Homebuying in Maryland underwent seismic shifts from 2018 through 2023, particularly for middle-income households.
Overall sales volume first rose and then fell dramatically, while prices marched steadily upward.
By contrast, 2022 sales fell back to ~84,600 (21% year-over-year) as the post-lockdown surge subsided.
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In 2023, only ~67,500 sales closed, marking another 20.5% drop the lowest volume in years.
Thats an increase of roughly 38% in five years, significantly outpacing income growth and inflation.
The 2023 median sale price (~$400K) was $110,000 higher than in 2018.
This trend intensified in 2020-2021: by late 2020, active listings were 60% below late-2019 levels.
By 2023, new listings were even scarcer (~83,000).
This lack of inventory meant buyers faced intense competition for what few homes were available.
Interest Rates and Affordability Challenges
A crucial backdrop to these trends is the interest rate environment.
In 2018, 30-year mortgage rates averaged around 4.5%.
They then fell to historic lows during 20202021 hitting ~3% or below by late 2020.
Cheap mortgages greatly expanded buying power and spurred the 20202021 sales surge.
However, by mid-2022 the Federal Reserves inflation-fighting measures drove rates up sharply.
Many middle-income buyers were priced out or forced to lower their budgets as a result.
The majority of Maryland home sales are detached houses, and this was true throughout 20182023.
Many first-time buyers, however, had to adjust expectations.
Townhouses (including Baltimores iconic rowhomes) are prevalent in Maryland and tend to be cheaper than detached homes.
Generational Patterns: Upsizing vs.
Staying Put
Younger buyers largely upsized during this period, while older owners mostly stayed put or downsized selectively.
On the flip side, empty nesters and retirees showed a strong tendency tonotmove.
Aging baby boomers in Maryland have been holding onto their houses longer than previous generations.
All these factors kept many older Marylanders in place, limiting the turnover of single-family homes to younger buyers.
Urban vs.
Rural Market Patterns
By 2023, a few geographic storylines emerged.
Many city purchases were by investors or first-time buyers taking advantage of lower prices.
Shifting Buyer Psychology
Throughout 20182023, buyer sentiment swung from optimistic to cautious.
Home Feature Priorities Transformed
Remote work changed what buyers looked for in a home.
Home offices (or extra bedrooms) became a must-have for many in 20202021.
Basements, bonus rooms, or detached studios that could serve as dedicated workspaces commanded a premium.
Backyards and outdoor space also gained importance as people spent more time at home.
Quality of Life Relocations
The pandemic led many to reevaluate lifestyle.
Investment Property Dynamics
Remote work and the rise of platforms like Airbnb also influenced investor behavior.
In Baltimore, some investors began to retreat.
Vacation home sales surged during 20202021 across the U.S., and Maryland was no exception.
These areas saw unprecedented demand from both out-of-state buyers and Maryland residents seizing the chance to own a getaway.
Staycation Homes and Extended Stays
With remote work, some vacation homes turned into semi-primary homes.
This created a second season in typically seasonal towns, as shops and restaurants saw more year-round activity.
Price Surge in Vacation Markets
The influx of demand drove prices in vacation markets to record highs.
Worcester County (Ocean City) saw its median vacation-home sale price jump 14% in 2020 alone.
This made it challenging for some local or more budget-conscious buyers to compete.
This cooled the investor frenzy.
Indeed, by 2023 national demand for vacation-home mortgages had plummeted down more than 50% from pre-pandemic levels.
MMP offers 30-year fixed-rate loans often at below-market interest rates, along with down payment and closing cost assistance.
Local Government Assistance
In addition to state-level help, some counties and cities offer their own incentives.
Federal Loan Programs
Buyers from 20182023 benefited from historically favorable federal mortgage programs.
These programs became increasingly vital as affordability worsened.
Low inventory and high demand drove up prices, benefiting those who owned homes but frustrating many would-be buyers.
