Table of Contents
- Frederick County Real Estate Market Update
- FHA Raises Loan Limits
- Mortgage Interest Rates
- Where Will Mortgage Rates Go in 2024?
- Factors that determine your mortgage rate
- All Real Estate Is Local
- Real Estate Market Trends in January in Frederick Md
- The Unicorn Years
- Detailed Market Statistics for Frederick County
- Real Estate Market Trends Across Frederick County
- Luxury Homes in Frederick County:
- What’s Notable for Buyers:
- Notable for First-Time Buyers:
- Our Advice: Marry the House, Date the Rate…
- What’s Notable for Frederick Sellers:
- When Median Prices Fall, but Average Prices Rise
- Where Will Prices Go?
- Will We See A Housing Bubble?
- Recent Maryland Real Estate Statistics
- What the Terminology for the Maryland REALTORS® Monthly Statistics Means
Frederick County Real Estate Market Update
Provided by Chris Highland ~ January 2024
Winter has made her frosty appearance in the central Maryland real estate market. Demand has slowed, which is usual for this time of year. We have seen a drop in mortgage rates into the high 6% range, which is a positive sign. There are still buyers looking for their dream home in central Maryland.
Even though some first-time buyers have been priced out of the market, it seems that qualified buyers have adjusted to current interest rates. Until August, as rates have risen, the median home price had dropped, evidence that people are buying in a lower price range. Since September, however, we see that the median price has risen.
The number of units sold in January was down 14% from last January. Demand is still healthy, considering we have such a low inventory. Inventory is down 12% since last year at this time.
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 2024 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 2024 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.
What to Expect in 2024 Regarding FHA Loan Limits
On November 28, 2023, FHFA released 2024 conventional conforming loan limits. New conventional limits increased 5.56% from $726,200 in 2023 to $766,550 in 2024. High-cost areas will be increased to $1,149,825.
Mortgage Interest Rates
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:
- As of today, January 17th, the average rate on a 30-year fixed mortgage is 6.74%, according to Freddie Mac. This is a nice drop from 8%. Lenders are positive and hope that the slide continues.
- The average 20-year fixed rate is 6.5%.
- The average rate on a 15-year mortgage is 6.04%.
- On a 30-year jumbo mortgage, the average rate is 7.05%.
- A 30-year fixed rate VA is 6.28%
- A 30-year fixed rate FHA is 5.92%
- The average on the 5-year ARM is 7.1%
- A 7-year ARM is 7.1%
A word about a 5/1 ARM (Adjustable-rate mortgage): 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. Similar for 3/1-, 7/1-, and 10/1 ARMS.
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 mean your interest rate may be a good deal higher once the rate adjusts. Be sure to discuss all your options with your lender!
If you’re shopping for a mortgage, keep in mind that 6.74 percent is just an average. Rates will be different for each borrower, based on several metrics: Loan-to-Value, Debt-to-Income Ratio, Credit Score, Credit History, Points, and Down payment, among other things.
Where Will Mortgage Rates Go in 2024?
While no one has a crystal ball, the Fed has indicated that it’s likely done hiking rates and that it could start cutting soon. This will likely allow mortgage rates to trend down later this year.
In January 2024, the Consumer Price Index rose 3.1% year-over-year. Inflation has slowed significantly since it peaked last year, which is good news for mortgage rates. Mortgage rates are expected to go down this year, but they likely won’t start falling until we get more data showing that inflation is continuing to slow. (Business Insider)
Learn more about what the experts predict in Bankrate’s forecast.
Factors that determine your mortgage rate
Lenders consider these factors when pricing your interest rate:
- Credit score
- Down payment
- Property Location
- Loan amount/closing costs
- Loan Type
- Loan term
- Interest rate type
- Your debt-to-income ratio (DTI)
- The price of the property
All Real Estate Is Local
We are seeing a mixed bag when it comes to prices. Some sellers are seeing a longer time on the market, and some are seeing multiple offers. Different areas of the state, different cities, and different neighborhoods are having different experiences.
Real estate is local. That has never been more true than it is today...use a local real estate expert to help you navigate your market.
We’ve never seen this strange kind of market before, with mixed signals…it is more complicated than anything a glance can tell us.
Demand for homes has slowed since last year, true, but there is still demand. 46% of the homes that sold in January went under contract in less than 10 days!
In our experience, real estate markets turn on a dime. Most people see it in the rearview mirror after the statistics start to show the evidence. The story at this time is inventory. 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 January in Frederick Md
The Median Home Sales Price: is $492,000, up 15% from last year.
Average sold price:
- Average Single-Family Sales Price: $555,000, up 10% from last year at this time.
- 84 single-family homes sold, up 2% from last year’s number.
- Average Attached Home Sales Price: $428,200, up 16% from last year.
- 75 townhouses and condos sold, down 26% from last year’s number.
- Altogether 159 homes sold, down 14% from last year. 30 of these were new construction homes…down from 40 last month.
Although demand has been slowing since last year, the demand that we are seeing is closer to a NORMAL market, the inventory, however, is about 25% of a normal market.
The Unicorn Years
The data reflects an increase month-over-month but decreases year-over-year regarding sales numbers. This is an important observation that must be made:
Real estate activity during the pandemic was abnormal…let’s call them the “Unicorn Years”. With unheard of interest rates (< 3% interest rates) and the lowest inventory we’ve ever seen, coupled with high demand, the market heated up like nothing we’ve ever seen. To compare anything to this time period is not an accurate synopsis.
The Inventory of homes for sale in January was down 12% over this time last year…to an average of 291 listings.
Keep in mind that a “normal” inventory is between 1000 and 1200 homes on the market. This abnormally low inventory has created a strong seller’s market for several years. The low inventory still creates competition for those buyers who are in the market.
**As of today, February 17th, there are currently 343 homes listed for sale or coming soon in Frederick County. The breakdown is 218 existing homes and 125 new construction homes. Inventory is ticking up.
Detailed Market Statistics for Frederick County
Average Days on Market (DOM) the time it takes to get a home under contract is 26 DAYS, down from 32 days last year, down from the the 5-year average of 28 days.
New Listings in January: There were 267 new listings during the month, down 14% from last year.
Number of Homes Under Contract: 252 homes went under contract during the month, 11% less than last year. There were 346 homes total under contract, making their way to closing, 22% less than last year.
Real Estate Market Trends Across Frederick County
Sellers got 99.3% of the original list price on average, last year was 98.1%.
Possibilities this Winter: Home values are still increasing, just at a more moderate rate…what we like to call NORMAL. Or, if interest rates fall, (which some optimists expect) more buyers will enter the real estate market and competition will heat up. Prices may rise at higher rates.
It varies neighborhood by neighborhood. Real estate is local, hyperlocal. As of now, appraisers are telling us to see a more healthy value increase…5-6% increases.
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.
Luxury Homes in Frederick County:
- There is a slightly longer absorption rate for homes in the upper price ranges.
- 14 homes sold, 7 new construction homes, and 7 existing homes.
- The average time on the market before sale was 60 days for all luxury homes. The one new custom home sold in 532 days. *Read on to see how new homes skew the data.
- Existing homes sold in an average of 28 days.
- Homes selling over $800,000 got on average 103% of the original listing price. Existing homes got 99.5% over the list price and new homes got 108% over the list.
- 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 have chosen to consider $800,000 as the threshold for “luxury”. That is our subjective number.
- There were 58 homes listed above $800,000.
- 9 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 is currently one home on the market in this price range.
*New homes skew the statistics. Separating the new homes in the luxury market helps us see deeper into the trends.
- The New homes sold for 108% of the list price.
- Normally, the skewed statistics illustrate how new homes are sold, with the list price as the base price, and the options added to the base price.
- The days on the market are also skewed by the way new homes are listed. They are often listed the day they go under contract.
What’s Notable for Buyers:
In any market, but especially the 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 $600,000 to 799,000 price range (higher competition for sellers)
- Although rates have risen, as predicted, to help slow down inflation, these rates are lower today, below 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 5 and 10 percent, depending on location and price range.
As prices increase and rates increase, your buying power decreases.
Our Advice: Marry the House, Date the Rate…
and divorce your landlord.
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, 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.
Something to think about also…when mortgage rates come down, buyers will enter the market in force! There will be more competition. We hope that more people will sell as well when rates come down.
Consider the Maryland Mortgage Program with lower-than-average rates and good terms for first-time buyers.
The other aspect to consider is that rents are increasing. Inflation has its 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?
Buying real estate is a hedge against inflation.
And of course, make sure you use a buyer’s agent to help you through the process. We never waiver on this advice. Make sure your agent comes referred and is a trustworthy real estate agent.
What’s Notable for Frederick Sellers:
- All indications are that buyers have been coming back into the market, albeit not in the numbers we saw a year ago.
- With a very low inventory, 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 “unicorn years”. Sellers cannot expect to get 20% above similar homes that sold last month. Expectations should change with the market.
When Median Prices Fall, but Average Prices Rise
There have been a few “click-bait” articles and videos in which prognosticators are calling for a drop in home values. What is interesting is that they all use the “median home price” as the metric to make these claims. If you remember from math class, the median is the point at which half the houses sold at prices above, and half at prices below.
Yes, the median home price has fallen since last year (except this month). With the increase in interest rates, buyers cannot afford as much house, so they are buying in a lower price range. While this happens, we still see multiple offers and prices increasing over time. Home values are not falling in our market. Maybe they are in some markets in the U.S., but not in ours.
Watch Chris’s explanation: https://www.facebook.com/724397783/videos/648049243653229/
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 predicted anywhere from a 6% to 8% increase—less than half the increase we saw the previous year. 2023 is difficult to project, it depends a lot on what happens with interest rates. We recently heard from a local appraiser that he is expecting an increase of 6% over 2023.
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
What the Terminology for the Maryland REALTORS® Monthly Statistics Means
The monthly housing statistics are presented as reported by Bright MLS. The “Units” category represents sales settled in that month. The “Pending Units” category includes units currently under contract, which will settle in the future. “Active Inventory” includes units that remain on the market.
The average sales is the weighted average of sales prices in the county, calculated by weighting the price of homes by the number of homes sold. To calculate the weighted average Maryland price, we weigh the average price for all 24 Maryland jurisdictions by the number of homes sold.
The median price is the middle value of all homes sold in the period—the price at which half the sold homes are above and half are below in selling price. We estimate the median price for home sales in each Maryland jurisdiction because Bright does not provide this level of detail. The median price for the whole state is calculated by using the simple unweighted averages to calculate a state-weighted average for all 24 Maryland jurisdictions and establishing a median value through appropriate weighting techniques.
2024 Market Statistics provided by Bright/MRIS (Mid-Atlantic Regional Information System – A Bright MLS publication)
These statistics are not guaranteed but are considered accurate.
Chris & Karen Highland
eXp Realty – 301-301-5119
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