City housing market cools, but just slightly

Retreat: Homes on average sold for 97.8 percent of their asking price, down a fraction of a percent from a year earlier.

September 13, 2005|By June Arney | June Arney,SUN STAFF

Metropolitan Baltimore's hot housing market let up slightly on the accelerator in August, though prices continued to advance at a double-digit pace.

The average cost of a house in the region rose 15.95 percent last month over August 2004, the smallest increase this year. And the number of homes available increased, according to new statistics from Metropolitan Regional Information Systems Inc., which tracks homes sold through the multiple listing service.

Even so, said industry and other experts, it remains a boom market. "It's still double-digit," said Henry A. Strohminger III, president of the Greater Baltimore Board of Realtors, with Long & Foster. "The numbers are fantastic. There's no bubble bursting."

But Strohminger noted that the numbers do show that the sellers' market has turned "ever so slightly."

"The discount has increased. Sellers are willing to accept slightly less," he said.

Homes on average sold for 97.8 percent of their asking price, down a fraction of a percent from a year earlier. But they also sold on average three days faster, spending just 35 days on the market.

Buyers purchased 4,639 homes in the city and five surrounding counties in August, up 3.97 percent over a year earlier, for an average of $309,188. New listings were 5,887, up from 5,658 in July.

The overall price appreciation was held down by Baltimore City, where the 10.67 percent price gain was the smallest in six months. That's not so much an indication of a slowdown as it is that buyers are buying more fringe properties, Realtors said. With demand for city properties remaining strong, Baltimore posted by far the greatest percentage increase in the number of houses sold.

"I've had clients looking for a nice house at the $150,000 to $200,000 level, well everyone's looking for that," said Melvin Knight, a Realtor in Coldwell Banker's Roland Park Office.

"So they start looking in the next lowest tier. People are more inclined to buy the house on the edge of the neighborhood now. It's the positive perception that buying a house on the edge of a hot neighborhood is a good investment. And it is."

Belair-Edison, for instance, is one neighborhood that had a large inventory for years. Now prices are rising there, Knight said. Similar patterns are unfolding in Charles Village, Ridgely's Delight and Washington Village, he said.

"In some of those neighborhoods, there's hardly any inventory," he said. "No prices are going down in this city. I can't think of one neighborhood where the house prices are getting cheaper."

Celia Chen, director of housing economics for Economy.Com, said that a dip in price appreciation did not mean the market was slowing.

"The mix of homes can really skew price appreciation," she said. "It's not necessarily indicative of a softening in the demand for housing."

Nationally, prices remain strong, Chen said.

"I find it very hard to tell whether this slowing is indicative of something longer lasting or just a bump," she said. "It's still a little early to call an end to the housing boom. It really all depends on where interest rates go, and we don't expect them to change substantially through the end of the year."

George Papademetriou, 41, said low interest rates allowed him and his wife to consider homes selling for as much as $1.2 million -- double what they had thought they could afford.

He spent the month of August touring more than two dozen homes before he found one that met their requirements, including a lot of land. But it turned out to be nowhere near Annapolis, where his search began.

"I was determined to move to Annapolis, and then I started looking in Millersville, Pasadena and Severna Park," he said. "We decided if we wanted more land, we'd have to move out."

He looked at a $1.1 million home on the water in Annapolis, but it had a shack next to it, he said, and another built in 1939 was too dated.

He ended up much farther than he expected. The couple is scheduled to settle next month on a new 5,600-square-foot house with 11.6 acres of land in Harford County, roughly 60 miles from his Washington office. But as the owner of Spartan Security, Papademetriou works from home a lot and usually can plan his trips to Washington on off hours.

Jim Parks, of Century 21 Mount Vernon Realty, doesn't view the August change in the region's pace of appreciation as portending anything dramatic.

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