Home prices surging in Carroll

Brisk: Low mortgage rates and fewer homes for sale have buyers caught up in bidding wars.

April 25, 2004|By Hanah Cho | Hanah Cho,SUN STAFF

Realtor Joe DeLuca figured the robust real estate market would reach its peak and then eventually bottom out.

"I have been telling my group that it'll slow down for three years," said DeLuca, who manages the Eldersburg branch office of Long & Foster Cos. "It hasn't."

In fact, business at DeLuca's office has been brisk, with buyers trying to lock in low interest rates and bidding up home prices in Carroll County.

Across the country and in Maryland, the real estate market has been a boon in what otherwise has been a lackluster economy.

The median price of a house in the Baltimore metropolitan region last year was $173,000 - 16 percent higher than a year earlier, according to Metropolitan Regional Information Systems Inc.

Carroll County has been no exception.

Here, the median price of a house last year was $230,000 - 15 percent higher than a year earlier, according to MRIS.

The price surge doesn't seem to be slowing. Home prices in the first two months of this year registered double-digit increases from the previous year. In February, the median home price rose 13 percent to $237,500 from a year earlier, according to MRIS.

Much of the activity, Carroll County real estate agents say, has been driven by favorable interest rates, which for a 30-year fixed mortgage averaged 5.6 percent in February.

The attractive rates are encouraging homebuyers to trade up for larger houses.

"A lot of people, because interest rates are good, they're looking to move up to another home in the county," said Janice Kirkner, president of the Carroll County Association of Realtors. "We're seeing growth in that. It opens up homes on the other end."

Then there are out-of-county residents, particularly from Howard County, who are crossing into Carroll, where they can get more land for their money. Howard County's median price for a house in February was $275,400.

Intangibles, such as the quality of life, also draw homebuyers into the county, said Westminster Realtor Scott Gentile.

"I didn't grow up in Carroll County," Gentile said. "When I first came here, it just felt nice. Nice scenery, nice people. That's why we choose to live where we do."

At the same time, brokers say, a dearth of listings is leading to bidding wars and driving prices up. Not only are homes priced around $200,000 moving quickly, but escalating clauses in contracts are becoming more of a standard practice with multiple buyers.

All that is good news for sellers, who have the edge in this market.

"You're trying to get them the best deal, but the bottom line is they want to buy a home," said Kirkner, who has been an agent for 27 years. "If you are looking to buy, you have to be aware of the market and may need to compete with other offers."

Besides existing homes on the market, new construction in Carroll County is not keeping pace with demand, Gentile said. This was the situation before the Carroll County commissioners imposed a freeze on residential growth in June, he said.

The freeze halted plans for new subdivisions that are covered by the county's "adequate public facilities" law while the county revamps its growth-related laws.

The freeze interrupted about 90 projects, totaling 1,700 lots, that had passed the early stages of development review.

"There is significantly more demand, given the rates, than the housing supply," Gentile said.

Alison and Todd Welch saw both ends of the real estate market.

After the recent birth of their son and plans for a second child, they decided to shop around for a more spacious house in Westminster. They found a four-bedroom house they liked, but had to compete with two other bidders before paying $310,000.

Then, when they put their three-bedroom Westminster townhouse on the market, the couple discovered what it was like for sellers: The house sold less than two days later and well above the original price of $145,000 four years ago.

The couple accepted the first bid of $210,000 because they needed to sell their house quickly to close on their larger house.

"It couldn't have gone any smoother," said Alison Welch, who moved into their new home in February. "We knew [the interest rates] weren't going to get any lower. If we weren't going to do it now, we knew we wouldn't have the opportunity to do it later."

With Carroll's median home price at $237,500 - which means half of homes sold for more and half sold for less - in February, affordability becomes a concern.

"It's a complicated issue, but the bottom line is that the housing cost for ownership and rental has been increasing," said James Upchurch, president of Interfaith Housing Alliance Inc., a nonprofit housing developer in Frederick. "Supply has not been increasing in the affordable housing side, creating a severe problem for a growing number of households."

Interfaith Housing has helped more than 100 families build their own homes in the Taneytown area. But high impact fees and the cost of land have become obstacles, Upchurch said.

In Frederick and Montgomery counties, a zoning policy called inclusionary housing sets aside a certain number of affordable houses for rental and ownership in new developments, Upchurch said.

Carroll County should follow that model, he said, to create more homeownership opportunities for moderate- to low-income families.

"This is where Carroll County, wealthy and booming, has to go in public policy," Upchurch said.

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