Declining home sales after the federal government’s tax credit expired are hurting Maryland, once considered one of the stronger regions in the country in terms of home values. Falling prices hurt the housing market as it erodes confidence in home values recovering any time soon.
The battle being waged to produce a housing recovery in the region is provided by a variety of sectors, including politicians in Washington, D.C., many of whom make their second homes in Maryland bordering the nation’s capitol. Dropping home prices provide buyers with cheaper homes to chose from but come at the expense of homeowners who have been foreclosed or are often forced to sell because of life changes.
The sales slump in Baltimore has seen fewer would-be buyers qualify for mortgages to make purchases to further weaken the marketplace. Changes in the political climate could produce a higher unemployment rate in the area producing an increase in foreclosures. The atmosphere in Baltimore is anything but stable these days in terms of the real estate market.
The Baltimore market has been a bit like taking an elevator ride up and down. But now as home sales plummet, the value of neighboring homes are leveled and are likely to remain down for an extended period of time as the region comes to grips with a highly volatile housing market. Foreclosures and bank assisted short sales are hurting Baltimore, which is now forecast to sustain average housing deflation of 9.3% for the year.
Maryland is a mix of high-end housing markets and less expensive areas as a highly densely populated state. Bethesda and the Silver Spring area adjacent to the nation’s capitol and is showing signs of a weakening market, despite a smaller inventory of homes. Demand is declining as consumers grow weary over the state of the nation’s economy.
But home sales should remain somewhat consistent as members of Congress tighten the reins of the housing market to protect their own home values in Silver Spring, where many of them make their second homes when Congress is in session. Bethesda and Silver Spring home prices are forecast to average just 3% inflation during 2011 but could see a sudden drop should the economy worsen.
Some places in Maryland are affected less than others like Columbia. Home sales are soft in the area with much higher asking prices. But a realignment program at the local military base should bolster sales over the next couple of years with an addition of more than 20,000 new residents. However, military wages aren’t enough to buy many of the homes in Columbia leading to some weakness for the region. Average home prices are forecast to decline just 3.8% for the year in Columbia as a result.
The inventory of homes in Prince George’s is still bloated, despite a sell-off as a result of the foreclosure crisis. They’re simply are not enough buyers to pick up the slack for this marketplace, which has been suffering through one of the worst foreclosure crashes on the east coast. Home sales spiked due to the federal tax credit only to drop more than a quarter after it expired. The real estate crash has been severe and it isn’t close to ending in Prince George’s, which is located within commute distance to Washington, D.C.
Home sales are projected to remain sluggish through most of the year, and housing prices are forecast to decline an average of 8.8% in Prince George’s in 2011 as the region feels the impact of the great housing crash, and prepares for more foreclosures to be sold off by banks.