Berkowitz family

Jason Berkowitz and his family want to sell their townhouse before looking for a home in the Lutherville-Timonium area. Jason, background, listens to a call as his children, Nathaniel, 2, Shiloh, 3 months, and Leah, 3, play with his wife, Bethany. (Kenneth K. Lam, Baltimore Sun / February 23, 2012)

Jason Berkowitz wants to sell his family's townhouse and get a place nearby with more room, but there's a lot less on offer than you'd expect in a buyer's market.

The number of homes for sale in Berkowitz's Lutherville-Timonium ZIP code is down to levels not seen for five years, just before the financial crisis hit. New listings — the homes that just came on the market in January — are especially low for this time of year.

It's essentially the same story in communities in the Baltimore region — and across the country. But this is not the usual story of less supply and more demand, the precursor to price gains, that beleaguered homeowners have been waiting for.

Millions of Americans who would otherwise be trying to sell and buy something new are stuck in the homes they've got and probably will be for years, said Mark Hanson, managing director of M Hanson Advisors, a California company that does housing-market analysis for investors and asset managers.

"We call that … 'ghost inventory,'" he said. "It's ready sellers that have held off because prices have moved too low. They don't want to take a loss or don't feel it's worth it."

Berkowitz has come to that conclusion about his community after several years of market-watching. He's not underwater on his mortgage, but many others — 125,000 in the Baltimore region, according to real estate data firm CoreLogic — aren't so fortunate. Thousands more do not have enough equity for a down payment on another place.

"It's not that people don't want to sell," said Berkowitz, 36, who works for a software company. "They're just not selling."

Fewer choices for buyers works in his favor as a seller, though. Berkowitz put his home on the market just over a week ago for $355,000 and got it under contract in just six days. He was stunned. The lesson he takes away: If the price and condition are right, buyers will jump on a home — while those that aren't in that sweet spot sit ignored.

Some of the drop in homes for sale is driven by the slowdown in foreclosures that hit after the revelations a year and a half ago of widespread "robo-signing" by mortgage servicers. The number of bank-owned homes on the market in the Baltimore area is down 70 percent from a year ago — a slump that is likely temporary. Mortgage delinquencies remain high.

But buyers also have fewer homes to choose from that aren't foreclosures or short sales. Their numbers dropped 20 percent over the past year, according to Rockville-based Metropolitan Regional Information Systems, the multiple-listing service for buying and selling homes in the area.

This comes despite the fact that far fewer people have moved in recent years than normal, creating not just "pent-up demand" but also pent-up supply. Across the Baltimore region, a total of 23,000 fewer homes sold in the past five years than from 1997 to 2001, before the bubble. And the past five years saw a whopping 76,000 fewer homes sold than in the 2002 to 2006 period, during the bubble.

"There is some fatigue and resignation in the market on the part of sellers," said Jonathan Hill, president of the multiple-listing service's RealEstate Business Intelligence arm, in an email. "Unless they are forced to sell, due to financial or relocation issues, most do not want to take the equity hit with current lower market prices."

So while they might like to move now, some homeowners aren't putting up a "For Sale" sign. Their hope is that improving employment and economic indicators will at some point raise home values, Hill said. "Lower inventory will eventually drive prices back up."

There's no stabilization yet for most of the region. Average sale prices dropped at least 5 percent last year in the majority of ZIP codes in Baltimore and its five surrounding counties, according to a Baltimore Sun analysis of Metropolitan Regional Information Systems data.

Drops were especially pronounced in Baltimore, home to many of the region's distress sales. Average prices fell at least 20 percent last year in nearly half the city's neighborhoods.

The biggest declines hit areas that were modestly priced to begin with. In Carrollton Ridge in Southwest Baltimore, the average price fell roughly 70 percent to just under $10,000. McElderry Park in Southeast Baltimore, north of Patterson Park, saw prices drop nearly 60 percent to $24,000. More than half the sales in both neighborhoods' ZIP codes last year were either foreclosures or short sales.

"These are tough, tough areas where investors were dominating during the boom days, and the only reason that homeowners bought there is because they could not buy anywhere else," said Vladimir Kats, whose Kats & Associates team at Keller Williams Realty Baltimore provided the MRIS distress-sale data that The Sun analyzed.

The suburbs haven't proved immune to falling values or financial distress.

Foreclosures and short sales accounted for just over half the sales last year in hard-hit Edgewood in Harford County. Average prices there fell 20 percent. Communities with distress transactions making up more than a third of all sales last year include Randallstown and Owings Mills in Baltimore County, Severn in Anne Arundel County and Cooksville in Howard County.