Housing decline hits area unevenly

Losses relatively few, while some sellers report large profits

Sun Exclusive

Home Sales

February 25, 2007|By Jamie Smith Hopkins | Jamie Smith Hopkins,Sun reporter

Despite a nationwide housing slump last year, most communities in the Baltimore metro area weathered the soft market fairly unscathed -- and some posted hefty price gains.

Home prices declined in one out of six communities, but it appears there was no slump for a sizable part of the region. The striking split seemed less about location, location, location than about price, price, price.

Areas with declines were generally expensive, with homes costing $500,000 on average, while many of the fast-appreciating communities were more affordable, according to a Sun analysis of home sales data that offers the first detailed look at the post-housing-boom landscape. Half of the region's 10 most costly ZIP codes in 2005 saw a drop in average price last year, from Monkton in Baltimore County to Davidsonville in Anne Arundel.

Local real estate agents say they believe the market is on an upswing after months of sluggishness. January seemed to bear that out, with sales rising for the first time in more than a year just before the all-important spring season. But even last year, average prices increased at least 10 percent in a third of Baltimore's suburban communities -- and in a remarkable three-quarters of city neighborhoods.

Prices in half of the city's neighborhoods, in fact, jumped at least 20 percent.

"That just confirms what I see and what I hear," said Joseph T. "Jody" Landers III, executive vice president of the Greater Baltimore Board of Realtors. "We see pockets where there have been some slight declines ... but you continue to see some strong gains. ... You also have to put that into some historic context: For two decades, there was no price appreciation in many of these neighborhoods."

Westport -- a downtrodden Southwest Baltimore neighborhood slated for a huge infusion of new homes, offices and shops -- saw the average house price shoot up nearly 90 percent to about $90,000 as speculators descended.

In Mount Vernon, which has attracted Washington commuters with its historical architecture and proximity to Penn Station, the average price jumped 76 percent to $365,000.

But even in the city, price declines hit nearly two dozen of the 184 neighborhoods with enough sales for comparison. In Otterbein near the Inner Harbor, one of the priciest areas in Baltimore, the average seller got about 10 percent less last year than sellers in 2005 -- a difference of about $45,000. Prices had been pushing a half-million in 2005.

Collapse, correction

"It was the collapse in affordability that was the catalyst for the housing correction," said Mark Zandi, chief economist at Moody's Economy.com. "Those areas where prices are high and affordability low were the areas that got hit the hardest."

But not in every case. Glenwood in Howard County became the most expensive ZIP code in the region last year -- more than $1 million on average -- as prices rose roughly 40 percent.

Sometimes averages mask underlying factors. If homes sold in a community last year were markedly different from those sold the year before, that would skew the numbers. Values are more likely to rise quickly in neighborhoods with a big share of construction or high-end rehabs.

For comparison's sake, the Sun analysis included only those ZIP codes and city neighborhoods with at least 10 sales in each of the two years. The information comes from monthly reports by Rockville-based Metropolitan Regional Information Systems Inc. of homes sold through the multiple listing service. The company recently updated annual statistics at the county level but says it does not revise its monthly numbers, the only data that can be analyzed for community-level trends.

Last year was a turning point, the region's first full year of deceleration after a string of double-digit annual increases that had boosted average prices 80 percent since 2001. In 2006, the price gain slowed to just under 5 percent, and the number of homes sold declined 13 percent. As a result, listings have mounted, more homes are sitting vacant and some homeowners are juggling two mortgages.

Matter of timing

Frances T. Bond got blindsided by the turn in the market when she bought a townhouse condominium last summer, never dreaming it would take months to sell her Stoneleigh home of 41 years. She listed the Baltimore County property in July, didn't get a contract until December and won't settle until Wednesday.

"I could not believe my sense of timing was so poor," said Bond, an educational consultant, "because when I bought the condo, I didn't quibble whatsoever. She was asking for a certain price, and I said, `OK, I'll take it.'"

Sales plummeted more than 20 percent in the county section of her ZIP code last year. For a while, she despaired. She buried not one but two statues of St. Joseph -- the Catholic patron saint of carpenters who is also thought to help with home sales -- in her yard. In the end, Bond lowered her price about $68,000 to $482,000, more than her $400,000 townhouse but not as much as she had expected.

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