Home sales in region rise 15.6%

High employment, lower interest rates keep market strong

Sales up 28% in quarter

Every subdivision but Howard had double-digit gains

April 13, 2001|By Robert Nusgart | Robert Nusgart,SUN STAFF

House hunters in the Baltimore metropolitan area paid no heed to signs of the slumping stock market or a sluggish U.S. economy as sales of existing homes in March rose 15.66 percent over the same period last year.

The rise in sales capped a first quarter in which sales soared 27.77 percent over sales in the first three months of 2000, according to statistics released by the Metropolitan Regional Information Systems Inc., the multiple-listing database used by real estate brokers.

"Looking at the numbers and talking to people, the market is strong. There are no weak spots," said Patrick Welsh, president of the Greater Baltimore Board of Realtors. "Everybody I talk to ... the title people, the mortgage people, they are all busy."

And for the ninth consecutive month, pending sales, an indication for future settlements, continued their upward swing, rising 16.29 percent when compared with March 2000.

"When you look at all the national news about the economy, you hear all these gloom and doom stories. But it certainly hasn't hit us locally," Welsh said.

Except for Howard County, which had a 5.71 percent gain over March 2000, the region's five other subdivisions recorded double-digit increases.

Harford County was up 24.76 percent, followed by Carroll County at 23.88 percent. Baltimore City rose 18.17 percent; Baltimore County climbed 15.02 and Anne Arundel County gained 14.04 percent when compared with the same period last year.

Yet, as sales and pending contracts continue to show strength, the average sales price has started to moderate. Prices rose 4.37 percent from March 1999 to March 2000, yet only 0.16 percent from March 2000 to last month.

The average sales price of a home in the Baltimore metropolitan area increased to $150,088 last month from $149,847 in March 2000.

"What I think that number is telling you is that there is growth at the lower end," Welsh said. "A lot of the growth that was in the market over the last couple of years was always at the high end of the market. That was always the hottest. Now what we are seeing I think is some of the spillover into the more moderately priced markets."

Anirban Basu, director of applied economics at the Regional Economics Institute at Towson University, pointed to three aspects that have kept the region's sales humming: low interest rates, low unemployment and a shift from investing on Wall Street to buying a home.

"Right now we [in Maryland] have one of the best economies in the country," Basu said. "Maryland has fared very well.

"Unemployment remains remarkably low in Maryland [4.1 percent in February, compared with 4.6 percent for the nation] so people still feel quite empowered to enter into these 15- and 30-year commitments.

"People are using money - that in previous years would have been used to buy more mutual funds - toward a down payment on a home. I think that makes sense," said Basu.

Mortgage rates that have fluctuated between 6.875 percent and 7.5 percent in recent months have helped sustain the market.

"Take this back a year, and rates are down a percent from where they are today," said Theodore E. "Chip" Reichhart, president of First Horizon Home Loans, MNC Division.

"These interest rates over the last 90 days have ranged as low as they have in the last three or four years. We're awfully close to the bottom," Reichhart said, though he thinks rates might go a bit lower. "There is nothing out there to indicate that rates will be going up."

In Baltimore, the average 30-year, fixed rate mortgage is 7.12 percent. A year ago it was 8.14 percent, according to HSH Associates, a New Jersey company that tracks and analyzes mortgages. The last time rates were above 8 percent was the last week in August.

The drop in rates means that a buyer who was qualified for a $150,000 mortgage last year at 8.14 percent can now maintain the same monthly principal and interest payment - $1,115 - while qualifying for a $165,630 mortgage.

Still, the nagging problem in this market, according to most industry professionals, continues to be the lack of inventory. "If there was more product we could probably be up 50 percent over last year," Reichhart said.

Last month, 10,866 homes were on the market in the metro area, compared with 12,113 in March 2000. In hotbeds such as Howard County, the inventory is down almost 37 percent from where it was a year ago, with just 653 for sale.

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