The Montgomery County, Maryland real estate market has experienced an absolute explosion over the last few years with prices and sales volume reaching in an all-time high. However, there are several factors occurring right now and on the horizon that will bring about a change. This includes rising interest rates, job growth, and the economy as a whole, it’s difficult to make predictions about any market let alone the real estate market, which can be highly volatile today. I’m gonna show you the latest statistics from Montgomery county, Maryland showing you what’s going on right now. I will not only break down Montgomery county as a whole, but we’re also gonna take a deep dive into two zip codes. One’s outperforming the county statistics and one’s underperforming the county statistics. Just to kind of show you that when you ask about the real estate market and how’s it going, it’s never a one-size fit.
Before we dive into the data I can, with 100% assurance tell you that we are in a market that’s currently shifting from where it seemed like three or four months ago. Everything was scorching hot. Now we see some pockets in Montgomery county where they’re very hot. Some that are reasonably hot and others that are Luke warm. So without further ado, let’s break it down. July 2022 statistics, which just came hot off the press show that there’s an increase in listing inventory on the market of 8.69%.
From the same time last year, there were 1,232 homes on the market as of the last day of July 2021 in comparison to 1,339 properties on the last day of July 2022, there you go. And an 8.69% increase in listing inventory. The total amount of sales in Montgomery county during the month of July 2022 was 1069 home sales in July of 2021. There were actually 1,516 home sales during the month of July. That’s a pretty noticeable drop of 27.7%. Okay. Real Kevin. But what does all this really mean? Personally, when I’m counselling buyers and home sellers, I like to focus on the absorption rate. The absorption rate is the relationship between current inventory, as well as, past sales, the lower the ratio of home inventory to home sales shows a hotter market. Conversely, the higher amount of home inventory to home sales shows a slower market.
When we crunch the numbers for Montgomery county, here’s what we find when you divide the amount of the sales during the month of July by the current amount of inventory on the market, what you find is that there’s one sale for every 1.22 homes. This represents roughly a five-week supply of inventory. If you compare the same thing to July of 2021, what you will actually find is a three-week supply of inventory. So what we’re starting to see now is inventory rising and demand falling. Now let’s compare it to two local Montgomery county zip codes that I just picked at random. One of these zip codes is outperforming Montgomery county and the other is lagging behind greatly. First, let’s take a look at the 20878 zip code. This zip code includes the Western side of Gaithersburg and areas like north Potomac and parts of Darnestown.
The total amount of sales in July was 81. The number of sales for July of 2021 is the same as 20878. The zip code was 111. What we’re starting to see is a drop of 27% in home sales between 2022 and 2021. Now let’s shift our attention to the amount of inventory in the 2 8 78 zip code. You will see that as of the last day of July, there were 68 properties for sale in the 20878. Zip code. Now let’s compare this to July of 2021. When there were actually 91 homes for sale. As of the last day of July, this represents a 25.7% drop in inventory between last year and this year. Once again, let’s take a look at the absorption rate. When you divide the number of sales during the month of July for 2022 by the amount of inventory that was left as of the last day of the month.
What we’re seeing is a three-week supply of inventory. When you run the same calculations for 2021, what you’ll find is the same three-week supply of inventory. So when you compare the 2 878 zip code to the county, what you will see is a three-week supply of inventory on the market for 20878 versus a five-week supply of inventory in Montgomery county. Now let’s take a look at the 2871 zip code in Montgomery county. This zip code covers all of Clarksburg, which is located in the very Northern section of Montgomery county. I have to say these statistics immediately jump off the chart from the moment you first look at them and not in a good way. If you are a home seller, the total amount of sales in July of 2022 for the entire zip code of 2008, 71 was 26 home sales in comparison, and the total amount of home sales for 20871 in July of 2021 was 62.
Home sales have dropped 58%. When you compared July 2022 to July 2021, that’s huge. Now let’s focus on the listing inventory side in Clarksburg, where you see a huge explosion of homes hitting the market. There were 63 homes for sale in Clarksburg as of the last day of July in 2022, there were only 26 homes for sale on the last day of July in 2021, this is a whopping increase of 142%. When you look at sales down 58% and inventory up 142%, you know, it changes occurring once again, let’s crank out the calculations. When you look at the absorption rate for 2021, we were looking at a 10-day supply of inventory. That is nothing. Today. One year later, we are looking at a two-and-a-half-month supply of inventory, and that is getting larger month after month. So there you have it. We’re looking at Montgomery county statistics, which are definitely starting to slide some, but when you look at some of the other zip codes around the area, what you find is some areas are still pretty hot and other areas definitely are not.
So I get asked the question all the time. Hey, real Kevin, what’s the market like, as you can see, it’s not a one-size fits. So I basically have to ask them some questions. What location or zip code are you asking about? What price point are you looking at? Are you inside the beltway? Are you outside the beltway? What school district, all of these factors have a huge impact on the sales market that you’re either buying or selling in my prediction for the real estate market in Montgomery county for Q4 is I do expect to see growing inventory. I also believe we’ll see sales pick up a little bit after labour day, but then taper off some, as we get closer to the holidays, I don’t believe we’re gonna see a crash, but there’s definitely gonna be a noticeable correction because it’s taking place right now.
The other question I get asked all the time is Kevin, is it a good time to buy right now? The future for real estate values will be going up over time. It’s just that they don’t go up necessarily every month or every year, but over the long haul, the values are going to be trending up. The key that I use and that you should consider is long-term. I define long-term investment by being at least five years, but preferably closer to 10 or longer, if you are thinking about buying a home and potentially selling it a year or two later, that’s far too risky and frankly, I’d continue to rent. However, if you are thinking about purchasing long-term that’s five years or longer, I think home purchasing makes a lot of sense. Not only will you set down roots, but you’ll start building equity and get some of the tax savings you won’t get from renting.
Also, it’s important to mention when you’re thinking long-term, this doesn’t mean that you actually need to live in the home the entire time when you own real estate, if your circumstances change, you can opt to rent your property out, as opposed to just simply selling once again, the keywords are long term. So what do you think now that you’re armed with all the facts about the current real estate market in Montgomery county?
If you are interested in additional information, feel free to reach out to me directly by text at 240-793-7495.
