the country. That’s an increase of $51,350 from last year’s $420,680 FHA loan limit.

The new ceiling is $1,089,000 for high cost counties for one-unit properties, which is 21.21% higher than the limit of $970,800 from last year.

Local Maryland Loan Limits:

The limit for Frederick County and Montgomery County in 2023 is $1,089,300. Calvert, Charles and Prince George’s Counties have limits of $1,089,300.

Howard, Carroll, Anne Arundel, Baltimore and Washington Counties conforming loan limits will be $726,200, as well as all other counties in Maryland.

Additional Reading: Benefits of an FHA loan.

Mortgage Interest Rates in 2023

The (national) average rate on a 30-year fixed-rate mortgage has been on a wild ride since the FED started raising the base rate last year. Just recently rates have dropped a bit:

As of today, January 15th, the average rate on a 30-year fixed mortgage is 6.46%, according to Bankrate.com today. This is down from last month when the average was above 6.64%.

The average rate on a 15-year mortgage is 5.85%, also down. On a 30-year jumbo mortgage, the average rate is 6.44%. The 5/1 ARM is 5.50%.

A word about a 5/1 ARM (Adjustable-rate mortgages):  For the first five years, you’ll typically get a lower interest rate with a 5/1 ARM compared to a 30-year fixed mortgage. However, shifts in the market could cause your interest rate to increase after that time, as detailed in the terms of your loan. If you plan to sell or refinance your house before the rate changes, an adjustable-rate mortgage could make sense for you. Otherwise, changes in the market means your interest rate may be a good deal higher once the rate adjusts.

Demand for homes is slowing, true, but there is still demand. 41% of the homes that sold in December went under contract in less than 10 days! 

Since rates began to rise in July, we are seeing fewer showings, fewer offers, and buyers are not paying so much over listing as before…sometimes they are paying list price, sometimes less than list price. We believe the market is turning. The market has turned. In our experience, real estate markets turn on a dime. Most people see it in the rear view mirror after the statistics start to show the evidence.

However, the inventory is still really low. If and when inventory increases, we will see a more balanced market. This is truly a very unusual market.

Real Estate Market Trends in December in Frederick Md

The Median Home Sales Price: $426,800, down 2% from last December. Average sold price is barely up…less than 1%. We’ve seen an increase in both townhouse sales and single-family sales prices.

• Average Single-Family Sales Price: $549,100, up 3% from last year at this time.
• 162 single-family homes sold, down 39% from last year’s number.
• Average Attached Home Sales Price: $373,400, up 5% from last year.
• 177 townhouses and condos sold, down 10% from last year’s number.
• Altogether 341 homes sold, down 27% from last year. 96 of these were new construction homes…up from 66 last month.

Although demand is slowing, we must remember that the previous year the number of sales was abnormally high. In contrast, the demand that we are seeing is what we like to call NORMAL.

The Inventory of homes for sale in December was up 41% over this time last year…to an average of 368 listings.

Keep in mind that a “normal” inventory is between 1200 and 1300 homes on the market. This abnormally low inventory has created a strong seller’s market for a couple of years. Even though demand has cooled, the low inventory still creates competition for those buyers who are in the market.

**As of today, January 15, there are currently 359 homes listed for sale or coming soon in Frederick County. The breakdown is 199 existing homes, and 160 new construction homes.

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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: 23 DAYS , up from 18 days at this time last year, less than the 5 year average of 30 days.

We’re looking forward to a balanced market in the (near?) future.

New Listings in December: There were 281 new listings during the month, down 25% from last December. There are 363 homes under contract, making their way to closing, 44% less than last year. 

Number of Homes Under Contract: There were 231 new contracts (homes that went under contract during the month) 31% less than last year.

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…just not as much acceleration as we saw in 2021-22.

For buyers: the elevator is still on the way up it’s just not a high-speed elevator anymore! See below**

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What Are Contingencies?

Why is DOM (Days on Market) an important statistic? 

Find Out What Your Home May Be Worth

Real Estate Market Trends Across Frederick County

Sellers got 99% of the original list price on average, lower than last year (100.6%). Appraisers are saying we can expect a slowing of these accelerated values. Homeowners who purchased at the top of the market in late 2021 and early 2022 may be giving back a little bit of the value that they had, but that is yet to be seen.

It varies neighborhood by neighborhood. Real estate is local, hyperlocal. As of now, appraisers are telling us to see a more healthy value increase… 3~5% increases…what we like to call NORMAL.

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.

What are the best neighborhoods in Frederick County?

Luxury Homes in Frederick County:

• There is a 2 month absorption rate for homes in the upper price ranges
• Homes selling over $800,000 got on average 108% of original listing price. *Read on to see how new homes skew the data.
• 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 47 homes listed above $800,000, with 20 that sold in December in that price range. Seven were existing homes, 13 were new homes.
• 15 homes sold between $800,000 and 1 million.
• 5 homes sold between 1 and 2.5 million.
• 0 homes sold between 2.5 and 5 million. There are currently no homes on the market in this price range.
• The average time on the market for (resale) luxury homes was 16 days, The average sold price to original list price was 96.4% (this doesn’t include new homes, which skews the numbers…) ***see below.

New homes skew the statistics. Separating out the new homes in the luxury market helps us see deeper into the trends:

• 13 new homes sold during the month of December…all between $800,000 and $1.5 million.
• New homes sold in an average of 9 days. Several sold in 0 days, which is the way they are often reported, so that skews the statistics. They are listed after they go under contract.
• *New homes sold for 114% of list price, on average. 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 Buyers:

In any market, but especially  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.

• The majority of homes sold were in the $400,000 to $499,000 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 rates are sitting at the historical average, which is 7%.

Notable for First-Time Buyers:

As we see home values continue to rise 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 between 20 and 21 percent, depending on location and price range. 

As prices increase and rates increase, your buying power decreases. 

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Our Advice: Marry the House, Date the Rate

All things are cyclical, especially the real estate market. What goes up (interest rates) will come down…at some time. If you can get into home ownership, our advice is to do it.

When mortgage rates come down, and they will, then refinance into a lower rate. You will reap the rewards of equity. If you sit on the sidelines and wait for the rates to come down, you will lose those years of building equity.

The other aspect to consider is that rents are increasing. Inflation has it’s effects on landlords too. As rents continue to increase, you will be paying more. Why pay your landlord’s mortgage at increasing rates, when you could be paying your own??

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What’s Notable for Frederick Sellers:

• All indications are that buyers have been slowing down, as is normal as we approach winter and the holidays. But there is a very true aspect of the winter market…the buyers who are looking are serious buyers.
• With an inventory that is very low, prices are still on the rise. When demand is normal and inventory is low…it’s a good time to sell.
• Homes in great condition and priced well for the market are going under contract in days, and fetching top dollar.
• Just remember, top dollar is not what it was during the last year. Seller’s cannot expect to get 20% above similar homes that sold last month. Expectations should change with the market.

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 8% increase—less than half the increase we saw the previous year.

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 2023 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.”

Will We See A Housing Bubble?

NO. It makes great headlines and clickbait, but no, we do not think we will see a bubble bursting any time soon. This housing boom is completely a product of supply and demand, unlike the housing crash of 2008. That was an artificially inflated market, driven by the availability of loans to people who could not pay them.

The crash of the last decade bears no resemblance to what is happening today.

Recent Maryland Real Estate Statistics

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

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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