Area home sales plunge 30% from September 2006

October 11, 2007|By Jamie Smith Hopkins | Jamie Smith Hopkins,SUN REPORTER

Baltimore-area housing sales fell last month to the lowest level for a September in at least nine years, as the turmoil in the mortgage industry hit the slumping market full force.

The number of homes sold - 1,975 - dropped nearly 30 percent from a year earlier, already well into the downturn, Metropolitan Regional Information Systems Inc. reported yesterday. It is the lowest sales figure for September since MRIS began tracking the area in 1998.

By comparison, buyers snapped up more than 4,000 homes in September 2005, the last hurrah of the housing boom.

Average home prices still eked out a gain last month, according to MRIS, which runs the local multiple-listing service. Prices in the metro area rose just under 2 percent, to about $315,000, with most jurisdictions seeing slight gains.

It took homes an average of 95 days to sell, a month longer than a year earlier. And the inventory of unsold homes, nearly 21,000, set a record.

Lender bankruptcies, a credit crunch and a jump in interest rates for jumbo mortgages in August continue to depress sales nationwide. Yesterday, the National Association of Realtors lowered its forecast of 2007 U.S. existing-home sales for the eighth month in a row. It now expects that the number of homes changing hands will be off about 11 percent from last year.

"I think the buyers are scared - they're afraid that if they buy today, that tomorrow [the price] is going to drop 15 percent," said George Brookhart, an agent with Long & Foster in Ellicott City.

Moody's Economy.com predicts that the local and national markets will not hit bottom until late next year, and its forecasts show values falling about 15 percent in the Baltimore area over those months. There are signs of backtracking now: Average prices dropped about 4 percent in Harford and Howard counties last month, the MRIS data showed.

Prices rose about 4 percent in Baltimore County, 3.6 percent in Anne Arundel, 2 percent in Carroll and half a percent in the city.

Economy.com says prices in the region would be down overall if they included the value of incentives that sellers now routinely give to buyers, such as thousands of dollars in closing-cost help.

High-priced Howard County was hardest hit last month, with the number of sales dropping by 34 percent. The average home there sold for about $418,000 - the point at which buyers would need a jumbo loan if they were financing the entire purchase. Harford, with an average price of $285,000, saw the smallest decline, but sales were down 22 percent.

Jada Krall, who is trying to sell a two-year-old colonial in Harford for $444,400, said she sees homes for sale everywhere she goes in the county. She counts 15 in her subdivision alone. To make hers stand out, she's offering a $7,500 incentive to be used toward closing costs or upgrade work.

"We've seen a few houses in the neighborhood sell," said Krall, whose family is relocating to Tampa, Fla. "We're just hoping ours is going to be next."

She can expect good deals in Florida, at least. Economy.com expects price declines of 20 percent to 30 percent in some of the once-hot housing markets there.

Celia Chen, director of housing economics at Economy.com, said recent tightening of credit is holding back demand nationally even as foreclosures increase supply. Borrowers with good credit can still get traditional mortgages, she said, but 40 percent of the loans issued last year were "subprime" and "nonprime" - from jumbo to interest-only.

"The lack of that kind of funding is going to have a big negative impact on housing this year," Chen said.

To avoid the higher rates of jumbo loans, city residents Bonita and Radames Rodriguez are opting for a regular mortgage plus an equity line of credit to purchase a $615,000 new home in Canton.

"I don't like the idea of having two separate loans, but it's better, much better, than the alternative," said Bonita Rodriguez.

The couple, who work in sales, will settle on that house this month and also complete the sale of the Bolton Hill rowhouse they've owned for eight years. They're selling it for $575,000, $74,000 less than the original asking price in April.

But they're buying their new home for $135,000 less than the builder's original price.

Bonita Rodriguez believes it was priced way too high to begin with. "I think we got a good deal, but I don't think we got a real bargain," she said.

Real estate agents say the days of setting prices based on past sales are over. Now, said Ron Howard with ReMax Sails in Baltimore, it's about the competition - other homes on the market.

After one of his Canton rehabs sat on the market for six months, Mel Stachura of Urban Rehab Consultants LLC decided to deal with the competition by adding a bathroom and more closet space.

"You have to adapt to survive," said Stachura, who was reacting to feedback from prospective buyers who looked and left. More than 60 came through. "There's buyers out there - they're just picky."

They're much more demanding from start to finish than they used to be, said Tressa Manna, his agent.

"Buyers are asking for everything on the home inspection, to the point of, `I want the burnt-out bulb in the hallway replaced,'" said Manna, with ReMax Sails.

jamie.smith.hopkins@baltsun.com

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