Market Update 1.8.2025

Wrapping up the 2024 Real Estate Market

Residential real estate in 2024 was generally “sluggish”. Typically what we have seen over the last 50 years or so has been a mean average of home sales volume around the 5 million units (excluding new construction) per year. 2024 is hovering right around the 3.8 to 3.9 million units sold. This helps bolster the high home values that we’ve seen over the last years and will likely not cause any sort of huge price crash in the short term. Sorry folks (mostly first time home buyers). People who have equity in their homes also can’t go anywhere because the interest rates on mortgages are back up to the 6.5 to 6.8% range even after the Fed’s overnight rate cut back in September and December.

Will affordability affect the power of buyers and sellers going into 2025? Oh yeah. There are plenty of people who WANT to buy homes but fewer and fewer CAN buy a home right now. There are many more buyers than sellers so you can probably figure that conundrum out. Maybe we’ll see a return to the good old days of people staying in their homes for 30 or 40 years? Or maybe even better, if you own a home that you live in, you’ll be considered part of the aristocracy!

Now, this isn’t to say that there aren’t markets around that aren’t losing their appeal and therefore seeing declining home prices. These areas may become the next places to get gentrified in 10 to 20 years.

What’s Coming in 2025

It’s hard to say for sure but I believe the data and general feel of “the experts” is that we’ll see more of the same but with a tightening of lending standards and probably more strain on people’s ability to maintain their lofty mortgages among the probable rise in property taxes, food and energy costs. According to New Nation, a vast majority of surveyed Realtors believe the mortgage interest rates will remain in the high 6’s range throughout the year barring any significant changes in the economy and job market.

Defaults are on the rise. From the average consumer to the big fish companies. The prediction, as of August 2024, for private credit debt defaults is going to fall around the 5.0% range. This is down from 2023 but we don’t have the final data yet. In 2022, the private credit debt default rate was 3.07%. Fitch Ratings

Leveraged debt defaults (the big fish) generally hover around the 1.7% in non recessionary periods and peak around 6.4% during recessionary periods. Right now, the default rate is hitting 5-5.5%. This is due to the high interest rate environment we are in and companies are having trouble just covering their interest payments much less paying off principal and putting funds toward growing. Fitch Ratings

Moving on to the credit card debt problem we have…. According to the NY Fed, credit card debt has risen in Q3 2024 $87 billion to $1.166 trillion. That number is up from 2021’s total US credit card debt of $770 billion. This is probably due to the fact that living expenses have risen 20% while median income has risen 12% since 2019. Defaults have risen over the last 4 years but they are still relatively low compared to just before and during the Great Financial Crisis. Nerd Wallet

What’s Going on With Real Estate Prices in Maryland

As of Q3 of 2024, the average sales price in Maryland is $514,062. MD Association of Realtors.

In 2023, the average home price in Maryland was $464,157. MD Association of Realtors.

So, yikes! A lot of this price increase has to do with all of the new construction happening all over the state. Home builders see people have money here so they build to suit…. It’s not all about increase to labor and material costs.

Foreclosure data by county can be found here.

Is this enough to move the needle? Well, no. We’d need a lot more of the Notice of Foreclosure to move into the Foreclosure Registry to see an real impact on home prices. Even then, with low inventory is most neighborhoods, the prices will remain relatively insulated from meaningful fluctuations.

I’m getting back into the groove with these blogs so I will keep up with them the best I can. This blog didn’t cover the investment side of things as much as I normally would but I think I will keep these topics separate as much as possible. I hope you found this article to be enlightening and I look forward to bringing you the latest info on what’s going on in the real estate game and the investing world.