August city home sales overcome regional drop

September 18, 1994|By Lorraine Mirabella | Lorraine Mirabella,Sun Staff Writer

Rising mortgage rates have hurt home sales in the metropolitan area, but the city -- at least for one month -- has bucked the trend.

Home sales in the region fell 3 percent in August, but rose 13 percent in the city. And pending sales -- the number of contract signings -- fell 18 percent in the region but only 9 percent in the city, the best showing of any jurisdiction.

The city faces the same conditions as the rest of the area, most notably a dearth of buyers, real estate experts and economists say. Some buyers had rushed into the market earlier this year; others have been excluded by higher rates.

But factors ranging from pricing to lifestyle to closing-cost assistance have led to a burst of activity that drove city sales up to 433 from 381 in August last year, according to the Greater Baltimore Board of Realtors.

The figures include new and existing homes sold through the Mid-Atlantic Real Estate Information Technology, which covers the metropolitan area except Anne Arundel County.

"A lot of people out there are banking on the city and willing to put their money there," said Brandon Gaines, a partner with W. H. C. Wilson & Co. of Roland Park. He said he has seen sales across all price ranges -- from $100,000 to a half million. Buyers have been drawn to homes as "sellers in the city have taken the fat out of their prices," he said.

As a result, the average price of a home sold in the city in August fell 10 percent, to $75,300 from $84,300 the same month a year earlier. For the region, the average home price was unchanged, and all other jurisdictions posted increases.

Bill Cassidy, sales manager of Long & Foster's city office, agreed that pricing has heightened interest among buyers in neighborhoods such as Federal Hill and Otterbein.

Mr. Cassidy views increased settlements in the city as a byproduct of depressed pricing in many neighborhoods. First-time buyers -- in many cases single people, roommates or couples without children -- who otherwise would be cut out of the market by rising interest rates, have found affordable homes in the city, Mr. Cassidy said.

"It has also created opportunities for investors who see some real bargains in the city," he said.

Some of his recent sales in Otterbein have been to Washington commuters, who can buy homes for three to four times less than in the D.C. area. Other sales have been to renters living near the Inner Harbor who've been able to negotiate deals on homes that might have been on the market as long as a year, Mr. Cassidy said.

More of those moving into neighborhoods such as Otterbein and Federal Hill have come from out of state, and many times, "they appreciate what downtown has to offer more than natives," he said.

Nancy C. Hubble, president of the Realtors board, said buyers generally have taken longer to make decisions, leading to cycles in which bursts of sales follow slow periods. She noted that programs and incentives to strengthen homeownership in the city have been a factor in some sales.

Since July 1, first-time buyers have been required to pay just half the first year's real estate tax in advance, rather than the full year's tax. Other buyers have used the city's Settlement Expense Loan Program, which offers loans of up to $5,000 toward closing, she said.

"We're seeing a lot of buyers not leaving the city, buying larger houses but staying within the city limits," Ms. Hubble said.

L But not all city neighborhoods have shared in the mini-boom.

In Carroll Park in Southwest Baltimore and from Highlandtown to Canton, "There's an abundance of property and not enough buyers to take it off the market," said Ed Chase, broker with Inner Harbor Realty Inc. "Anytime there's an abundance of property, it becomes a buyer's market and buyers take longer to close. There are more homes they want to look at. Whereas in the old days, you could say if you don't buy, someone else will buy it."

Property values have leveled off or fallen in areas such as Canton and Highlandtown, as the Eastern Avenue business district has declined, older homeowners have died or moved and more people rent.

"Not as many young families are willing to purchase in Highlandtown and Canton because there's no immediate appreciation being gained," Mr. Chase said. "Young families starting out are renting, then making the step into the county."

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