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August 20, 2009

Where home sales are brewing

If you want to know how many homes have been sold in a particular area, you look at settlements. But if you want to know how many homes will be sold, you've got something better than tea-leaves -- you've got pending deals.

The number of buyers signing contracts last month (with or without contingencies) rose throughout the Baltimore area vs. a year earlier, according to Metropolitan Regional Information Systems. That includes Baltimore, which was still seeing a drop in completed sales last month.

Here's how pending deals stacked up last month compared with July 2008:

Carroll County, up 31 percent

Anne Arundel County, up 26 percent

Howard County, up 22 percent

Harford County, up 16 percent

Baltimore City and Baltimore County, both up 8 percent

Contracts don't always turn into sales -- something could go wrong, like a loan falling through. But they're a clear intention to buy.

I was surprised to see that the counties posting the biggest increases in pending deals were also the most expensive in the region, on average. Much of the action is in first-time-buyer markets, and you'd think that first-time buyers would have an easier time finding affordable homes in the city and Baltimore and Harford counties. 

But maybe buyers are uncovering deals in pricier communities. Of the completed sales in Carroll last month, 36 percent were under $250,000. A year earlier, it was 26 percent.

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (13)
Categories: Housing stats
        

Comments

We have a contract in Howard County for a nice townhouse under $210K. They do exist!

Good points Jamie. I would agree that the city should have more of these first time home buyers, but most people are probably just finding great deals in the counties and it just makes sense to them. High taxes and crime are a huge turn off for the city. For a little more a month to have schools, parking and lower crime it's probably worth it overall.

My observation for this is that it is a great sign of some bottoming in the market, but we are also comparing these numbers to July 08 when I don't think people wanted to buy milk much less a house. I would like to look at the longer term numbers to see how they compare. I understand the point of the year vs year view, but I would be interested to see 06 or 07 numbers as well.

M - It is useless to compare this years numbers to 2006 - we will never see those home sales figure again. The banks have learned they can't give anyone a loan. Year over Year numbers are the best measure of a recovery.

Except that those houses in the more expensive areas are taking advantage of the new homebuyers credit: My wife and I are a good example, we're looking to upsize after an increase in the size of our family. We put our Balitmore County house for sale now, hoping that because of the new homebuyers credit we will get more interest, so that we can move to Carroll or Frederick county. And since those counties are less populated than Baltimore County & City the percentage of homes being sold is higher.

I'm sure it's not as simple as all that, but that's just one thought about why you're seeing this.

Strike one from the pending deals in AA county. I was insulted by a bank's high-ball counter on a short sale. They finally made a decision with mere hours remaining. However, I did already switch to a new construction contract. Builders are building a lot of stuff in the Marley area of Glen Burnie. I don't really find it surprising that the counties are up. I think there's some negative stigma attached to the city. Baltimore needs to do more to reduce crime and redevelop the old industrial era housing.

I think the level of pending sales is going to remain elevated for the next year at least. There's a supposed tidal wave of foreclosures to come on the market, but with so many short sales and REO's on the market already the pending numbers will probably swell since so many contracts will require third party approval.

BigDragon, your deal that fell through was written up several months ago, right? The number of pending deals I mentioned in the post includes only those contracts written last month -- not the cumulative number. (That's good, because short sales like the one you were trying to get can stay pending for a while.)

I'm not sure how much of the increase pattern is city vs. counties. Baltimore County saw the same 8 percent increase that the city did.

M, sorry it took me so long to respond -- long day. Here's how the pending contract numbers look for the metro area as a whole over the last few years:

2009: 2,658
2008: 2,299
2007: 3,075
2006: 3,430
--
2000: 2,979
1999: 2,744

As you can see, we're still far below '06 and '07, and in fact have only just pulled into view of '99 numbers. But for people trying to sell, any increase is good news.

I see what you are saying and agree. I was trying to think about comparisons between now and when the market started to weaken. Of course there is no point to compare numbers to 02-05, but we can use 06-07 numbers. Comparing to 08 is not a good metric in my opinion, but I so agree that it does give a good gauge of where are heading year over year.

Jamie, my mistake. I didn't realize the numbers weren't cumulative. I do think they'll keep going up though.

Thank you Jamie that is what I was looking for. My main point was that while we are taking a "large" increase in sales as such great news, we need to look at the big picture. I think the increase is a good start, but they are compared to numbers that were devastatingly low, which is why I think comparing to 07 is better. 2007 was when the wheels really started falling off and that may be a better metric to gauge progress. It's like going bankrupt and broke with no money in July 08 and being happy you have $1000 in your pocket in July 09.

M, I hope this post didn't come off as "look at the HUGE INCREASES!!" because it wasn't meant that way. There's no question sales and pending sales are both far lower than the area is accustomed to seeing. But it's worth nothing that pending sales are up, since that's a change at long last.

From CNBC Diana Olick:

Existing home sales rose for the fourth straight month in a row, now to the highest pace in two years. Excellent news that buyers are getting off the fence, but they're only getting off at a certain price point. Just like in retail, where the big bargain stores are showing gains, only the low end of the housing market is moving. As I did last month, I asked the Realtors to break down sales for me by price point. Take a look:


U.S. Existing Home Sales Yr/Yr
$0 - $100,000 Up 38.8%
100,000 - $250,000 Up 8.7%
$250,000 - $500,000 Down 6.2%
$500,000 - $750,000 Down 8.9%
$750,000 - $1,000,000 Down 10.6%
$1,000,000 - $2,000,000 Down 23.3%
$2,000,000 + Down 32.4%
Source: National Association of Realtors


My view:

If housing prices and the market were to "recover" - we would have a repeat of the "financial" crisis we are out of or in (depending on if you are a stockbroker/regular person) - how would that not be true?

Jamie - do you have similar stats for Baltimore/Maryland region?

Chris, MRIS doesn't break out pending deals by price point -- it's just an overall number -- but I regularly look at the sales figures to parse out price trends. Here's what I reported recently about July sales in the metro area:

So far, the lion's share of the boost is going to more moderately priced properties. The number of homes selling for less than $250,000 rose about 25 percent last month from a year ago. Sales above that price range fell slightly. And nobody bought a home for $2.5 million or more, though 119 were on the market for that price.

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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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