A tale of two housing markets

Contrasting realities: Metro area's low-end sales sag while bidders fight over its few luxury homes.

March 27, 2001

THE RECENT roller-coaster ride on Wall Street evidently has done nothing to cool demand for luxury homes.

The supply of local top-end properties is so tight that some buyers have submitted bids on houses they haven't even visited. Or they have signed escalation causes that allow them to outbid any rivals.

These are new tricks in our market, although eager buyers have long resorted to them in the cut-throat scramble for choice real estate in Washington.

This real-estate craze has not extended to the low-end market, though. Particularly in Baltimore City, modest rowhouses are begging for buyers.

The reason is simple. As rapid population losses continue, the glut of rowhouses in depopulated neighborhoods soars. That, in turn, depresses prices. Would-be buyers can afford to be picky.

Although Washington and Baltimore are still separate real estate markets, overflow from the former is driving up the prices of upscale homes in Howard, Anne Arundel, Carroll and Frederick counties.

Short supply, meanwhile, is driving up prices in the city's northern neighborhoods -- from Homeland and Roland Park to Mount Washington. Sellers' markets have also greatly escalated costs of top-end residences in many Baltimore County neighborhoods.

But in Baltimore County, too, modest older homes often prove to be tough sells. Their prices may be right, but they may not have all the bells and whistles that buyers today demand.

As the spring home-buying season starts, Baltimore-area residents will be out in droves to see what's available. By all means, join the crowd.

But whether it's a fixer-upper you are thinking of buying or a luxury home, do your homework. The recent gyrations of Wall Street prove that the safest course is to keep a cool head, investigate valuations as well as future upside potential and avoid excessive emotionalism.

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