Area home prices rose 1.2% in '93

February 06, 1994|By Ellen James Martin | Ellen James Martin,Federal Home Loan Mortgage Corp.Sun Staff Writer

Home prices in the Baltimore area rose 1.2 percent last year, less than the national average, according to the Federal Home Loan Mortgage Corp.

But a local economist said he believes that home prices, stable over the last several years, will start to rise substantially again this year.

"I think 1994 is going to be an excellent year for the Baltimore area -- with some real price growth in most areas," said Michael Conte, director of the University of Baltimore's regional economic studies program.

"Homes are going to turn into a real investment again."

With the economy finally picking up steam here, home sales are rising. And the increase in home sales should finally translate into price increases for sellers, Mr. Conte said.

"We're having very much increased demand in all price ranges, and at some point that has to translate into increased prices," he said.

Harford County should be "way out in the lead" for home price gains in the Baltimore area, with an average increase of 10 percent in 1994, Mr. Conte said. Large-scale new-home development in Harford County is acting as a magnet for buyers there, and increased demand is pushing up prices, he explained.

Worst off will be Howard County, where home prices will remain flat or rise only by the rate of inflation, about 3 percent a year, Mr. Conte said.

"Howard was really seriously hurt by the recession," Mr. Conte said. The county developed a large surplus of office and warehouse space in the late 1990s, and many Howard residents who work in commercial real estate lost jobs as a result, he said.

Elsewhere, price increases in 1994 should range from 5 percent to 10 percent, Mr. Conte said.

Most Carroll and Anne Arundel homeowners should find themselves at the upper end of the range, while those in Baltimore and Baltimore County should be at the lower end, he said.

The study by the Federal Home Loan Mortgage Corp., or Freddie Mac, which buys and sells mortgages, measured price appreciation by looking at price changes for homes whose mortgages went through Freddie Mac.

In the Baltimore market, for example, an average home wort$100,000 at the start of the year was worth $101,180 at year's end.

"Basically, housing prices follow what's going on in the economy," said William Stephens, a Freddie Mac economist.

Since economic recovery and job growth in the Baltimore area lagged the nation as a whole last year, so did home prices, Mr. Stephens said.

"Maryland is only now coming out of recession. It was among the bottom 10 states for employment and income growth during the last year," said David Berson, chief economist for the Federal National Mortgage Association.

Housing prices for the Baltimore region have not always trailed ,, the nation, according to the Freddie Mac index.

From 1988 to 1993, local home prices were up 17.53 percent, while those across the nation gained an average 15.4 percent.

SINGLE-FAMILY VALUES

Rise in home values in 1993, compared with 1992, in percent. Baltimore ranked 17th out of 32 metropolitan areas surveyed.

TOP FIVE

Denver .. .. .. .. .. .. ..7.2%

Cleveland .. .. .. .. .. ..4.9%

Columbus, Ohio .. .. .. ...4.9%

Minneapolis .. .. .. .. ...3.4%

Chicago .. .. .. .. .. .. .3.1%

BOTTOM FIVE

San Francisco .... .. .. .-3.1%

San Diego .. .. .. .. .. .-3.6%

Sacramento, Calif. .. .. .-3.6%

Riverside, Calif. .. .. ..-4.2%

Los Angeles .. .. .. .. ..-6.9%

U.S. average .. .. .. .. ..1.9%

Baltimore .. .. .. .. .. ..1.2%

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