Some metro prices drop to 3-year lows

Home sales are continuing to slump, but price declines have opened up pockets of affordability

July 11, 2008|By Jamie Smith Hopkins | Jamie Smith Hopkins,Sun reporter

Average home prices dropped to three- or even four-year lows in parts of the metro area last month as sales continued to slump.

Baltimore County's average price of about $296,700, down 9 percent from a year ago, is slightly lower than it was in June 2005. Howard County, where prices dropped nearly 13 percent from a year earlier to $426,200, is thousands below its June 2005 mark. And sales prices have fallen so rapidly in Carroll County that its $329,000 average in June is about the same as sellers got four years earlier.

The numbers, released yesterday by Metropolitan Regional Information Systems, showed just more than 2,300 homes changing hands in the city and five surrounding counties last month. That's down 31 percent from a year ago, much the same as it has been since lenders clamped down on mortgage rules last summer, according to data from the Rockville-based multiple-listing service.

On average in the Baltimore metropolitan area, prices fell 4.4 percent to about $322,200. Only the city posted a gain, and its current average price of nearly $211,000 is substantially ahead of 2005.

Prices are being pressured in many parts of the country as the reversal from earlier boom years is further fueled by tougher mortgage standards. Average prices are also dropping locally because homeowners are finding it much harder to sell expensive properties than it was even 12 months ago.

"A lot of our stuff that's in the higher price range is, I like to say, on the market but off the market," said Pat Hiban of the Pat Hiban Real Estate Group at Keller Williams Crossroads in Ellicott City. "Nobody's looking at it ... listings over a million dollars especially."

Sales of homes priced $500,000 or more fell 45 percent in the metro area from a year ago - to about 300 from 540. Sales of homes priced under $250,000, the typical range for first-time buyers, dropped a less severe 22 percent.

First-time buyers "are the dominant market right now," said Ross Mackesey, a vice president at Coldwell Banker in Baltimore who focuses on Federal Hill and new homes across the metro area.

"Eighty percent of the transactions in June in Baltimore City were under $300,000," he said.

For every home that sold in the Baltimore metro area last month, owners were trying to sell nine more. That's an improvement over recent months, when homes on the market outnumbered sales as much as 14 to 1, but it's worse than it was this time last year. Four or five listings for every sale is normal, said John McClain, a senior fellow at the Center for Regional Analysis at George Mason University.

All the suburban counties recorded drops in average price - the biggest in Carroll and Howard, both down nearly 13 percent. Average prices rose 5.3 percent in Baltimore City.

But the city saw the largest decrease in activity. Home sales were off nearly 40 percent. Howard's 25 percent drop in sales from a year earlier was the smallest.

Price declines are opening up pockets of affordability. The most expensive parts of the metro area - Howard, Anne Arundel and Carroll counties - all saw sales increase in the under-$250,000 range. Howard had nearly 200 homes on the market for under $250,000, more than double the number from a year ago.

But an asking price under $250,000 is by itself no guarantee of a fast sale. Shirley J. Bennie, whose Abingdon townhouse is listed for $224,000, has been trying to sell for about eight months. She recently painted her house and replaced carpeting in the hope that would make the difference.

She gets good feedback from buyers, she says. But either they want something very specific that her home doesn't have - one recent would-be buyer had already been to 50 places before seeing Bennie's - or they want to pay less. She says she can't afford to lower her price. It's set to allow her to break even on her first and second mortgages.

"I have to come out with those two covered," said Bennie, 64, who is selling the home she's owned for almost 10 years because the house payments have gotten tough for her.

Steve Kuzma, her agent and an associate broker with Century 21 Diana Realty in Bel Air, said it's not unusual for potential buyers to look and look and look, only to decide not to buy at all. "They don't know where the market's going," said Kuzma, who figures that prices for comparable homes are down 10 percent in the past year in Harford County. "They think it's going to keep falling."

At some point, though, falling prices do seem to bring people off the sidelines, McClain said. He points to Loudoun County, Va. Average prices in that Washington suburb dropped 17 percent in June - and sales rose 19 percent.

"It may indicate that prices do have to fall to a certain level - and it probably won't be the same level in each jurisdiction - but after they fall to a certain level, buying does increase," McClain said.

Moody's Economy.com has predicted that prices will decline a total of 21 percent in the Baltimore metro area from the beginning of 2007 - when prices peaked according to its measurements - to the end of next year. That's slightly less than the drop the company anticipates nationwide.

"It's definitely being hit by the housing downturn, but not as badly as some of the markets on the West Coast and Florida, where conditions really got overblown during the housing upturn," said Celia Chen, director of housing economics at Economy.com. "Now, Baltimore also had a very strong housing boom, so the fact that the expected downturn is average might be a positive. It didn't get as overbuilt as some of these hotter markets."

jamie.smith.hopkins@baltsun.com

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