Small declines in Baltimore-area home prices
The slump in home prices was less severe in the Baltimore metro area over the past four months than it was in most large regions, according to a new analysis that compares recent housing-market performance with the spring period.
Prices fell less than 1 percent in the metro area, ranking the metro area sixth, says real estate data firm Clear Capital. One other metro area had a smaller drop -- San Jose, Calif. -- while four posted price increases.
That's a turnaround from earlier in the year, when the Baltimore area showed up on Clear Capital's "lowest performing" list. The region apparently didn't feel the upward pull of the first-time home buyer tax credit as much as some markets, places in hangover mode now that the federal incentive is gone:
Clear Capital's "lowest performing" list is peppered with "lower-priced markets that reacted positively to the tax credits of the last eighteen months, and are now giving back the short term gains, and then some," the firm says.
The number of home sales slumped in our metro area post-credit, however. In May, the month after the deadline to sign contracts, new pending deals declined more than 30 percent compared with a year earlier and even more sharply vs. April, according to separate figures from Metropolitan Regional Information Systems.
Clear Capital's figures do show prices in the Baltimore metro area down 4.7 percent year-over-year, despite the smallish quarterly drop. That's out of sync with most of the regions on the "highest performing" list -- two-thirds are up vs. a year ago.
Here are those top 15 markets, as measured by quarter-over-quarter change:
Thoughts?
Clear Capital draws its sales figures from assessors' and recorders' offices, calculating price by comparing repeat sales of the same homes over the years. In order to include October, with data that could be incomplete, the company throws in an extra month of sales for balance -- thus the "four months vs. the previous three" comparison.
We'll get to see October housing-market figures for Baltimore and all its suburbs on Wednesday -- from prices to the pace of sales -- when the firm that runs the multiple-listing service releases its monthly statistics.
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Comments
I admit to still being baffled by persistently elevated Baltimore home prices. I cannot piece together any fundamentals to support near peak bubble prices.
Posted by: Darwin Rules | November 9, 2010 5:22 PM
I apologize in advance for the lengthy comment...
As with any chart, context is important. In our area, it seems like high end homes are leading the way in sales--the ones that buyers are buying NOW (relatively early in the foreclosure cycle) are well maintained and possibly upgraded. A lot of people pulled out money via a 2nd mortgage and did substantial home improvements, only to lose the house when they lost their job or were unable to refi as their ARM blew up.
We're not seeing the middle-middle class and lower-middle class homes lead the way in sales. We're not seeing what NEW homebuyers will pay for 50 yr old, run of the mill 3 BR houses in areas like Parkville, Rosedale, Owings Mills, Dundalk, Glen Burnie, etc. This price range of houses (150-300k) is the entry level and the most common type of house in our region, yet they're not leading the way in sales. So while I can't speak to Long Island or Boston or LA, I can say that these numbers are not representative of the Baltimore/Towson market.
You'd get much more interesting numbers if you weighted the mix of home sales to match the mix of homes in the region. A week ago you were reporting that high end homes were increasing in sales, thanks to greater avail of JUMBO loans among other things. At the same time, I asked a question and then researched it myself, regarding how far "down" sales among entry level homes were. The answer is that they're down by 35-45% from 2007 and 2008. My guess is that when THESE homes, the rank-and-file Baltimore region homes, start to sell and make up a representative part of the sales picture, then you'll see where prices are.
These homes tended to be owned by working class people hit hard by the economy. They aren't upgraded, they aren't kept up to date, which you'd expect because they're middle- or lower-middle class homes. These people don't have the resources or financial security to do new bathrooms, new kitchens, new roofs, new appliances, finish their basements into livable areas, etc. These home owners are the ones most at risk for losing their jobs to outsourcing or productivity increases from technology, so they're the least likely to have a home in ready-to-sell condition.
My hunch is those homes will be sold at big discounts, when they start to sell. For one thing, that's the price range where the most foreclosures are. For another thing, many of these homes have been on the market 6 months or longer with no offers (I know, I've been out looking and talked to a number of seller's agents). There is a HUGE overhang of inventory, which is going to kill these sellers whenever they end up selling. As you've reported on this blog, we're talking well over a yr of inventory. Other blogs I read have said it would take ~14 months to exhaust current inventory even if nothing new went on the market. And as we know, the supply of houses hitting the market is not going to slow in 2011.
I'm not saying it's a doomsday scenario, but I am saying that I think this chart is misleading. I think a lot of the price decreases just haven't been worked into the numbers yet bc the houses are sitting unsold or waiting for a bank to foreclose & sell cheap. Compare this to $500k+ houses which are well maintained, sought by less-stressed upper middle class buyers, and consequently have increased in sales.
Posted by: Chappy10 | November 10, 2010 5:11 AM