The three charts on the left represent the overall sales trends in Baltimore over the past 7 years. I'm sure many of you have been hearing that the market is stagnant, or that there are very few new listings coming onto the market. I wanted to give an easy to understand explanation of what this means and how it affects the market.
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Let's start with the first chart, which shows the number of new listings that have been coming on the market in Baltimore. It is pretty clear to see that the number of new listings rose steadily from 2011 until 2015, then started to stagnate in 2016 and actually dropped slightly in 2017. If you reference the second chart, which shows Closed Sales, you can see that the number of closed sales rose at a similar rate to the New Listings, until around 2016, where Closed Sales continued to rise while New Listings remained stagnant.
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When Closed Sales and New Listings rise or fall at a similar rate, Median Sale Price generally tends to remain the same. This is a good thing, it indicates that the housing market is stable. However, when listings stagnate, but home buyers do not, the homeowners selling their homes can ask for a higher sales price. Over time, these higher prices will set a trend and become the new standard for sales prices in the area.
Should I Be Concerned?
I often hear neighbors, clients, friends compare the current market to the housing market that caused the Great Recession. Personally, I do not think this could be farther from the truth. Regulations aside, the trends discussed above show that while sales prices are beginning to climb, they are caused by a natural reaction to a fairly common market condition (stagnating listings). The increase in sales and stagnation in listings have remained relatively steady over the past couple of years. However, if new listings started to drastically decline, or if we saw a huge surge of new buyers on the market, it could become unstable again.