Housing market in region tightens

As inventory dwindles, prices rise

sales down except in Baltimore

July 11, 2002|By Robert Nusgart | Robert Nusgart,SUN STAFF

Homebuyers learned two things last month about the Baltimore real estate market: The hunting is getting harder, and prices continue to rise.

Lifted by a surge in city settlements, sales of existing homes in the Baltimore area were 1.83 percent higher last month than in June of last year, according to statistics released yesterday by the Metropolitan Regional Information Systems Inc., the multiple listing database used by brokers.

The rise in sales helped keep the Baltimore-area market on pace for another record year. Preliminary sales figures for the first six months were up 4.11 percent over those for the first half of last year, with 17,908 homes sold vs. 17,200. Sales were up 22 percent compared with those for the first half of 2000.

"The sales trend is remarkable," said Alan R. Ingraham, president of the Greater Baltimore Board of Realtors. "With the lack of inventory that we have, to still show numbers above last year, which was an extremely strong year, is unbelievable."

The drop in housing inventory has alarmed many in the industry, including Ingraham, who said the level is "at a critical point right now."

In the area, the number of homes for sale at the end of last month fell to 7,491, the lowest in years.

With supply dwindling and demand higher, the average sales price last month rose to $189,024, 10.01 percent higher than in June last year.

Nowhere was price appreciation more noticeable than in Anne Arundel and Howard counties. In Anne Arundel, the average sales price jumped 28.59 percent to $261,804 from $203,598 in June last year. In Howard County, the average was $275,049, up 19.83 percent from $229,534.

Last month's dollar volume for number of homes sold in the region rose to $748.3 million, 12.02 percent more than in June last year.

The number of available houses slipped 2.82 percent from May's 7,709. But the number of homes for sale is down 30.04 percent from the 10,708 that were on the market the previous June, and down 41.42 percent from the 12,788 listings the multiple listing database showed in June 2000.

Potential buyers can't take advantage of favorable mortgage rates because so few homes are for sale, Ingraham said.

Those sinking mortgage rates continue to help fuel the demand for housing. Last week, the average interest rate for a 30-year, fixed-rate mortgage in the Baltimore area hit 6.59 percent, the lowest ever recorded for the area, according to HSH Associates Inc., a New Jersey company that analyzes mortgages.

Even so, the combination of rising prices and lack of inventory dampened sales in every jurisdiction except Baltimore, where sales were 28.13 higher than in June last year.

Sales in Anne Arundel and Carroll counties were off 7 percent; Harford County dropped 4.72 percent; Baltimore County was off 3.61 percent; and Howard County was down 1.7 percent.

Real estate agents said one reason sales in the city have jumped might be that renters realize buying can be cheaper than renting.

"The majority of my buyers are currently renters who are converting to buyers," said Jamie Mason, an agent in the Fells Point office of Long & Foster Real Estate Inc.

"There are two major driving factors. The first is low interest rates, and ... people who were renters previously have been a little hesitant to make the commitment in purchasing because they always heard you need to keep it five years to recoup your investment," Mason said.

"In the city market, that has not been true. And renters are starting to see that. That mindset has changed and has turned a lot of people who would have continued renting into buyers in the city market."

Indications are that sales will continue their ascent. Pending sales, contracts signed last month that act as an indicator of future settlements, rose 2.33 percent for the area.

"The continual length and strength of the market that has been going on for five years is just amazing in itself, and on top of that the price escalation is unbelievable," said Bob Merbler, an agent with the Federal Hill office of Coldwell Banker Residential Brokerage. "We've seen people make $100,000 in a year or two. It's very hard to price homes."

In highly sought-after Howard County, agents tell of similar situations.

"I've never seen anything like it. Townhouses that I sold last year for $161,000 I could put on the market today for $215,000 to $220,000 in certain areas," said Jan Hayden, an agent for 21 years and an assistant manager of the Ellicott City office of Coldwell Banker Residential Brokerage.

"It was interesting because last year [buyers] thought [they] were overpaying, but guess what? Even from last year, people are making $50,000 to $100,000," said Creig Northrop, an agent in the Howard County at Waverly Woods office for Long & Foster. "Townhouses are hitting $300,000-plus. ... Isn't that amazing?"

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