The Baltimore metro region had the best July in six years for contracts signed to buy homes, according to data released Friday by an affiliate of the region's multiple listing service.
Home buyers signed 2,883 contracts last month — a nearly 20 percent increase over July 2011, according to sales figures from RealEstate Business Intelligence LLC. It was the highest July total for new contracts since 2006, said a statement from the firm, which is an arm of Metropolitan Regional Information Systems.
"What we're seeing in Baltimore is similar to what we're seeing in a lot of the country, in the sense that you're having strengthening demand for housing," said Gus Faucher, a senior economist with PNC Financial Services Group.
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More home buyers put their names on dotted lines this July than any other since the housing bubble burst, a trend continuing from June, which also had the highest new contract number in six years. The strong June and July numbers — and the accompanying return of bidding wars — serve as a counterbalance to news earlier this week that Maryland's foreclosure rate skyrocketed this spring, and help convince real estate experts that Baltimore's home market is bouncing back.
Contracts signed in July typically lead to completed home sales in August and September. More than half of the contracts signed — 1,573 — were for detached homes; townhouses accounted for 1,000 signed contracts, and there were 310 condominium units in the mix, RBI said.
It was also the best July in three years in terms of closed sales. The Baltimore metro area — including Baltimore City and Anne Arundel, Baltimore, Carroll, Harford and Howard counties — saw 2,322 closed sales last month, according to RBI.
The average sales price increased nearly 6 percent July-over-July to $295,128.
For homes sold, the average time on the market was just over three months, a decline of 16.7 percent year-over-year.
That decline is due in part, Faucher said, to pent-up demand — people who have put off purchasing a new home for financial reasons. At the same time, the housing supply is tight, which helps increase prices, Faucher said.
Throughout metro Baltimore, there were 12,242 home listings at the end of July, more than a quarter fewer than a year earlier, RBI said. The firm suggested in a statement accompanying its analysis Friday that the inventory of homes may be low because "economic uncertainty is keeping many potential sellers in their homes."
But Faucher said a glut of new foreclosures, plus people looking to upgrade now that the economy is improving, are likely to increase supply in the coming months.
On Thursday, data released by the Mortgage Bankers Association showed that Maryland had the highest rate of new foreclosure filings in the nation during the second quarter of 2012, a flood that resulted from the settlement of a nationwide inquiry into the practices of five giant mortgage servicing firms.
The number of homeowners who were 90 or more days behind on their mortgages dropped in the second quarter from the first quarter of the year. That supports the theory that a backlog was responsible for the high rate of foreclosure filings, experts say.
At least 20,000 home loans in Maryland were drawn into foreclosure proceedings during April, May and June, the Mortgage Bankers Association said.
Inventory will start to increase once homes stuck in that foreclosure pipeline come on the market, Faucher said. An increase in the number of homes on the market could lead to a dip in prices, analysts say.
Vladimir Kats, a real estate broker with the Kats & Associates team at Keller Williams Realty Baltimore, said that diminished supply has led to something he hasn't seen in at least five years: escalation clauses inserted in a buyer's offer.
"That's kind of a way for a buyer to hedge the offer price," he said of the clauses that allow a buyer to make one offer but automatically increase that offer if there are competing, higher offers.
"What has been happening is over the last couple of months buyers are having a hard time finding properties. They can find them, but there have been bidding wars," he said.
The solid ratio of sale-to-list-price bears this out, Kats said. Last month, the sale-to-list-price ratio was 92.2 percent, according to RBI — the highest for the month of July since 2008.
Another report released Friday indicated strong demand for housing in Baltimore. The Downtown Partnership and Goldseker Foundation released an update on the potential for market-rate apartments and for-sale development in and around Baltimore's city center.
The update concluded that, on average, nearly 8,000 households — more than half from outside Baltimore — would be potential buyers and renters in downtown each year over the next five years.
Considering those potential new residents, downtown should be able to support about 5,800 new units in the next five years, the study said. Most — almost 60 percent — of those new units should be rental apartments and the rest of the new units should be almost evenly divided between condos and townhomes, the Downtown Partnership said.
The study's results did not come as surprise to Kirby Fowler, the Downtown Partnership's president, because downtown occupancy is currently strong. The data, he said, will be useful for developers seeking financing, to convince banks and investors that demand for housing around the Inner Harbor is high.
The study's results also "give impetus to developers sitting on the fence right now," Fowler said.