Baltimore’s Single-Family Housing Market is Softening (And Why That’s Good News for Apartment Owners)

Homeownership has increasingly become more difficult in the past year as inflation soars and mortgage rates tick up. Single-family housing prices in the Baltimore MSA have increased nearly 30% since the pandemic's beginning, making affordability a significant concern. As prices remain elevated and the cost of capital continues to rise, buyer demand for single-family homes has steadily decreased.

Several key indicators suggest that the housing market is starting to see signs of a slowdown. According to data from the MLS, the number of houses sold during the summer months was the lowest total since 2014. This year, less than 7,000 homes were sold in the months of June and July, far less than the more than 9,000 homes sold in 2021.

*Total Units Sold in June & July Only

Source: Bright MLS

Mortgage rates continue to be a deterrent as current rates are now at levels not seen since the Great Recession. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 5.55% as of late August, up more than 260 basis points from last year. The Federal Reserve has raised rates three times so far in 2022, and if these hikes persist, homeownership rates will likely fall.

Source: Freddie Mac, Primary Mortgage Market Survey

U.S. weekly averages as of 08/25/2022

The increased cost of homeownership will likely continue to drive demand for renting. And with vacancies already near historic lows and a slowdown in multifamily construction, owners in Baltimore could see elevated rent growth for the foreseeable future. Asking rents have increased roughly 20% since the start of 2020 and are currently averaging more than 5% year-over-year growth, according to CoStar. With healthy multifamily fundamentals, alongside a softening single-family market, the Baltimore apartment market is well-positioned for future growth.