Home sales down 22% from year ago

Metro area skids in June as listings pile up, prices flatten

July 11, 2006|By LORRAINE MIRABELLA | LORRAINE MIRABELLA,SUN REPORTER

Housing sales in the Baltimore area skidded more than 22 percent last month from June 2005 levels, the biggest drop in more than seven years, and prices flattened as the real estate slowdown extended into the prime summer season.

On average, homes in the region commanded just 3.41 percent more than they did a year earlier - the first time price appreciation fell into the single digits since March 2004.

Even Baltimore City, which until June had been the only jurisdiction this year to have posted double-digit price gains, felt the impact. Last month the average price in the city rose just under 4 percent as listings piled up and sellers in popular areas like Fells Point and Canton took price cuts.

Overall 3,909 houses sold at an average price of $319,633 in Baltimore and the five surrounding counties, compared with 5,048 homes in June 2005, according to statistics compiled by Metropolitan Regional Information Systems Inc. That represents the steepest year- over-year decline for any month since Rockville-based MRIS began tracking data in the region in March 1999. Sales fell in every jurisdiction.

Selling also took longer - 51 days on average versus 38 days a year earlier - as the number of houses for sale continued to mushroom. There were more than twice as many houses for sale in June this year as last, MRIS statistics showed, with 6,950 new listings added during the month but just 3,137 contracts signed. In total, more than 16,000 houses were on the market in June in the city and five surrounding counties.

"The market has changed to significantly more sellers," said Stephanie Bamberger, a Realtor with Zip Realty. "The buyers I've been working with are not as anxious to jump on properties as they'd been in the past year. There's more hesitation and not wanting to pay the price sellers are asking."

Baltimore's market reflects what's happening across the nation, said Celia Chen, director of housing economics for Moody's Economy.com.

"Sales are slowing and house price appreciation is weakening. The housing market is definitely on the downside of the cycle."

Rapid price appreciation in the past year has eroded affordability, making it more difficult for people to buy homes, Chen said.

Rising interest rates have eroded real estate's stature as the hot investment, said John Hopkins, associate director for applied economics at RESI, Towson University's research and consulting arm.

"I think we are working out the hyperactivity that we've seen over the past three to four years," he said. "That was fueled by very low interest rates as well as investment activity. And now that interest rates have started to climb and we see a resurgence in other financial markets, people have other alternatives for investment gains. They're not just focusing on real estate."

In the Baltimore region, slower demand in June kept price gains flat in Harford County and under 5 percent in all other jurisdictions but Carroll County, where the average price rose 13.12 percent.

"In the past, prices went up at an astronomical rate, but that trend is not holding up," said Ken Levine, a Coldwell Banker agent in the Reisterstown office.

Home sellers increasingly are disappointed to find they need to drop their price or offer cash for closing costs to entice buyers, real estate agents said.

"Instead of 10 houses in your neighborhood for sale, there might be 20," said Ann Mangels, a Coldwell Banker agent. "If it isn't priced fairly, the place is going to sit there until the seller realizes they have to reduce it.

"Buyers don't feel the pressure they did last year, for instance," she said. "Last year, if they liked what they saw, they were paying whatever they thought it would take to buy a place."

Even with more homes on the market, some buyers are finding the rapid appreciation of the past five years has put houses out of reach. Some have considered less pricey areas to afford more house.

Keri Miller and her husband, who had a baby in November, wanted to move up from a townhouse with a small yard but found they couldn't afford a single-family house in their Perry Hall neighborhood. They decided to look in Harford County rather than wait any longer.

"The market was increasing in price so dramatically and if we waited any longer, it wasn't going to be affordable to move," said Miller, 28, an accountant who settled last month on a detached house in Joppa for $295,000.

Christine Horwega said she and her husband were unable to buy a house at the height of the market because they were relying on a VA loan as first-time buyers.

"Three years ago it was a hot market and you wouldn't get anywhere with a VA loan," said Horwega, who bought a townhouse in Bel Air last month for $243,000. "So we waited."

Despite the increasing inventory and market slowdown, real estate agents said houses in the $150,000 to $250,000 price range can still bring multiple offers and sell fast. Buyers of homes in that range "are pulling out all the stops to get a contract," said Bamberger, the Zip Realty agent.

"As soon as a house that's priced right goes on the market, it goes off the market," she said.

lorraine.mirabella@baltsun.com

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