OCEAN CITY — With the calendar flipping from 2013 to 2014 last week, the real estate market in Ocean City and across the Lower Shore continues to show marked signs of improvement and the promise of a return to stability after a decade of sharp peaks and deep valleys.
The final real estate numbers for December 2013 and the year-to-date were released last week for the Lower Shore and while last month was certainly not one for the record books, the market in Ocean City, Worcester County and across the Lower Shore showed gains in practically every significant indicator during 2013. The amount of available inventory in most categories and in most geographical areas continued to drop, while the number of properties under contract and settlements continued to increase, suggesting a solid trend upward after years of malaise as the recession dragged on.
The level of inventory available is always a good barometer of the health of the real estate market and the figures for 2013 across the Lower Shore suggest that indicator continues to trend in the right direction. In Ocean City, for example, there are currently 1,024 properties for sale, including condominiums and single-family homes, representing about a 12-percent decrease in inventory from the end of 2012. Over a three-year period, the level of inventory in Ocean City is down by about 41 percent. Although there is a wide variety of factors, real estate, like most businesses, boils down to supply and demand and the numbers for 2013 suggest the latter is starting to exceed the former.
“Seeing the inventory go down is obviously a great indicator of the health of the market,” said Ocean City Realtor Nick Bobenko of the Mark Fritschle Group-Condominium Realty LTD, this week. “Barring any type of major catastrophe, there is no reason to believe it won’t continue. It’s definitely not 2005 again by any means, but the market is doing very well.”
Coastal Association of Realtors President Susan Megargee, a broker with Re/Max Crossroads, agreed the steady decline in inventory is a solid indicator of the restored health of the market in 2013 and a promising 2014.
“In general, we saw a much lower volume of inventory, so the demand is definitely there,” she said. “Absolutely we’re excited about the market in 2014.”
After a boon in the local real estate market for several years from roughly 2004 to 2007, the bottom fell out in 2008 with the arrival of the recession that is only now starting to abate. Demand waned and supply grew, causing the market in the local area and all over the state and country to become stagnant. Now, with the economy recovering, the real estate market is showing signs of new life and inventory is a key indicator of that.
“When you look at where we were, we had two years of inventory out there and very little was going on,” said Megargee. “We’re now down to about seven months of inventory and the sellers are motivated and the buyers are motivated.”
Of course, contracts and settlements are where the rubber hits the road in real estate and the end-of-year figures in those indicators suggest the market continues to thrive.
For Worcester County single-family residential properties in 2013, the number of contracts went from 568 in 2012 to 722 in 2013, representing an increase of 27 percent. Similarly, the number of settlements in Worcester went from 558 in 2012 to 700 in 2013, representing a 25-percent increase. Active listings actually went up slightly by 1.7 percent, from 516 in 2012 to 525 at the conclusion of 2013.
For Worcester County condominiums, there were 1,010 settlements in 2013, compared to 872 in 2012, representing an increase of 16 percent. Listings declined by 3.6 percent, from 968 in 2012 to 933 in calendar year 2013. Contracts also spiked, by 8.8 percent from 912 in calendar 2012 to 992 in 2013.
Similar trends continued in Wicomico where single-family home contracts increased by 24 percent in 2013 and settlements increased by 19 percent. Listings dropped 17 percent, from 494 at the end of 2012 to 411 for 2013. In Wicomico, condominium settlements increase by 6 percent, from 82 in 2012 to 87 in 2013, and contracts jumped by 21 percent from 2012 to 2013.
In Ocean City, as far as condominiums, 955 properties went to settlement in 2013, up 14 percent from the end of 2012 when 835 went to settlement. The average property for December of 2013 was listed for $273,656 and sold for $258,080, or 95 percent of the listings price.
In Ocean City, for single family homes, listings are down 8.5 percent as of the end of 2013, while contracts jumped 48 percent and settlements soared 43 percent. The average listing price for a single-family home in Ocean City was $383,717 for December this year and the average sale price was $359,561, or 95% of the listing price.
A total of 297 properties sold in Ocean Pines in 2013, representing a 25 percent increase over the 238 that sold in 2012.
“This is great news for the Ocean Pines market and a trend that will likely continue as the market has fully stabilized and the fact that there are great values to be had,” said Bobenko.
In Ocean City, the average sale price for residential properties in 2013 was $297,000, representing a 3-percent increase over the average sale price in 2012, according to Bobenko, who said that increase would have been higher if it were not for the number of sales in 2013 in the lower price brackets, which artificially pulled the numbers down.
Bobenko said the type of property most in demand currently in Ocean City is the traditional two-bedroom, two-bath oceanfront condo, but after a glut of those units were available over the last few years, they were being gobbled up in 2013.
“I have four buyers right now that would pull the trigger tomorrow, but there is just nothing out there that meets their needs,” he said. “Three years ago, they would have had 30 to choose from.”
However, that is a good sign, not a bad sign, according to Bobenko. Instead, it’s a sign the inventory has gotten to the point the buyers are motivated to take action when a property that meet their needs become available.
“As inventory goes down, there is a sense of urgency,” he said. “Three years ago, there was an abundance of options to choose from. Now, there might be 10 to 12 that meet their needs and they’re more inclined to make offers because they don’t know when the next one will come around.”
During the real estate boom seven, eight and nine years ago, when lenders were handing out mortgage loans to practically every applicant regardless of their income and other financial indicators, but that changed dramatically when the bottom fell out. There was a resulting spike in the number of foreclosures, but Ocean City was somewhat insulated from that, according to Bobenko.
“Ocean City never had a tremendous amount of foreclosure activity and foreclosures and short sales are such a small part of the market,” he said. “That means the integrity of the market is stabilized. In 2005 and 2006, there were people out there that shouldn’t have been buying. The lenders were handing out stated income loans with very loose proof of income, but those loans are no longer there and that’s a good thing.”
Lending tightened to the point even the most qualified prospective buyers became frustrated, further contributing to the stagnant market, but the banks are loosening up again somewhat and the result is a growing real estate market.
“It got a lot tighter and we saw prospective buyers throw their hands up and just walk away because they didn’t want to go through the process,” he said. “Now, it’s calmed down somewhat and the banks are lending money again, but to those who qualify. It’s much more stable.”