The real estate sales in Aberdeen, MD in July of 2011 mirrored that of July of 2010, with an unremarkable 15 sales having closed during the period. As a Realtor®, I was actually looking to see a much stronger number, especially since the middle of the year was so flat. Last year, with the First Home Buyer’s Tax Credit ending on June 30th, buyers were hurrying to get a house settled before the deadline. This caused the numbers to spike slightly last year, and as a result, make the numbers for this year seem weaker.
But some people assert that the tax credit essentially just brought forward the sales that would have taken place anyway. In other words, the people that bought last year and the year before in order to get that credit would have been the people buying this year and next year regardless.
So that kind of covers the circumstances surrounding the local buyers and sellers, but what about BRAC? Weren’t we supposed to be overwhelmed with demand from the imports from New Jersey? This is the final year for the Base Realignment, and Fort Monmouth is scheduled to close permanently in September, but the impact on the real estate market in the Aberdeen MD area has been modest at best, although it could be argued that the volume that has resulted from the Government effort has actually prevented us from experiencing catastrophic conditions that have been felt elsewhere.
There is really no way to twist it; the real estate home sales in Aberdeen MD were weak in July, despite it being peak summer shopping season, and with BRAC winding down. On top of the pathetic numbers, interest rates are still at historic lows, and home prices are dropping like Enron stock! The difference here is that Aberdeen MD real estate market is expected to rebound, but we just have to look underneath the obvious barometers for answers to our questions.
One positive indicator pointing to the rebound of the Aberdeen MD real estate market is the fact that the homes took less time to sell; Days on Market (DOM) decreased from 125 days down to 101, which represents a 25% drop. Also, the number of active listings dropped from 185 down to 173. Still, this number represents over 11 months of inventory, which is almost 3 times as much as what we would find in a healthy market.
Overall, we are facing the effects of a double-edged sword. Home prices in Aberdeen MD have decreased significantly since last year, but sales have remained flat. On the surface, it would appear that we are in trouble, but we have to take a closer look under the hood at we economists call “price elasticity,” which measures the reaction of demand in response to price reductions (just think about how much you drive when gasoline prices jump to more than $4.00 a gallon). Although prices have dropped and sales have only held steady, pending contracts have spiked upward, and if these contracts make it to settlement, we will be seeing stronger sales numbers in the coming months.
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