Home Sales Stir

Real Estate Activity Rises In A Third Of Baltimore-area Neighborhoods, A Sun Analysis Finds, Offering A Glint Of Hope Amid A Nearly 4-year Decline

August 23, 2009|By Jamie Smith Hopkins | Jamie Smith Hopkins,jamie.smith.hopkins@baltsun.com

The MacDonalds' Glen Burnie house sold four days after they listed it with an agent. And the Baltimore home the couple moved into? They had to outbid another buyer for it.

Not in the bubble days. This year.

Falling prices and the $8,000 tax credit for new homeowners are tempting buyers back into the fray, in what could be the early signs of a turnaround for a housing market that's been declining since late 2005. In a third of the metro area's city neighborhoods and suburban communities, more homes changed hands in the first half of the year than during the same months last year, according to a Baltimore Sun analysis. Compare that with a year ago, when buyers were pulling back from all but a handful of ZIP codes.

Sales increases came in expensive places - such as Howard County's Fulton and Baltimore's Inner Harbor - as well as more moderately priced communities, such as Edgewood in Harford County.

This isn't happy-days-are-here-again for would-be sellers, however, many of whom are stuck with homes worth less than their mortgages. Average sale prices dropped in eight out of 10 city neighborhoods and suburban ZIP codes, according to the same Sun analysis, which looked at home sales reported to Metropolitan Regional Information Systems. One out of six communities posted price drops of at least 30 percent on average.

But homeowners who can afford to set lower asking prices are getting offers.

"Now there's definitely hope out there," said Pat Hiban of the Pat Hiban Real Estate Group at Keller Williams Crossroads in Ellicott City. "Sellers are seeing their neighbors actually selling."

The new housing-market reality, agents say, is buyers competing over bargains while high-priced homes languish. Real estate investors, faced with limited financing options, doing all-cash deals. And lots of homeowners who want to move but can't unless they - or their lenders - take a loss. A quarter of all Baltimore-area homes with a mortgage are worth less than that mortgage, according to estimates by real estate information company First American CoreLogic.

Jason and Christi Stevenson's home is in that "under water" group. When they got word that the Navy was going to relocate Jason Stevenson to Hawaii, they put their home near Baltimore's Patterson Park on the market for $325,000. That was a year and a half ago. They're just selling now - for $246,000, which is $49,000 less than what they bought it for in the spring of 2006. At one point they tried to rent it out, but "rent has gotten so competitive because a lot of people were in the same boat that we were in," said Jason Stevenson, 33.

To pay what he owes to his lender, plus the additional fees of selling, he's having to tap retirement funds, dip into savings and borrow money.

"It's been very trying, to say the least," he said. "When we bought, everything was just so overinflated. We didn't realize the bubble was going to burst, and it did."

Their agent, Stephanie Bamberger Yungmann with ZipRealty in Towson, said people flocked to homes around Patterson Park - north of Canton - in the days when prices were skyrocketing. Then, young professionals were priced out of places closer to the harbor.

"But now, because the prices have adjusted so greatly right around the water area, those places slightly off the water areas are not moving as quickly - or not moving at all, unless it's just a great deal," she said.

Falling values have contributed to the rising number of foreclosures and potential short sales on the market. Homeowners trying to sell short are under water on their mortgages, and they're hoping their lenders - to avoid the cost of foreclosing - will eat the difference between what's owed and what a buyer will pay. Buyers are making offers, but it can take weeks or even months for the lenders to respond, said Jim Gunsiorowski, an agent at Prudential Carruthers Realtors in Federal Hill.

Falling values are also creating a "shadow inventory" of homes that people intend to list once they think they can sell. In an online survey in July conducted for real estate service provider Zillow, a quarter of U.S. homeowners said "they would be at least 'somewhat likely' to put their homes on the market in the next 12 months if they saw signs of a real estate market turnaround." Gunsiorowski said banks seem to be taking the same tack, delaying foreclosure proceedings. He sees two key tests for the market: what happens when those homes go up for sale - and what happens when the first-time buyer tax credit expires. The last day is Nov. 30.

"This could be falsely pushing along the market, just like the 'Cash for Clunkers' is falsely pushing along the auto sales," he said.

The credit was important to Will Cocks, 28, who just settled on a home in Baltimore. He has already filed an amended tax return to get it. But he had been home-shopping before the credit was approved and said he wasn't "blinded" by the lure of $8,000.

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