Area home prices 17.5% above year ago

Average is $189,862, but fewer change hands

March 12, 2003|By Trif Alatzas | Trif Alatzas,SUN REAL ESTATE EDITOR

Prices for existing homes in the Baltimore metropolitan area were 17.5 percent higher last month than in February 2002 but sales were down slightly from a year earlier as buying activity slowed because of the Presidents Day weekend snowstorm.

The average sale price for a home in Baltimore and the five surrounding counties grew to $189,862, according to figures released yesterday by Metropolitan Regional Information Systems Inc. It marked the seventh straight month that prices were higher by double digits than in the corresponding period a year earlier.

Sales declined 1.41 percent to 2,168 homes.

Prices continue to rise due to low mortgage rates and a dwindling supply of homes for sale.

Buyers have flooded the market in search of the right home only to be frustrated by the lack of choices, the prices and the speed at which houses move.

The supply of homes for sale last month was down 20.27 percent to 6,534 homes. The average home sat on the market for 60 days - that's 25 days shorter than at the corresponding time last year.

Larry Smith is searching for a larger home in Baltimore to replace the Lochearn house in which he has lived for 27 years. After losing about $6,000 in the stock market, Smith said, he began looking for a safer place to put his money.

"Finding the home you want in an area is a problem," Smith said. "I haven't looked a lot because I just didn't see any homes open." Adding to the frustrations were snow-clogged streets in the weeks after the storm.

"One of the reasons was there was no place to put your car when you got there," said one agent.

Pending contracts, which offer a snapshot of future sales, were down 12.91 percent.

The National Association of Realtors had predicted last month that February and March sales along the East Coast would be depressed because of the storm. But they still expect that homebuying will remain healthy during the year despite threats of a war and the slumping economy. Housing sales have posted records the past two years.

With mortgage interest rates at 40-year lows, agents said, many first-time homebuyers find that monthly house payments are no higher than the monthly rent they are paying for an apartment.

Harford County experienced the largest decline in terms of sales last month, with a drop of 27.5 percent to 174 homes. Anne Arundel County saw the biggest jump - 15.91 percent to 539 homes. Prices rose in every jurisdiction. Baltimore County had the largest percentage increase - 21.8 percent to $177,143.

The rising numbers continue to signal caution for some economists, who worry that the housing market may be overvalued. Others said they doubt prices will fall but they predict moderate growth this year.

"There probably will be some damping of housing price appreciation in the coming quarters," said Celia Chen, a senior economist with Economy.com in West Chester, Pa.

"If economic conditions begin to pick up, that will drive mortgage rates higher."

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