Region's home prices rise just 1.8% in April

Baltimore records first decline in 4 years

May 11, 2007|By Lorraine Mirabella | Lorraine Mirabella,Sun reporter

Amid a continuing slowdown, home prices in metropolitan Baltimore eked out a slim gain in April, thanks largely to strength in Baltimore County. The city recorded its first decline in more than four years.

The average sale price in Baltimore and the five surrounding counties rose 1.88 percent from $310,323 in April last year, Metropolitan Regional Information Systems Inc. reported yesterday.

Half the jurisdictions in the region registered an increase, and half a decrease.

Baltimore County posted the strongest appreciation at over 6 percent, with slight gains in Howard and Carroll counties. Anne Arundel County had the biggest drop, at nearly 5 percent.

The mixed-price picture came as home sales continued to stumble. The 2,831 homes sold last month were 11.23 percent fewer than the 3,189 homes sold in April 2006, according to MRIS. Sales declined in each jurisdiction except Howard and Carroll counties.

In Baltimore City, the average price fell a little more than $3,000 - or 1.79 percent - from April a year ago, the first drop since January 2003. Average gains have soared by double digits through much of that time as homebuyers sought cheaper alternatives to the counties and an urban lifestyle.

But as the booming real estate market has cooled, the pace of price appreciation has been shrinking since the middle of last year. The city's price drop likely reflects a slump in once rapidly appreciating, expensive waterfront neighborhoods such as Canton and Federal Hill, rather than a broader drop, said one economist yesterday.

"Those were areas seen as very hot markets," said Daraius Irani, director of the applied economics group at RESI, Towson University's research and consulting arm.

"People rushed into those markets and housing prices were bid up substantially. As the market has softened, and there is a decline in demand and tightening credit restrictions, those are areas that are likely to see slowdown. If you're not selling as many $500,000 units as you did in years past, that's going to tend to pull down overall averages."

While April's settlements reflect contracts signed in preceding months, the arrival of spring hasn't brought the boost to the housing market that typically comes with the season, agents said. And some believe that tightening credit requirements - the result of problems with subprime loans and rising foreclosure rates - will reduce the pool of buyers.

"It is somewhat of a random market," said Tom Mooney, a partner with O'Conor & Mooney Realtors in Baltimore. "We're getting showings, but buyers are not as quick to pull the trigger. There's very little impulse buying any more."

While 6,524 homes were listed for sale in April alone, contracts and contingent contracts were reached on just over half that number, or 3,536, properties, the MRIS said.

The number of homes for sale topped 17,000, nearly three times as many as were listed two years earlier at the height of the housing boom. Homes stayed on the market an average of three months, compared with the average of two months it took to sell in April 2006, MRIS said.

Buyers are holding out, expecting that prices will come down more.

"The market has not stabilized to the point where everybody is on the same page yet," said Sharon Martin-Sims, a broker with S. Lee Martin & Co. in Baltimore. "For this time of year, we should have been a little stronger by now."

With homes staying on the market longer, buyers have more to choose from, she said.

"Since buyers know it's a buyers market, they want to offer much lower than what sellers are asking for," Martin-Sims said. "Sellers, on the other side, don't want to understand the fact that prices should be coming down a little bit."

Offers tend to be for less than asking price, by 5 percent to 10 percent, on average, Realtors said. Martin-Sims said sellers are beginning to adjust prices more quickly.

A four-bedroom Colonial with a two-car garage in the Ten Hills neighborhood of Baltimore went on sale for $499,000 in September and has now been reduced to $399,000. Another house in Randallstown, a three- bedroom rancher, went on the market at $314,500 and was reduced by $10,000 after 30 days, Martin-Sims said.

Diane Boynton said she worried when she and her husband decided in April to sell their Timonium townhouse so they can move to a retirement community. "The bad part was the market," Boynton said. "We thought this is going to be a mess. We just missed the right time."

Boynton said the couple followed their real estate agent's advice to price the home within a certain range and listed the two-bedroom townhouse at $305,000, below prices neighbors got last year. The house sold in just five days for the asking price.

lorraine.mirabella@baltsun.com

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