Sales of homes shatter record 2nd year in row

Baltimore-area sales topped 36,000 last year

3% more than in 2001

Prices up nearly 11%

market strong in Dec.

January 14, 2003|By Trif Alatzas | Trif Alatzas,SUN STAFF

Sales of existing homes in the Baltimore metropolitan area posted their second consecutive record last year as historically low interest rates and double-digit price increases helped the housing market continue to withstand a slowing economy.

Preliminary figures indicate that 36,738 homes were sold in the five-county area and Baltimore last year, 3.21 percent more than in 2001. Official year-end figures are expected next month.

The year closed out with strong sales. The number of homes sold in December was 5.92 percent higher than that in December 2001, according to figures released by Metropolitan Regional Information Systems Inc., the listing service used by agents and brokers. The average sale price in the region rose 10.83 percent, to $194,546.

Most agents said homes sold quickly in December, even though activity usually slows during the holidays. The average home took 58 days to sell last month, the same as the previous year.

But in a sign the market might be softening, pending sales in the region, which offer a snapshot of future settlements, were 3.7 lower than in December 2001.

"I do think people want to take advantage of the interest rates," said Shirley Camiolo, a sales agent with Coldwell Banker Residential Brokerage in Bel Air. "The interest rates are supposed to stay low. If that continues, I see another strong year. But it has to level out sometime."

Mortgage interest rates, which have hovered near 6 percent during the past few months for a 30-year fixed rate, are expected to rise to 6.8 percent by the second half of the year, according to the Mortgage Bankers Association of America.

Most mortgage bankers and real estate agents are forecasting healthy sales, but they do not expect to surpass the past two years. Housing sales in the Baltimore area were 13.2 percent higher in 2001 than in the previous year.

The average home value in Maryland rose 10 percent during the past year, according to Freddie Mac, the No. 2 buyer of U.S. mortgages.

As housing values continue to rise, concerns that the market might be overvalued is an issue most industry leaders are grappling with more often.

One expert said the Baltimore area could be overpriced because the increase in home values has outpaced income growth.

"Over the last few years, people probably have paid more for housing than they might have five or six years ago," said Ingo Winzer, president of Wellesley, Mass.-based Local Market Monitor, which tracks housing values and estimates that the Baltimore area is 14 percent overpriced.

He based that figure on sale-price estimates for last year and actual prices through the third quarter of last year. Baltimore could make up those values in the next three years, Winzer said.

"It's an amount that I wouldn't find terribly worrisome," he said.

Price rise foreseen

Few economists expect the double-digit price increases of the past year to continue.

But Frank Nothaft, Freddie Mac's chief economist, said he thinks values will rise 3 percent to 5 percent in Maryland.

At the end of the third quarter, home values in Baltimore were up 15.2 percent compared with those a year earlier. That was the 16th-strongest price appreciation in the country, according to the National Association of Realtors.

"We believe there is no bubble," said S. Lawrence Yun, a forecasting economist with the association. "Demand is very strong, and supply is very lean."

Post-holiday surge

There were 6,721 active listings in the Baltimore area in December, 24 percent fewer than in December 2001. But some agents said they have seen more sellers put their homes on the market since the holidays.

Real estate experts said new buyers and those trading up for larger homes continue to dominate the market.

For example, Stephanie Thornton, 31, is a hopeful first-time homebuyer from White Marsh, who wants to purchase a rancher between $60,000 and $80,000. She recently took a class for first-time homebuyers at Neighborhood Housing Services of Baltimore Inc. and hopes to enter the market this year.

"It's a little bit scary," Thornton said. "But the time is right. I'm concerned that [mortgage rates] might go up so I better get it together."

Michele and Patrick Sewell sold their Dundalk rowhouse in November and bought a three-bedroom single-family home in Edgewood last month for $165,000.

They wanted a larger house so that their 3-year-old daughter, Gabrielle, would have more room to play. They looked for three months and couldn't find a home they could afford.

When their frustrations grew, they considered putting off their search. Then they looked at mortgage rates and kept visiting open houses.

"I didn't anticipate that it would be this difficult," she said.

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