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September 11, 2008

Home sales and housing predictions

Today's story about home sales includes information about the recent drop in mortgage rates, in case you've been wondering where things stand:
Benchmark 30-year mortgage rates dropped from a national average of 6.3 percent Friday to 6 percent yesterday, according to financial publisher HSH Associates, thanks to the weekend announcement of the takeover of Freddie and Fannie. That's a big drop in a short period of time - considering that rates were 6.5 percent a week earlier. For borrowers, a drop in rates of half a percentage point means nearly $100 a month savings on a $300,000 mortgage.

Whether that will translate into more home sales -- or affect prices -- is anyone's guess.

Dean Baker, co-director of the Center for Economic and Policy Research, says he continues to expect that prices will fall in many places, Baltimore included. "It won't be one of the worst-hit cities -- it's not going to be a Miami or San Diego -- but I'd be very surprised if you didn't see a substantial price decline there," he told me.

Some of you watching the averages and medians, and thinking it doesn't seem like a substantial drop yet, have wondered when, if ever. Economists predicting declines chalk it up to delayed reactions and sellers holding out as long as possible. (As some sellers who have taken a haircut will tell you, averages and medians don't always reflect what's happening to individual properties.)

Another perspective comes from The PMI Group's most recent "Market Risk Index," which uses first-quarter data. It considers the Baltimore metro area at pretty low risk of price drops in the next two years. (California and Florida metro areas top the risk list.) PMI bases its predictions on past home prices, affordability and unemployment rates.

Posted by Jamie Smith Hopkins at 3:22 PM | | Comments (3)
        

Comments

Affordability in Maryland?! You got to be joking... My income is just above median and I can't even afford a decent townhome! Single-family homes start from 400$K - you have to have a good 6-figure income to afford such house (I doubt there will be more bailouts coming any time soon).

So far we were rather lucky in MD with low unemployment rate, but wait until Bush is out of the White House and we have to pay his debt. There will be no more huge federal spending and it will be another Michigan here.

If you don't have to shop at Wal-Mart, or eat at Olive Garden, the city welcomes you. We have a ton of affordable homes for under $250k. Baltimore-Towson posted a 5.3% salary increase thios year. It is not a bad place to buy.

and our unemployment rate went up. Stop promoting yourself. Pay for an ad instead!

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About Jamie Smith Hopkins
Jamie Smith Hopkins, a Baltimore Sun reporter since 1999, writes about the regional economy. Her reporting on the housing market has won national and local awards. Hopkins is a Columbia native and has lived in Maryland all her life, save for 10 months spent covering schools in Ames, Iowa.
She trained to become a wonk by spending large chunks of time as a geek and an insufferable know-it-all.
Baltimore Sun articles by Jamie
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