Pace slows as prices of homes rise again

Agents in area reporting more cautious buyers

August 10, 2004|By Jamie Smith Hopkins | Jamie Smith Hopkins,SUN STAFF

Home prices in the Baltimore area continued a strong double-digit march upward last month, but the average price failed to increase 20 percent for the first time since February, a sign that the hot market might be cooling a bit.

Some real estate agents say they are seeing a new nervousness among buyers who fear getting their foot in the door just before values stop their upward spiral.

The average existing home in the Baltimore region sold for nearly $260,000 last month, about 15.3 percent more than in the same month last year, Metropolitan Regional Information Systems Inc. reported yesterday.

In June, the average home in the region sold for 20.2 percent more than in the same month last year and several thousand dollars more than in the preceding month.

Home prices have been increasing at a slower pace in the past few months since soaring at a nearly 23 percent annual growth rate in April, but the homes themselves are still rapidly jumping off the market.

The average home in the Baltimore area sold in 37 days last month, one day faster than in June and seven days faster than in the same month last year.

"We're doing great, and we don't see any reason that it won't continue," said Patty Smallwood, president of the Howard County Association of Realtors. "But ... obviously buyers are cautious when you get so much appreciation in so short a time."

They're more anxious now, wondering whether values could actually drop, she said. They're less urgent about buying immediately, and less generous. "We still see an increase in prices, but it's not as high an increase as it had been when people were escalating their offers," she said.

The average selling price for existing homes in the Baltimore area rose almost 3 percent in 2000, 3.5 percent in 2001, 11.5 percent in 2002 and 15.3 percent last year, a huge surge in the past few years as interest rates dropped to historic lows. Rates have been rising this year and are expected to continue heading up.

New homes in the Baltimore area are getting very expensive. This spring, the average selling price for a new single-family house was nearly $507,000, according to Meyers Group, a California-based real estate information company. That's a 36.2 percent increase over the average in the spring of last year, driven up by a drop in the number of homes built.

"There are more buyers chasing fewer houses," said Tom Ballentine, director of government affairs for the Home Builders Association of Maryland.

Across the region last month, price increases on resales ranged from about 13.3 percent in Harford County to 21.6 percent in Baltimore County, according to MRIS.

About 250 more existing homes were sold than in July last year, an increase of about 6.3 percent. Only Howard and Carroll counties recorded fewer home sales. That drop appeared to reflect a lack of inventory rather than a lack of interest.

A little more than 5,000 existing homes were newly listed for sale last month in the Baltimore area. That's about 400 more than in the previous July but down by about 160 from the historically busier June.

Average home prices for Maryland last month have not been released, but they also increased rapidly in the first six months of this year. In June, they jumped 20.8 percent to more than $300,300.

Henry A. Strohminger III, president-elect of the Greater Baltimore Board of Realtors, said the statistics in the city and its suburbs are impressive for what is generally a slow season. Home sales usually take a back seat to vacations in July and August.

"Everyone has said it can't continue this way, but then it keeps continuing," said Strohminger, an agent with Long & Foster Real Estate in Timonium. "There's no bubble. Prices are what they are. ... I think the Baltimore market is just finally stepping up to the plate with other metro areas around - D.C., Philadelphia, New York. So we're finally enjoying those large marketplace prices."

He said there aren't enough sellers to satisfy all of the interested buyers, which helps explain why prices continue to climb.

That's a particular issue for people looking in the low and middle price ranges, said Smallwood, an associate broker with Century 21 H.T. Brown Real Estate in Scaggsville. She's seeing an increase in inventory at the high end, but people in townhouses looking to buy their first single-family home for $350,000 to $500,000 are having a hard time because of the scarcity on the market.

Kris Willing, 33, whose family is getting ready to move from a Baltimore County townhouse to a Howard County house, can attest that there's not a lot out there. But she has a bigger problem: No one has bought her townhouse, which has been for sale for about 60 days, twice as long as the average home in the county.

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