Home sales slacken in Balto. area

September increase for existing homes was lowest in a year

Harford has largest rise

Contracts signed show first decline since June 2000

October 11, 2001|By Robert Nusgart | Robert Nusgart,SUN STAFF

In a sign that the Baltimore-area housing market is softening and could be headed for a downturn, sales of existing homes in September posted their lowest monthly increase in a year and pending sales registered their first decline since June 2000.

Metropolitan Regional Information Systems Inc., the multiple-listing database used by brokers, reported that home resales last month rose a meager 2.71 percent - nowhere near the double-digit monthly gains seen during most of 2001. Still, the increase was a relief to real estate agents who expected worse in the aftermath of the Sept. 11 terrorist attacks.

But contracts signed - an indication of future settlements - fell 3.72 percent, the first decline since June 2000, while the number of new listings was down 4.31 percent compared with September 2000.

"The settled numbers would not be impacted by what happened on Sept. 11," said Patrick Welsh, outgoing president of the Greater Baltimore Board of Realtors, who said those settlements are a reflection of contracts signed in the previous 60 days. But "the fact that pendings are down [is] basically because we lost a week of business as a result of Sept. 11."

Harford County had the largest increase in sales, rising 14.86 percent over those in September 2000. Anne Arundel was next at 5.76 percent, followed by Baltimore County at 5.15 percent and Howard County at 2.04 percent.

Baltimore City showed a 6.19 percent decrease - its first month-over-month decline since July 2000 - and Carroll County was down 1.69 percent.

"The market is still good," said Tim Rodgers, president of Hill & Co., a Cross Keys firm that deals in the luxury market. "It has just slowed from the pace it was last spring."

Nevertheless, those in the industry said the drop in stock prices and eroding consumer confidence had begun affecting the housing market before the terrorist attacks. Since the attacks, both have fallen further as companies have warned of losses or weaker earnings and laid off tens of thousands of workers.

"Last spring when people were paying astronomical prices, it was because their stock values were still climbing, and there was a lot of cash around for people to put down," said Steve James of Re/Max Columbia in Howard County. "Once that goes away, it affects the market."

Listings are beginning to linger on the market longer and sellers' expectations of getting multiple contracts and full price and beyond may be a thing of the past.

"I can't help but notice that there seems like there are some houses in Guilford that have been on for a while, that six months ago would have sold overnight," said Melvin Knight, an agent in the Roland Park at Wyndhurst office of O'Conor, Pipe & Flynn ERA.

Market in transition

Rodgers diagnosed the market as being in transition.

"I would say transition is a good word, because it's not the buyers who are in transition, it's the sellers," Rodgers said.

"It just takes the seller a while to see that the price that their neighbor got two, three or four months ago is not the price they are going to get today, and certainly is not going to be higher than what their neighbor got unless they have an exceptional house."

Even so, the average price of homes that settled in September rose to $169,736 from $155,586, a 9.09 percent increase over the corresponding period last year.

The one area that is continuing to aid the market is mortgage rates, having dropped by approximately three-quarters of a percentage point since the Sept. 11 tragedy.

According to Gene M. Lugat, senior vice president of AccuBanc Mortgage Corp. in Columbia and president of the Maryland Mortgage Bankers Association, buyers can expect to see 30-year, fixed-rate mortgages hovering around the 6.5 percent mark, the lowest since October 1998.

`Great opportunity'

"This is a great opportunity for those in the market not to recede [from buying], but approach this market as an opportunistic market for purchasers," Lugat said.

Before the attacks, Lugat said he was offering a 7.25 percent 30-year, fixed-rate mortgage. On a $150,000 loan, the principal and interest would be $1,023.

Today, at 6.5 percent, the same loan would be $948, a $75 monthly difference.

The lower rate also translates into more buying power for a purchaser.

Instead of a $150,000 loan at 7.25 percent, an applicant could qualify for a mortgage of $161,000, a benefit of the lower rate.

Anirban Basu, director of applied economics at the RESI economics institute at Towson University, said the softening of the market was "inevitable."

"We've had this period of robust home sales for many months, and the pent-up demand had started to wane," Basu said.

"But what I am suggesting is a market that simply will not be as hot or nearly as hot as we've been accustomed to."

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