April 2020

Metro Baltimore shows significantly slower economic conditions than Metro DC. While home sales and prices for March were trending up, demand conditions in Baltimore shifted significantly. With lower rates and low supply, we expect a modest slowdown for Baltimore’s housing market in the coming months. We will baseline future months data on March 2020 activity.

Consider our fundamental affordability, supply, and demand conditions:

      • Home sales were strong going into the recession with major increase in sales and higher prices.
      • Supply conditions were tight due to a significant rise in home sales and YOY drop in permit volumes.
      • Demand conditions declined with the loss of 21K jobs MOM. However, since the metro area had strong job growth through year, YOY job growth was 1% higher than the year ending April 2019.

April data begins to show us the pandemic’s impact on local employment.  Preliminary BLS numbers showed Metro DC lost 21K jobs in March, a -1.45% decline from February.  This change is significantly greater than Metro DC’s 0.6% decline.

Job Growth

Weak: Compared to Metro DC, Baltimore’s job is significantly lower recording a 20.9K job loss from February to March, or -1.45%. National job losses are -0.6% drop MOM in March and -13.5% in April. We expect a major job loss report for next month as Metro job reports lag the national job reports by one month.

Permit Growth

Moderate: Pre-Covid permit levels shows weakening multifamily permits and a weak to moderate single-family market. Multifamily permits dropped 36% YOY for the 12 months ending in April. SF permits dropped 6% during that same period but remains flat compared to 2019 activity.

Employment-to-Permit Ratio

Weak and falling: A declining E/P ratio suggests that demand fundamentals are weakening. We should expect rising inventory levels and declining demand for new homes as the employment market struggles.

Housing Inventory

Weak, but helpful for price stability: Despite weakening job market and rising listings, we saw a dip in the months-supply to reach 1.3 months as the sales pace increased 34% and listing inventory increased only 1%. A low supply will help maintain current price trends.  We expect inventory to rise in coming months as the data sources begin to show the impact of the recession.

Existing Home Sales and Prices

Strong: Projected resales closings increased a staggering 7.0% to 53K for the last 12 months ending March and are at the highest level since the 2006/2007 peak. Median sales prices have also increased from $248K average in 2019 to $251K average for the past 12 months.  While low mortgage interest rates helped increase sales for higher priced homes, we anticipate the median sales price will decline as home shoppers move towards affordable homes during a recession.

Affordability

Moderate: After seeing declining home values in 2014-2015, Metro Baltimore values have posted positive annual home value appreciation for 16 quarters. Quarterly changes to home value in 4Q2019 show more weakness in Baltimore than seen in metro DC or nationwide.