Finding Balance In Baltimore's Housing Market

REAL ESTATE WONK

August 30, 2009|By JAMIE SMITH HOPKINS

When will home sellers and buyers be on basically equal footing? When supply equals demand. The magic number, many housing experts say, is six.

As in, "it'll take six months to sell all the homes now on the market at the current pace of sales."

During the first half of the year, the Baltimore metro area's supply averaged 11.5 months.

"As that number approaches six, we'll start to see stabilization in pricing," said Kenneth Wenhold, director of the Mid-Atlantic region for Metrostudy, a housing-market research firm. "When Northern Virginia broke the six mark, we saw things change very dramatically in a very short period of time. ... They were at about 10.4 months two years ago, and it only took them about nine months to get down to a six months' supply."

Could that happen farther north?

"Hypothetically, the Baltimore market could be close to equilibrium, if not at equilibrium, by this time next year," Wenhold said. "Northern Virginia has shown that is a possibility."

Northern Virginia has seen a more drastic drop in prices, though, which could be driving buyers into the fray.

That's the resale picture. As for new homes, Wenhold says there's a 9.2-month supply in this region. Condos are a big part. Counting just newly constructed single-family homes and townhouses, there's a "much healthier" 5.8-month supply, he said.

The new-home supply is more restrained than the resales because builders hit the brakes on construction when the market slumped, and kept those brakes on hard.

"They've been very good at limiting the amount of supply that's out there," Wenhold said.

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