Home prices across Maryland increased in September for the 7th month in a row, increasing more than 4% from August 2017, according to Maryland Realtors.
Despite the improvement in home prices, low supply and pending interest rate hikes this year remain a concern. Active home inventory has also declined across the state, dropping 9% from last year.
In Metropolitan Baltimore, the median sales price reached $280,000 in August, the highest median price in August in the last decade. In Montgomery County, the median sales price hit $442,000 last month, up 2.9% from the previous year. Prince George’s County experienced a soaring 7.3% increase, reaching a median price of $294,000. Howard County also experienced a steep climb in median sales price in the Baltimore area, reaching a median home price of $440,000, up 7.3% from last year.
In Baltimore, home prices rose a stunning 22.5% from previous August with a median sales price of $158,000, which is still the lowest among metro jurisdictions in Baltimore.
With rising mortgage rates and home prices, buying a home in Maryland is becoming harder and more expensive which is helping to increase demand for apartments and pushing rents higher. In the third quarter, rents were up almost 3% from last year. Rent growth was slowing over the last three years but the increased demand has reversed this trend. The apartment occupancy rate remains very high at 95.8%, up from 95.4% last quarter. Construction of apartment complexes continues to heat up with new multifamily starts up 37% in August yet construction outpaces demand, especially for luxury apartments.
The good news is Baltimore hasn’t reached the level of rent distress that is being witnessed in many cities. Many markets have seen greater rent increases such as Orlando, Las Vegas, and Phoenix, all of which experienced rent increases of 6-7% over the last year.
Improvements in Baltimore home prices are impressive but they are tempered by a large inventory of distressed homes. Baltimore currently leads the nation in distressed home sales, including short sales and foreclosures. While distressed sales reached an 11-year low nationwide, two cities in Maryland — Baltimore and Hagerstown — have been left behind.
In Baltimore, distressed homes accounted for 20.7% of all home sales last quarter, the highest share in the country among metropolitan areas with a population of at least 1 million. A handful of other cities weren’t too far behind, including New York, Providence, Cleveland, and Philadelphia, all which had distressed sales at 19-20%.
Last year, community advocates and council members pushed for a new government program to sell thousands of vacant buildings in Baltimore for $1 each in exchange for a promise from buyers to update and live in the properties for a minimum period of time. The move was hoped to revitalize the many distressed communities in the city to curb the blight epidemic and reduce the number of vacant homes. Of course, the program would be expensive as there is not enough government funding to address the 16,000 to 46,000 city-owned vacant homes in Baltimore.
According to a new report, homeowners who sold their home in the last quarter had owned their home for an average of 8.09 years. This is an all-time high for homeownership tenure. Average gains also reached their highest level since 2007 with an average gain of 30.2% on the home’s purchase price.