Home prices still on the rise

Cost for a house in Md. rose 22.3% over 12 months

Appreciation at 25-year high

December 05, 2004|By Kathleen Cullinan | Kathleen Cullinan,SUN STAFF

Home prices in Maryland and the nation continued to surge last quarter and appreciation rates reached their highest in 25 years during the 12 months that ended in September, federal data released last week show.

Maryland ranked sixth among the 50 states and the District of Columbia with a 22.3 percent growth in housing prices in the 12-month period, according to the Office of Federal Housing Enterprise Oversight report released Wednesday. The 12-month increase was the highest for Maryland since 13.74 percent during the second quarter of 1979.

Maryland's third-quarter growth rate of 8.28 percent was nearly twice as large as it was during the previous three months, according to the report.

The national appreciation average was nearly 13 percent for the 12 months that ended Sept. 30, and 4.6 percent during the third quarter. The 12-month increase was the biggest since 13.1 percent in 1979's third quarter.

The study does not specify median or average home prices. But a separate report released last month by the National Association of Realtors found that the median price of a single-family home in Baltimore and its five surrounding counties was $250,500 at the end of September, an increase of 14 percent from the corresponding quarter in 2003.

The state's homebuyers continue to pay more because of limited space and a durable economy in Maryland, said Patrick Lawler, the federal housing agency's chief economist.

"It's part of the whole Northeast, Maine to Virginia," Lawler said, where homes typically cost more than in the rest of the country.

Maryland's appreciation rate was behind that for houses in Nevada, which posted the nation's highest with 35.8 percent compared with 12 months earlier.

Nevada was followed by Hawaii and California at 28.3 percent and 27.2 percent respectively. Rounding out the top five were the District of Columbia and Rhode Island, both rising about 23 percent, according to the report.

The slowest-growth states were Texas, with 3.8 percent; Utah, 3.9 percent; Indiana, 4 percent, and Mississippi, at 4.5 percent, according to the report.

In the Maryland area, real estate agents said they continue to see strength in the market even though most experts predict that mortgage rates will rise in the coming year.

Mortgage rates have remained below 6 percent for much of the year and helped many first-time buyers enter the housing market.

Many experts predict that home prices cannot continue at their current spiral and that homeowners should not get used to these double-digit increases. But most said they think the housing market will remain healthy next year, even if it does not reach the record rates of the past three years.

"The market continues to be incredible," said Henry Strohminger, president of the Greater Baltimore Board of Realtors and an agent with Long & Foster Real Estate Inc. "Everyone keeps waiting for the bubble to burst," he said, but next year should be nearly as strong as this one.

The Baltimore-Towson region outperformed the state, posting a 22.6 percent price gain during the 12 months that ended in September, according to the report. It placed 26th among 245 metropolitan areas in the country outlined in the report.

The metropolitan Washington area, which includes parts of Maryland, ranked 17th in the nation with 24 percent growth during the past 12 months.

"There may be a few people that are being priced out of the market," Strohminger said. But most buyers still are being helped by the low mortgage rates.

The study, known as the House Price Index, excludes properties with mortgages higher than $333,700, the maximum amount allowed in 2004 for loans bought by government-charted Fannie Mae and Freddie Mac.

The index also tracks average house price changes in repeat sales or loan refinancing of single-family homes in their portfolios.

Bloomberg News contributed to this article.

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