Lower Eastern Shore, Md. – The local housing market closed out 2015 on a high note, showing solid increases in sales and contracts on the Lower Eastern Shore, according to the latest figures from the Coastal Association of REALTORS® (CAR).
In 2015, single family home sales increased by about 17 percent compared to 2014 in the entire Tri-County area. Contracts, or pending sales, also increased by 17 percent and listings increased by 3 percent. The average sale price decreased by roughly 1 percent.
In Worcester County, single family home sales in 2015 increased by 19 percent, compared to 2014. Contracts increased by 18 percent and listings increased by 0.2 percent. The average sale price of a single family home increased by roughly 1 percent.
Terrence McGowan, a REALTOR® with Berkshire Hathaway HomeServices PenFed Realty in Ocean City and a member of the CAR Board of Directors, said activity is still up in Worcester County.
“Buyers are coming into the area and actually looking and sellers are becoming more realistic about the values of their properties,” McGowan said. “As far as inventory, short sales and foreclosures are no longer the majority of the inventory, which is the reason there are less and less new listings each year. Money is still readily available and interest rates are still at an all-time low. I think that buyers are still waiting to see where the economy is going to go, especially heading into an election year.”
In Wicomico County, single family home sales in 2015 increased by 15 percent, compared to 2014. Contracts increased by 18 percent and listings increased by 9 percent. The average sale price of a single family home increased by 4 percent.
Joel Maher, a REALTOR® with Coldwell Banker Residential in Salisbury and Vice President of CAR, said Wicomico County’s market is poised to continue to improve as its inventory of foreclosures is alleviated.
“That’s always going to suppress the market because these properties are generally not well maintained, and boarded up homes with tall grass create a lot of doubt in the long term stability of a neighborhood,” Maher said. “But the good news is that these properties are selling. Foreclosure agents are very busy. We’re also seeing less and less short sales, which is very positive.”
Maher added that the trend in Wicomico County of increased contracts and sales in general will definitely continue into 2016.
In Somerset County, single family home sales in 2015 increased by 12 percent, compared to 2014. Contracts increased by 13 percent and listings decreased by 6 percent. The average sale price of a single family home decreased by 15 percent.
Neda Cox, a REALTOR® with Long & Foster in Salisbury who deals primarily in Somerset County real estate, said she is seeing a rebound in new construction, which is a good indicator of increased market activity in 2016.
“We’re seeing new construction in Somerset subdivisions that fall into the $200,000 price range, which will help increase that average sale price as well as boost our inventory numbers,” Cox said. “Right now we do still have a few bank foreclosures, which are really impacting the average sale price. If we can get those out of the way, I think we’ll see prices in Somerset come back up.”
Nationally, according to Lawrence Yun, chief economist for the National Association of REALTORS®, the pent up demand for buying in recent years finally broke out in a meaningful way in 2015, fueled by sustained job growth in many parts of the country and rising home values giving more homeowners the incentive to sell – a trend that is expected to continue in 2016.
“Sales activity in 2016 will once again be primarily driven by the ongoing release of more pent-up sellers finally realizing their equity gains and using it towards the down payment on their next home,” Yun said. “Home sales reached 5.3 million by the end of 2015 and are expected to expand 3 percent to around 5.45 million in 2016.”
CAR President Linda Moran, a REALTOR® with Berkshire Hathaway HomeServices PenFed Realty in Ocean City, said 2016 will be a very good year for real estate locally and nationally.
“However because a lot of our sales on the Shore are second homes, we may be the last to fully recover,” Moran said. “Inventory numbers decrease more and more each year, which is a good sign. However our prices have not made a significant increase, so it’s still a very good time to buy real estate.”
Increased interest rates
The Federal Reserve’s recent decision to raise the benchmark interest rate by 0.25 percentage points is not expected to impact the real estate market, according to Jamie Wetzelberger, a loan officer with SunTrust Mortgage in Ocean City and an affiliate member of CAR.
“In spite of the Fed’s increase on interest rates, it’s important to keep in mind that since most home loans today are fixed rates and based on long-term interest rates, the mortgage interest rates will not necessarily increase at the same pace as shorter-term interest rates,” Wetzelberger said, adding that loans more likely to be impacted are car loans, personal loans and home equity lines of credit.
Yun expects mortgage rates to gradually move upward towards 4.5 percent by the end of 2016. The rates are currently just under 4 percent.
“Another year of stronger housing demand and sales will be driven by increasing consumer confidence and solid job growth,” he said. “The one variable to even higher sales will be if supply can keep up enough to keep a lid on prices, especially with mortgage rates on the rise.”
Expected to continue impacting sales in 2016, Yun added, are challenges facing first time buyers, such as shortages in affordable inventory, competition from vacation buyers and investors buying similarly priced homes and repaying student loan debt.
CAR’s housing statistics for the month of December 2015 reflected increased listings, contracts and days on market, as well as decreased settlements, list prices and sales prices.
“These numbers are typical for the month of December, when most are focused on the holidays rather than real estate,” Moran said. “We also expect to slow down just a bit in January and February, which are traditionally the slowest months of the year for real estate, not only on the Lower Shore, but across the country. However potential buyers should keep in mind that these cold months are optimal times to see how properties hold up in winter weather conditions.”
CAR’s monthly housing statistics are pulled from the association’s Multiple Listing Service, which represents the activity of over 1,000 local REALTORS® in Somerset, Wicomico and Worcester counties.
Visit www.coastalrealtors.org for more information.
More about Coastal Association of REALTORS®
Coastal Association of REALTORS® is the leading local advocacy group in the real estate industry on the Lower Eastern Shore of Maryland. Coastal REALTORS® works in partnership with its members to promote home ownership and preserve, protect, and advocate private property rights. The organization supports 1,000 REALTORS® who serve Somerset, Wicomico, and Worcester counties.
For more information on Coastal REALTORS®, visit www.coastalrealtors.org. The term REALTOR® is a registered collective membership mark unique to real estate professionals who are members of the NATIONAL ASSOCIATION OF REALTORS® and subscribe to its strict Code of Ethics.
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