Maryland Real Estate Prices Approaching Neutral Territory
There have been several reports around of late that seem to indicate that real estate in Maryland is approaching neutral territory – or an equilibrium. In layman terms, this is a point where there is less than six months worth of stock on the market (real estate for sale) and where demand is relatively flat, or just keeping up with supply. The result is that real estate prices reach a point of neutrality: they are no longer falling, but they are no longer rising.
For investors, and those looking to buy, the decision to buy will depend on your outlook. If you feel the economy is improving then now could be the most opportunistic time to buy. If you feel the economy is still weak then waiting a month or two would be advisable. If your guess is wrong then, of course, you will pay the price.
The economy does seem to be stabilizing somewhat, however, national debt remains a worry. The amount of foreclosed stock held is also of concern. Of even bigger concern is the tightness of money. Lenders are no longer free with their funds and many are finding that, despite meeting eligibility requirements, they are still having mortgage applications refused. This is to an extent causing an artificial drop in demand which has been exacerbated somewhat by the termination of the tax credits for first time buyers.
Maryland real estate prices are in neutral territory at present. If any of the conditions mentioned, particularly lending availability, improves, then you will see some changes. More buyers will have a snowballing effect. Real estate prices will start to climb, slowly at first. Those contemplating selling may just hold back for a month or two hoping to get higher prices. This will cause a drop in available stock adding further impetus to price rises.
I wouldn’t panic, however. It will be a long time before we start to see large price hikes or demand outstripping supply. Real estate is in a perpetual state of flux. Neutrality doesn’t mean price variations stop, it just means they are in a temporary pause. National trends are not helping with some areas falling while others are rising. In Maryland, the latest research suggests that buying is still more economical than renting. That is always a good sign to buy!
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