Hard Money Lending in Maryland: Q4 2026 Market Update

Q4 2026 at a Glance

• Mortgage rates: The average 30-year fixed rate reached 7.40% in Freddie Mac's October 8 survey, the highest since November 2023 and up from 6.30% a year earlier.

• The Fed: The Federal Reserve raised its benchmark rate by a quarter point in September, to a range of 3.75% to 4.00%, its first increase since 2023.

• Maryland sales: Closed sales fell 8.5% year over year in August, while the statewide median sale price rose 2.3% to $445,000.

• Listings: In September, active listings were up about 21% in the Baltimore metro and 20% in the DC metro from a year earlier, while pending sales fell 15% and 17%.

• Flipping returns: The typical U.S. flip earned a 21.5% gross return in Q2 2026, down from 27.6% a year earlier.

Mortgage Rates Climb Above 7%

In our Q3 update, mortgage rates were holding in the low-to-mid 6% range. That changed quickly. According to Freddie Mac, the average 30-year fixed rate rose for seven straight weeks, from 6.65% in late August to 7.40% in the week of October 8, its highest level since November 2023. The 15-year fixed averaged 6.73%.

Mortgage rates tend to follow the 10-year Treasury yield, which traded between about 5.2% and 5.3% in early October, according to Federal Reserve data. Higher energy prices and persistent inflation have kept long-term borrowing costs elevated.

For investors, the effect shows up at the exit. On a home priced at Maryland's August median of $445,000, a buyer putting 20% down would pay about $2,465 a month in principal and interest at 7.40%, compared with about $2,204 at 6.30% a year ago. That's roughly $261 more per month. Put another way, the monthly budget that bought a $445,000 home a year ago now stretches to about $398,000. We walk through this math in our new construction loans guide.

The Federal Reserve Raises Rates

At its September 16 meeting, the Federal Reserve raised the federal funds target range by a quarter point, to 3.75% to 4.00%. It was the first rate increase since 2023, and the vote was unanimous. The Fed's statement said inflation "remains elevated."

Officials' projections point to one more increase before the end of 2026, and the meeting minutes released October 7 showed most participants saw a second hike as possibly needed this year, depending on the data. The next meetings are October 27–28 and December 8–9. In our Q2 and Q3 updates, we noted that markets had started to price in possible rate hikes. That possibility is now policy.

Maryland and DC Metro: A Cooling Fall Market

Maryland's housing market is slowing in volume while prices hold up. Maryland REALTORS® figures for August 2026, as reported by The Washington Informer, show:

• Closed sales: 5,582, down 8.5% from August 2025

• Median sale price: $445,000, up 2.3%

• New listings: 6,249, down 23.6%

• Median days on market: 17, up from 16

• Months of supply: 3.0, compared with 3.5 a year earlier

The picture varies by county. In August, the median sale price rose 3.8% in Montgomery County, to $640,000, and 1.3% in Anne Arundel County, to $507,000. It dipped 1.1% in Prince George's County, to $445,000, and 0.8% in Howard County, to $640,000. Howard was the only one of the four where closed sales increased, up 7.8%.

September data from Bright MLS shows the slowdown continuing into the fall. In the Baltimore metro, the median sold price was flat at $405,000, active listings rose 21.2%, and pending sales fell 14.9% from September 2025. In the DC metro, the median rose 1.6% to $610,000, active listings increased 20.1%, and pending sales dropped 17.1%. Bright MLS chief economist Lisa Sturtevant put it plainly: "With rates escalating quickly to close to 7.5%, more buyers are being priced out of the market."

Nationally, the National Association of Realtors reported existing-home sales at an annual pace of 3.99 million in September, down 2.2% from a year earlier, with a median price of $417,500. Investors and second-home buyers made up 20% of purchases, up from 15% a year earlier.

What the Latest Flipping Data Shows

ATTOM's Q2 2026 home flipping report, released October 1, shows margins continuing to tighten nationwide:

• 77,991 single-family homes and condos were flipped, 6.2% of all sales

• The typical gross profit was $60,526, down from $71,000 a year earlier

• The typical gross return was 21.5%, compared with 27.6% in Q2 2025

• The typical flip took 161 days from purchase to resale

The Washington, DC metro had one of the lowest flipping rates among large metro areas, at 4% of sales. Lower margins don't mean flips stop working, but they leave less room for an optimistic after-repair value or a rehab overrun. Our guide to calculating your real profit on a fix-and-flip walks through the full math, including holding costs.

Construction and Renovation Costs

Material costs are a growing pressure point. According to the Associated General Contractors of America, prices for construction inputs rose 8.9% between August 2025 and August 2026, led by energy and metals: diesel was up 77.8%, aluminum 27.3%, steel mill products 23.4%, and copper and brass 20.9%. For residential construction, the National Association of Home Builders reported input prices up 7.8% year over year in August.

Smaller builders are feeling it most. In an NAHB survey, builders starting five or fewer homes a year reported a median material cost increase of 9.1% over 12 months, compared with 1.8% for the largest builders. One exception: framing lumber prices were down about 4% from a year earlier in early October. For rehab budgets, the practical takeaway is to get updated quotes rather than relying on last spring's numbers, and to carry a realistic contingency.

Energy and Geopolitical Risk

The conflict involving Iran and the shipping disruptions in the Strait of Hormuz continue to drive energy prices. According to the U.S. Energy Information Administration, Brent crude averaged $114 per barrel in September and briefly reached $131 in mid-September. The EIA expects Brent to average about $105 in the fourth quarter. Energy prices feed directly into transportation and material costs, and into the inflation readings that shape the Fed's decisions.

Policy Updates Investors Should Know

The ROAD to Housing Act is now law. The 21st Century ROAD to Housing Act, which we covered in our Q3 update, became law on July 11, 2026, according to Latham & Watkins. One provision getting attention restricts investors who control 350 or more single-family homes from buying more, starting January 7, 2027, with exceptions for build-to-rent and renovate-to-rent. The threshold is aimed at large institutional buyers rather than local investors.

New Maryland laws took effect October 1. Several affect landlords and home sales, according to the Maryland Department of Housing and Community Development and the Maryland State Bar Association. Among them: the Fair Chance Housing Act limits when landlords with five or more units can consider criminal history; new rules address how landlords screen applicants who use housing subsidies; buildings with 10 or more units must keep units at or below 80°F from June through September; and SB 691 updates the rules for contingency clauses and deposit refunds in home sale contracts. If you hold rentals or are preparing to sell, it's worth reviewing these with your attorney or property manager.

Midterm elections. The general election is November 3, 2026, with early voting in Maryland from October 22 to 29, according to the Maryland State Board of Elections. The results can influence housing policy and the economic outlook heading into 2027.

What This Means for Investors

Higher rates and a slower market change the math, but they don't close the door on good deals. A few things we'd keep in mind this quarter:

• Price your exit for today's rates. Buyers shop by monthly payment. Base your after-repair value on what buyers can afford at current rates, not on where rates were a year ago.

• Plan for a longer hold. With more listings and fewer pending sales, homes may take longer to sell. Build extra months of carrying costs into your numbers. If a project does sit, our post on what to do if your flip doesn't sell covers the options.

• Look for negotiating room. More inventory and fewer competing buyers can mean more flexibility on price and terms, especially on properties that have been on the market for a while.

• Re-check your refinance numbers. If you plan to refinance into a long-term rental loan, make sure the rent still covers the payment at today's rates.

• Budget for material costs. Get current contractor quotes and carry a contingency, especially for work involving metals and electrical.

Risks to Watch

• Another Fed rate increase at the October 27–28 or December 8–9 meetings

• Mortgage rates staying above 7%, further reducing buyer demand

• Energy price swings tied to the Strait of Hormuz

• Rising material costs squeezing rehab budgets

• Policy changes following the November elections

Q4 2026 Outlook

The fourth quarter is shaping up to be a slower, more rate-sensitive market than the first half of the year. Prices in most of Maryland are holding, but sales volume is down and buyers are more cautious. For investors, that puts a premium on conservative underwriting, realistic timelines, and financing that doesn't lock you into today's long-term rates. Our loans are short-term with no prepayment penalties, so if a project finishes early, you stop paying interest early.

If you have a fix-and-flip, BRRRR, bridge, or new construction opportunity in Maryland, DC, or Virginia, we're happy to look at the numbers with you. Call us at 443-684-7997 or start a no-obligation quote.

More market updates: Q3 2026 (previous) · all quarterly market updates