The National Association of Realtors' chief economist told local real estate agents yesterday that he believes the Baltimore housing market has hit bottom and 2008 should be a better year - assuming buyers don't sit on the sidelines, anticipating major price drops.
"This area will be very interesting to watch because there's very solid economic growth, but people aren't buying homes," said Lawrence Yun, the economist. He added: "Ten years from now, people will look back at 2008 and say, `Wow, that was a great time to become a homeowner.'"
The Greater Baltimore Board of Realtors, which brought Yun in to speak to a packed hotel conference room, said yesterday that it will team up with other local Realtor groups in the metro area on a $50,000 media campaign with that "great-time-to-buy" message.
But other economists aren't so optimistic.
Anirban Basu, chief executive of Sage Policy Group, a Baltimore economic and policy consulting firm, said yesterday in an interview that he's sticking to the forecast he gave the Home Builders Association of Maryland: No bottom until next year.
"This year I expect to be the year of the falling prices," Basu said.
Last year, average prices in the metro area ticked up just under 2 1/2 percent, according to preliminary figures from Rockville-based Metropolitan Regional Information Systems Inc.
Yun said "excessive negative coverage" about the nation as a whole, which saw prices fall, has given buyers a distorted picture.
The NAR economist said he thinks the worst is over from a seller's point of view in many markets, including the Baltimore area.
Job growth helps
Continued job growth is helping create pent-up need for homes, he said, while mortgage interest rates have fallen below 6 percent, a two-year low.
Yun acknowledged that some economists are predicting massive price drops, but he said some of those forecasts are based on the unusually large gap between income and home prices. He thinks it's more accurate to look at the cost of borrowing money to buy a home, which he argues is not out of whack with incomes, thanks to low interest rates.
In the Baltimore metro area, monthly payments on a 30-year fixed-rate mortgage would take 20 percent of a typical family's income if they buy the typical home, Yun said. That's on par with the nation's historical average, he said.
