Home prices hit average of $207,098

Metro area up just 6.3% from November 2002

Demand still strong

Number of sales on pace for record

December 11, 2003|By Trif Alatzas | Trif Alatzas,SUN STAFF

The average price of a home sold in the Baltimore area in November was just 6.3 percent higher than in the same month last year, reflecting a significant slowing in the recent torrid growth in home prices here.

The increase was the smallest year-over-year gain in 2003. Double-digit year-over-year gains were recorded in the previous seven months.

This November, the average sale price of a home in this region was $207,098, compared with $194,830 in the same month last year.

Despite the slower growth in prices, the number of homes sold last month remained on pace to set a third consecutive yearly record.

Area real estate agents said the November figures show that demand remains strong. Most economists and industry experts predict home sales will slow next year but still will post their second best year in history. They also expect price appreciation to rise at more modest levels.

"At this point, it's still one of the [most sound] investments out there," said Cindy Ariosa, president of the Greater Baltimore Board of Realtors. "This is the one arena that has kept the economy looking good."

Sales in Baltimore and the five surrounding counties rose 5.92 percent, to 2,971 homes last month compared with November 2002, according to figures released yesterday by Metropolitan Regional Information Systems Inc. in Rockville.

Homebuyers have purchased 36,012 homes this year in the metro area - a 6.42 percent increase over the first 11 months of last year. There were 37,118 homes sold in the Baltimore area last year.

Home prices were highest in Howard County, with average prices of $300,522. That was followed by Anne Arundel, at $280,931; Carroll, at $249,508; Harford, at $207,670; Baltimore County, at $191,398; and Baltimore City, at $104,505. Sales rose in every jurisdiction except Howard, where 313 homes were sold - a 15.41 percent drop.

Increasing worries about a letdown in the housing industry hit Wall Street this week when Seattle-based mortgage lender Washington Mutual lowered its profit outlook for next year and announced 2,900 job cuts as a result of a slowdown in refinancing activity due to rising mortgage interest rates. Shares of several mortgage lenders and homebuilding companies subsequently fell. And in a separate report yesterday, the Mortgage Bankers Association of America said applications for mortgages fell last week to their lowest level in 18 months.

But some experts insist that the housing market will continue to prosper as the economy improves.

"The housing market is still very tight and I don't see that changing much in the next couple of years," said Mark Vitner, a senior economist with Wachovia Securities. "We did see sales prices start to slow last quarter, but prices are still appreciating."

The National Association of Realtors expects the national median existing-home price to rise 9.1 percent to $172,600 this year. It would mark the highest increase since 1979 when prices rose 14.4 percent to $55,700. The Realtors' group predicts the median house price will rise 4.7 percent next year. The median price of a Baltimore-area home was $220,200 during the third quarter - a 17.8 percent increase from a year earlier, according to the Realtors' group.

A federal report released last week showed that home prices in Maryland rose 8.65 percent during the 12 months that ended Sept. 30 - the fourth-best appreciation rate in the nation.

Home-price appreciation has helped fuel the economy during the past three years as many homeowners have either sold their house at a healthy profit or refinanced their existing mortgage to tap the growing equity in their real estate. Mortgage rates have remained at historically low levels during the past two years while the inventory of homes for sale has been limited. That scenario has helped more buyers afford pricier homes and contributed to the healthy price spikes.

While still low, benchmark 30-year mortgage interest rates have increased during the past few months, rising above 6 percent last week.

Baltimore-area homes took an average of 53 days to sell last month - five days fewer than in November 2002. And pending contracts, which often offer a measure of sales to come, were up just 0.4 percent from the corresponding period last year.

Inventory remains limited even though the gap is not as acute as it was several months ago - there were 7,006 active listings last month, a 5.6 percent drop compared with November last year.

"The market is still strong because of that [limited] inventory," said Joe DeLuca, vice president and manager of Long & Foster Real Estate in Eldersburg.

"All indications for 2004 are that it's not going to be quite as hot but it doesn't look like it's going to slow down."

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