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?