Further woes expected for housing market Sinking values add to area's stagnation

'Dramatic change' seen

Slowed growth of budget means cuts in services

March 31, 1996|By SHANON D. MURRAY | SHANON D. MURRAY,SUN STAFF

Howard County's glory days are over -- at least for now.

Once Maryland's prized county when it came to annual revenue growth, Howard is now mired in financial stagnation.

And continued weakness in the county's residential real estate market -- as evidenced by the latest data on average selling prices and county assessments -- is a strong sign that the bad times may continue.

"Howard County has had more of a change in its fortune than most counties in the state," said Michael A. Conte, a University of Baltimore economist and director of the school's Regional Economic Studies Program.

"Howard has always been a real leader in [financial] growth, but it has suffered through a dramatic change in the last year or two," he said.

According to a recently released report on the county's latest economic indicators, the average selling price of single-family homes and townhouses in Howard dropped by nearly $2,500 over a recent 12-month period.

In November, that average price was $197,423, which is $2,483 less than in November 1994, says the report issued by the Howard County government and the Economic Forum, a local business and civic lobbying group.

And judging from the latest round of county residential reassessments, that trend will continue: For this fiscal year, countywide assessed residential property values increased 1.1 percent.

A third of the county is reassessed every year. The rural western section and Laurel-Savage got their turn last year. Most homes in those areas were assigned overall increases for the next three years of 1 percent to 5 percent, and the assessments of more than a third were lowered.

The county does have some economic bright spots, particularly in jobs and, as a consequence, personal income tax revenues. And not everyone is forecasting doom and gloom.

"Howard County is expecting a bad year. But, relatively speaking, we're in pretty good shape," said Richard Story, executive director of the county's Economic Development Authority. "The bottom line is, our economy is diverse. Every county experiences stress from time to time.

"Certain sectors are flat, and others, while not robust, have been growing steadily," he said. "I'm very bullish on the future of Howard County."

Residential taxes provide about 44 percent of all county tax revenues, so stagnant housing values mean slowed budget growth. And that means cuts in park services, school textbook purchases and free trash pickup.

For Raymond Wacks, administrator of the county's Office of the Budget, bad news about the county's revenue picture is old news.

There is already "pressure on the budget to meet expenditure demands," Mr. Wacks said. "The trend is for slower growth than we usually are used to."

Reasons for the stagnation in the local housing market range from the area's recent losses of high-paid defense-related jobs to the national decline of confidence in the economy.

Mr. Conte, the economist, said Howard is making "painful adjustments" as it begins to attract more moderately paid residents than in the past.

"Howard is known as the bastion of highly paid, two-income homes. That's changing," he said. "Residents with more-moderate incomes are looking for more moderately priced homes. That's an area of the market a lot of builders haven't caught onto yet."

But with a recent fall in interest rates and spring weather just around the corner, optimistic local agents say the Howard real estate market is picking up.

According to the latest economic indicator report, which is issued quarterly, there was a 17.7 percent increase in the number of singe-family homes sold from November 1994 to November 1995.

"It's not just optimism about the future," said Joan Cochran, an agent for Long and Foster. "There have been a lot of sales this month. People are out there looking and are ready to buy again."

She said potential buyers typically begin looking in March so that they can move at the beginning of summer, the end of the school year.

Bob Coursey, marketing director of Ryan homes, also characterized the residential real estate market "as extremely brisk."

He attributed the recent traffic to pent-up demand from buyers who planned to start looking for new homes in January but were deterred by the blizzard.

Mr. Coursey said he expects the local real estate market to hold firm during the rest of the year and perhaps even to gain slightly.

According to the economic report, Howard's economy has at least one indisputable bright spot -- job growth.

This fiscal year, the county's average unemployment rate is 4 percent, slightly below the 4.1 percent average rate through the same period in the 1995 fiscal year, the report says.

Much of the job growth has resulted from the opening of large new retail outlets in the county. But Mr. Story said that growth in relatively low-paid retail jobs is not outstripping the growth in better-paid jobs.

Total wages in the county grew 9.7 percent from June 1994 to June 1995.

Other findings in the report:

Personal income tax revenues from workers living in the county increased by 17.3 percent from January 1995 to January 1996.

The local banking industry is expecting a good year with refinancing, new small businesses and consolidation of banks.

A "cleansing" has taken place within certain retail sectors, as some recently established businesses are going out of business.

Pub Date: 3/31/96

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