Baltimore-area home sales rise as prices fall

Looming tax credit deadline, sales to investors boost March figures 17% over '09

April 10, 2010|By Jamie Smith Hopkins | jamie.smith.hopkins@baltsun.com

Homebuyers in the Baltimore area picked up the pace last month, with both the spring season and a looming deadline for an $8,000 tax credit as enticements.

As prices continued to fall, March home sales rose 17 percent from a year earlier in the metro area, Metropolitan Regional Information Systems reported Friday. New contracts signed in March - deals that will likely turn into settled sales this month or next - jumped almost 40 percent.

"The homebuyer credit is pushing a lot of people into the market right now," said Keith L. Cross, a real estate agent and office manager at Cornerstone Real Estate in Baltimore.

First-time homebuyers hoping to qualify for the federal tax credit of up to $8,000 have to sign a contract by the end of this month and close by the end of June. The timing is the same for a $6,500 credit aimed at certain repeat buyers, though agents say that doesn't seem to be motivating as many people as the first-time credit.

The average Baltimore-area home sales price dropped slightly more than 4 percent from that in March 2009, to about $266,000, according to MRIS, which runs the regional multiple-listing service used by buyers and sellers. Historically, the average for March has risen as high as $307,000 - in 2007 - before falling as part of a national slump.

Falling prices have made homes more affordable for more people, another reason for increased sales, economists say.

"Prices have gotten down far enough that sales are beginning to pick up," said John McClain, a senior fellow at the Center for Regional Analysis at George Mason University.

Even with the recent rise, the number of homes changing hands remains far below the peak five years ago, when easy mortgage money and speculation were rampant. Half as many homes sold last month as in March 2005. But sellers did find buyers for about 250 more homes last month than a year ago.

The first-time buyer credit was instituted to rev up purchasing in the face of the worst housing market decline since the Depression. Baltimore-area home sales spiked last fall as buyers raced to meet a Nov. 30 deadline, but that was extended and the credit program was expanded after lobbying from the real estate industry. Cross said a lot of would-be buyers last year were counting on an extension, but few are now.

"It's really a reality this time," he said of the deadline. "They have to get it done."

Some economists say the credit has artificially boosted the market by giving people who would have bought later an incentive to buy now, which would mean a drop in sales once it's gone. McClain said he does expect some bumpy times ahead. But he said he's uncertain how many people the credit is influencing now, so many months after it was made available.

"If there is going to be a bumpy time, we may just need to go through that because the market needs to get back on its own two feet," McClain said.

Ricardo Carter, who owns a house in North Baltimore's Idlewood neighborhood, hopes the credit will help him find a buyer. He's been renting out the two-bedroom rowhouse after failing to sell it in 2008, when he moved to the Washington area to be closer to work. With his tenant leaving, he's putting the home back on the market. He looked at asking prices for other houses in the area before setting his at $115,000.

"I'm trying to undercut them," Carter said.

More homes changed hands across the metro area last month than a year earlier, from a 10 percent increase in Anne Arundel and Carroll counties to a 30 percent jump in Howard County. Sales rose 14 percent in Baltimore City, 24 percent in Baltimore County and 11 percent in Harford County.

Average prices fell 1 percent in Baltimore City and Carroll County, 4 percent in Baltimore County, 7 percent in Harford County and 11 percent in Anne Arundel County. In Howard County, the average price rose 4 percent.

First-time buyers aren't the only ones moving the market. Nearly 40 percent of the homes sold in Baltimore last month were bought entirely with cash, often a sign of a real estate investor at work. In the suburbs, 12 percent of purchases were cash deals.

"Foreclosures are doing very well right now," said Cross, the real estate agent. "A lot of investors are buying."

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