The year 2021 was a historic year for the resort real estate market in Ocean City MD and the Delaware beaches, but what is in store for 2022?
Will interest rates rise? Will we see more inventory? Ryan Haley of Atlantic Shores Sotheby’s International Realty shares his predictions.
In 2021, we saw the biggest number of sales and some of the most activity and demand when it comes to resort housing. In Ocean City, for example, we sold 2,087 homes in 2021. At present, we only have 143 properties for sale in all of Ocean City.
Currently, we continue to see this trend of an extremely low inventory / high demand market.
What does this mean for 2022, and what can we expect moving forward in terms of interest rates, inventory, price appreciation, and home sales?
Interest Rates Projections for 2022
Interest rates are going up without a doubt. In fact, they have already increased.
In the second-home markets such as the Ocean City and Delaware Beaches, we are already seeing second homes and condominiums that have rates in the mid-3%. This figure is expected to continue to rise.
Fannie Mae and Freddie Mac have announced that the cost to the individual lender is going to be increased for a second home, more similar to that of an investment property. Thus, we may see higher fees associated with this.
We should also see higher interest rates that will probably hit mid-4% or even 5% as we move into spring.
This is all the more reason—if you are a buyer—to get ahead of the projected increase and find the property you want early on.
Real Estate Inventory in 2022
Will we see more inventory this year? This is something that will not likely happen.
Many economists are predicting that we will see more inventory in 2022. However, up to this point, that has not happened. Inventory is set to increase, but the increase is going to still be fairly low.
Anybody who has refinanced or purchased a property in the past two years is used to lower interest rates of around 2% to 3%. If they are to move up, they’ll face interest rates of around 4.5% to 5%. The idea of them putting their homes on the market is still something that may not happen. At the same time, the demand is extremely high; thus, the homes that hit the market are getting gobbled up quickly.
We will likely continue to see strong demand with very low inventory, causing the prices to continue to rise. The experts are forecasting that home prices are going to increase by 2.8% to as high as 7.4% over the course of 2022. This is fueled by the supply-and-demand dynamics.
Locally, in Worcester County, we saw prices appreciate as close to 30% in 2021. Thus, even if we see appreciation in the higher end of what is projected, it is still going to be lower than what we saw in the previous year. However, this is more of a normalization. That is, we normally see price appreciation of around 3% to 3.5%, and that is what we are going to get again.
So, if you are thinking about selling and maybe waiting to see where prices will go, you may want to decide to get that property on the market now. That is because it does appear that we are in that period where price appreciation is going to slow down.
Home Sales in 2022
What are experts saying as far as the number of homes sold?
The experts are predicting that we are going to continue to see home sales increase. In fact, they are projecting that in 2022, we will have more home sales than in 2021.
It is expected to be another strong year for real estate. If you are planning to buy a beach property, it is best to get it early, ahead of the competition, and get it before the summer frenzy begins. As the summer season nears, you can expect a more competitive market with multiple offers happening.
Have more questions?
We’d be happy to talk to you and discuss with you our strategies to put you in the best position if you’re buying a property. On the other hand, if you’re listing or selling a home, we can share with you some of the techniques that will encourage multiple-offer situations and put as much money into your pocket as we possibly can.
Give us a call, and we’ll be happy to talk in detail about the resort market or any other questions you might have.