Report: Expect 2% increase in 2011 Baltimore-area home prices
Real estate information firm Delta Associates thinks the Baltimore metro area's housing market has hit the "recovery phase" of this unprecedented cycle and will end the year with prices up about 2 percent.
"We expect that renewed demand, in part by migration to the area due to BRAC, will yield modest price gains by mid-2011," the firm says in a new report.
However, it notes, "The pace of the recovery may be uneven."
Very uneven so far for the condo part of the market:
Just under 380 new condos sold during the past 12 months in the Baltimore metro area, down 18 percent from the previous 12-month stretch, Delta said. And prices dropped nearly 11 percent, comparing sales within the same condo projects.
That varies quite a bit. The northern suburbs saw new condo prices rise 3.2 percent, Delta said, as the pipeline there has "drastically reduced." Prices in the southern suburbs, meanwhile, fell almost 16 percent while dropping just over 17 percent in Baltimore City.
Overall, "There are 4.1 years of inventory in the Baltimore metro area at current sales rates," Delta says -- less in Baltimore County and Harford County, more to the south.
So recovery could be a ways off still for that part of the market: "We look to 2012 when price traction could return to the Southern Suburbs and longer still for Baltimore City." (One of the firm's recommendations to condo builders: convert to apartments.)
One of the worrisome question marks for this region, and most of Maryland, is how federal budget cuts will play out here. Between direct federal work and contractors, Uncle Sam accounts for a sizable piece of the state's economy.
Delta thinks the region will come out all right, which is why it's not projecting price drops for the housing market overall. It notes that Standard & Poor's believes defense contractors as a whole will see "minimal" impact from Defense Secretary Robert M. Gates' plan to cut back on spending because they also work with other federal agencies. "In addition, any cuts will be offset by the influx of military and government contractors to the Baltimore area due to BRAC," Delta says.
"However, we expect the Baltimore metro area to experience further cuts in the government sector, as state and local governments throughout the nation face budget shortfalls," it adds.
We'll just have to wait and see. But don't let that stop you from making your own predictions about home prices. Do you think Delta will be proved right or wrong on its forecast of a 2 percent increase in the Baltimore metro area this year?
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Comments
I think Delta has been spot on in their predictions since 2000. They always seem to be one step ahead. I agree that despite higher mortgage interest rates, tighter credit, Federal cutbacks (thanks to those Republicans), possible taking away of morgage interest deductions, skyrocketing gas/food prices, foreclosures/short sales expected increases and the fact employers are paying people less that the housing market (which caused are alleged global financial collpase) will continue to thrive.
Delta and Greg Norhtrop are never wrong. Never!! Granite counters forever!!
Everyone wants to be in debt to banks like their neighbors. Everyone who has saved up money would love to lose it to a "down payment" or "instant underwater payment".
Posted by: Miles Avarooni | April 6, 2011 8:58 AM
I think that it's reasonable to predict that most major metro areas with strong employment are skipping across the bottom. I suspect we'll see a handful of cities with positive real estate price growth, Baltimore is one of them.
Posted by: Grant Hammond | April 6, 2011 9:11 AM
That's interesting about condos and unfortunate for those who own them.
Posted by: Bayview | April 8, 2011 10:02 AM
I've seen no evidence--none--that BRAC will be any significant factor in house prices in this area. Jamie even posted the raw numbers and it showed that BRAC relocations were a drop in the bucket of total purchasers, especially with the massive amount of purchasers that would be needed to balance out all the homes (esp foreclosures) hitting the market this spring as another real estate season starts up.
My fiance and I looked at right around 50 homes in 2010 before closing on a house last month. We also stalked all the online listings and tax databases hard-core during basically all of 2010 (to obtain actual sale prices, actual taxes, etc). Every offer we made, we were the only offer and the first offer in a while. And we only offered on strongly built homes in good location where the asking price was at least reasonable (not ridiculously high). If there was any seller power at all, we saw no evidence of it. At some homes we went to, where the owners were there, they even asked us/begged us for tips--what do you think we should price it as? etc.
There is just sooo much inventory, I truly can't see BRAC affecting anything and it's basically up to the banks to determine when they're actually going to start selling some of these foreclosures and letting some short sales go through. If this new report by Delta doesn't get into the mechanics of how all that shadow inventory will affect prices, I'd have to say it's just another report on the scrap heap of this real estate bubble burst.
Posted by: chappy10 | April 11, 2011 12:26 AM