Pamela Milby has been trying to sell her deceased father's… (Baltimore Sun photo by Kenneth…)
The long decline in home prices all but ended in the Baltimore region during the first half of this year — a ray of hope for beleaguered homeowners who have seen all their equity wiped out.
The Baltimore region's $278,000 average sale price was down just a few hundred dollars from a year earlier, compared to a $30,000 dive that prices took on average during the first half of 2009. The recent stabilization came as buyers pushed home sales up 18 percent, according to a Baltimore Sun analysis of Metropolitan Regional Information Systems data.
But the reprieve from housing-market meltdown may be temporary or sporadic. The market got a major lift from a federal tax credit for first-time home buyers, a program that spurred sales but is no longer available to new buyers. And that boost did not ripple to all Baltimore-area communities.
More homes changed hands in nearly two-thirds of the metro area's suburban ZIP codes and city neighborhoods, but some areas saw big declines in home sales. And while a significant number posted price increases, average prices fell at least 5 percent in nearly half the region.
"There's still an immense fear among buyers about getting a bad deal," said David Orso, a real estate agent with Century 21 Associates in Annapolis. "The low interest rates are helping them pull the trigger, but they want to see every single property on the market … and they're making aggressive offers, which is disappointing to sellers."
Some economists contend that Baltimore-area prices appear to have nearly hit rock bottom, but it remains an uncertain and difficult-to-predict market. Simply measuring where prices stand now is tricky.
In many of the local communities where average prices increased, the uptick appears to be driven by buyers purchasing larger homes this year. The number of single-family houses changing hands in the metro area jumped by nearly 900 to 5,400 home sales in the first half of this year, compared with the same period a year ago. That's more than the increase in townhome and condo sales combined.
Jennifer O'Donnell, 30, is purchasing a three-bedroom house in Arnold for $250,000. That's less than the townhouses she was considering back in 2003, when the housing bubble hadn't even fully inflated yet. She said she's very glad she decided to hold off buying until now.
"I just couldn't justify spending $300,000 for a home that was attached to another home," said O'Donnell, an Anne Arundel County police officer. "Then, when [the market] hit the boom, it was half a million dollars for a townhouse. That's just ridiculous."
The house she's buying could use an update to its kitchen and bathrooms, but it has a big yard for her two dogs and a floor plan she loves. Best of all, "They had priced it to sell."
Home prices can't stage a genuine turnaround until demand is in balance with supply. That's why there's angst about how the market will fare without the popular home buyer tax credit, which enticed so many buyers that it helped the Baltimore area post sales gains last summer after three and a half years of declines.
The deadline to sign a contract and qualify for the $8,000 incentive was April 30, and most of those deals have already closed.
After the April deadline passed, contract-signing took a steep drop here and nationwide, prompting many economists to postulate that prospective homeowners looking to buy over the next few years simply did so earlier to get the tax break.
"The tax credit moved a lot of demand forward from 2011, 2012," said David Stiff, chief economist for Fiserv, a financial services provider that tracks housing trends across the country. "Most markets, especially those that had large bubbles, will probably flat-line for two or three years."
He expects that single-family home prices will fall in the Baltimore area — though only slightly — before stabilizing at the end of 2011. Moody's Economy.com has a similar forecast, though it expects the bottom to come early next year.
U.S. home prices have dropped about 30 percent since their peak a few years ago, Stiff said, which makes the Baltimore metro area's 18 percent decline seem almost modest by comparison.
"Baltimore's having a softer landing," he said. "On the way up, Baltimore appreciated faster than the U.S. as a whole but actually fared a bit better on the downside. I think that's probably because the labor market in Baltimore is better than the U.S."
The Sun's analysis of the local housing market used sales data from Metropolitan Regional Information Systems, a Rockville firm that runs the region's multiple-listing service. To cut down on statistical skewing, ZIP codes and Baltimore City neighborhoods were included in the year-over-year comparison only if they had at least five sales in each period.
Homes sales increased in about 70 percent of suburban ZIP codes and 60 percent of city neighborhoods. In addition to the tax-credit stimulus, interest rates have remained at or near historic lows.