Pat Hiban: Surge in part of Md. housing market as buyers, investors leap
When I did a Q&A with real estate agent Pat Hiban at the beginning of 2009, he said foreclosure resales were about to hit in a big way, prices would continue to head downward and the higher end of the market had been "severely beaten up."
Now he returns as a guest blogger -- the first of what I hope will be many -- to talk about a new market shift he's seeing.
Hiban (pictured above) has been in the business for more than 20 years and runs the Pat Hiban Real Estate Group with Keller Williams Crossroads Realty. He's a billion-dollar agent who focuses primarily on Central Maryland and as far south as Washington, and he has a book coming out later in the year.
Take it away, Pat:
Very recently, the market has taken a major turn upward with regards to activity. I have one property on Nursery Lane in Gaithersburg with 23 offers on it -- multiple offers escalating the list price significantly. This is a single-family home listed at $630,000.
I currently have 51 properties pending whereas I am used to about 30. As I write this, we are negotiating 12 offers on 12 different properties and on an average day we may only be negotiating two or three.
The housing statistics for the state of Maryland show pending units are up 34 percent compared with February 2010. Because the number of active listings has only decreased by a mere 7 percent, this tells me that it's not an inventory shortage that has created a frisky market but a large increase in buyers.
Why have so many buyers come out of the woodwork?
Four very technical factors exist today that didn't even a year ago:
1. All the fence-sitters who previously believed the prices would continue to fall have finally become convinced the values are at or close to rock bottom and are confident buying now.
2. Interest rates remain incredibly low but the consumer hears daily threats that they will rise soon.
3. The delta between what an investor can buy a mold-infested, rundown house for and what he can sell a mold-free, crystal-clean, fully improved home for has increased to allow for a more significant profit margin. This delta between these two values didn't exist a year ago. In simple terms, flipping has become an attractive play for investors.
4. Rents have gone up and values have gone down. That creates a different but nonetheless more profitable delta between the home value or mortgage payment and the rental income. This has gotten "buy and hold" investors back out into the market place.
It appears that activity in the southern end of the state is driving the surge in market volume. While all pending sales shot up 34 percent statewide, Howard County actually saw a 9.9 percent decrease in its sales of single-family homes. In February 2010 we saw 192 houses go under contract while last month only 173 went under contract.
In my opinion, this an issue of better deals for investors elsewhere. I myself bought two homes in Prince George's County last month with the intent of fixing them up and flipping them for a profit.
It certainly appears that this rush of activity will continue on into the late spring and early summer. But if we have learned anything from the rise and fall of the Maryland market, it is that nothing stays the same forever.
Thanks for writing a guest post, Pat! Thoughts, questions, arguments? Let the commenting begin.
If you'd like to suggest a guest poster or volunteer yourself, check out these details.