Local housing market shows some stability Recovery may start by mid-'91, study says

December 09, 1990|By Timothy J. Mullaney

A new study by a Silver Spring-based consulting firm says metropolitan Baltimore's housing market has stayed much more stable than markets around Washington and other Northeastern cities, and the study's author thinks the local market could begin to recover by mid-1991.

The study by Rufus S. Lusk & Son Inc. said that in metropolitan Baltimore, the total number of single-family homes sold, including town houses, rose by less than 1 percent in August, compared with August 1989. The study included Baltimore and the counties of Baltimore, Anne Arundel, Carroll, Harford and Howard.

The condominium market was much softer, however. Condominium sales fell 16 percent during the month.

For the first eight months of the year, single-family sales also increased by less than 1 percent, while condominium sales were up 11 percent. The median price of a single-family house rose to $126,000, a 3 percent increase compared with the first eight months of 1989. The median condominium price fell 2 percent to $89,850.

The Lusk data roughly correspond to similar reports from the Greater Baltimore Board of Realtors, which tracks home resales, and Legg Mason Realty Group Inc. of Baltimore, which monitors the new home market.

But both the Realtors and Legg Mason have reported sharp drops in home sales after the period covered in the Lusk report, suggesting that the local market has grown softer since the period tracked in the Lusk report.

The report is based on homes that were settled on in August. Because of the usual delays caused by the time it takes for a buyer to get a mortgage and tend to other details before closing the sale, most sales settled in August were actually agreed to in May or June.

The Realtors and Legg Mason say that during the third quarter the number of new sales agreements dropped sharply -- about See LUSK, 2J, Col. 5LUSK, from 1J20 percent for existing homes and up to 35 percent for new homes, according to studies released earlier.

"Speculative homebuilding has more or less come to a stop,said Rufus S. Lusk III, president of Lusk & Son. He said the slowdown in new home construction that has occurred this year will allow the backlog of unsold speculative homes to be partly cleared up over the next several months.

After sales use up the excess supply of new homes, he said, thbalance of power could eventually tilt back toward home sellers.

In the meantime, Mr. Lusk said, the current buyers' market will be at its peak for about three more months. The softer market has allowed buyers of existing homes to negotiate some price cuts and forced builders to offer generous incentives.

Barbara Allen, who follows homebuilding companies as an analyst for Kidder, Peabody & Co. in New York, adds that lower interest rates are likely to help the housing market next spring.

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