Hate to be a downer but... It's spring. If the volume numbers didn't rise this time of year when would they?

Notice that the 2 counties with the greatest increase of pending sales are Howard and Anne Arundel. Growth in these places are because of Washington and their lown caps should be based on that metro area. Baltimore's housing market looks pretty pathetic if you exclude them.

MrRational, I'm comparing year-over-year for just that reason -- to avoid seasonality problems. So yeah, it's spring, but it's vs. last spring.

Smirkman, Howard and Anne Arundel are counted as part of the Baltimore metro area for conforming-loan limits. (You can see for yourself here: https://entp.hud.gov/idapp/html/hicostlook.cfm) But you're right that the counties attract Washington commuters as well as Baltimore ones.

Baltimore is still 40% overpriced

I think this correlation is tenuous at best. If you look at the stats for Jan-March, I see no ability to say if pending units are up, then home sales will increase as well as compared to previous years.

Sellers will continue to stay in denial over the next several months or price their houses at the proper value to sell.

Hi, Dyeah -- that's why I threw in the all-important "if all goes well." Buyers can back out, after all, especially when the contracts are contingent on something.

But I think it's too early to assume that these pending-sale numbers are meaningless. (Well, obviously, or I wouldn't have wasted your time and mine posting about it.) When a buyer is trying to get a foreclosure or short sale, it can take a while to go from contract to settlement.

Besides, the two counties that have been showing big gains in pending sales recently -- Prince George's and Frederick -- posted gains in closed sales last month. (Montgomery was even.)

Time will tell for the Baltimore area.

I think this indicator possibly may be indicative of a difference in a drop of 20% versus 10% in future months of home sales.

In the end, I think the big simple quantifier is median income to average single family home value. This measure is clearly off where it should be; in some places by a factor of 2.

Think about this if you are a home buyer. What if banks decide to cap loans at 3x your salary as indicated by the link below for the UK market. As a buyer, this is still the rule of thumb I use to choose a home and thus it is clear to me that sellers are in denial and I just have to be patient.

http://www.economonkey.com/2009/03/16/mortgage-lenders-to-be-banned-from-lending-over-three-times-your-salary/

I think we're arguing at cross-purposes, Dyeah. You're saying prices are too high compared with incomes and thus prices will have to drop, correct? I'm saying that pending sales could be an indicator of future sales.

Both could be true. We don't know what prices were struck for those pending sales, after all.

Pending Sales Volume for the Baltimore Metro Area (city plus 5 counties) is flat: 2605 in April 2008 and 2623 in April 2009--despite the fact that interest rates and prices are substantially lower.

Yup, John -- only half the metro area saw an increase in pending sales (specifics in the post above). The real pickup is in the Washington area.

100k income -> 200k house.
200k house w/ 20% down = 160k mortgage.
160k at 5% = $859 + property taxes (1.1-2.42 of assessed value) and ~..1 -.2% for insurance. Tax deductions may be possible, too.

You think that going too far beyond 1100-1200 with a gross monthly income of 8300 is a stretch? 300k bumps the cost by 50%?

I think you need to be more nuanced and account for more factors: e.g. variable median indexes, actual tax rates and sliding scales, DCF models, CAPs, and others. All the stuff you'd learn in freshman finance.

I find that too many of the bears replace their otherwise good intuition with shoddy logic and overstated predictions (e.g. Patrick.net, Bubblemore).

It seems like Jamie anticipates most of your responses. If you feel that she's a bit too sanguine about the market--create a compelling model that exludes outliers.

It's funny that people are seeing any of my posts as arguments -- either for market improvement or continued slumping -- because I never mean them that way. My criterion for posting something is it makes me say, "Hmm, that's interesting."

David, The rule of thumb is 3x median income not 2x so please redo your arithmetic. The factor of 2 I was discussing is the belief that a 100k income can support a > 600k house which is essentially the belief of home sellers in certain counties in MD.

Jamie, I think you misunderstand strong opinions for arguments. I did not want to appear argumentative to your posting and I appreciate your blog as an advocate for both buyers and sellers in the MD community. Just want to add my 0.02 to the mix.

Sorry to misunderstand your purpose, Dyeah -- I want people to add their two cents.