Mortgage Rates and Home Prices Mean Quick Changes in Maryland Real Estate

By Richard Barrington
Local Lender Columnist
Nov 2, 2007
Dramatic changes in home sale figures and a sustained trend in mortgage rates add up to major developments in the Maryland real estate market. While the news about the housing market has been all gloom and doom, for Maryland home buyers these changes add up to opportunity.

Trends toward lower prices and lower mortgage rates point toward a best-of-both-worlds scenario for buyers.

Home Prices, Sales Activity Soften

Nationally, home sales have been weakening, as measured by both prices and the number of sales. This is a reversal of the trend of the prior few years, which saw a dramatic housing boom, especially in some areas of the country. This change means that the shoe is on the other foot--while sellers held the upper hand during the boom, now buyers have more bargaining power.

The national trend for slowing real estate activity has been magnified in Maryland, at least during the second quarter of 2007. Sales dropped by nearly 21%, almost twice the national rate of decline. While this lower activity level has yet to translate into lower average prices in Maryland, falling demand will eventually put downward pressure on prices. In the meantime, it certainly puts buyers in a better position to be demanding.

Mortgage Rates Also Point Lower

The icing on the cake is that mortgage rates have also been falling. With lower borrowing costs, a better bargaining position, and the potential for lower prices, the so-called "mortgage crisis" actually looks like a pretty sweet deal for most home buyers.

Only time will tell how much momentum these trends will gather, and how much more attractive the buying environment will become as a result.

Sources
WJZ-TV
Freddie Mac

About the Author
Richard Barrington is a freelance writer and novelist who previously spent over twenty years as an investment industry executive.