Homes up in value

Prices in area rise, counter U.S. trend

November 21, 2006|By Lorraine Mirabella | Lorraine Mirabella,Sun reporter

Baltimore's home values continued to rise over the summer, even as housing demand weakened in Maryland and elsewhere and the median sales price in the U.S. slid by 1.2 percent, the National Association of Realtors said yesterday.

In third-quarter sales and pricing surveys released yesterday, the NAR said the median price of a single-family home in the Baltimore area rose 1.6 percent to $286,500 for the July-September quarter, from $282,100 during the corresponding period in 2005. The median price of an apartment or condo rose 3.8 percent to $234,400 from $225,900 a year earlier.

The median is the midpoint, with half of the homes selling for more and half for less.

Nationwide, the median price of a single-family home fell to $224,900 from $227,600 in the previous year, with the biggest drop - 10.5 percent - in the Detroit area, the survey found. Forty-five of 148 metropolitan areas surveyed experienced a price drop, the NAR said.

The nationwide condominium median selling price was $222,900, down 2.1 percent from the same period in 2005.

"The thing that's pushing our market is the demand here has remained fairly strong," said Joseph T. "Jody" Landers, executive vice president of the Greater Baltimore Board of Realtors. "In a lot of neighborhoods in the city and in the county where housing is reasonably priced and affordable, people are buying these houses. And when you compared to what's happening in Northern Virginia and D.C., we're very affordable compared to those markets."

At $431,900, the median price of a home in the Washington area, including Northern Virginia, was a third higher than in the Baltimore area, according to the NAR data. Still, it represented a 2.2 percent drop from the summer of last year, the NAR survey showed.

The NAR survey painted a picture of a far-reaching slump in the housing market, with 38 states experiencing a sales decline over the summer months.

Nationwide, the number of existing homes sold fell by 12.7 percent to a seasonally adjusted annual rate of 6.27 million units.

In Maryland, sales skidded 19.4 percent, the NAR said. Nine states had bigger sales declines than Maryland, with the highest in Nevada, down 38 percent.

Experts said the fact that falloff in sales did not translate into lower prices here was because Baltimore area home values never became as overvalued as in other parts of the country, experts said.

"Baltimore is holding up better price-wise, because homes are not as overvalued as in the places that are seeing declines," such as California, Florida, Arizona and Nevada, said Brian Carey, an economist with Moody's Economy.com. "Those are the markets that got overly inflated, valued well above where fundamentals indicated they should be and those area areas seeing corrections."

The Baltimore area is still affordable based on the ability of a median income family to afford a median-price home, he said.

The nationwide 12.7 percent fall in sales was from a summer 2005 pace of 7.18 million units, the second highest in history. Home sales in the U.S. had hit a peak of 7.18 million units in the third quarter of 2005, the NAR said.

Sales of existing and new homes set records for a fifth-consecutive year in 2005 but have been falling steadily this year as conditions in the housing market deteriorated and interest rates crept up.

David Lereah, chief economist for the NAR, said yesterday that he believed the decline in prices in formerly red-hot areas of the country was setting the stage for a rebound next year.

"With the market in full transition, buyers now have choices and sellers are more willing to negotiate - under these circumstances it's no surprise that overall home prices are slightly below a year ago," he said.

Lereah said he expects to see modest appreciation in most of the country next year.

But Carey, who expects national sales to hit a bottom annual rate of 6 million homes in the second quarter of next year, said sales will be essentially flat through the third quarter of next year.

"I would hesitate to call it a rebound or turnaround," Carey said. "It's going to be a stabilization."

He said he expects prices to hit bottom in the third quarter of 2007, with the median home price reaching $213,00, down from a record $227,000 in the fourth quarter of 2005.

lorraine.mirabella@baltsun.com

The Associated Press and Bloomberg News contributed to this article.

Bottom 10

Maryland was among the 10 states that saw the largest declines in existing home sales during the July-September quarter.

Percent drop, year over year Nevada -- 38.0% Arizona -- 36.0 Florida -- 34.2 California -- 28.6 Hawaii -- 25.8 Virginia -- 24.4 New Jersey -- 23.7 Maine -- 21.5 Massachusetts -- 20.0 Maryland -- 19.4

[Source: National Association of Realtors]

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