Mortgage Rates and Housing Supply Sweeten the Deal for Maryland Home Buyers

By Richard Barrington
Local Lender Columnist
Jul 27, 2007
For a few years there, the deck was stacked against real estate buyers. Home prices were rising, and in a hot market supply was often so scarce that sellers got to dictate the terms. To top it all off, mortgage rates were rising. Now these trends have reversed, and before making an offer prospective buyers should be aware of how much the rules have changed.

In many ways, Maryland has been a microcosm for these national real estate trends. Meanwhile, since mortgage rates tend to be similar in any area, lower interest rates are also benefiting Maryland home buyers.

The Maryland Market: Prices Cool as Supply Grows

Using the greater Baltimore area as a bellwether for the Maryland market, the cooling off of the housing market, and its causes, are clear. Prices in April, 2007 were only 1.9% higher than a year earlier. Prices in Baltimore City itself actually fell some 1.8% from a year previously.

The cause of this is simple supply and demand. 6,524 homes in the Baltimore area were listed for the first time in April, but only 3,536 were sold that month. That disparity brought the total still on the market to 17,000, or nearly three times as many as at the peak of the housing boom.

Tighter lending standards due to problems with subprime mortgages are often cited as a cause of the housing slowdown, though it should be noted that higher-end areas have been affected as well.

Buyers Exercise Bargaining Muscle

The days of buyers breathlessly chasing sellers are over. Forget about above-list-price offers; discounts are now more common, and list prices are starting to be cut as houses linger on the market. Prospective buyers should adjust to these new conditions, because sellers are already having to get used to them.

Source
Baltimore Sun

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