Homes getting harder to find

Buyers are finding shrinking inventory as sales keep rising

March 14, 2002|By Robert Nusgart | Robert Nusgart,SUN STAFF

For buyers beating the streets in search of the perfect home, the hunt is getting harder.

As home sales in the Baltimore metropolitan area continue to rise, the number of homes available for real estate agents to show is shrinking by the month.

Existing-home sales in the region rose 13.82 percent last month compared with February 2001, according to statistics released yesterday by Metropolitan Regional Information Systems Inc., the multiple-listing database used by real estate brokerages. The rise represented the 18th consecutive month of higher sales when compared with February of the previous year.

Sales in Harford County led all jurisdictions, rising 56.86 percent over February 2001. Baltimore County was next with a 24.34 percent increase, Carroll County grew by 20.18 percent, Anne Arundel County was up 7.14 percent and Baltimore rose 2.26 percent. Only Howard County showed a decline, dropping 1.57 percent from the comparable period last year.

The most alarming statistic - for real estate agents - was the continuing fall in homes for sale. At February's end, 8,195 homes were listed for sale in the region; in January, 8,559; and in December, 8,786. That amounted to a 6.7 percent decline from December to February.

The decline is even more significant when looking at the three previous Februarys, as the number of homes for sale dwindled from 15,271 in 1999, to 11,962 in 2000, to 10,897 in February 2001.

"What is hard right now with the lack of supply is that buyers are frustrated," said Jan Hayden, president-elect of the Greater Baltimore Board of Realtors and an assistant manager at the Ellicott City office of Coldwell Banker Residential Brokerage, formerly O'Conor, Piper & Flynn ERA.

"We're the person they come in contact with most, so a lot of buyers perceive that we are not doing our job. But it's not that at all. We can't produce what isn't there.

"If we get in the 7,000 range ... that's really something for us to look at," said Hayden, who in her 23 years of being an agent has never seen inventory as slim as it is right now.

Although agents say demand is strong, another sign that buyers are having a tougher time finding a home is that pending sales, an indicator of future settlements, were down 1.58 percent when compared to February 2001. The decline is the first month-over-month drop since September, when the terrorist attacks brought business to a halt for the last two weeks of the month.

Another indication that buyers are taking more time in finding the right home is the number of days that a property was on the market. That number increased last month to 85 compared with 76 in February 2001, an 11.84 percent increase.

"The properties that are out here [in Howard County] are getting seven to nine offers sometimes," Hayden said. "So obviously, that tells you there are going to be a lot of losers. But that tells you how much demand there is."

She pointed to continued low mortgage rates that have helped to bring buyers into the market, saying that she has never seen rates "sustain themselves for so long."

Neither has Tom Champion, manager of the Lutherville office of Wells Fargo Home Mortgage, who noted that the 30-year, fixed-rate mortgage has seen "nominal volatility over the last six to nine months."

"There was a rundown in interest rates, they came back up to their highs of about 7 3/8 or 7 1/2 and fell back down to 6 3/4 and now they are just ranging between 6 3/4 and 7 3/8 ," Champion said.

Champion has seen an influx of buyers who, with such affordable rates, have been able to secure "pre-approval" letters for loans when beginning their search for a home. But because of the lack of inventory and competition for homes, many of his customers haven't been able to put those letters to use.

"We're like the produce salesman. If we're not selling the produce ... or [in our case] selling the money - we're not making any money," Champion said.

"It's good that we have the potential business sitting in our pipelines. It's bad that it's just sitting in our pipeline with no sales."

And as those buyers continue to search, what they will find is that prices of homes continue to rise.

The average sale price in the Baltimore metropolitan area rose to $161,591 from $149,289 in February 2001, an 8.24 percent increase.

A single-family detached home rose 7.21 percent to $231,569 from $215,996, and a townhouse increased 17.35 percent to $124,421 from $106,029.

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