Huge year for resales of houses

Area's 35,239 deals in 2001 were most in recent memory

Preliminary count

Buyers unfazed by economic woes or even Sept. 11

January 16, 2002|By Robert Nusgart | Robert Nusgart,SUN STAFF

The mix of low mortgage rates and seemingly unshakable buyer determination was enough to overcome a weakened economy and make 2001 a blockbuster year for existing-home sales in the Baltimore metropolitan area.

A preliminary count shows 35,239 homes were sold in the Baltimore area last year, compared with 31,405 in 2000, a 12.2 percent increase, making it the best year for home sales in recent memory.

The year's final boost came as the Metropolitan Regional Information Systems Inc. - the multiple-listing database used by the industry - released its December figures, showing a 4.61 percent rise in sales over December 2000.

Official year-end statistics won't be released until next month, but when comparing 2001 with earlier years, the bullishness of the market is remarkable. Consider this: Sales last year were 14.09 percent higher than those of 1999; 69.36 percent higher than 1997, which had 20,806 sales, and 93.24 percent more than the 18,235 sales of 1995.

It seemed that people who wanted to buy a home in the area weren't fazed by warnings of recession, layoffs, a sagging stock market or the aftermath of Sept. 11. They sought real estate as an investment that provided appreciation in value and pleasure.

"We've been somewhat immune to what has gone on elsewhere in the country and with the recession being pretty much over in most people's opinions, I think our market will continue to show the strength it has shown in the last few months," said Alan R. Ingraham, president of the Greater Baltimore Board of Realtors.

"We still see a consistent level of activity and for the first time in many, many years we saw virtually no slowdown around the holidays and historically it has always been a period when people rethought the process, stepped back and said, `I need to take a deep breath and we're not going to do anything for a while.' But we saw very little of that this year," he added.

One consequence of having such a robust market is that the active inventory of the number of homes for sale in the marketplace has dropped to the lowest level in years, making it even more difficult for buyers to find their dream home.

At the end of December, only 8,786 homes were listed with real estate agents, as 1,180 more homes were sold last month than came onto the market. Comparatively, there were 10,775 homes on the market in December 2000 and 15,625 at the end of 1998.

"It's not a lot," said Steve James of Re/Max Columbia in Howard County where only 514 homes were listed at the end of the year.

"Things have been pretty well picked over since the end of last year and there is really nothing new that has come on," said Arthur Davis, president of Chase Fitzgerald & Co. in Roland Park.

"We stayed much busier in December than I thought we would. Busier than I think we all wanted to be," James added. "And I still attribute that to interest rates. The market was forcing people to go out there and buy."

Attractive mortgage rates have played a major part in keeping the housing sector vibrant throughout the year and especially after the Sept. 11 terrorist attacks when 30-year, fixed-rates slipped below 6.5 percent before gradually climbing back above 7 percent in mid-December. However, in the last few weeks mortgages have been going back downhill.

Ingraham believes that the late November spike in rates motivated "second-guess experts" who made the decision to purchase on fears that rates would continue to rise.

All jurisdictions but one - Baltimore City, which dropped 11.47 percent - showed gains over December 2000.

Carroll County was up 18.9 percent; Anne Arundel gained 13.55 percent; Baltimore County rose 10.51 percent; Howard County was up 4.24 percent; and Harford County gained 3.13 percent.

"What is really noteworthy is that we continue to show positive numbers against extremely strong comparative numbers," Ingraham said. "But we all know how extraordinary last year was. Now we're going to start to click against those numbers.

Overall, it was the 15th straight month of higher month-over-month gains and if pending sales - a barometer of future settlements - are any indication, the momentum of 2001 will carry well into this year.

Pending sales were up 17.22 percent in December, following similar gains in October and November, meaning that it's likely the first quarter of 2002 will outperform the same period last year.

"I am a little surprised that we are entering 2002 with this much sales momentum," said Aniban Basu, director of applied economics at Regional Economic Studies Institute at Towson University. "I think the pending number is the one that really surprises me. It seems that the market has accelerated somewhat."

And what continues to accelerate is home prices. The average sales price for the Baltimore metro area in December rose to $176,690 from $156,359 in December 2000, a 13 percent increase.

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