A tale of two jurisdictions' housing markets
So the housing market is looking brighter for sellers in Howard County, as I mentioned yesterday. At the current pace of sales, it would take 5.3 months to find buyers for all the Howard homes on the market -- a pretty balanced supply and demand. Tilted slightly in sellers' favor, if anything. (The rule of thumb for market equilibrium is roughly six months, with more being good for buyers and less, good for sellers.)
Baltimore, meanwhile, has more than 15 months of supply, according to Sawbuck Realty.
Now, I realize that anyone of the opinion that Howard County is a nicer place to live than Baltimore will think these statistics require no explanation. But both situations look more complex to me than, say, several thousand people trying to sell their homes in the city and move to the county that James Rouse put on the map. At least, that's the impression I got from burrowing into the sales data.
First off, plenty of Howard County homeowners trying to sell are ... well, just trying. Though it's the most expensive spot in the metro area, the county isn't bucking the trend of buyers going for the less-pricey stuff.
Would-be sellers there with asking prices in the $700,000s and $800,000s are competing against a nearly 12-month supply, according to Metropolitan Regional Information Systems' figures for August. In the $1 million to $2.4 million range, the supply of homes topped 60 months. And there were no Howard County homes sold last month in the $900,000s or $2.5-million-plus, which means a supply that will last ... let's see ... until the end of time. (Just kidding. At least, you hope I am, if you're one of those sellers.)
But every price category from $150,000 to $450,000 was under five months. The $250,000 to $299,000 range, for instance, is down to 3.8 months. And $400,000 to $449,000? Just 3.2 months. That, my friends, sure looks like a seller's market.
I wouldn't call $400,000 an inexpensive home, by the way, but everything's relative. Two years ago, more than half the homes sold in Howard were pricier.
So, then: What about Baltimore?
It probably doesn't help the city that prices have fallen in the surrounding counties. As the 'burbs got increasingly expensive during the bubble, more people opted for Baltimore. Now, buyers on the fence about urban vs. suburban have more options in the latter category than they did a few years back.
"That's my theory," said Joseph T. "Jody" Landers III, executive vice president of the Greater Baltimore Board of Realtors, when I asked him why he thought sales were still falling (modestly) in the city. "There's a high level of choice, and the choices are more affordable now."
But there's another issue to consider, too. Between 2001 and 2005, home sales rose nearly 50 percent in the city. Fifty! That's 3,700 more homes changing hands in '05 than '01. In Howard County, by comparison, the sales increase was less than 10 percent.
Some of the city's sales boom was driven by investors, many of whom weren't planning to hold the properties long term. So that's a piece of the inventory now.
But plenty of regular homeowner-types bought in the bubble years, too. And here's the thing: The average American moves every seven years. You'd expect that a not insignificant number of those boom-time buyers would be wanting to sell now, just because it's been a while. People's needs change. They want a home that's bigger, or smaller, or across town, or in another state.
Oh, and here's one gee-whiz stat: There's about nine months of supply in the city's $1 million to $2.4 million price range, thanks to five homes selling for that amount in August. That can change a lot from month to month, but still -- that's nine vs. Howard County's 60.
In any case, the housing-inventory numbers could be sending a message about buyers' and sellers' opinions on community quality of life, as MrRational suggests in a comment on yesterday's post. Or that might be one of a number of reasons as varied as the ingredients in a good stew. The real test, I suppose, is where the people who are trying to sell in Baltimore end up buying, once all is said and done. And what happens to the folks with pricey homes on the market in Howard County.
Are you buying or selling in either Howard County or Baltimore City? Why, and what have you noticed about your local housing market?
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Comments
We are trying to buy a house in Howard County and are being constantly outbid. We previously had a short sale contract, but the bank decided our offer was too low (they wanted 50K more than our offer), so they're moving on with foreclosure instead.
Posted by: sh | September 18, 2009 11:19 AM
I think that is a great point about the counties being a more affordable option now and that isa reason why less people are moving into the city. You also have to consider the city taxes probably average an additional $200/month more. So you can take that $200 price difference and compare homes. You can get a more expensive house in the county instead of a city home and your mortgage will probably be similar.
I am looking to move to the county soon and with the taxes and insurance considered, i can get a bigger mortgage than I have now and pay less!! The extra $200 on a mortgage payment can be a huge swing in what you can afford.
Posted by: M | September 18, 2009 1:40 PM
There were two houses in HoCo that I was involved in. The first one I was outbid and the second one I had to withdraw the offer. I might be paranoid, but I swear there's a LARGE number of people out there scouring the HoCo listings between 350K and 450K. They're like vultures! Myself included.
Seriously though, the market for SFH in howard county is out of whack. The size, number of bedrooms/bathrooms, conditions of homes in the above stated price range vary so greatly that it's hard to make sense of what's going on here. Even within school districts it's hard to make any sense of how sellers are choosing their price points. One thing is for sure, anything over 500K that isn't perfect is guaranteed to sit on the market for a long while.
Posted by: Kevin R | September 18, 2009 2:36 PM
Kevin laments: "Seriously though, the market for SFH in Howard County is out of whack."
How long have you been looking there?
What you describe as "out of whack" has been the norm for at least the last 30 years that I've known HoCo and probably since Columbia was planned in the mid sixties.
The issue with the high(er) price is like the admission fee to a Country Club. So long as you are comfortable that you'll some day be able to recover it, and you have it to spare or can justify it vs say private school tuition which isn't deductable... it becomes "that small price one pays" to avoid the public course and the riff raff found there.
Elitist? You bet!
But it's working out quite well for them as an operating model as their schools and other public services far out perform every other district in the state and most of the nation.
Posted by: MrRational | September 18, 2009 3:17 PM
I've been looking for the past 4 years, but I've lived in HoCo my entire life. It wasn't so much that HoCo is overpriced compared to other areas (I can understand why even though I feel most homes here are grossly over priced). It was the huge price variation among comparable homes (size, condition, school district) that I think is out of whack.
Here's a good example:
http://franklymls.com/HW7066120
http://franklymls.com/HW7072403
These two homes are about 10 houses away from each other. I lived somewhere in between them for about 20 years. Built within 5 years of one another. Both listed around the same time, same condition. The one with an extra bedroom was originally listed 60K CHEAPER. That's probably why it sold. Here's another comparable that sold a year earlier for 50K less than the cheaper one.
http://franklymls.com/HW6651243
These homes are all a 5 min walk from one another, and are very similar but have an original pricing variance of 100K. There are a lot of these types of situations around the county, as well as other inconsistencies. It very well may be like this in other places, and I just don't realize it. I've been only been focused on a few neighborhoods in HoCo, so I don't really know if this is a common thing.
Posted by: Kevin R | September 18, 2009 4:09 PM
Kevin, Gotcha. I mistook what you were asking.
I'd call those hiccups and other pricing error issues as the agents and properties were (are) finding their (still far too high) level. $100K is a lot of money but relative to $600K it is still just 15%... ya know?
I hope everyone else can still make good use of the rest of my lesson on HoCo realty and use it to their advantage. ;)
Posted by: MrRational | September 18, 2009 4:53 PM
I've been looking in Columbia (area codes 21044, 21045, and 21046) for the last year, and I noticed a big difference in the sales activity over the last 3 months. A lot of homes got sold, and people were hitting the open houses. But price point really mattered. If the home is over $400k it better be worth it. I saw a lot of homes priced at $350k that were sold in a matter of days while similar homes down the street were priced at $425k have been on the market for months. Anything priced low (under $350k) and not selling has serious problems.
Homes are still above my current price point of $300k (counting the interest rates). At that price I'm usually looking at split levels that haven't been properly maintained (mold and other problems).
I currently live in that area and my apartment rent is scheduled to rise by only $17/month (a 1.5% increase). Last year when I renewed it went up 5% so I think the rentals are feeling pressure from falling home prices. I will probably renew my lease, but I think the bottom is really close.
Posted by: jfg | September 18, 2009 11:49 PM