Baltimore-area home sales fell in July

Fewer are buying in the absence of the homebuyer tax credit

August 10, 2010|By Jamie Smith Hopkins, The Baltimore Sun

Home sales in the Baltimore metro area fell nearly 19 percent in July compared with a year earlier, a sharp decline that offered the clearest view yet of real estate activity after the expiration of a popular homebuyer tax credit.

About 1,820 homes changed hands last month in the metro area, down from 2,240 a year ago, according to figures released Tuesday by Metropolitan Regional Information Systems. Home sales dropped in the city and all but one of its suburbs.

The decline was no surprise, coming after two straight months of pullback in contract-signings — a trend that continued in July. Home-buying contracts usually take a month or two to turn into sales.

"With the drop in the pendings over the last couple of months, I did expect to see a drop in the actual sales," said Joseph T. "Jody" Landers III, executive vice president of the Greater Baltimore Board of Realtors.

Harford County was the exception in the region. Sales there rose nearly 11 percent, most likely thanks to federal workers being transferred from New Jersey to Aberdeen Proving Ground as part of the military base realignment and closure effort.

Average prices in the metro area bumped upward slightly, less than 1 percent, to $299,900. Price changes varied widely, from a 12 percent gain in Anne Arundel County to a 14 percent drop in Baltimore City.

Real estate agents and others in the industry aren't seeing many homes selling for more than they would have a year ago, but other factors, such as the purchase of larger homes, also can contribute to average-price increases.

"I'm seeing an increase, a slight increase, in the sale price, but that's largely due to the mix of business being a little bit different this year," said Timothy Bird, a Towson-based real estate agent who is ZipRealty's district director for Maryland. "More single-family homes and, just simply stated, more house for your money."

Charles DiPino Jr., a senior vice president in mortgage lender New Penn Financial's Columbia office, said applications for loans to purchase homes have dropped since April 30. That was the deadline to sign a contract and qualify for the federal tax credit for first-time homebuyers, worth up to $8,000.

Record-low interest rates haven't proved to be enough of an incentive to pick up the slack post-credit, he said.

"I'm completely shocked with rates the way that they are that we're not seeing more action," DiPino said.

That makes him think the downward pressure on prices, which eased earlier this year, will return. With falling home sales, there's less demand at a time of high supply. Unsold homes on the market in the Baltimore metro area passed 20,000 in July for the first time since October 2008.

"There's nowhere for prices to go but down," DiPino said.

Contract-signings plummeted after the April rush. In July, new contracts in the Baltimore metro area were down 17 percent from a year ago, according to Metropolitan Regional Information Systems, a Rockville-based firm that runs the region's multiple-listing service.

Most of the contracts signed in time for the April tax-credit deadline closed by the end of June. A small number are still working their way to the settlement table — Congress extended the closing deadline to Sept. 30. So July was a look at what the housing market could be like without the credit.

Economists expected a drop in markets across the nation because the tax credit "borrowed" sales from the future by encouraging people to buy before May rather than afterward. Whether the dip will be short-lived or long-lasting is a critical question for buyers and sellers alike.

The average home that sold last month in the metro area was on the market for 99 days, or just over three months. That's quicker than a year ago, when the average was 115 days.

Real estate agents say asking prices, location and the amount of competition all play a role. So does the condition of the home.

"Buyers will grab up good, solid homes, ready to move into," said Bird, with ZipRealty. "But the properties that are distressed are continuing to stay on the market for enormous amounts of time. They're just sitting, for the most part."

jamie.smith.hopkins@baltsun.com

http://twitter.com/realestatewonk

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