Sellers find local market is cooling off

No more `multiple offers and $10,000 over full price'

Balance shifts to buyers

14 homes are for sale in Roland Park, up from 2 or 3 in April

October 14, 2001|By Robert Nusgart | Robert Nusgart,SUN REAL ESTATE EDITOR

The cliche from the always effervescent stereotypical real estate agent goes something like this: "You know, there's never been a better time to buy a home."

More times than not, the cliche is mindless chatter used by commission-driven agents who want to generate business.

But now, it just might be true.

For the first time since Baltimore's housing boom took off in late 1997, there's the sense among industry professionals that the market is beginning to swing back from a seller's market to a more balanced playing field.

Bidding wars and the days of multiple contracts on homes are rarer.

Homes in highly desired neighborhoods - Roland Park, Guilford, Mount Washington, Canton - that would go on the market in the morning and be sold by the afternoon are now lingering on the market.

Non-contingent contracts - some of which even eliminated the home inspection - seem to be a thing of the past.

And sellers asking higher and higher prices - and many times getting them - are beginning to get a reality check.

That alone should encourage buyers.

Add to that the fact that mortgages have drifted to their lowest levels in three years, providing buyers with greater purchasing power. And world events have created an atmosphere of uncertainty, giving buyers some leverage by reminding sellers that anything could happen to alter the marketplace.

Yes, it just might be the best time in years to buy.

According to last week's Freddie Mac survey, the 30-year, fixed-rate mortgage had dropped to 6.58 percent, the lowest since Oct. 9, 1998, when it averaged 6.49 percent, which was the lowest ever recorded by the mortgage giant.

In Baltimore, the 30-year fixed rate mortgage is at 6.8 percent, slightly higher than its low point of 6.62 in October 1998.

What does that mean to a buyer? A year ago, the Freddie Mac 30-year average was 7.84 percent, meaning that the monthly principal and interest on a $150,000 loan has dropped from $1,083 to $956, a difference of $127 a month.

And for the life of the loan, the borrower would save approximately $46,000 in interest.

The Freddie Mac 15-year average was 6.06 last week, the lowest since Freddie Mac began tracking that product in 1991. Last year at this time, the 15-year average stood at 7.52 percent.

For that same $150,000 loan, the principal and interest would fall from $1,392 to $1,270, and the borrower would save $22,000 in interest during the 15 years.

Helped refinancing

The drop in rates has helped those buying a home as well as those refinancing an existing loan. According to last week's Mortgage Bankers Association of America loan index, refinancing accounted for 73.8 percent of all applications taken, the highest level since the MBAA began surveying in 1990.

"These are remarkable times," said Gene M. Lugat, senior vice president of AccuBanc Mortgage Corp. in Columbia and president of the Maryland Mortgage Bankers Association. Lugat said his company had forecast "about $1 billion in business, about 9,000 homeowners" at the start of 2001.

"We are probably going to see that number climb to 16,000 and a volume at about $1.75 billion. We have seen tremendous impact from this," Lugat said.

Arthur Davis, president of Chase Fitzgerald & Co., in Roland Park, has seen the impact and the evolution of the market.

"We should be entering a period where you should see some good opportunities," Davis said.

"There were times when you walked in here and wanted to see a house in Roland Park, there was nothing," he said. "There are 14 houses in Roland Park to choose from now; last April you would have had two or three."

Patrick Welsh, outgoing president of the Greater Baltimore Board of Realtors, said he senses the same thing.

"Since Sept. 11 hit, I'm not so sure that there is a frenzy when a new listing comes on the market," Welsh said. "For buyers, at least, if the market slows a bit, there will be some inventory to pick from."

And with more homes on the market, buyers can feel as if they don't have to make a snap decision.

"We are starting to see buyers put in offers a little less than list price, get a counter and say, `I'll stick by my number,'" Davis said.

"If you have a detached buyer who doesn't have to have to have the house, he might wait.

"Certainly in the situation if someone is looking to take advantage of inventory and search out a seller who wants to get a house sold, there are some great opportunities out there."

For Anirban Basu, director of applied economics at the RESI economics think tank at Towson University, it was a simple declaration: "I no longer think we are in a seller's market. And we are not in a particularly good buyer's market, either.

"It's not the case that sellers are going to be giving stuff away. Sellers have become accustomed to demanding a full value for their product.

"And I think you are going to see some resistance from sellers in terms of adapting to this new cycle in the housing market."

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