Are Home Values Going Up or Down In Frederick Md?

A frequent question we get: Are home prices going up or down in Frederick Md? Every home owner is interested in knowing what’s going on with their home value, and every potential home buyer is also wondering what the real estate market is doing. Although we don’t have a crystal ball, we can analyze the trends and see what’s been happening to home values over the last few years. We can make an educated guess about the near future based on the most recent trends.

We are often asked where we think home prices are headed over the next year. Recently, several national groups have published reports and given their predictions about the level of appreciation we can expect by the end of 2019 and into 2020.

Here is what they said:

• Veros® Real Estate Solutions: the average expected appreciation rate for residential real estate in the 100 largest markets in the US will be 3.7%.
• Urban Land Institute:  Survey respondents expect home prices to rise an average of 3.3 % over the next three years…not as much is the most recent three years, but above inflation.
• Zillow Home Price Survey: (which surveyed a panel of over 100 real estate and economic experts),  forecast that home prices will rise 2.8% in 2020 nationally.
• S&P CoreLogic predicts home prices will rise 5.4%.
•  Home price appreciation will slow to 2% over 2018

All four publishers are calling for home values to rise throughout next year. The projections are that the increases will slow compared to the last five years. However, no one projected the increases that we’ve seen in previous years, as far back as 2013.

Inventory Remains Tight in Most Housing Markets

In many housing markets across the country, supply is still too low. That means there aren’t enough homes for sale to satisfy the demand from buyers.

This is partly why prices are expected to continue rising into 2020. Limited supply and steady demand (driven in part by low mortgage rates) are putting upward pressure on house values.

But any news with a + sign is good news to Frederick home owners. As you know, all real estate is local. National statistics don’t always show what is happening locally. The local real estate market always hinges on two things: supply and demand.

What about the market in Frederick Real Estate?

In any local market, those are different. At any given time they vary, as well. Supply and demand depend on many issues, like the job market and overall economic development, local and state taxes, and changes in population. Schools are proving to have more and more influence on home values these days. Hence, that overused but meaningful phrase: location, location, location.

Much of the outlook for the near future depends on the simple formula of supply and demand. The inventory of homes on the market in Frederick Md continues to be too low, although we’ve seen about 8 – 10% increase over last year. Right now there are about 1020 homes on the market and 737 are in process of selling (pending). A normal inventory for Frederick County is about 1200.

It’s the third quarter of 2019. So far in 2019, we’ve seen an average increase in:

• Overall average home price has increased 2.6% since the beginning of the year. (closer to 3% for homes under $400,000…less for homes over $400,000)
• The Days on Market, or the time it took to sell a home decreased an average of 9.2% since January. 61 days on average for the year. (spring and summer were lower, winter higher, as typical)
• The number of homes that sold was very close to last year, so far 4% fewer homes sold. 3101, compared to 3234 this time last year. (9 months of sales) This is in keeping with predictions that the market would start to slow a bit in 2019, but not a large slowdown.

What Can We Expect for 2020?

Of course, we don’t claim to be Zoltar, but we can safely project more increases. Appraiser Wayne Six, of Six and Associates has giving us this expectation:

• Steady demand throughout the remainder of this year, although less than spring and summer, as seasonal slow-downs are normal.
• A continuing number of homeowners putting their homes on the market throughout fall and winter, although at a lower number, again seasonally normal.
• Increased demand next year as new households are formed, a result of economic growth (2.6% GDC in the first half of 2019)
• Time will tell whether we continue to have a tight inventory.
• More first-time buyers…creating more move-up buyers.
• A Healthy, steady market over-all. 3% is a healthy growth number.
• A healthy, steady rise in home values between 2% and 3%. (I can live with that!)

Incidentally, Wayne Six told us that 35% of his company’s business is in doing appraisals for refinances. Is this a good time for you to refinance?  It may be, depending on your present rates. Contact your lender and find out. You can reach out to Six and Associates for an appraisal, (301) 694-5626.

Can We Expect Lower Mortgage Rates?

Many economists are chattering about the continuation of rate reductions in 2020. As the threat of a recession rears it’s ugly head, the rates typically fall. Freddie Mac predicts that the 30-year fixed-rate mortgage will remain around 3.6% through the second quarter of 2020.

This is Historically LOW!

A Note About Real Estate Bubbles

All major news outlets like to wring their hands about real estate bubbles since the Great Recession of ’08, and about affordability. While it makes great headlines, most real estate experts don’t have the same fears. All of the aspects which attributed to the last real estate meltdown are not in play anymore.

• Credit has tightened up, it’s difficult to get a mortgage without decent credit.
• Loan programs have changed from the dangerous, easy-access types of loans that were available before the crash.
• Home prices have increased, but should be much higher based on inflation.
• Foreclosures are very low (76,480) compared to the height of the crash in 2009 (566,180) [According to this CMED Report]
• Housing is still affordable in the majority of metropolitan areas, in spite of what you read in the headlines. Certainly, housing is affordable in Frederick County and central Maryland.

“The main reason the typical mortgage payment remains well below record levels in most of the country is that the average mortgage rate back in June 2006, when the U.S. typical mortgage payment peaked, was about 6.7 percent, compared with an average mortgage rate of about 3.7 percent in October 2019.” Core Logic Report

 

Real Estate Sales Are Seasonal

During the winter months, many home sellers take their homes off the market for the holidays. The market slows down a little, but there have been months and years when the market activity defied the usual seasonal trend…you just never know.

We do know, however, that there are always buyers in the market, no matter what the season.

We expect to see a steady market throughout the fall and winter, although not as active as the spring and summer. How much? A healthy number. There is pent-up demand among buyers who have been waiting for the economy to improve. There is pent-up demand among sellers who have been underwater on their mortgages. As home prices improve gradually, more sellers will enter the market.

If you have been waiting for the improving market to sell your home, this may be the year for you. Contact us for a free market analysis of your home.

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