Spy Real Estate Outlook: Benson & Mangold’s Tim Miller

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Tim Miller of Benson and Mangold

Tim Miller of Benson and Mangold Real Estate says he has seen the best of times and the worst of times in Talbot County’s real estate market, and right now is among the worst of times. Miller publishes a monthly market report for Talbot and says the rebound has been “sluggish” since the housing meltdown in 2008, and the subsequent dive in property values in 2009.

“In 2009 was the free fall. We didn’t know where the floor was,” Miller says. “In 2010 we said the free-fall was over, so lets just try to figure out where [the market] will land firm. We’re still trying to figure it out; things have stabilized somewhat, but we don’t know how much further things are [going to drop].”

Miller says that sales were around $205 million in 2010, a boost from a record low in 2009, made possible by the Worker, Homeownership, and Business Assistance Act of 2009,
— a first-time home buyer tax credit. Nearly 30,000 Marylanders took advantage of the credit before it expired in April of 2010. Buyers were required to have a contract of sale by April 30 of 2010 and close on their purchases by July 31.

Miller says the tax credit really had an appeal to younger buyers and was moving the market forward, but the market started to crawl again when the incentive ended.

“These buyers weren’t looking for waterfront, these were younger buyers.” Miller says. “They were chasing that free money and the tax credit really got them off the fence, but sales cooled off again in July [of last year] when the tax credit expired.”

Miller says that property is simply not moving, even though interest rates are at record lows.

“There’s just not that many people trying to get mortgages,” Miller says. “There’s very little movement, and I’m telling my customers that the only weapon we have left is to reduce the price, that’s all we have to get buyers off the fence …it is the only thing that is going to motivate the consumer at this point.”

Hired in 2002, Miller says he was the eleventh real estate agent to come on board with the company when sales in Talbot were around $235 million annually. Miller got in at the beginning of the boom years and saw a steep climb in sales that peaked in 2005 at $435 million — August of 2005 alone saw a record $150 million in sales, and the Mid-shore had a robust roster of 800 real estate agents. “The sky seemed to be the limit,” said Miller’s colleague, Tracy Jordon.

In September of 2005, derivative speculators and the Federal Reserve Bank of New York started to question whether the market had peaked. A New York Times article in September of 2005 pointed to concerns within the Federal Reserve Bank of New York about the high pace of derivative sales and the backlog of processing derivative trades. There were also concerns at the Fed that the real estate market was at record lows in mortgage defaults; regulators warned that even a slight uptick in defaults would have a major impact on the banks, because the banks at the time also held record lows in cash reserves against bad debt — not seen since the Great Depression.

Early 2006 would start to see a cooling off period in Talbot, according to Miller. Steep drops in sales each year after 2005 pointed to growing skepticism among investors and home buyers about the direction of property values. The Talbot market continued to slide to a record low of $190 million in 2009; the number of agents in the area also fell from 800 to 400, according to Miller.

But at the end of the day, Miller is optimistic and wants to stay in the real estate business. “It’s a good way to make a living,” Miller says.

Miller believes the market will remain stable but sluggish for the next few years — with sales in Talbot holding at around $200 million.

“People don’t have any money to spend right now,” Miller says. “When that changes we’ll see an improvement [in the market].”

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