Home values rebound amid signs of slowing

Prices in Baltimore area reverse 3-month decline

December 10, 2005|By JUNE ARNEY | JUNE ARNEY,SUN REPORTER

Defying signs of a slowdown, home values in the Baltimore area bounded upward in November, posting the second-highest average price on record and reversing three consecutive months of decline.

The average sales price was $309, 291, up from $297,821 a month earlier and second only to the $311,093 reached in July. Only Harford and Carroll counties bucked the trend.

Compared with a year earlier, the average price surged 19.75 percent despite a nearly 16 percent drop in the number of homes sold.

"It still remains a strong market," said Henry A. Strohminger III, past president of the Greater Baltimore Board of Realtors and a Realtor with Long & Foster in Timonium. "Houses are still appreciating."

Across the region, 3,138 homes were sold last month, down from 3,716 a year earlier, according to statistics released yesterday by Metropolitan Regional Information Systems Inc., a Rockville company that tracks homes sold through the multiple-listing service.

Sales fell in every jurisdiction, including Baltimore, where the falloff was the first in three years. Even so, the 7.9 percent decline in the city was the least in the region, while price appreciation was the greatest - 33.41 percent over a year earlier. The biggest sales decline was in Anne Arundel County, down nearly 24 percent.

Trade groups are predicting that home sales and price appreciation will slow next year as mortgage rates rise. The average rate for a 30-year fixed loan in the Baltimore area average 6.48 percent this week, according to HSH Associates. In February the Baltimore average dipped to 5.63 percent.

Even though fewer homes sold, those that did were bought after just 38 days on the market, six days fewer than a year earlier.

The quicker selling time is more a reflection that sellers are being more realistic in pricing than of an overheated market, said Anirban Basu, chief executive of Sage Policy Group Inc., a Baltimore economic consulting firm.

"The trend for more days on the market had been driven by excessively wide-eyed investors who believe their property can fetch any price they ask," Basu explained. "Realtors have been working with this class of sellers to tell them the prices they have set are too high. They are starting to realize this."

Last month there were 10,913 homes listed for sale in the Baltimore metropolitan area, more than double the number in November of 2004.

Sellers on average got 95.95 percent of their asking price, more than a percentage point lower than a year earlier. That's a plus for buyers, Strohminger said.

"The discount continues to grow between the average sales price and the average list price. That's good news for the consumer."

The rising number of listings could have an impact after two or three months of inventory building, Strohminger said.

And that rising inventory also contributes to a healthy market, he said.

"Sometimes when there are only two or three houses out there, people don't want to decide, but if there are 7 or 10, they feel like they've done comparison shopping," Strohminger said.

Elizabeth Hammond, a 35-year-old recovery room nurse, was glad to have a number of houses from which to choose, because she was under pressure to find something quickly. She and her two cats have to vacate their current premises by Jan. 2.

She spent about three weeks last month - sometimes looking at as many as 13 houses a day - in Locust Point, Canton, Federal Hill, Remington Station and Washington Village for a rowhouse costing between $180,000 and $220,000. She ultimately settled on a renovated rowhouse in Hampden for $219,900.

"The way everything has gone up in the past years, I decided if I was going to stay here for four years, I should buy a place," she said.

Nationally, mortgage applications showed a small increase in November because interest rates fell slightly, said Douglas G. Duncan, chief economist with the Mortgage Bankers Association.

Looking ahead, Duncan said he doesn't expect much fluctuation in the market.

"You won't see dramatic declines in home sales," he said. "They'll sort of bump around a little bit. They'll be up one month and down another. You'll see a gradually slowing market but not precipitously."

Long-term interest rates have gone up, but not as much as short-term rates, he noted.

"The advantage of affordability in ARMs [adjustable-rate mortgages] has decreased, and that will make the cost of homes more expensive and will be one of the factors slowing the home sales market," Duncan said.

Baltimore's market, said Basu, will likely remain robust.

"Why not?" said Basu of the Sage Policy Group. "Job growth has accelerated, and interest rates have remained shockingly low.

"I still think we have, at least, several strong months ahead of us in the Baltimore-area housing market. Long term, the supply and demand dynamic will continue to work in favor of the seller."

june.arney@baltsun.com

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