Economic Outlook for Real Estate, October, 2018
Anne Arundel County Association of REALTORS®
Higher Mortgage Rates Make Impact
Every community with a strong or reasonably strong economy can point to at least one or two hotspots that are leading the way. These hotspots can take the form of industries such as cyber-security or government contracting, or they can relate to a particular geography, like Hanover in Anne Arundel County.
To some stakeholders, it may feel like Maryland’s Live! Casino & Hotel, the state’s largest casino has been a part of the community forever. The casino/hotel project has made a big splash, attracting visitors from around the region and stimulating State of Maryland tax receipts.
In fact, Maryland Live! is of recent vintage, opening in June 2012. Despite emerging competition from similarly-oriented venues in Baltimore City and Prince George’s County, Maryland Live! attracts more than 10 million visitors each year. It has also stimulated a multiplier effect throughout Hanover, MD, including right next door. Earlier this year, the Cordish Companies opened a new 310-room, 17-story hotel, making it Anne Arundel County’s tallest building. Hanover also continues to attract more residents, in part of because of such profound job creation there. A late-2017 Washington Post article spotlighted the community’s relatively affordable housing and easy access to major employers.
Hanover and Anne Arundel County’s solid economic performances continue to support solid economic growth in much of Central Maryland. According to the latest data from the Bureau of Labor Statistics, the Baltimore metropolitan statistical area added 22,500 net new jobs in August on a year-ago basis. The data indicate that the Baltimore region is responsible for the bulk of job creation in Maryland.
Unemployment in Anne Arundel County dipped to 3.6 percent in August, the latest month for which data are available. This places the county 7th among Maryland’s 24 jurisdictions in terms of sustaining the lowest rates of unemployment. The statewide unemployment rate stood at 4.2 percent in August.
Employment growth has been slow in Anne Arundel County on a year-over-year basis according to data released by the U.S. Bureau of Labor Statistics. This could attributable, in part, to a general scarcity of workers, as employers nationwide are having a difficult time filling available job openings. As of August, the number of job openings in the U.S. was 7.14 million, an all-time high.
Due in part to widespread and growing workers shortages and their impact on current and expected inflation, 30-year fixed mortgage rates recently rose to about 5 percent. Rising mortgage rates coupled with declining inventory resulted in a 6.4 percent decline in home sales countywide on a year-ago basis according to data released by Maryland REALTORS. Statewide, home sales performed were even worse, down 10.8 percent. Average and median home sale prices, however, were up in the county by 12.5 and 10.9 percent, respectively, a testament to the high regard many purchasers have for the county’s diverse stock of neighborhoods and the effects of scarcity. The inventory of homes available for sale remained below 4 months as of September 2018.
Anirban Basu, Chairman and Chief Executive Officer of Sage Policy Group, for Anne Arundel County Association of REALTORS®