Will Baltimore Home Prices Drop in 2023?

baltimore home prices

Now that we’ve reached the end of the calendar year in 2022, we’re looking ahead to see what trends are going to be shaping the real estate market in 2023. As hard money lenders in Baltimore, we’ve been keeping a close eye on what’s happening in our own backyard to try and get an idea as to what deals will look like in the year ahead. While we can never state with complete certainty whether or not Baltimore home prices will drop in 2023, we can look at the data, look for patterns, and make a prediction based on our experience in the local market.

Using data sourced by major market watches like Redfin, Zillow, and Rocket Homes, as well as our own proprietary data based on the deals we’re funding, we think we have a pretty good picture of how things are shaping up – at least for the immediate future. Let’s take a look at the market trends shaping the Baltimore real estate market and see if we can figure out where prices are headed over the next 12 months.

Baltimore Housing Sale Prices are Currently Up Year-Over-Year

If 2021’s most-used adjective for the broader housing market was “hot,” 2022 has had more of a lukewarm or even downright frigid temperature throughout most major real estate markets in the United States. But in Baltimore, housing prices have actually seen an overall increase in the last 12 months, with median sales prices increasing from about $195,000 to nearly $215,000 – a roughly 10% increase year-over-year. It’s true that prices did stagnate throughout the majority of 2022 hovering right around the $200,000 from February through August, but we did see continued growth in median sales prices in September and October.

Whether or not this growth will continue is tough to say, and that has a lot to do with other factors that come into play in this equation. If long-term investment mortgage rates stay put or continue to increase, this trend may reverse. But so far, Baltimore has been bucking a national trend by seeing increases in home listing prices and final sale prices as well, which on its face seem to signal that further growth could be coming, especially in the immediate future.

Number of Houses Sold in Baltimore Has Declined in 2022

According to Redfin, the number of houses sold in Baltimore in October of 2022 declined year over year, from over 1,000 in October of 2021 to just 675 this year. In total, the decline was almost 35%, which is very statistically significant. Given that home prices have increased by 10% despite this drop, it would suggest that the houses that are selling are selling at above-average prices, which could mean that the data is skewed by locations with higher property values being more active. After all, Baltimore is the “City of Neighborhoods,” and property values can swing quite a bit from neighborhood to neighborhood.

Of course, we do have some additional factors to consider when determining whether or not this data is being skewed. One of those is the number of days that houses are spending on the market, while the other is the average listing price – if houses are spending more time on the market and listing prices are falling, we might get a good idea as to where the larger pricing trends will be headed from here.

Median Days on Market Have Increased for Baltimore Homes

With all property types in consideration, the average amount of time that a property in Baltimore spent on the market was 38 days as of November 2022. This represents a 4-day increase year over year, which may not seem like much, but considering that this is aggregate data, the needle has clearly moved in one direction – and it’s one that favors buyers rather than sellers. Given that the number of homes sold has decreased quite a bit, and the median days on market is increasing, the year-over-year increase in median sales price seems a bit less significant in the grand scheme of these trends.

Average Home Listing Prices Have Decreased for Baltimore Real Estate

According to the St. Louis Fed, the average home listing price in Baltimore peaked in July of 2021 as mortgage interest rates bottomed out and homebuyers of all stripes rushed in to purchase real estate. Since that peak, listing prices have come back down, but are still about 10% higher than they were in January of 2020, prior to the onset of the pandemic that sent the real estate market into a frenzy.

Trendline movement during this time has not been exactly consistent, as there have been peaks and valleys throughout the 2022 calendar year, with the lowest average listing prices appearing in January. But if recent trends from September through November remain, we could be in for further reduction in the average listing price for housing inventory in Baltimore, especially as mortgage rates are not expected to come back down to the 3-4% range any time in the near future.

What Should Real Estate Investors Know About the Baltimore Market for 2023?

Like we said up top, we can’t state anything with 100% certainty regarding where prices are going. However, given that the number of houses sold has decreased significantly, the median time on market is increasing, and average home listing prices have been decreasing, we’re inclined to think that the overall Baltimore real estate market is likely to see lower sales prices, at least throughout the first half of 2023. That said, inflation is showing signs of slowing, and increases in mortgage rates are beginning to slow or even decrease as a byproduct of the slowdown in demand throughout the past 9 months.

For investors, this should signal favorable buying conditions as lower purchase prices can mean greater profit margins for flips, while turnkey rentals will be seeing more reasonable monthly payments on long-term investment property mortgages. Have any deals you want to discuss now? Give us a call at 410-855-4600, or fill out our online rate calculator for an instant quote today!