From the Baltimore Sun
Region's home prices slip
'Going to get worse' for the housing market,
UB researcher says
The Baltimore Sun -
June 9, 2007
The average home price in the Baltimore region fell for the first time
in six years last month, reflecting a sputtering housing market that
continues to lose momentum.
The decline was small - just a notch more than 1 percent - and prices
fell from year-earlier levels in only half the region's six
jurisdictions, according to statistics released yesterday by
Metropolitan Regional Information Systems Inc. But the decrease,
accompanied by a nearly 17 percent drop in the number of homes sold and
a surge in listings, signals that an end to the housing slump is not yet
in sight.
"Clearly things are going to get worse, with prices likely falling
somewhat, new housing starts slowing and days on market increasing.
We're in for a bumpy ride, but not a fall off the cliff," said Richard
Clinch, director of economic research at the University of Baltimore's
Jacob France Institute.
The average price of a house sold in Baltimore City and the five
surrounding counties dipped 1.11 percent in May, to $312,617 from
$316,123 a year earlier. The decline was the first for the region since
a 0.08 percent dip in June 2001 - before the housing boom began - when
prices averaged $173,008.
The area's most affordable jurisdictions, Baltimore City and Harford
County, had the strongest price gains - 7.2 percent and 5.15 percent,
respectively, the MRIS data showed. Anne Arundel County sustained the
biggest drop, with the average price skidding 6.75 percent, the most
since the market started to turn down in the last half of 2005.
In all, 3,030 homes were sold through the multiple-listing service in
the metro area, MRIS reported. Sales fell in every jurisdiction, with
the biggest declines in the two priciest counties - Anne Arundel and
Howard.
May's price decline - which reflects contracts largely signed in April
and March - comes at the start of the crucial spring and summer selling
season, when more people typically put their homes up for sale. In May,
the number of listings soared to 18,870, the highest since the slump
began. New listings outnumber contracts by more than 2-to-1.
Flood of listings
The flood of new listings, on top of a bloated inventory of unsold
homes, has squeezed prices, economists said yesterday.
"Traditionally, this is a time when houses get put on the market, but
the fact that there is a huge active inventory from homes that haven't
sold is putting downward pressure on home prices," said Daraius Irani,
director of the applied economics group at RESI, Towson University's
research and consulting arm. "Baltimore is not immune to any kind of
real estate home price adjustments that are going on in the rest of the
nation."
Just this week the National Association of Realtors predicted that the
median price of an existing home would fall this year for the first time
since the 1960s, when the trade group began keeping tabs. The NAR also
said it now expects sales to drop 4.6 percent, more than double the 2.2
percent decline it predicted two months ago.
Still, the Baltimore region has continued to outperform the nation as a
whole. In the first quarter, the median price gained nearly 5 percent,
putting it in the top quarter of 145 metro areas surveyed by the NAR.
Clinch said that's thanks to the area's strong job base, relative
affordability and fewer speculators - factors that should help the
housing market recover once jobs expected from the federal base
realignment process (BRAC) start coming.
William L. Yerman, president of the Greater Baltimore Board of Realtors,
said he was encouraged by the price gain in the city and Harford County
and the essentially unchanged prices in Baltimore and Howard counties.
'Values are holding'
"I still think we're close to a flat market, and not a downward trend,"
Yerman said. "The values are holding in the Baltimore metro region and,
if you price a house right, it will sell."
Home sellers are finally beginning to understand the market and price
homes accordingly, said Wanda Lehman, a real estate agent with Long &
Foster Real Estate in Timonium.
With more inventory on the market, homes in May took an average of
nearly three months to sell, compared with just under two months in May
2006 and 39 days in May 2005, the MRIS statistics showed.
"Sellers had been over-ambitious with their expectations after five
years of double-digit appreciation," Lehman said. "The sellers that
really want to sell are becoming realistic. "
Sometimes that means reducing the price, offering to help buyers with
closing costs or making additional repairs or renovations.
Cindy Stewart first listed her renovated 1923-era farmhouse on 1.2 acres
in Lutherville in January for $720,000 after getting it appraised, but
has had no offers. She has since reduced the price twice, first to
$699,000, then to $675,000, added another bathroom and switched real
estate agents, to Lehman.
Stewart, who has relocated to start a new job in Florida, said she feels
encouraged about the increased interest she's seen and is hopeful the
right buyer is out there.
"I'm trying to stay calm, and I'm trying to be understanding about the
market," a vastly different market from three years ago, when she sold
her last home in three days. "This is a beautiful house, and we've done
a lot of work. "
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