Inflation and interest rates appear to be driving the housing market in southern Maryland

HUGHESVILLE, Md. – May 11, 2022 As inflation soars and interest rates continue to rise from historic lows, the spring housing market in southern Maryland is beginning to show some anticipated trends.

Although an overwhelming majority of homes sold in the past month did so in less than 10 days, there is more active inventory than this time last year. Although most homes sold quickly, the average days on market in southern Maryland increased slightly by two days from 2021.

This is a slight positive as the region saw its inventory months drop to 0.71 months in April and hopefully on its way back to healthy market levels, which have not been seen since 2019.

With interest rate hikes now over 5%, home sales and home price appreciation are expected to slow. Due to the time of year and current economic volatility, it will be increasingly difficult to determine the effectiveness of these rate changes for several months.

“It’s always a good time to buy real estate, despite recent mortgage rate hikes and low inventory,” said 2021-22 Southern Maryland Association of Realtors® President Gregg Kantak. “Nevertheless, understanding how housing affects inflation means understanding what US inflation data is trying to measure. The consumer price index (CPI) is a “cost of living index”: it aims to measure the price of the various goods and services consumed by households. It is not intended to measure the value of families’ investment assets, such as stocks. However, this objective creates a unique challenge with owner-occupied housing: the price of a home reflects both its value as an investment asset, which CPI in principle wants to ignore, and as a property that provides a “service” (i.e. housing) to the families living there, the cost of which CPI wants to incorporate.

Prices continue to rise, with the region seeing the median sale price rise 8.11% from a year ago to $400,000.

Market volatility and uncertainty are seen as major contributors to fewer people wanting to sell their homes, leading to a 7.09% drop in new listings in April last year. The total number of new registrations is not far from the five-year average.

Another sign of the market returning to more normal levels is a slight drop in the average sale price from the original list price.

This time last year, homes were selling for an average of 101.8% of what they were originally listed for, but that figure has now dropped to 101.3%. Although this is a small decrease, it shows a significant change in the local market.

“Rising house prices directly affect household wealth and neighborhood affordability,” Kantak explained. “They also play an important role in headline inflation. Even small increases in rent and house prices can, in principle, have significant effects on headline inflation.

Housing market statistics for each county in the Southern Maryland region are available below:

Calvert County

  • Units sold: 136 (-26.09%)
  • Total sales volume: $65,823,743 (-12.67%)
  • Average days on market: 14 (-3 days from April 2021)
  • Median Selling Price: $442,450 (+17.99%)

Charles County

  • Units sold: 261 (+1.56%)
  • Total sales volume: $113,706,555 (+11.57%)
  • Average days on market: 15 (+3 days from April 2021)
  • Median Selling Price: $420,000 (+11.41%)

St. Mary’s County

  • Units sold: 164 (+2.50%)
  • Total sales volume: $66,109,657 (+16.73%)
  • Average days on market: 23 (+5 days from April 2021)
  • Median Selling Price: $379,545 (+8.47%)

The statistics in this article were compiled with the cooperation of Bright MLS, a leading housing market data source and real estate listing service for Realtors® throughout the region.

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