Home prices eke out small gain in Sept.

Number of houses sold in Baltimore area fell 30%

October 11, 2006|By Lorraine Mirabella | Lorraine Mirabella,Sun reporter

Baltimore-area home prices eked out Sept. gain Baltimore-area home prices eked out a slim gain in September, posting their weakest performance in more than five years as the number of homes sold plummeted more than 30 percent.

The average sales price rose just 1.69 percent from a year earlier to $308,841 in Baltimore and five surrounding counties, Rockville-based Metropolitan Regional Information Systems Inc. reported yesterday.

It was the fourth consecutive month of single-digit increases in home values - a sharp contrast to the peak of the housing boom when price gains sometimes exceeded 20 percent - and the worst showing since prices fell 0.08 percent in June 2001, MRIS statistics showed.

Home prices rose in all jurisdictions except Baltimore County and Carroll County, which had the steepest decline, at 5.5 percent, MRIS said.

Real estate experts said the market was continuing to shift after several years of rapidly appreciating values fueled by historically low interest rates and speculative buying.

For several months the market has cooled, with inventory piling up as homes sit on the market longer and sellers are forced to slash prices.

"This is not a bad market, it's a normal market," said Katie Grove, president of the Greater Baltimore Board of Realtors. "We have dropped a little, but not where we should feel the bottom has dropped."

The Baltimore region has thus far fared better than the nation as a whole and other once-hot areas, such as Northern Virginia, where the average price fell nearly 6 percent last month.

The average sales price in the United States fell 1.2 percent in August, to $264,960, compared with August 2005, said Celia Chen, director of housing economics for Moody's Economy.com.

"Inventory levels are remaining high, and there are a lot of sellers out there that want to sell their homes," she said. "There's more supply than demand right now."

Home prices have continued to rise, however, in some areas where housing tends to be more affordable and thus more in demand, said John McClain, a senior fellow at George Mason University's Center for Regional Analysis.

"In the under-$400,000 range, there's still pressure on prices for housing in that segment," McClain said.

In the Baltimore area, 2,810 homes were sold last month, 30 percent fewer than the 4,038 homes sold a year earlier. Home sales skidded the most in Carroll County, where they were down 34 percent.

Listings mount

Listings, meanwhile, continued to mount, swelling 81 percent from September 2005 to 17,648. During the month, 5,829 additional homes were listed for sale, but just over half that number, 2,998, went under contract, MRIS data shows.

Houses on average took 62 days to sell, 24 days more than in the previous September, MRIS said. Sellers often cut prices more than once to make a sale, real estate agents said.

Subrinia Pierpont, a real estate agent with Coldwell Banker Residential Brokerage, said one of her clients listed a three-bedroom, 2 1/2 -bath rowhouse in Canton in September for $365,000, cut the price to $345,000 and then to $329,000, a price that drew a contract - after just 30 days. "The sellers are finally coming to terms with the fact that they are unable to get last year's prices," Pierpont said. "The real convincer is the fact of how long the house is sitting on the market."

September also brought out more potential buyers, lured by price reductions and decreasing mortgage rates, agents said. Rates have continued to edge down, with rates on 30-year loans the week of Oct. 5 averaging 6.30 percent, the lowest for a 30-year mortgage since early March, according to Freddie Mac, a purchaser of loans.

Brenden Coyne, who moved with his family in May from out of state to Annapolis, had been renting while he waited for the right house and right time to buy.

"It seems like homes are staying on market quite bit longer and seeming to be more reductions in prices," said Coyne, who works in Linthicum as a consultant. "We thought of that as a nice benefit of having the luxury of waiting. It was good to see the market softening and prices come down."

Coyne signed a contract last month on a house in the Stoneleigh neighborhood in Baltimore County, negotiating a price reduction from $575,000 to $520,000.

Expecting declines

Chen, of Moody's, said she expects to see continued declines in home prices over the next couple of months, and expects the median price of a home in the United States to drop by 3.5 percent next year, compared with this year.

"It could be the end of next year before the market bottoms," she said. "Once some of the excesses are wrung out, you'll start to see price gains again."

lorraine.mirabella@baltsun.com

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