Most At-Risk Housing Markets for the 2nd Half of 2022

While the overall prices are not expected to drop as housing market conditions cool, there are some markets that face a greater risk of downward pressure on prices. In general, the local markets that are at the greatest risk of price declines are those where:

• Prices grew much faster than average over the past two years
• Second home buyers drove up prices during the pandemic
• Remote workers had been heating up demand (e.g., rural and exurban markets)
• Inventory is rising quickly, and
• Household incomes are lower than the regional average.

Counties Where Risk of Price Drops is Greatest

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The Top 5 Riskiest Markets in the Mid-Atlantic

1. Sussex County, Delaware

Between 2019 and 2022, the median sales price in Sussex County increased by 54.0% driven by strong second-home demand and buyers from the Baltimore and Washington metro areas looking for housing further out during the pandemic. Inventory is up year over year and competition has been easing for months. At $429,500 in June 2022, the county’s median sale price is more than $150,000 higher than it was in the summer of 2019.

2. Warren County, Virginia

Homes sales activity surged in Warren County in 2020 and early 2021 as remote workers looked for homes outside of the Washington metro area. Over the past three years, the median price in Warren County rose by more than 45%. Demand for further-out locations has eased as people return to the office and gas prices shoot up. In the second quarter of 2022, the number of closed sales in the county is down 25% compared to a year ago, falling back to pre-pandemic sales totals.

3. Worcester County, Maryland

Another coastal market where the housing market was fueled by vacation home buyers, sales in Worcester County have dropped off considerably in 2022. While prices are still rising, prices may be hitting levels that are unsustainable over the next year. The median sales price in Worcester County is now $160,000 higher than it was three years ago.

4. Page County, Virginia

Page County has seen the median home sales price nearly doubled between 2019 and 2022. Its location in Virginia’s Shenandoah Valley attracted out-of-town buyers during the height of the pandemic. In this local market, where the median household income is significantly lower than the statewide household income, local buyers often cannot afford the higher prices. A the end of June, inventory in Page County was up 109% compared to a year ago.

5. Schuylkill County, Pennsylvania

While prices have not risen quite as fast in Schuylkill County over the past three years, inventory is expanding rapidly. At the end of June 2022, the number of active listings was 63.1% higher than a year earlier and the absorption rate (i.e., the number of new pendings compared to new listings) was down significantly.

To stay informed about housing market conditions, be sure to make use of Bright’s housing market reports and get a preview of future buyer activity by tracking the Bright MLS T3 Home Demand Index for the Philadelphia, Baltimore, and Washington DC regions.

 

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Dr. Lisa Sturtevant serves Bright MLS as the nation’s only MLS-focused economist. She leads research, reporting and insights from Bright’s comprehensive array of real estate data. In 2021, Bright’s over 100,000 subscribers facilitated $142B in real estate transactions through its system stretching across 6 states and the District of Columbia.