Unsold homes swell to record in region

Backlog hits 19,985 in July as prices flatten, sales fall

August 11, 2007|By Lorraine Mirabella and Stephanie Newton | Lorraine Mirabella and Stephanie Newton,Sun reporters

Home prices flattened in July in metropolitan Baltimore, as unsold houses swelled to a record and buyers faced tightening credit from a distressed mortgage industry.

The average price of a home in the region rose less than half a percent to $331,053 last month from $329,855 in July 2006, according to Metropolitan Regional Information Systems Inc., a Rockville multiple-listing service.

Average prices rose as much as 4.2 percent in Carroll County and 3.5 percent in Baltimore City, but were down slightly in Anne Arundel, Baltimore and Harford counties and flat in Howard County.

As the number of homes on the market mounted, buyers were being forced to cut prices to make a sale happen.

At the same time, buyers - some with good credit - are finding their home loan options more limited as lenders pull back in light of problems in the subprime market.

"The pool of buyers has been shrinking," said Gail Feirstein, an agent with Coldwell Banker in the Annapolis Plaza office. "The mortgage market has created more of a gap for buyers who want to buy a house. Programs with 100 percent financing are on hold right now, and first-time homebuyers have to stretch more. That makes the whole move up market more difficult."

Earlier this week, a report by the National Association of Realtors predicted that home sales nationally likely will fall 6.8 percent to 6.04 million this year, a five-year low.

"Mortgage disruptions will hold back sales over the short term, but long-term fundamentals are favorable," with a modest upturn expected by the end of the year, predicted Lawrence Yun, a senior economist with the Realtor's association, in the report.

Prices have been falling across the nation, said Celia Chen, director of housing economics for Moody's Economy.com.

"Baltimore prices are holding up a little better," she said. "There's certainly weakness all over the country. It's getting more difficult to get financing for homes, particularly for those buyers who don't have very good credit ratings. The subprime segment has obviously collapsed, and very few lenders are now originating loans for subprime borrowers."

Subprime loans are made at higher interest rates to borrowers with poor credit.

"The fact that fewer of those mortgages are being written is behind, in large part, the declining number of sales of homes," Chen said.

Though prices barely budged from a year earlier in metropolitan Baltimore, the number of home sales has been sliding by double digits each month since April.

The number of homes sold in Baltimore and the five surrounding counties fell 12.36 percent to 2,921 in July, compared with 3,333 homes in July 2006, said MRIS, the multiple-listing service.

With listings at a record 19,985, homes took an average of 80 days to sell, compared with an average of 55 days in July 2006 when inventory was 16,749, the statistics showed.

Some price ranges are faring better than others, real estate agents said. High-end suburban houses - $3 million and up - are selling well, sometimes even within a month, said Marc Witman, a partner at Yerman Witman Gaines & Garceau Realty.

But Baltimore's downtown housing market has an abundance of homes in the $300,000 to $500,000 price range.

"There is such a supply of housing in that price range, they all start to run together," Witman said. "Buyers are becoming more deliberate and are taking their time to select the properties they want to view because there are just so many, and you don't have time to go through them all."

To compete, sellers are having to rethink asking prices and stay on top of repairs and maintenance, real estate agents said.

"Some houses have been on the market for so long that people have lost interest in keeping them up," said Tina Marine, an agent with Coldwell Banker in Annapolis. "They're grungy. The beds get stopped being made. ... People just give up."

David Schreiber and Stacey Wooden are not giving up on selling their renovated, five-bedroom, century-old house in Mount Washington. The family plans to relocate to the Chapel Hill-Durham-Raleigh, N.C., triangle for his job, which has an office in Raleigh.

They have cut their initial price of $769,000, set in April, twice to its current $699,999. The couple had hoped to move over the summer to enroll their two sons in school in North Carolina by fall. But despite several open houses, they have had just one offer.

"We're trying to be pragmatic about things," Schreiber said. "There don't seem to be a lot of variables we have control over in the housing market."

lorraine.mirabella@baltsun.com

stephanie.newton@baltsun.com

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