Severna Park Real Estate Market Is Puzzling

Low housing inventory, high demand and strong employment is typically a trifecta that results in rising home prices. But Severna Park has been confounding the market, exhibiting price depreciation over the past year.

According to MRIS, which serves as the local multiple listing service for the Mid-Atlantic region, the average sales prices of homes in the 21146 zip code dropped 6.6 percent for the first half of 2018 compared to the same period a year ago. Likewise, total volume of real estate sold is down 4.2 percent, although the number of homes sold is up 2.6 percent.

“It’s been baffling,” said Jean Andrews of Champion Realty in Severna Park. “You’d expect greater appreciation with such low inventory, but we’re not seeing the price appreciation you’d expect given the low inventory.”

Andrews said despite many properties receiving multiple bids with escalations, most properties still are not realizing full asking prices. “Unlike the ridiculous scenarios in 2006 to 2007 where homes were fetching 10 percent over list price, it’s not the situation today,” she added.

Even though home prices in many parts of the country have fully recovered from the housing bust of 2007 to 2008, real estate pricing service Zillow reports that Severna Park prices are still 3.2 percent below their peak prices reached in April 2006.

“Sellers are assuming that with low inventory and many buyers out there, they can name their price; but that is not case,” Andrews cautioned. “Low inventory does not mean sellers can jack up their prices.”

Severna Park’s David Orso of Century 21 New Millennium had similar thoughts on the local market.

“The Severna Park real estate market has been sluggish in 2018 and is underperforming compared to 2017 for the first half of the year,” he said.

Interest rates play a major factor in the cost of home ownership and home demand. For over the past year, the Federal Reserve has been on a campaign to gradually raise short-term interest rates and has signaled plans to continue raising rates into next year. Mortgage rates, however, which follow long-term rates rather than short-term rates, don’t always follow suit. Long-term rates rose sharply earlier this year but have since leveled off.

“It is tough to blame interest rates because it is common for sales to jump when we see rates increase a bit,” Orso said. “In my professional opinion, 2017 will be noted as a high point in our history, and now the market is performing fairly normally.”

Despite the threat of higher rates, the Severna Park area continues to be an attractive location for its water-privileged communities and high-ranking schools.

The Anne Arundel County Association of Realtors expects demand for housing to continue to grow in conjunction with the economy, according to its March 2018 Economic Outlook for Real Estate. Anne Arundel County’s unemployment rate stood at just 3.1 percent at the end of 2017, below the state’s unemployment rate of 4 percent. The report concludes that “interest in homeownership is becoming increasingly apparent,” given the surge in consumer confidence combined with relatively low interest rates since the Great Recession ended.