City, D.C. home prices up 23%

Metropolitan areas show top growth in Mid-Atlantic

U.S. median sales figure rises 9%

August 15, 2004|By Emily Bregel | Emily Bregel,SUN STAFF

Home prices in Baltimore and Washington grew at the fastest rate in the Mid-Atlantic region from April to June, and those locales ranked 15th in the nation in terms of appreciation growth among metropolitan areas studied by the National Association of Realtors.

In Baltimore and its five surrounding counties, the median sales price of an existing single-family home rose 23 percent to $251,700 during the second quarter compared with the corresponding three months last year, according to data released by the Realtors' group Thursday.

Washington-area prices also posted a 23 percent increase, to $352,400.

The national median sales price increased 9.1 percent to $183,800 from April to June. The median price is the point at which half the homes sold for more and half sold for less.

House prices have grown by double digits in Baltimore and surrounding areas during the past several quarters, helping many homeowners enjoy newfound wealth in their homes after suffering stock market losses in past years.

But the increases have stymied many buyers, especially those trying to get into their first house.

Across the country, Las Vegas, experienced the most rapid increase in home sale prices from April to June, jumping 52.4 percent to $269,900 compared with the second quarter of last year.

The second-largest growth rate was in Anaheim-Santa Ana in Orange County, Calif., where the median price rose 38.7 percent to $655,300. It was the nation's highest median sale price in the second quarter.

A record 49 metropolitan areas nationwide had double-digit increases during the quarter, the Realtors' group said.

The group, which studied 128 metropolitan areas, said 11 regions posted declines.

Prices in Knoxville, Tenn., declined 7 percent to $131,400 from April to June compared with the second quarter of last year.

Other areas posting declines included Lake County, Ill., which fell 3.3 percent to $254,600; Montgomery, Ala., with a 3.3 percent decline to $116,900; and Austin, Texas, which fell 1.2 percent to $96,400.

Sales of homes have posted records during each of the past three years nationwide and locally.

A separate report released last week by the Realtors' group said home sales posted a record during the second quarter of this year. The boom is attributed to low mortgage interest rates and strong demand.

Proximity to D.C.

Baltimore-area prices have continued to grow, real estate experts said, because of the region's economy and its proximity to Washington.

"The level of home prices [in D.C.] is still far more expensive than the Baltimore region, and actually, that's a plus for Baltimore," said Lawrence Yun, senior economist for the National Association of Realtors.

Yun discounted concerns that home prices could fall as mortgage interest rates rise, as they are expected to do by the end of this year.

Price growth has "been driven by the fundamentals of the job creation in the Baltimore region," Yun said.

The low mortgage rates also have pushed more first-time buyers into the market. That, coupled with empty nesters looking for smaller homes, has added to the demand for housing, real estate experts said.

"We're seeing this phenomenon is occurring in various degrees throughout the country but [in Maryland] we are literally a hot spot, and it's because of the very tight constraints on supply," said John Kortecamp, executive vice president of the Home Builders Association of Maryland.

Several homebuilders complain that construction limits in various jurisdictions have contributed to the price increases.

New-home prices in the Baltimore area grew at even higher rates during the second quarter. Average single-family home prices in the region rose 36 percent to $506,779 during the second quarter compared with the corresponding period last year, according to the Meyers Group, which tracks new home sales. Average prices for attached new homes rose 24 percent to $311,588.

The average first-time buyer in Maryland earns 54.4 percent of the salary needed to purchase a home, according to an index calculated by the Maryland Association of Realtors. The group's latest figures were calculated for June and have hit a four-year low.

State officials expanded a program this year to help more people become homeowners. The More Houses 4 Less program provides low-interest loans to qualified buyers.

Leslie Mooney, a spokeswoman for the Maryland Department of Housing and Community Development, said state officials recently increased the income and purchase price limits for the program to make more buyers eligible.

From June to August, the state offered $5,000 to help qualified buyers with closing costs, an increase of $2,000 from the program's typical assistance plan.

First-time homebuyer

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