Sales of new homes drop Region's consumers hesitant

sales off 18% for third quarter

'Wait-and-see attitude'

But single-family, detached houses are hot sellers

December 08, 1996|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Lackluster consumer confidence took a toll on Baltimore-area new-home sales in July, August and September, but detached, single-family homes emerged as a hot seller, a third-quarter analysis shows.

Sales plummeted 18 percent during those months, compared with the same period a year earlier, according to the Washington-based Housing Data Reports Inc. In Baltimore City and Baltimore, Anne Arundel, Carroll, Harford and Howard counties, 1,489 new homes sold, compared to 1,813 in the third quarter of 1995.

"New-home shoppers have assumed a wait-and-see attitude" because of economic uncertainty, executives of the housing market research company said.

For the entire area surveyed -- the Baltimore region plus the Maryland and Virginia counties surrounding Washington -- third-quarter sales of new homes lagged 13 percent, HDR reported.

The statistics came as no surprise to local builders accustomed to hesitant house shoppers.

"Overall, people are still skeptical and still afraid to make a commitment," said John P. Martonick, immediate past president the Home Builders Association of Maryland. "Seeing people laid off and industry transferred out of the area and downsizing of even white-collar jobs is something that frightens people making 30-year commitments."

Sales from January through September lagged for the entire Baltimore/Washington region, with the Baltimore area posting 6,359 sales, a 2 percent decline from that period in 1995.

But at the same time, sales in the once-depressed sector of detached single-family homes have soared, climbing 10 percent for the entire region and 13 percent in the Baltimore area. Carroll and Harford counties showed the best results, with single-family sales up 40 percent and 24 percent, respectively.

Value-conscious consumers opted for detached homes as opposed to townhouses because of low, relatively stable interest rates, price rollbacks by builders and improved cost-per-square-foot values, the researchers said.

Gains in single-family sales translated into losses in the townhouse sector, HDR said. Year-to-date sales tumbled 7 percent in the greater region and 9 percent in the Baltimore area.

"There's a definite trend toward smaller-lot, single-family homes, and that has hurt townhouse sales," said Keith Sugarman of Housing Data Reports. "There's a value associated with a

single-family home, and people are choosing them as a better value over townhouses."

First-time buyers or first-time move-up buyers have been bTC attracted to the smaller, detached products, especially in areas of Columbia and Harford and Carroll counties that are typically traditional single-family markets, Sugarman said.

This represents a shift away from townhouses -- long a staple in the industry -- though not necessarily a permanent one, Martonick said.

"I don't know whether you'd call it a trend," he said, adding that townhouses have continued attracting buyers in recent years as builders have improved quality and offered more options and style variations.

With a shrinking supply of new condominiums coming on the market, sales in that category have fallen more than 16 percent.

HDR reported the single-family, average base asking price at $260,937, a 1 percent increase, for the Washington/Baltimore region in July, August and September. The Baltimore area's average base price climbed 3.5 percent, to $237,123.

Steady interest rates helped counter single-family price gains, HDR said.

But as the townhouse market foundered, builders rolled back prices. Base asking prices dipped 2.6 percent in the Baltimore region to $129,778 in the third quarter.

Despite the downturn in townhouse sales, demand among "empty-nesters" fueled sales in the higher price ranges. That demand bumped average base sales prices at which townhouses actually sold up 1.3 percent in metropolitan

Baltimore.

More than 63 percent of the Baltimore/Washington region's single-family sales were in the $160,000 to $300,000 range, the report said.

The review shows builders operating in an intensely competitive market.

"For each community that garners healthy sales volumes, there are twice as many struggling to stay alive," the researchers said, noting that, as a result, sales rates in developments in the Baltimore/Washington region fell below 1995 levels.

Instead of an average 1.21 sales per project, per month, Baltimore-area builders tallied an average 1.15 sales per project, per month, the report said.

The researchers predicted the current buyer's market will continue next year. Builders, they said, need to anticipate that most new homebuyers will have less cash to put down, less equity to roll over and more debt created by higher credit-card usage.

Pub Date: 12/08/96

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