Area home prices still rising

Region holding its value, while U.S. overall loses 1.8%

May 16, 2007|By Lorraine Mirabella | Lorraine Mirabella,Sun reporter

Baltimore's housing market is holding up better than the nation's as a whole, with the price of an existing single-family home rising nearly 5 percent in the first quarter over a year earlier. The gain in median price put the region among the top quarter of 145 metro areas surveyed by the National Association of Realtors and contrasted sharply with a 1.8 percent nationwide decline.

And the Cumberland area in Western Maryland, which has become one of the last markets in the country to experience a housing boom, registered the biggest increase in the nation, with the median price of a single-family home soaring 17 percent in the first three months of the year.

The Baltimore area's relative affordability in the pricey region surrounding the nation's capital helped drive demand, real estate experts said, fueling the association's reported 4.9 percent increase in median price to $278,900.

By contrast, the median price - or midpoint - of an existing single-family home in the United States slid 1.8 percent, to $212,300, the association said. Half of homes sold for more and half for less.

The Baltimore area ranked 34th among the 145 statistical areas in home value appreciation, NAR statistics showed. Eighty-two of those areas saw prices increase over a year ago, including 11 areas with double-digit gains, while 62 experienced price declines; one was unchanged.

In the Cumberland region, prices jumped by the biggest percentage increase, to a median of $100,000 from $85,400 in the first quarter of 2006.

"What this comes down to is affordability," said Joseph T. Landers III, executive vice president of the Greater Baltimore Board of Realtors. "When you look at [the Baltimore-area]market, ... it is largely affordable when you compare [it] to most of the rest of the state and Washington and Virginia. And interest rates have stayed relatively low, helping to fuel demand."

Areas that are benefiting now experienced less speculative buying, and in turn less of a huge spike in prices over the four-year housing boom, experts said. .

"The focus has turned to value," said Anirban Basu, chief executive officer of Baltimore-based Sage Policy Group Inc.

"Many prospective home buyers sought to place as large a bet as possible on the housing market. Today, that speculative aspect of the housing market has effectively been extinguished and now the buyer is focused on ... making a good deal and buying as much house as possible for their money," Basu said.

Buyers perceive value in Baltimore's market, Basu said. "That explains why Baltimore-area prices have held their own, even as Washington-area price changes have in many instances turned negative,"

Cumberland, too, benefited from the perception of value and is just now seeing the effects of a housing boom that had previously swept through the Baltimore market, economists said. As prices have risen in adjoining Washington and Garrett counties, buyers have been attracted to lower prices in Allegany County, Basu said.

"Cumberland is, from a Western Maryland perspective, the oasis of affordability," he said.

Prices have held up despite slowing sales. In Maryland, the report said, sales, including single-family homes and condos, dropped 10 percent in the first quarter, to 115,000 from 128,400 in the year-earlier period.

Nationwide sales dipped to 6.41 million, down 6.6 percent from 6.86 million sold in the first three months of 2006, the NAR report said. But an NAR economist said the market has likely bottomed.

Fourteen states and Washington showed an improvement in sales in the first quarter, said Lawrence Yun, NAR senior economist, compared to six states posting increases in the fourth quarter. On a quarter-to-quarter basis, sales rose in the United States by 2.4 percent, the NAR said.

The numbers suggest the market is stabilizing, thanks to job growth and relatively low mortgage interest rates that have hovered at just above 6 percent.

"We are encouraged by the fact that there is modest improvement in our quarterly figures, less of a decline in prices and a modest uptick in sales," Yun said. "This is positive compared to what we had experienced before."

He said he would not be surprised to see sales volume increase, on a year-over-year basis, by either the fourth quarter or the first quarter of 2008.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.