Home sales in the Baltimore metropolitan area are going through the roof.
Sales of existing homes for the region in July rose 20.9 percent over the comparable period last year as 3,509 homes changed hands -- the highest one-month total in more than three years.
"It's extraordinary," said Marc Witman, president of the Greater Baltimore Board of Realtors and an associate broker with Long and Foster Real Estate Inc. "The activity is not slacking off. August generally in Baltimore is a really down month, and we are not seeing that at all. It is really busy."
Every jurisdiction except Carroll and Harford counties showed double-digit increases in sales. In the upscale neighborhoods of Baltimore, sellers are still seeing multiple and above-asking-price contracts come their way.
The rise in July closings was linked to April and May's buying spree, when home hunters were signing contracts in droves.
"There has been the threat all spring that the interest rates were going to start creeping up, so the buyers really got out there," said Arthur Davis, president of Chase Fitzgerald & Co. Inc. in Roland Park. "Anyone who was sitting on the fence came forward, because if they were going to lock into those lower interest rates, they were going to do it when they had the chance."
Although a softening is predicted, Witman and other industry observers expect the market to remain solid since pending contracts, an indication of future sales, rose 12 percent over July 1998.
Higher sales reduce inventory, causing higher prices.
In July 1998, the average price of a four-bedroom detached home in the area was $240,101. Last month, the average price rose to $259,258, an 8 percent increase. And in Howard County, the rise was more pronounced, going from $272,567 to $303,376, an 11.3 percent rise.
According to one agent, a home in Guilford in Baltimore City that sold in March for $472,500 went back on the market and sold for its asking price of $565,000.
"It definitely is still strong," said Davis, adding that "buyers and sellers are both aware of the pressure on the market. We are seeing houses come on [the market] and selling in a very short period of time."
On average, the number of days on the market dwindled from 125 in July 1998 to 109 last month. It took an average of 73 days to sell a home in Howard County, and of the 435 homes that settled last month, almost half sold within 30 days.
"That shows you that the inventory is short and the market is strong. There are a lot of buyers looking for houses," Witman said.
And the competition among real estate agents may be heating up as sellers look for brokers who will agree to put houses on the market at whatever asking price they desire.
"The market is changing every day," said Pat Hiban of Re/Max Advantage Realty in Columbia. "You get to the point where you are willing to list anything at any price. Nowadays, you pick your price as a seller."
But as prices inflate, the threat of higher mortgage rates may also be on the horizon. Rates in the Baltimore area are hovering around 8 percent for a 30-year, fixed-rate loan.
Anirbar Basu, director of applied economics at the Regional Economic Studies Institute at Towson University, expects the Federal Reserve to raise rates by half of a percentage point at its meeting Aug. 24. That in turn will cause mortgages to rise and "while historically favorable, [they will be] higher than they have been in weeks and months, [causing] a slowdown in home sales."