Home sales plunge

While price rise slows, number of homes in area to change hands in July falls 23% from last year

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

Housing sales in the Baltimore area skidded more than 23 percent last month from July 2005 levels, and price appreciation slowed as a shift from a seller's market to a buyer's market took hold.

Sales in the city and five surrounding counties totaled 3,333 last month, down from 4,362 a year earlier, Rockville-based Metropolitan Regional Information Systems Inc. said yesterday. That represented the biggest decline for any month since MRIS began tracking data in the region in March 1999.

Sales were down by at least 20 percent in all jurisdictions.

Prices rose in all jurisdictions but Carroll County though momentum is markedly down from last summer. The price of the average home rose 6.03 percent over a year earlier - the second consecutive month of single-digit appreciation and far below the nearly 20 percent annual gain registered in July 2005.

Before June, average monthly prices on a year-over-year basis had risen by double digits in every month since March 2004.

Prices were reined in by the flood of new listings, housing experts said. While 6,230 additional homes went on the market in June, buyers signed contracts on 3,430 properties, swelling the total number of homes for sale to nearly 16,749, MRIS said. And houses stayed on the market an average of nearly two months, rather than selling in just over a month as in July 2005.

Though the market in the Baltimore area has cooled, it remains healthy - with sales prices continuing to rise - thanks to strong job growth said John McClain, a senior fellow at the Center for Regional Analysis at George Mason University.

The Baltimore area added 18,100 jobs from June 2005 to June 2006, he said.

"People are being recruited to the area for jobs and looking for housing," McClain said. "What I also see in Baltimore's data, places where the housing market is at more affordable level, they still have healthy increases."

Other areas of the country, though, are starting to see prices deflate. Statistics he compiled for July in the pricier metropolitan Washington area, including five counties in Maryland and 10 counties in Virginia, show the average price down 1.4 percent, compared with July 2005, he said. That represented the first drop in average price in that region since the mid-1990s, he said.

"Prices escalated so much over the last four years, there had to come a point where you begin to not have those 20 percent increases each year," he said. "People can't afford it."

Still, with more than twice as many homes on the Baltimore market as there were last summer, sellers sought to entice buyers with incentives such as help with closing costs, reduced prices or giveaways.

"There are a lot of houses that are sitting, so you have to get a little more creative," said Frank Lanham, a real estate agent with Coldwell Banker in Baltimore's Fells Point.

"Everyone is trying to get creative and throwing certain things in to make the sale or to get people to see the property," Lanham said.

One of his clients, Danny Garrison, is hoping that throwing in "cool, lounge-y" furniture, a grill and a bar on the rooftop deck of his Canton rowhouse will help it sell faster. Since the end-of-group house went on the market three months ago, Garrison has cut the price twice and is now offering it for $525,000.

"We're just trying to do everything we can to differentiate ourselves from all the inventory out there, so we came up with that idea," said Garrison, who is moving to a new house in Sykesville.

Kimberly Grace, who is selling a two-bedroom-with-den townhouse-style condo that borders the city's Patterson Park, plans to pay a fee for three months to Gaines McHale designers to decorate the now-empty first floor.

"Some people were having a little trouble visualizing how they would lay out the first-floor floor plan," said Grace, whose company, Stonington Partners, redevelops properties in the city.

Grace said her real estate agent, Cindy Conklin of Coldwell Banker Residential Brokerage, suggested the strategy.

In a slower market, "we have to give [properties] a lot more attention," Conklin said. "Those of us in the market have to work longer and harder and try to be a little more creative."

The shift in the market has emboldened buyers to ask for concessions they would not have dreamed of last summer, when bidding wars erupted and buyers competed by offering well over the asking price.

Where last summer's buyer would handle a broken garbage disposal himself, "this year they want it fixed or repaired," said Ilene Kessler, an agent with ReMax Advantage Realty in Columbia.

Kessler, who is also president elect of the Maryland Association of Realtors, said she views the market as returning to a more normal balance. But sellers often still expect to sell homes for a hefty increase over last year's prices.

"Sellers still have not come to the realization that the market has changed," Kessler said.

lorraine.mirabella@baltsun.com

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