TheÂ AppraisalÂ Factor Â (X-FACTOR) that may derailÂ theÂ recovery?
For a long time the so called experts in the real estate market have been predicting an extremely long rebound in the housing market in areas like Urbana Maryland inÂ Frederick CountyÂ because ofÂ theÂ "ShadowÂ Inventory" looming behind the scenes.
This predicted new wave of new inventory was supposed to crush the housing market in Maryland and slow down any momentum that was generated by the Spring and Summer markets of 2011, 2012. To my surprise after seeing the numbers year to year for August 2011 to 2012 .Â .
"I think the shadow inventory is not really the cause but our market specifically Â in Urbana is really sucking right about now!"
The shadow inventory has notÂ materializedÂ Â yet there is another factor that is stoppingÂ theÂ growth besides the sluggish local economy . The X Factor here may beÂ theÂ appraisals.Â AppraisalsÂ are coming low and killing deals all over Maryland right now. In newerÂ communitiesÂ like theÂ Villages of Urbana, this is significantÂ becauseÂ of the time in between sales. In an older neighborhood, someone selling a home 20 years later does not have problemsÂ adjustingÂ theÂ final sales price toÂ theÂ appraisedÂ value.Â
The good news is that we should be looking to a healthy 2013 after we get over this hump.
The market itself will pressure the appraisals to raise prices,Â togetherÂ withÂ theÂ decline of short sales andÂ foreclosuresÂ inÂ theÂ area. TheÂ evidenceÂ of this is already showing in manyÂ placesÂ inÂ Maryland.Â
Looking at the cart below, the mostÂ significantÂ number isÂ theÂ "Median Sold Price" being 26.48 % LOWER compared to last year.
This affects home prices across the board and one of theÂ reasonsÂ whyÂ appraisalsÂ are coming low.
The average Sold in 2011 was $482,890
The average Sold in 2012 is $355,000
According to the chart below, we have definitely started to see a measurable down trend but do not panic yet. .Â
Days on the market is down from 77 to 51, meaning more buyers out there.
Also,Â theÂ actual average SOLD price isÂ onlyÂ down 9.71%, a good sign.
In 2013, interest rates will most likely still be at record lows pushing renters in purchasing homes all over Frederick County. .. Â in cities such as Urbana Maryland this will push prices higher.