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Ocean City Real Estate Q1 2024 Update

Inventory is up 28%, while prices are starting to ease. That, plus more in the first quarter recap of the market conditions for this week in the Running Real Estate Podcast. 

Ryan Haley is back with the latest update. And if you like numbers, then you’re going to like the show today. 

We’ve got all the facts and the stats as to what we’ve seen in the first quarter of 2024, not just for Worcester County, but for Worcester, Wicomico, and Sussex counties, our Lower Shore counties here on Delmarva. 

What is going on in the real estate market? 

Many of you tune in on a weekly basis just to get the stats to see what’s going on in the last seven days and any trends that we might see across the board when it comes to the last 30 days. But, I wanted to go a little bit deeper on that and truly give you a picture as to what is actually happening here. 

Many people at the beginning of 2024 were very optimistic that we would see interest rates that pulled back, thus increasing the rate of speed in our market here for the spring market. What we have actually seen is interest rates that have continued to increase a little bit, and we are currently sitting today at our highest levels on mortgage rates going back to last fall. 

Now, will it stay at those levels, or are we going to see rates retreat?

That’s the big question. Our overall economists believe that as time goes on, we will see mortgage rates pull back and get down to lower numbers. The question is, when will we see that? That’s all speculative. But what are the straight facts? Let’s focus on the first quarter numbers here, and we’re going to start with Worcester County.

Worcester County in Q1 2024

So, coming to you in Worcester County, when we look at what has gone on as far as inventory in 2024, this year we’ve seen 491 new listings hit the market in the first quarter, while last year we had 381 listings in the first quarter. That is an increase of 28%. 

So, a lot of buyers who are saying, “Oh, I just can’t find that inventory, I just don’t see it out there,” that’s not necessarily the case here in Worcester County as we’ve had an increase of 28% in total available listings in the first quarter. Lots to choose from, and that’s a great time to be hitting, especially as we’re going into the spring market just before summer. That gives you some more options. 

With that increased inventory and with the increase in interest rates, we’ve actually seen a pullback as far as the total number of sales. Sales this year thus far are down 11%. In 2024, we’ve had 258 properties go to settlement, while in 2023, we had 291 go to settlement in the first quarter. That is a difference of 11% downward as far as total number of transactions. 

When we look at the median sales price in 2023, our median sales price was $419,900, pretty much right in line with the national average. Whereas in 2024, thus far, we are looking at $449,950. That is a decrease of 2%. So, obviously not across the board as far as all segments of the market, but when you average everything out, our median sales price in 2024 is down 2%. That’s Worcester County.

Sussex County in Q1

Moving over to Sussex County, our largest county here on the shore. Year to date, we’ve had 1,198 active listings, whereas in 2023, we had 1,733. That is an increase in new listings. Here, inventory is up by 10% in Sussex County.

When we look at the total number of solds, 1,188 sales so far here in 2024, whereas in 2023, we were at 1,187, so that is a decrease of 88.3%. That’s kind of mirroring what we see in Worcester County. And then when it comes to the median sales price, in 2023 we’re at $447,000 as the median sales price, whereas in 2024 we’re at $435,000. That is a decrease in median sales price of 2.7% in Sussex County.

Wicomico County in Q1

Finally, Wicomico County. Many of you have heard us talk about this time and time again as Wicomico County’s inventory has been tight, and that is truly the case in 2024. We’ve had 303 active listings, whereas last year at this time, we had 282. So that is an increase of 7.4%, but not quite the increase that we saw in the other counties. 

When we look at the total number of sales in 2024, 226, and wouldn’t you know it, in 2023 we also had 226 sales, straight even there in Wicomico County. And when we look at sales price, we actually had an increase in sales prices. So, the median sales price here in 2024 is $256,400, whereas in 2023 it was $235,000. That’s an increase of 9.1% in prices in Wicomico County. So, the primary housing market in Wicomico County remains very tight, and the best properties are selling very quickly.

Obviously, we’ve seen some more inventory, we’ve seen the number of sales drop a little bit, we’ve seen the prices drop a little bit here in Worcester and Sussex County. 

But why is that happening? What is the reason for that? 

An interesting thing to look at is what has happened with mortgage rates in the last year. At the end of the first quarter in 2023, our average mortgage rate for a 30-year fix was 4.67%. Fast forward to today and we are sitting at 7.06% on average. That’s an increase of 51% in mortgage rates over the last year.

So, that certainly dips into people’s affordability, and when rates go up, they can afford less. And at the same time, we’ve seen prices pretty much hold. That definitely has allowed us, or actually, we’ve seen as a result of that, a little bit more inventory staying on the market and the number of sales decreasing a tad. So, there are your facts when it comes to the recap of the first quarter snapshot into what’s actually going on on a weekly basis. And this is going to be very similar to what you see when I give you our weekly market reports.

In Worcester County in the last 7 days, we had 72 new listings come on the market while we had 53 go under contract. And over the last 30 days, we have currently 531 total actives in Worcester County, while we’re selling 199 a month. That gives us a 2.7 month supply in Worcester County. Wicomico County: 32 new listings, 26 going under contract, 154 total actives, while we had 132 go under contract in the last 30 days. That gives us a 1.2 month supply in Wicomico.

Rounding out to Sussex County: 171 new listings in the last 7 days, while we had 185 go under contract. And we’re currently sitting countywide at a 2.8-month supply in Sussex County.

What to Expect

Finally, let’s go through a couple of different projections with you. A lot of the projections that economists make are national numbers. So, we just wanted to point this out. While we have seen a bump in inventory or properties that have stayed on the market a little bit longer, a lot of which having to deal with the fact that we’ve seen interest rates go up, the 2024 home price forecast still, this is as of April 2nd, still remain high, and almost all the economists are predicting that we’re going to continue to see prices increase throughout 2024. Goldman Sachs has us at 5%, MBA (The Mortgage Bankers Association) is anticipating a 4.1% increase in home values, Zillow still at 3.5%, Fannie Mae at 3.2%, Freddie Mac at 2.5%, and NAR is the lowest on that projection.

National Association of Realtors is predicting 1.4%. When we average all these agencies out, the average of all seven comes out to 3.2% as the anticipated appreciation price increase in homes nationwide in 2024. So, still great numbers. We’re not seeing this big dip in pricing by any stretch of the imagination.

Where do we see mortgage rates going? It’s very difficult to predict where we’re going to see mortgage rates go, but for fun, we would like to report to you what Fannie Mae, the Mortgage Bankers Association, and NAR feel and predict where we might see mortgage rates go in the next few quarters here.

So, the average of all three of these, they predict that we would see mortgage rates at 6.7% at the end of Q1. We’re a little bit above that right now; we’re at 7.06%. So, their predictions were lower than what you actually saw. At the end of Q2, they’re predicting the average of all three at 6.6%, at the end of Q3, 6.4%, and then finally rounding out 2024, the prediction amongst all three of these—Fannie Mae, Mortgage Banker, and NAR—the prediction is we will see mortgage rates at 6.2%. So, essentially 6 and a quarter percent.

Now, to address a top question we get every day: when are we going to see prices drop? When are we going to see interest rates drop? I see a lot of people who are waiting to jump back into the market till prices drop and/or interest rates drop. What we’re seeing from all of these experts and what we’re seeing in the local market is that if you’re waiting for prices to drop, you could be waiting for a significant amount of time because all indications are that prices will hold and many are predicting that they will increase with interest rates. If you’re waiting for a big drop, that’s probably not going to happen.

And if we go back to our initial projection at the beginning of the year, we would be probably between 6% and 7% throughout the entire year. And that’s what many of these folks are seeing as well. If you are thinking about doing something with more inventory out there, you may want to hop into the market and start looking at what is there. And when you do find that right property, it might be worth it to jump on it while interest rates are where they are because in the future, if rates do drop drastically and we do get back into the fives, we’re going to see a lot of pent-up demand come back into the market, which could make it very difficult to secure that property that you had hoped for.

So, there you have it. Today was the stats edition of the market report here. Like always, if you want any additional information on any of these topics, weI’d be happy to answer any questions you might have and/or provide additional data. Hope you like this information. If you do, please share it with a friend, like and subscribe, and we will see you back here next week with another edition of the Running Real Estate Podcast.

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