Area home prices hit record

Average topped $300,000 for first time in June

`It's a phenomenal increase'

Strong demand, limited supply of houses cited

July 12, 2005|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

The average sales price of a house in the Baltimore area raced across the $300,000 mark for the first time ever last month, showing continued strength in a heated housing market.

The average price hit $309,090 in June, a more than 17 percent jump compared with June 2004, the Metropolitan Regional Information Systems Inc. reported yesterday.

It took just 26 months for the average price to make the $100,00 leap, from $202,158 in May 2003, the first time it punched through that threshold, according to MRIS data. In contrast, it took more than 13 years for prices to rise from $100,000 to $200,000. The average price of a single-family home in metropolitan Baltimore first topped $100,000 in the first quarter of 1990, averaging $103,400, according to the National Association of Realtors.

Low mortgage rates and strong demand for homes are driving sales, which increased 9 percent in June compared with a year earlier, real estate experts said. A limited supply of homes for sale has helped boost prices to record levels.

"It's a phenomenal increase, and there really continues to be no end in sight," said Henry A. Strohminger III, president of the Greater Baltimore Board of Realtors. "I'm not seeing any end in sight of our business, in both listings and sales. We are a major metro area, and the prices are saying that."

Joanne Poole, president of the Maryland Association of Realtors and an agent for Coldwell Banker in Glen Burnie, recalled that only about a year ago speculation centered on whether prices would hit an average $250,000.

"It was destined to go over $300,000, " Poole said yesterday. Prices will continue to appreciate as long as demand outstrips supply. I don't see any immediate change."

In Baltimore City and in Howard, Baltimore, Anne Arundel and Harford counties, the average sales price increase ranged from 20.25 percent to 24.2 percent. The average sales price climbed above $300,000 for the first time in Baltimore County, jumping nearly 22 percent to $301,036.

Only Carroll County posted a significantly slower rate of appreciation, with a 5.51 percent increase, the MRIS said.

Baltimore City continued to have the area's lowest average sales price, at $173,293, but that represented a more than 21 percent jump in value. The city far outpaced each of the counties in sales volume increase, jumping nearly 26 percent to 1,365 homes sold in June.

Howard County had the area's highest average sales price of $451,871, a 20.25 percent increase, the MRIS said.

Poole, of the Realtors' association, said rising values have priced some people out of the market or forced people into lower housing price brackets.

"The pay scales aren't keeping up the same pace," Poole said.

For the past few years, the numbers of buyers in the market have outpaced the number of sellers, driving up prices and leading to bidding wars and dependence upon devices such as escalation clauses in contracts, which offer sellers a certain amount above rival bids.

But as the sharply escalating prices breach new levels, buyers' fervor may be cooling. Some agents said buyers are less willing to pounce on a house as quickly as they might have even a few months back.

"They're looking at more houses, and they're a lot more deliberate about their search," said Scott Smith, a Realtor in Baltimore and Baltimore County for Keller Williams Realty.

"A few years ago, people would put up with `fatal flaws,'" - such as a less than ideal lot size or kitchen, Smith said. "Now they're not as willing to live with fatal flaws and will keep searching."

Because many buyers are making a large financial jump from a current home to a new one, many are holding out for their dream home, Smith said.

"They want to be in their dream home now, and it is not seen as a stepping-stone house, because prices are so high," he said.

Miriam Doyle-Baschat and Ahmet Baschat had rented an apartment in Mount Washington for years before deciding to settle permanently in Baltimore. By the time the couple began house hunting a couple of months ago, home prices had skyrocketed.

"We're kicking ourselves that we waited this long," Doyle-Baschat said. "I remember two years ago thinking $300,000 is expensive for a house. Now it's the lower end of the market."

Doyle-Baschat said the family has been looking for a four-bedroom house with a yard that can accommodate their toddler daughter and Ahmet Baschat's 73-year-old mother. They want to stay in or close to the city. When they first started looking, after living in Germany for a year, friends warned them about Baltimore's housing market.

"Everyone was saying, `You can't afford to wait. Take a checkbook with you,'" she said.

But the couple has decided to carefully weigh pros and cons, rather than jumping at the first option, she said.

Though the market continues to favor sellers, some real estate agents said yesterday that the tight housing supply began to loosen somewhat in June.

The MRIS reported that 5,775 new listings came on the market in June, outpacing the 4,555 contracts signed. The average number of days it took to sell a house remained the same, at 38.

That means, "our inventory is climbing a little bit," Strohminger said. "That's a good sign for buyers because they're going to have more selection to choose from."

Sun researcher Shelia Jackson contributed to this article.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.