High hopes for housing

After terror attacks, models are visited by fewer prospects

Reason for optimism

`People still need housing,' explains Bob Ward executive

September 23, 2001|By Robert Nusgart | By Robert Nusgart,SUN REAL ESTATE EDITOR

Local real estate agents, as well as those selling new homes, were looking to this weekend to give them better insight into how the housing market is going to be affected in wake of the Sept. 11 terrorist attacks in New York and Washington.

Agents are trying to figure out if the aftershocks of the tragedy will tighten the brakes on a sector that has already shown signs of slowing or if buyers and sellers will take advantage of dropping mortgage rates and reinvigorate the market.

At Ryland Homes, traffic - the number of people who visit models - dropped 20 percent the weekend after the attacks, according to Earl Robinson, director of marketing and sales for the Baltimore metropolitan area's No. 2 builder.

Linda Veach, general manager and executive vice president for Bob Ward Homes, the area's fifth-largest builder, said traffic to the company's subdivisions dropped to about 70 visitors from 140 the previous week.

"We really have spent a lot of time with our sales representatives," Robinson said. "We pulled everyone in to talk about the situation. Get their feelings. Where do we go from here?

"Where we came out of it was that people's housing needs haven't changed because we had a terrorist attack. People still need housing.

"I'm sure there will be a short-term impact for sure on the overall market, but I don't think it will be sustained."

Likewise, Veach said she thought there would be a short-term impact on Bob Ward Homes, but she was optimistic about the months ahead.

"I think a lot of it, too, will be what [the government does] in the future," Veach said. "If all of a sudden things start happening ... we might see another slowdown. But all in all, I don't think that it will hurt all that much."

Along Baltimore's waterfront, where soaring real estate sales and values have been leading the city's property boom, agents are sensing a change in attitude and strategy among buyers and sellers.

Bill Cassidy, manager of the Fells Point and Federal Hill offices of Long & Foster Real Estate Inc., noted that listings in his office had cumulative price reductions of almost $300,000 in just the few days after the attack.

"In many neighborhoods, what had been a strong sellers' market has become a buyers' market," Cassidy said. "The conversation with agents is that a significant number of buyers are slowing down their house-hunting process."

Said O'Conor, Piper & Flynn ERA's Bob Merbler, who is one of the top agents selling in Federal Hill: "I think a lot of people who want to buy houses are reconsidering based on their own personal financial situation. A lot of people are looking at job situations.

"Then you have the opportunists who are saying, `Whoa, prices are going to start coming down. I better hold off.'

"And you have got some people who are under contract and who are suggesting that perhaps there's a way to go back to the seller and ask them to reduce the price even though they are under contract. There are individual circumstances where people are thinking that way - an opportunistic type of thing."

Merbler added that buyers are now "drawing a line in the sand, where before they might have stretched a little bit further."

Even so, Cindy Ariosa, vice president and Baltimore region general manager for Long & Foster, agreed that buyers are "a little distracted right now," but agents should be reminding and prodding buyers to look at mortgage rates, which continue to slide.

In its weekly survey, Freddie Mac reported that the average 30-year, fixed rate mortgage fell at week's end to 6.80 percent from 6.86 percent the previous week. That rate was the lowest since the average hit 6.77 on Feb. 12, 1999.

A year ago, the 30-year rate stood at 7.90 percent. In real dollars, that means the monthly principal and interest on a $150,000 loan has dropped from $1,090 to $977, a savings of $113 a month.

In the Baltimore metropolitan area, the 30-year fixed-rate mortgage slid to 6.95 percent from 7 percent, according to HSH Associates Inc., a New Jersey firm that tracks and analyzes mortgage rates.

And with more cash being pushed to the bond markets, which guide pricing for mortgages, experts foresee the possibility where rates may rival the generational lows last seen in October 1998, when mortgages went as low as 6.5 percent.

"Our best guess at this point is that interest rates do have the potential in the next period of time - 10 days, the next couple of weeks - [to] potentially touch 30-year, 35-year lows," said Keith Gumbinger, vice president of HSH Associates Inc.

But, Gumbinger added, even if rates do hit those lows, hesitant buyers may still not be in a rush to purchase a home.

"There is a great deal of uncertainty about what the real economic fallout will be," Gumbinger said. "Aside from hundreds of thousands of airline jobs disappearing this week, it's not readily known how long any economic disruptions might be."

But Ariosa put her faith in sticks and bricks.

"Real estate has always been a safe investment," she said. "So if [consumers] are looking for safety, what are they going to buy? Gold bars, or a house?"

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