New home sales up 11.5% Baltimore County the exception with decrease for Jan.

Howard closings rise 46%

Builders say they'll cut back on 'freebies' such as appliances

March 15, 1998|By Robert Nusgart | Robert Nusgart,SUN REAL ESTATE EDITOR

Linda Veach, vice president and marketing director for Bob Ward Homes in Harford County, hasn't seen this happen for a couple of years: Customers are actually fighting over building lots.

For Ray E. Smith III, whose Marketing Ventures Group in Virginia represents Patriot Homes and the Williamsburg Group, it's now a time when "prices are not coming down any further. Negotiations are not what they were before [and] I think everything has stabilized in the market."

And with such talk, builders are recognizing that new-home sales in the Baltimore metropolitan area have made a reversal and are on an upswing.

According to January figures -- the latest available -- by Meyers Housing Data Reports, new-home sales were up 26 percent from December and 11.5 percent over January 1997.

That is a significant turnaround for area builders, who last year saw sales slip from one month to the next. Meyers, a Washington firm that tracks and analyzes new-home sales, reported that sales were up from December in every county in the region and for every product -- single-family, townhouse and condominium.

Howard County was up 30 percent; Anne Arundel was up 28.7 percent; Baltimore County gained 25.7 percent; and Harford County jumped 6.1 percent. Carroll County had a 65.3 percent increase, based on 43 single-family sales compared with 23 in December.

When comparing January to the same month last year, only Baltimore County (down 3.6 percent) showed a decrease. Howard County was up 46 percent; Anne Arundel gained 9.3 percent, Carroll County 7.5 percent and Harford County 7.1 percent. The newsletter does not track new homes in Baltimore City.

"The overall climate is so good now," said Anna Pitheon, regional sales director for Meyers. "Interest rates are down, and from the builders that I talk to, they get the sense that buyers are finally opening their eyes and saying, 'We have to make a decision now. We have to move now. It's not going to get any better than this.' "

Pitheon said townhouse sales in the region -- and particularly areas around Annapolis -- have "zoomed" up almost 55 percent over January a year ago. She noted that Annapolis communities such as South River Colony, where Pulte Homes Corp., Ryland Homes and NVHomes sold 12 units and Annapolis Overlook (with 15 sales by PCS Homes), have given buyers "good prices and strong value."

Consequently, builders are finding their inventories beginning to shrink. Pitheon said there are 529 homes -- a one-month's supply based on demand -- that could be ready for delivery in 30 days and another 473 that are under construction with a 60- to 120-day delivery date.

"They [builders] are not sitting with inventory worrying about how to sell a home," Pitheon said.

But what is also pushing the market, she said, is the resurgence of the resale market, which also has shown steady increases during the last six months. Pitheon's research is showing that contingency contracts -- those that require a new-home buyer to sell their existing home before construction begins -- are being satisfied more quickly.

Smith and Veach are noticing it as well.

"With some of our more upscale communities that we have just started, we had anticipated the contingent buyer, so we usually anticipate slower starts, meaning the starting of construction," said Veach, whose firm is the area's fourth largest builder. "But what we've been seeing is that the resale market must be doing very well because [buyer] contingencies are being lifted."

Veach also noticed a renewed confidence among buyers, and that has translated into more household options and more expensive homes.

"The surprising thing for us is that our strongest sales are in the single-family and in the upper-price range," Veach said. "Even in our lower-priced single-family, people are adding a lot of options and it's becoming a more expensive house."

Veach added that the average sales price of a Bob Ward home has gone from $125,000 to more in the "$140,000 to $150,000 range." She's also been surprised by seeing higher-priced homes in their Aberdeen communities. "We have some houses in Aberdeen which are selling for $200,000," she said.

But as sales increase, builders are cutting back on free incentives such as finished basements or appliances.

"I think they [buyers] are going to stop seeing all the giveaways builders have given in the past," said Smith, whose client, Patriot Homes, is the area's fifth largest builder. "I think you will see some closing-cost assistance. But I don't think you are going to see all the freebies you've seen in the last four or five years.

"Every one of our clients in Virginia and Maryland are just about done playing these games. And it's time that they are making it a business again."

But that kind of bravado hasn't deterred buyers. Smith said Patriot already has achieved 30 percent of last year's sales total, and Veach said her January-February totals are running ahead of both 1996 and 1997.

Although confident, Veach wouldn't go so far as to say builders are enjoying an edge over buyers.

"I think it's more that we're not the underdog anymore," she said. "It's more on equal footing."

Pub Date: 3/15/98

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