All indications point toward one of the coastal economy’s most critical engines — the real estate market — finally leveling off, and that’s a good thing for everyone in this area.
This real estate market correction process has been the trend for the last couple years, but current real estate market data — particularly regarding the thousands of condominiums in Ocean City — confirms it’s the welcomed reality.
Even amid the boom years of the mid-2000s, veteran Realtors in the area knew it was an extreme that would not last. Properties were being sold at unsustainable prices, leading in most cases to buyers still underwater, as values inch toward normal levels.
These same tenured Realtors watched as their real estate offices ballooned with inexperienced individuals who were trying to score some easy commissions in a sizzling real estate market. They then watched as these individuals withered away as the second-home market collapsed and sales slipped to unimaginable levels when compared to the boom years. Again the appropriate term here is correction.
What happened in the Ocean City market were consecutive extreme periods. The boom time of the mid-2000s featured ridiculous and unsustainable settlement prices followed by excessive down years with inventory swelling and unrealistic sellers wanting top dollar when it was no longer possible. Inventory bloated to record highs, while settlements and contracts sunk. That’s not good for the real estate industry.
The fallout of that industry tanking was felt in all areas of the local economy and discretionary income among professional went from flush to scarce in many cases. That hit the hospitality industry, namely restaurants and retail stores, the hardest.
Additionally, the impact on government cannot be underscored. In the boom years, property assessments soared, resulting in enormous tax revenue for the local governments. Judgment errors led to most governments not being judicious with this new revenue and when the bottom dropped out of the market huge shortages began to be realized between revenue and expenses, which were not properly monitored with the inevitability property values would eventually decline to appropriate levels. Tax increases and service reductions coupled with stagnant employee pay are now the norm in many cases.
What’s happening currently in the real estate market is critical to the area’s economy. On the Ocean City condominium front, inventory is down 14% through October, while contracts and settlements continue to rise and impress with 11% increases to date, respectively. Even more revealing within the current state of the market is the average condominium sale price is $251,458 compared to the average listing price at $263,155 with it taking less than four months on average for a property sell.
With interest rates likely heading up before year’s end, it will be interesting to see how the local market is affected. Most in the industry feel this productive and fluid market is here to stay for now and that’s crucial to the private and public industries.