Hruz, the real estate investor and appraiser, blames this tightening for the drop in price on his Northwood home. He had 30 to 40 showings, but until recently, "no one was willing to pull the trigger."
Not all buyers are holding back because of loans, though. Nathan Hui, 32, who rents in Baltimore's Canton neighborhood, is a would-be buyer who sees no reason to hurry and plenty to hold off. All the research he's done, and he's done a lot, suggests to him that prices have further to fall. The one offer he made, back in February, was about 20 percent below the asking price to account for the future drops he expects. (No thanks, the sellers said.)
"In a case where there's [home-price] inflation, you've got to buy now because it'll get more expensive," said Hui, who works for a health care company and puts his chances of buying this year at about one in five. "But in a time of deflation, it's only to your advantage to sit back and wait."
Many seem to be doing the same. Metro-area home sales fell 33 percent in the first six months of the year compared with a year earlier, according to Metropolitan Regional Information Systems.
That's a much bigger drop than the U.S. overall, which was down about 19 percent, according to the National Association of Realtors. And it's a bigger decline than the metro area saw in the first half of last year, when sales were off 10 percent, or the first half of 2006, when the decrease was 16 percent.
Only three communities - White Marsh in Baltimore County, Crownsville in Anne Arundel and New Windsor in Carroll - saw an increase in home sales. Sales remained steady in one community, Anne Arundel's Davidsonville. They fell everywhere else, including a 60 percent drop in Edgewood. The number of homes changing hands in that Harford community went from more than 200 in the first half of last year to about 80 in the first half of this year.
These figures are mainly sales of so-called existing homes, not new ones. But builders are under pressure, too. New-home sales dropped more than 40 percent across the Baltimore metro area in the first half of 2008 vs. a year earlier, according to Hanley Wood Market Intelligence. Average prices fell 9 percent.
The base realignment and closure effort, expected to send thousands of new jobs to the Baltimore metro area, could turn the downward trend around for communities convenient to either Aberdeen Proving Ground or Fort Meade. But probably not soon. Many of the jobs won't appear until 2010 and 2011, says the Maryland Department of Business and Economic Development. And a number of the people currently based in Northern Virginia won't move here, at least not right away, the state believes.
The bright spot is that Maryland employers are still adding jobs rather than cutting, said Basu, the economist. Most states can't say the same.
"The market's down now, but it will be up later," said Hruz, the investor and appraiser. "Every real estate market is sooner or later pushed by two things: population and pent-up demand."
