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December real estate numbers hint at ‘new normal’ for resort market

(Jan. 24, 2012) The real estate market in the region – and nationwide – is starting to show signs of increased vitality and some sort of equilibrium, according to end-of-the-year data.  But local Realtors say it is not yet clear what exactly the “new normal” for the resort area will be.

“I truly believe that we’re on our way up,” said Pam Wadler, president of the Coastal Association of Realtors. “We’re bouncing back, but it’s going to take time, and I don’t think we’ll ever be back to where we were in 2004 or 2005.”

The new paradigm for the realty business – as opposed to the pre-2008 market environment – is not to see sale prices rise. Instead, 2012 has seen a gradual decrease in how much the average home actually brings in at closing. But what has risen is the volume of homes sold, which has correspondingly decreased the volume of unsold inventory currently on the market.

The inventory of condo units in the county has, according to CAR’s December report, decreased by 25.5 percent. At the same time, the number of homes under contract has increased 17.6 percent since the same time in 2011. And the total number of settlements for the year is up 12.8 percent.

As expected, the same trend is evident in single-family homes, although slightly less severely. Inventory is down 22.7 percent, while contracts and settlements are up 11.4 and 9.3 percent, respectively.

“People are looking [for property]. Why? That could be a hundred different reasons,” Wadler said.

But the increase in sales, and reduction in inventory, is not entirely attributable to the reduction of the glut of properties built during the boom years, and subsequently unsold after the real estate bubble burst.

According to Wadler, many Realtors are still wary of what is referred to as the “shadow inventory” of foreclosed homes that banks have not yet put on the market.

“The banks have more foreclosures that haven’t hit the market yet,” Wadler said. “There are a lot of different reasons why they’re holding back, but those properties still linger.”

This inventory – and the anticipation of it – could keep prices depressed for some time.

“Until it is gone, it’s very difficult to say what is ‘normal,’” Wadler said.

The market also shows no signs of returning the advantage to the seller, but instead to maintaining the advantage to buyers who are willing to negotiate. The average selling price of a home last year was roughly 94 percent of its list price; whereas in the boom years, most sellers could get what they asked for up front.

“In the early 2000s, yeah, that was the norm,” Wadler said. “That was a market trend that fell flat on its face. Everyone said, ‘If I don’t buy now, I’ll never get one.’ The seller had the upper hand, but that table has turned.”

However, according to Long and Foster’s December report, the median sale price of residential properties rose 4 percent, indicating that while prices are still on the decline, sales may be weighted less towards the less expensive end of the spectrum. But reports still indicated a steep drop-off in property turnover for homes priced at more than $400,000.

“That price, again, is relative,” Wadler said. “Every seller thinks their home is worth more than the market will bear. That inventory may be the result of people originally listing too high, but have ‘seen the light’ and started to bring their prices down.”

According to a nationwide survey by HomeGain, 75 percent of sellers do, in fact, believe that their home is worth more than what their agent has it listed for. But 63 percent also believe that homes, in general, are overvalued for the market.

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