Home prices ... up?
The Fiserv Case-Shiller index shows home prices in the Baltimore area going an unexpected direction in the first quarter of this year: Up.
The Baltimore metro area saw a price gain of 1.2 percent compared with a year earlier, the index says, and though that's a very small gain I called the company just to make sure it wasn't a typo. Other measures I've seen for the region all show losses.
It's not a typo. But Fiserv doesn't see it as the beginning of a trend. It's predicting that prices in the region will be 4.6 percent lower in the first quarter of next year than they were in first-quarter 2011.
David Stiff, Fiserv’s chief economist, attributes the Baltimore area's small increase -- at a time when the index shows home prices falling just over 5 percent nationwide -- to an unemployment rate that's not as bad as the United States'. It's averaged 7.5 percent in the region this year, compared with 9 percent for the U.S.
The Fiserv Case-Shiller index compares repeat sales of the same homes over time as a way to avoid the problem of changing mix -- homes selling now that aren't comparable to the homes selling a year ago. Taking the average or median price of everything that sells can leave you comparing apples and oranges, so you can see why Fiserv's numbers don't necessarily track with multiple listing service data. (In March, the MLS showed average sale prices in the metro area dropping 7 percent; the median fell 11 percent.)
But Clear Capital, another real estate information firm, has a repeat-sales index that shows home prices in the metro area falling, too. I asked Stiff what could explain the difference.
"When prices are reaching a bottom and there’s a lot of volatility in the data, different measures are probably not going to agree," he said. "In fact, ... the quarter to quarter changes in our indexes are up and down for Baltimore. So it could be because of the timing when the data was collected for each measure; it could be in differences in geographic coverage. ... They're all probably within the margin of error."
Something the Baltimore area has going for it, which helps cushion the employment and housing situation, is the Washington effect, Stiff said. More federal money in the form of government employees and government contractors, plus some "spillover demand" from people who work around D.C. but decide to live around Baltimore, he said.
Those ripple effects are likely to weaken as Washington tries to get a handle on outsized debt. As the University of Baltimore's Richard P. Clinch has so succinctly put it, "When the government sneezes, we catch the flu." Here's hoping it won't be the 1918 kind.
If you're interested/anxious about the effect of federal belt-tightening on the area, check out this Q&A with the founder of Blueprint Maryland, a nonprofit launched to help the state get through this test of its mettle with at least a passing grade.