Luxury steps from shadows

Buyers: In a startling turnaround, there's now a shortage of million-dollar homes as more area buyers yearn for "creature comforts."

February 28, 1999|By Robert Nusgart | Robert Nusgart,SUN REAL ESTATE EDITOR

Sue Miller easily recalled the office meeting 14 years ago -- right after she began work as an agent with Hill & Co., the little real estate brokerage in Cross Keys known for its handling of expensive homes.

"It's amazing. I can remember [a fellow agent] saying it just won't be so long before you see somebody buying a million-dollar house in Baltimore," Miller said. "At that time I had just sold a house, and it got a lot of attention because it was the most expensive house sold in Baltimore City, it was like $500,000. and now look -- there is $2 million, $3 million -- and that's in 14 years."

That's right, take a good look. Just as the combination of a still-rising stock market, low mortgage rates and high consumer confidence turned 1998 into the best year of the decade for first-time buyers, it also resulted in a rebound for luxury sales in Baltimore.

In 1998, the number of existing homes that sold for between $500,000 and $1 million almost doubled over 1997, as did the number sold for more than $1.5 million, according to statistics compiled by the Metropolitan Regional Information System, the multiple-list system used by Realtors.

The reverse, however, was true for homes selling for $1 million to $1.5 million. But Realtors who specialize in the high-end market attribute that to a simple reason: The turnaround that began in the summer of 1997 quickly began to diminish the number of quality luxury homes on the Baltimore market.

"Each year there seems to be more buyers for these properties," said Tim Rogers, president of Hill & Co., whose firm had a hand in two of the six $2 million transactions last year in Baltimore. "Right now there are really very few super nice things on the market. I think there are more and more people with money, and fewer and fewer nice properties."

It seems the definition of a luxury home in the Baltimore market has evolved over the last two years.

"A half-million-dollar house today is not truly a luxury-type home in Baltimore County," said Marc Witman, an associate broker with Long & Foster Real Estate Inc. and president of the Greater Baltimore Board of Realtors. "As a jest, sometimes to my buyers, I say, `A half-million dollars doesn't buy what it used to.'

"There was a time when I thought you'd buy a half-million-dollar house, it would be the castle on the hill. Well, a half-million-dollar house isn't the castle on the hill anymore. A half-million-dollar house is the four-bedroom, two-story, 2 1/2-bath Colonial with a couple-car garage in a subdivision."

Karen Bisbee, a vice president of O'Conor, Piper & Flynn ERA who with her mother, Nancy Hubble, combined for $30 million in sales last year, is well aware of the changes in the tide that swept the market last year.

"The pool of buyers [for these homes] has doubled in the last two years. My list has doubled," Bisbee said. "Part of the problem is not that the pool has doubled, the pool of houses has evaporated. It's going to cause a problem; it is driving prices up. It is absolutely driving prices up because there isn't a darn thing to sell people. So sellers can be cocky, and they can be aggressive in their pricing and bold in their opinions of value, and they can get away with it, and the market supports it.

"I remember six or seven years ago there were 43 properties over a million dollars on the market in Baltimore, and that was a heck of a lot of money. Based on the statistics at the time, that was a six-year consumption to absorb all that property.

"Now, these good properties come on the market, and they sell in 30 to 40 days max. Some of them sell the day they go on the market, the week they go on the market. There is no delay. People are delighted to have the opportunity to buy these places, there are so few of them."

The people who are making the purchase are not necessarily the stereotypical older mid-50s couple whose ship has come in. It wasn't uncommon last year for agents to be working with younger couples -- in their 30s and 40s -- who through entrepreneurial success and Wall Street savvy had a million-dollar-home on their wish list.

"Everything has changed, in my opinion," said Michael Yerman, of Long & Foster's Greenspring office in Baltimore County. "You have new buyers who have stepped into a bigger home quicker than we did it. I am a child of the 1950s, so when we moved into a bigger home, you were established, you were in your 40s and then you made that giant leap into a big family home. But I think people are doing it at younger ages, people in their late 20s or early 30s."

Younger buyers

Bisbee said she had a "couple of twenty-somethings" on her buyers' list, and another eight younger than 40 who are searching for their executive home. And those buyers -- like those in lower price brackets -- have been able to capitalize on mortgage rates, the lowest in a generation, that consistently dipped below 7 percent.

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