Kicker: Frederick County, Md.
Low Supply Drives Demand Frenzy

Lack of new developments in central Maryland is pushing up real estate prices.

BY PATRICIA STAHL

Frederick County is a bedroom community located in central Maryland, about 40 minutes west of Baltimore and 45 minutes north of Washington, D.C. The area has a mix of housing styles—townhouse subdivisions, detached single-family homes, a historic downtown with rowhouses, and public housing.

Housing prices in the county are soaring in a classic scenario of supply and demand. “There hasn’t been a major residential development approved in Frederick County in the last five years, and we don’t have any new supply in the pipeline,” says Stephen “Buzz” MackintoshCRS, GRI, president of the Frederick County Association of REALTORS® and co-owner of Mackintosh REALTORS® in Frederick, Md. “This is putting a lot of pressure on the resale market in this area.” According to the Metropolitan Regional Information Systems Inc., the median sale price for a Frederick County home in 1998 was $136,500. By 2002, that figure increased 33 percent to $181,500.

Despite the inflated prices, homebuyers today often find themselves in aggressive bidding wars, and many are using escalation clauses with their bids, agreeing to pay a specific amount over the highest bid, up to a certain price.

Although mortgage interest rates nationwide are at a 40-year low, housing prices in Frederick County have increased so dramatically that they cancel out the consumer’s extra buying power. Mackintosh noted that in 1999, one could find a well-maintained single-family home in the area for about $175,000. Today that won’t even buy a townhouse.