Maryland's Housing Market: Affordability Challenges and Policy Solutions

Maryland’s housing market faces significant challenges with affordability and new construction, earning a middling grade in a recent national assessment. The state's high home prices, coupled with a limited supply of new homes, create a difficult environment for middle-income buyers. However, recent state-level policy initiatives aim to directly address these supply constraints to improve long-term affordability.

What is the current state of housing affordability in Maryland? The core issue in Maryland is a clear imbalance between housing costs and household incomes. According to a recent state-by-state housing report, Maryland's median list price for new homes is $416,558, which is substantially higher than the national average. While the state's median household income of $97,364 provides some buffer, high mortgage rates and low inventory continue to pressure buyers. The report gave Maryland an Affordability Score of 0.81, indicating that typical homes remain financially out of reach for many median-income households. This score, a ratio of housing costs to income, underscores the need for more attainable housing options.

Why is new home construction lagging in Maryland? A critical factor driving affordability issues is the insufficient pace of new construction. Data shows that Maryland accounted for only 1.2% of the nation’s new-housing permits in 2024, despite representing nearly 2% of the U.S. population. This lag results in a permit-to-population ratio below 1. Builders face several headwinds, including high land costs, lengthy local approval processes, and a scarcity of available lots for development. These challenges have resulted in a new-construction premium of 50.9%—the significant price gap between a new home and an existing one. This is one of the highest premiums in the region, meaning new homes are often a much less affordable option for families.

How is the Maryland government addressing the housing shortage? Governor Wes Moore's administration has initiated a series of policy measures designed to accelerate housing production. A key action was the signing of the Housing Starts Here executive order. This order directs state agencies to identify publicly owned land suitable for residential development, particularly near transit hubs, and aims to reduce permitting timelines. Furthermore, the policy requires local jurisdictions to set specific housing production targets by early 2026, creating accountability for increasing supply. The stated goal is to "move faster to build new homes, move faster to make housing more affordable, and move faster to create a market that works for all Marylanders."

What can we expect for the future of Maryland's housing market? Maryland's current position reflects a state in transition. While affordability pressures are acute, the recognition of these challenges at the highest policy level is a positive step. The strategies being implemented—streamlining regulations, utilizing state land, and setting production goals—align with broader national recommendations for addressing housing shortages. Based on our experience assessment, the success of these initiatives will depend on their effective implementation at the local level. If these reforms deliver on their promise, Maryland could begin to close its housing gap, leading to a more balanced and competitive market over the coming years.