Mid Year 2015 Housing Report

State of the Salisbury MD Area Real Estate Market

As of June 30, there were 490 settlements on residential housing units in Wicomico County in 2015, an increase of 18% from this time last year. The

Salisbury MD Real Estate and Homes for Salemedian sales price was $140,000, up 9% over same period along with a 2% increase in inventory. Distressed properties have accounted for 35% of residential sales this year.

In short, the Salisbury Maryland area real estate market has experienced solid, stable growth for the last 12-18 months.  Recent quarters have shown median sales prices have rebounded in a very healthy 5-10% range, finally playing “catch up” after several quarters of significant gains in overall sales.

Two factors haven’t changed for the better over the last eight quarters or so. First, the number of foreclosed and short sale properties on the market in the Salisbury MD area remains stubbornly high, accounting for roughly one third of all residential sales over this period.

Secondly and contributing to the first, is the lack of growth in jobs and wages overall in Maryland and the Lower Shore in particular, although some very recent progress has been made in this area. A strong rental market has investors keeping distressed inventory from spiking, but it has been a drag on median prices for quite a while.

 

Housing Outlook in Salisbury MD for the Second Half of 2015

Most people look at mortgage rates as the driving factor in home sales. To a degree this is true, but remember real estate will always be bought and sold, regardless of the cost of borrowing money, with the early 1980’s being a prime example.

The Federal Reserve has for some time been warning of upcoming increases to the Federal Funds Rate, which in turn would impact mortgage rates accordingly. This has yet to come to pass, in spite of all the Fed’s talk, which brings us to the real driving factors in housing markets, economic activity and labor markets, which are inextricably tied together.

Domestic jobs growth and GDP have been in reality much softer than the spin from the Commerce Department would have us believe. Obamacare has forced employers to cut worker’s hours back or hire only part time workers. The additional regulatory burden has been an additional stress on already razor thin profit margins.

This time last year, the Fed said they would be looking to raise the Funds Rate by the end of 2014 or when unemployment fell below 6%. Then the prognostication was rates would climb by mid- 2015 (now) but the goalposts have moved again, this time to early next year.

The reality is the economy is not on healthy enough footing to sustain an increase in the Funds Rate and any premature action by the Fed would certainly be detrimental to the fragile recovery in the national housing market.

In conclusion, would be home buyers in the Salisbury Maryland area who are secure in their employment would do well to begin their home search this year to take advantage of favorable mortgage rates and moderately low home prices. It’s this author’s opinion that we will see a strong two quarters to finish out 2015, continuing the momentum seen since early last year.

 

Information compiled by Kennington Realty Inc. is deemed to be reliable, but is not guaranteed © 2015 MLS and FBS

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