Lower Eastern Shore, Md. – The local housing market continues to show marked signs of improvement, according to the latest figures from the Coastal Association of REALTORS®.
In 2016, single family home sales increased by about six percent compared to 2015 in the entire Tri-County area. Contracts, or pending sales, increased by about five percent and the average sale price increased by about eight percent. New listings of single family homes decreased by about six percent.
Condominium sales in 2016 increased by about nine percent and average condominium sale prices decreased by about 10 percent.
In Worcester County alone, single family home sales increased by about four percent, compared to 2015. Single family home contracts increased by about two percent, and the average sale price of a single family home increased by eight percent. Listings decreased by eight percent. Condominium sales in Worcester County increased by nine percent and average condominium sale prices increased by seven percent.
Linda Moran, a REALTOR® with Berkshire Hathaway HomeServices PenFed Realty in Ocean City and CAR’s immediate past president, said low inventory numbers in Worcester County isn’t necessarily a bad thing for the market.
“As a seasoned REALTOR® since 1979, I have been through many ups and down, and I must say that I am feeling very confident about the upcoming year,” Moran said. “I feel that since the inventory has
continued to be on the low side, we stand to have an appreciation in the cost of housing. If the inventory got another one or two percent lower, we may even start seeing multiple offers.”
Joe Wilson, a REALTOR® with Condominium Realty in Ocean City, said low inventory numbers are helping the market recover in Ocean City.
“When I first entered the business full time, there were over 1,800 condominiums for sale in Ocean City, and now there are a little over 800 – a necessary decrease to pull us out of the recession,” Wilson said. “As interest rates continue to rise this year, I am hopeful that those who are on the fence [about buying] will move forward with a purchase of a first or second home.”
In Wicomico County, single family home sales increased by about eight percent, compared to 2015. Single family home contracts also increased by about eight percent, and the average sale price of a single family home decreased by about three percent. Listings decreased by about six percent. Condominium sales in Wicomico County increased by about 10 percent and the average sale price for a condominium increased by about five percent.
Joel Maher, a REALTOR® with Coldwell Banker Residential in Salisbury and president-elect of CAR, said Wicomico County’s market is going in the right direction.
“My business personally is up 20 percent,” Maher said. “I think a big reason that Wicomico did so well in 2016 is because our foreclosure inventory has finally been relieved. Maryland’s foreclosure process takes a long time and we saw a lot of foreclosures in Wicomico. Those homes have wrapped up the foreclosure process this year and sold very well once they became available.”
In Somerset County, single family home sales increased by about seven percent, compared to 2015. Single family home contracts increased by about three percent, and the average sale price of a single family home increased by about 32 percent. Listings decreased by about four percent. Condominium sales in Somerset County increased by 75 percent and the average sale price for a condominium decreased bv about 35 percent.
Neda Cox, a REALTOR® with Long & Foster in Salisbury who deals primarily in Somerset County real estate, said she thinks the Somerset market will pick up in 2017.
“We’re starting to see a lot more properties selling for over $100,000 versus before, when everything was mainly under $100,000,” Cox said. “I think sales are going to increase; however I don’t think we’re going to see a lot of new construction and we’re running into some issues with the new FEMA flood insurance maps. I’ve heard some REALTORS® say the price hike of the insurance rates has driven some buyers away.”
Lawrence Yun, chief economist for the National Association of REALTORS® (NAR) is predicting about a one to three percent increase in existing home sales in 2017 across the United States. What will drive that increase, he said, will hopefully be robust growth in new home construction.
“That is the current choke point in the housing market recovery,” Yun said. “There were only 1.2 million new housing starts for all of 2016, which is a subpar performance. It is a growth from one year ago, but the historical average per year is 1.5 million. We are inadequately supplying new housing units in relation to the population growth occurring in the country.”
CAR President Don Bailey, a REALTOR® with Coldwell Banker Residential in Salisbury, said the local market has definitely experienced the inventory shortage occurring throughout the country.
“Our inventory numbers were down throughout most of the year,” Bailey said. “There are buyers out there, but we’ve had some trouble keeping up with the demand. Hopefully new home construction will
get a boost this year thanks to Gov. Larry Hogan’s recent restriction on Best Available Technology septic system regulations, which provides significant relief for people who want to build a new home. Relief could also come from Wicomico County’s recent repeal of its impact fee, as well as hopefully a new state law that will provide a tax credit for installation of mandatory sprinkler systems in new homes.”
CAR predicts a surge in sales activity in early 2017, as many buyers try to settle before mortgage rates increase later this year. Since the presidential election, said Yun, mortgage rates have increased from an average of 3.5 percent to above four percent. By the end of 2017, rates will be between 4.6 and 4.8 percent. In 2018, Yun predicts mortgage rates will be as high as 5.5 percent.
Mike Ciorrocco, Mid-Atlantic Division Manager of Universal Mortgage & Finance, said even at 5.5 percent, mortgage rates are still historically low.
“When I first got into the business, we were processing mortgages at 7.5 to 8 percent, so the rates are still historically low,” Ciorrocco said. “When interest rates go up, it’s because the economy is getting better, and when the economy gets better, more people are able to buy homes. I’m really expecting people to buy more homes this year. It’s going to be fantastic.”
CAR’s housing data for December 2016 reflected decreased listings and increased contracts and sales. Average days on market also increased, as did sale prices.
“We don’t generally see increased sales in the month of December because the weather is colder and people are shifting their focus to the holidays,” Bailey said. “These numbers indicate that more people are taking advantage of low interest rates. They also indicate that more people are feeling confident enough in their financial situations to move forward with buying a home, which is very encouraging for the local economy.
CAR’s monthly housing data is pulled from the association’s Multiple Listing Service, which represents the activity of over 1,000 local REALTORS® in Somerset, Wicomico, and Worcester counties.