Baltimore Real Estate Market: Prices Go Up; Inventory Goes Down
The active inventory of homes is at its lowest level in over 10 years.
For 18 consecutive months, there has been a decline in the year-over-year inventory levels.
The median sales price has increased every year since 2011.
The median sales price of $230,000 for February 2017 is up 2.2% from February 2016 and is at its highest February level since 2009.
A shrinking inventory, supply of available homes on the market, considered in isolation, should create an upward pressure on prices just as has been seen over the last few years.
Other factors to consider are mortgage interest rates, inflation, and wages.
Mortgage interest rates have been at historically low rates for several years now, but they have started to slowly move upward, however they are not predicted to go much higher than 4.6% on average. These lower rates keep affordability high, which, also, pressures prices upward.
Inflation has been at or below about 1.0%, but it is expected to increase to about 2.5% for the next 3 years or so. An increase in the rate of inflation will lower affordability for housing, which would pressure home prices downward.
Growth in wages is expected to level out at around 4.4%, down slightly from mid 2016, where it was at about 4.8%. This may be enough to offset increases in inflation and slight increases in mortgage interest rates, hence having little impact on housing affordability.
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