Originally published Mar 27, 2018
The real estate market here on Delmarva often lags behind the rest of the country, often up to three years behind. When the recession hit in the mid-2000’s, we enjoyed a couple more prosperous years before our local economy took a turn for the worse. Now, we have been hearing about positive real estate growth at a national level since 2015, but have just began to see the effects locally on the shore. As a result, we are experiencing record-low inventory coupled with increased sales numbers, which should pave the way for a seller’s market. Sales are up, and inventory is down, but we are still seeing sales prices remain relatively flat.
In 2017, residential real estate sales rose. In Wicomico County, we saw a 13.4% increase in settlements year-over-year, with the highest sales numbers in the late spring and early summer. However, sales remained higher than expected throughout the year, as inventory began to creep downward. We are still seeing increased sales numbers into the first two months of 2018, higher than they’ve been since last May, but we need the inventory to support the demand. Currently, the number of homes listed for sale is down 29.9% from a year ago, and is just not enough to satisfy all of the buyers out there. To put it in perspective, during the recession ten years ago, we saw inventory in the 800+ levels. Right now, in Wicomico County our inventory is less than 280. This is causing multiple offers on well-priced properties, and buyers’ agents have to get more creative to make their offer stand out.
Many of the sales we are seeing are in lower price ranges, with almost 80% of the sales under $200,000. Sales in the higher price ranges are a little slower, but that is expected to change as move-up buyers are able to sell their current home and begin their search for a higher-priced one. Our average sales price at the end of 2017 was right around $140,000, and we hope to see that rise this year as our market stabilizes.
With so many buyers out there looking, and so many homeowners who want to sell, why isn’t this a perfect storm? One reason is that the types of properties that are available for sale don’t always match the type of financing buyers are obtaining. We are seeing approximately 75% of home-buyers using government-subsidized mortgage programs like FHA, VA, and Rural Housing, and with these programs, the home must be in good condition. Another factor is the amount that these homeowners owe on their current mortgages. For people who bought or refinanced since 2008, they may be underwater, meaning they owe more on the mortgage than their home is worth today, and they are not able to sell their home without contributing a substantial amount of cash. In order for our market to stabilize, we will need to see home values increase to a point where many current homeowners are able to sell.
Inventory aside, buyers have more options today than they had in the past. As the economy and real estate market in our area improve, we’ve seen an influx of new construction for the first time in over a decade. This is a positive sign because the re-energizing of the residential new construction market puts many tradesmen back to work at higher wages, while creating the new inventory we so desperately need. Other new products like Renovation Loans and local rehab grants can allow a buyer to get creative and bring a distressed home to an acceptable condition. Overall, interest rates remain at historically low levels, allowing buyers today to afford more home for their money. Our mortgage experts tell us that interest rates are expected to sneak up a little in 2018, but will remain relatively low.
ERA Martin Associates, the largest locally-owned real estate brokerage in the area, announced recently that the firm was #1 in Wicomico County for the 5th year in a row. “2018 is off to a great start. Our Realtors are busy, and buyers are out there looking. It can be a challenge to help a buyer find a home that fits their need with inventory this low, but educating our agents and consumers on the market and their options can help.” said company President Joni Martin Williamson. ERA Realtors forecast strong sales numbers through the balance of the year, and we hope to see values begin to finally rise.
Article by Bill Martin, who founded ERA Martin Associates in 1985.
ERA Martin Associates is the largest locally-owned real estate firm in Wicomico County, licensed in MD, DE, and VA. ERA has been the top real estate firm in Wicomico and Somerset Counties for the past five years, but the company is equally proud of their Customer Satisfaction Rating, which is currently a 4.86 out of 5, making ERA #1 in Sales and #1 in Service.