Buyers gain ground as real estate slows

Area sales drop 14% as homes linger on market, but prices are still rising

June 10, 2006|By LORRAINE MIRABELLA | LORRAINE MIRABELLA,SUN REPORTER

The slowdown in Baltimore's housing market continued into May, with sales dropping as homes lingered longer on the market and listings piled up. Sellers often found themselves resorting to price reductions to snag buyers.

Still, statistics released yesterday showed average prices continued to rise, led by double-digit percentage gains in the city and Baltimore and Anne Arundel counties, even as the volume of sales fell.

During May, 3,648 homes were sold in Baltimore and the five surrounding counties, down 14.33 percent from the number sold in May 2005, according to the Metropolitan Regional Information Systems Inc., which tracks monthly home sales statistics. Fewer homes were sold in each of the jurisdictions, with the steepest decline - 20.31 percent - in Anne Arundel County.

"Houses are taking longer to sell," said Sue Balderson, a real estate agent in the Eldersburg office of Coldwell Banker Residential Brokerage. "Rates are edging up, and people are more cautious. With BGE [pending electric rate increase] and gas prices, people are more hesitant to make any big transactions right now unless they have to."

That hesitancy was reflected in the heavy load of homes listed for sale in May - some 14,872 properties, more than double the 6,575 homes on the market a year earlier, according to MRIS.

On average, homes took 53 days to sell, compared with 39 a year earlier.

Still, the average home price gained 11.21 percent over May 2005 to $316,123. Average prices rose more than 14 percent in the city and Baltimore County and more than 12 percent in Anne Arundel County, the MRIS said.

"It's pretty clear that the housing market has begun to respond to a less interest-rate-friendly environment, and that sellers and buyers are still having difficulty finding an equilibrium point," said Anirban Basu, head of the Sage Policy Group, an economic consulting firm in Baltimore. "Sellers are still demanding more than buyers are willing to pay because sellers have yet to fully realize how dramatically the market has begun to shift. Buyers are facing higher interest rates and simply do not have the spending power that they enjoyed this time last year."

Yet it is not surprising that prices continue climbing, he said. With a strong economy and more than 20,000 jobs added to the region in the past year, buyers are still competing for houses that have the most sought-after locations or amenities, he said.

Realtors agreed that the bidding wars that had become a hallmark of the heated market of the past few years have slowed down but haven't completely disappeared.

"If you have areas that are hot, and a lot of folks want in and there's not much turnover, if a house is priced right you'll see multiple offers," Balderson said. "But it's nothing like last year."

More commonly now, sellers are cutting the initial listing price or agreeing to a lower price in negotiations, agents said. Baltimore-area sellers got an average 96 percent of their asking price in May, MRIS statistics show. By comparison, in May 2005, sellers were getting an average 98.61 percent.

For the past several months, sales meetings at W.C. & A.N. Miller Realtors have ended with agents announcing how much prices on listings have been reduced, said Jerry Murphy, a real estate agent with the agency, which has expanded into the Baltimore area from its Montgomery County base.

"Prior to that, you never reduced prices, but now it's a buyer's market," Murphy said. "We're still selling a lot of houses, if they're priced properly."

He said the seller of a home he listed in the city's Guilford neighborhood put the home on the market for $699,000, reduced it to $649,000, then ended up signing a contract for $625,000.

"It depends on how critical it is to sell," he said. "This buyer was very anxious to sell and didn't want to see a bottom come. She was an aggressive seller."

The expectation of lower prices is drawing some buyers into the market.

B.E. Stern, who works in pharmaceutical sales, decided to put her Bolton Hill condo on the market and move up to a larger house to take advantage of price cuts she was seeing. Stern fell in love with a refurbished two-bedroom rowhouse in Butchers Hill, near Patterson Park, with exposed brick, hardwood floors, a skylight and a new kitchen. Even better, it had been reduced from $350,000 to $300,000. And with the help of her agent, she negotiated to an even lower $265,000 and settled on the house last month.

"It's beautiful, on a great street, quiet and completely redone," Stern said. "I got a great deal."

Stern's agent, Trent Waite, who works out of the Fells Point office of Coldwell Banker, said sellers are often basing their asking prices on what their neighbors got a year ago, then finding they need to reduce the price to sell.

"Buyers these days are usually making an offer and if that offer doesn't get accepted, going on to the next house," he said. "There's so much inventory on the market, it doesn't always make sense to pay full asking price."

lorraine.mirabella@baltsun.com

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