Home sales up 8% in January

Average price also rose for Baltimore metropolitan area

  • This High Street home in Little Italy is partly obscured by the back-to-back snowstorms that have interrupted house hunters and closings for sellers and buyers who have come to terms. A rise in houses being bought for cash signals the return of investor interest.
This High Street home in Little Italy is partly obscured by the… (Baltimore Sun photo by Karl…)
February 11, 2010|By Jamie Smith Hopkins | jamie.smith.hopkins@baltsun.com

More homes were sold last month - and for more money on average - than a year earlier in the Baltimore metro area.

About 1,100 homes changed hands in January, up almost 9 percent from the previous year, according to numbers released Wednesday by Metropolitan Regional Information Systems. The average sale price was about $272,000, an increase of just over 2 percent.

It's the first time in three years that both sales and average prices were up in the metro area. But it's too soon for home sellers to rejoice. Another measurement of value - the median, which is the midpoint sale price - was down 2 percent.

Many sellers are still accepting offers for significantly less than they'd asked for, too. Average buyers last month got homes for about 11 percent below their listing prices.

"I'd characterize it as a flat market still looking for some bounce," said John McClain, a senior fellow at the Center for Regional Analysis at George Mason University.

What's driving up sales is the long period of falling values, he said. Lower prices make homes affordable to more people, and also more attractive to investors in the market for rental properties.

One out of every five homes that changed hands last month in the Baltimore metro area was bought entirely with cash, according to Metropolitan Regional Information Systems. That's often a sign of an investor purchase.

The pickup in the number of homes sold - after a long decline - came after the government started offering a tax credit of up to $8,000 to first-time homebuyers. Sales in the metro area are still far below what they were even a decade ago, before the housing boom, but they've been on the uptick since June.

McClain suspects first-timers are no longer driving the market as much as they were last year because many who saw the $8,000 as an incentive have probably bought already.

The deadline, extended in November, is twofold: sign a contract by the end of April and settle by the end of June. As April nears, McClain figures the credit will mainly sway people who would have made purchases anyway, only not quite as quickly.

Cindy Ariosa, who manages the Baltimore and southern Pennsylvania region for real estate company Long & Foster, said the credit hasn't lost its appeal to potential buyers. "It's still driving the market right now, absolutely," she said.

A key test of the market's health will come after the credit is gone. Ariosa thinks it will be fine as long as mortgage rates remain low - rising rates would price more buyers out. McClain expects "some bumpy times," with a more normal market by 2011.

Last month, sales rose in every part of the Baltimore region except Harford County, which recorded a 1 percent decline compared with January 2009. The strongest gain came in Carroll County, where the 63 homes sold represented a more than 30 percent increase.

Average prices were up everywhere except the city, which had a drop of 18 percent. Fewer homes sold for $300,000 and up in Baltimore last month - just 18 - while a growing number changed hands for under $100,000. Forty percent of city homes sold were bought entirely with cash.

February, meanwhile, is proving a difficult month for buyers and sellers trying to get traction on home deals. Try scheduling home showings, inspections, appraisals and closings in the midst of back-to-back snowstorms.

"Obviously, people aren't driving around, looking at houses," said Derek Massey, president of Hunt Valley-based Mid-Atlantic Settlement Services, which closed its offices Wednesday because of the newest storm. "People aren't settling. ... I think it's fair to say that those that are in the pipeline are still going to close - it's just a matter of when."

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