Home prices, sales still on downgrade

City had area's only price rise in July

August 09, 2008|By Jamie Smith Hopkins | Jamie Smith Hopkins,Sun reporter

For anyone looking to buy or sell a home, last month was more of the same: Average sales prices in the Baltimore metro area continued to drop as the number of houses changing hands plummeted.

The average price in the area - Baltimore City and the counties of Anne Arundel, Baltimore, Carroll, Harford and Howard - was just under $320,000. That's down 3 percent from a year earlier, according to numbers released yesterday by Metropolitan Regional Information Systems Inc. It's also below the average two years earlier.

Sales fell 32 percent compared with a year earlier, the 11th-straight month of similar declines. Last year's switch from loose lending rules to tight ones has pummeled home sales since September.

Further tightening is coming: Mortgage financing giant Fannie Mae, reporting a $2.3 billion loss from April through June, said yesterday that it would raise fees and get out of the so-called "Alt-A" loan business entirely.

Fannie Mae, which buys many of the loans borrowers get, said an outsized share of its losses are coming from Alt-A mortgages, supposedly less risky than the subprime loans that have driven foreclosures skyward.

"The housing market has returned to earth fast and hard," Daniel H. Mudd, president and chief executive of Fannie Mae, told analysts in a conference call yesterday.

Though he saw some positive signs in hard-hit states such as Michigan and California, Mudd added: "We have a long way to go."

The company expects that home prices will decline about 9 percent this year.

Andy Bauer, regional economist for the Federal Reserve Bank of Richmond's Baltimore office, said the housing figures he tracks are all trending downward. The Maryland homebuilders and contractors he talks with every month as part of a business sentiment survey are not feeling particularly hopeful about the near future, what with high energy costs worrying potential buyers on top of everything else.

"For the most part, everybody's very negative," Bauer said.

Metropolitan Regional Information Systems' home sales statistics are pulled from its multiple-listing service, used by real estate agents to sell homes. Most are resales rather than new construction.

MRIS said the number of unsold homes on the market continued to rise last month in the metro area, almost reaching 21,000. It would take nearly 11 months to find buyers for all those properties if the pace of sales in the past year continues. That's about twice as long as normal.

Would-be sellers seem to be holding back as a result. The number of homes on the market rose just 5 percent from a year ago, the smallest increase since sales began slumping in late 2005.

Carroll County had the biggest drop in average sales price in July - about 9 percent. But its 12 percent drop in sales was the area's smallest. The opposite was true of the city, which had the metro area's only price increase but the largest sales drop. Baltimore prices rose 3 percent while sales fell 39 percent.

Prices were down 7.2 percent in Anne Arundel, 4.1 percent in Baltimore County, 3.9 percent in Howard and 1.7 percent in Harford, MRIS said.

Belair-Edison Neighborhoods Inc., a Baltimore nonprofit that offers such services as homeownership counseling, says it's getting half to three-quarters as many people at its monthly homebuyer workshops as it did a year ago - 10 or 15 rather than 20.

Home sales in the Belair-Edison neighborhood are also about half the number they were a year ago, says Mary Warlow, the nonprofit's marketing director.

"I get the sense that people are just biding their time," Warlow said.

jamie.smith.hopkins@baltsun.com

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