A rebound in the city Market: Sales are sizzlingin Baltimore's 'buyer's market,' as bargain hunters spark a buying spree.

November 16, 1997|By Joanne P. Cavanaugh | Joanne P. Cavanaugh,SPECIAL TO THE SUN

After years of sluggish activity, homebuyers are apparently rediscovering Baltimore, with sales citywide reaching a four-year high.

Yet even as sales surge, median home prices have dropped, according to numbers compiled by The Sun from sales transactions recorded by the state Department of Assessments and Taxation.

Real estate analysts and veteran agents say Baltimore's "buyer's market" moniker is drawing a new breed of homebuyers seeking bargains. First-time homebuyers, in search of affordable homes, apparently are sparking the buying spree. And, encouraged by low-interest mortgage rates and government and neighborhood incentive programs, they are purchasing homes despite the city's continuing urban problems.

Sellers also are getting a message: to make the sale, cut the price -- and that in effect is also helping to lower medians, according to analysts. They point to other factors that may be leading to a decline in the medians. Revived interest in popular areas, such as Federal Hill, are leading people to buy lower-end homes on the neighborhoods' fringes.

The Canton and Federal Hill areas, in fact, are experiencing a boom in sales -- with the number of transactions more than doubling in 1996-1997 over the previous year, according to figures compiled in 18 traditionally well-known neighborhood areas selected by The Sun. The figures take into account more than 20,000 transactions made in those particular neighborhoods, which were matched with U.S. Census tracts, during the last four fiscal years.

Of the areas reviewed, Roland Park and Mount Washington experienced the steadiest rise in median prices. The median rose 19 percent in Roland Park over the last four years, while Mount Washington climbed 4 percent. In neighborhoods such as Hampden, meanwhile, there was a moderate rise in sales, yet median prices remained relatively unchanged.

So, is a housing renaissance happening?

"In 100 percent of the city, no, there's no renaissance," said Bill Cassidy, sales manager at Long & Foster Realtors in Fells Point. "But, yes, the city is turning itself around. This is not a light-the-candle celebration, but there is a slow, steady increase in homeownership. It's piecemeal. As in any other business, marketing is pivotal. It's all perception."

Cassidy, an agent in the city for 21 years, focuses on the downtown and waterfront real estate markets, where trendy rowhouses are in demand.

"First-time buyers are driving the market," Cassidy said. "They want two bedrooms, two baths, wood floors, a well-done kitchen, fireplace and exposed brick. They want a finished, turnkey house. Renovation is too much of a drain on time for a young couple whose work schedules don't permit them to even sit down for a few hours with an architect."

Citywide, the number of home sales jumped more than 50 percent to 7,330 in 1996-1997 over the previous year. The numbers were drawn from fiscal yearly sales beginning July 1, 1993, and ending June 30, 1997.

Median home prices fell from $59,500 in 1995-1996 to $55,000 in the last fiscal year, the lowest in the four years calculated. The median price is the midway point, meaning that half of the homes sold were above that price and half were below.

However, median home prices are not singular indicators of market health. A home on any given block, depending on amenities and buyer demand, may increase or decrease in value, analysts point out. An area's median home price can be influenced also by what styles of homes are on the market at that particular time.

For example, the median for the Federal Hill area, which includes Otterbein and portions of South Baltimore, was $93,250 in the last fiscal year. Yet, in the same time period, the median for historic Federal Hill was $128,000.

Also, the number of homes sold in any given year can affect median prices, such as in Mount Vernon, where few single-family homes sold.

Baltimore's experience reflects the bigger picture. Overall consumer confidence, as well as low interest rates and other market conditions, seem to be fueling home sales. Sales nationwide are up this year -- a projected 4.1 million homes will be sold by the end of December, according to the National Association of Realtors. That's a record high, up from a slowdown in 1995, when 3.8 million homes sold.

"It has to do with a good economy. People feel more comfortable about their jobs and are looking to buy," said Michael Funk, research economist at the Regional Economic Studies Institute at Towson University.

"We are seeing the same thing," said Edward Gallagher, Baltimore budget director. "There are a lot of transactions and our [tax] receipts are strong. But the drop in median price means it's a buyer's market."

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