Gauging the trajectory of the real estate market in the Baltimore region has become a hyper-local exercise — it depends on precisely where you live.

While a handful of communities roared back so much last year that the number of home sales actually topped the market peak of 2005, many others are still free-falling years after the housing bubble popped, raising the possibility that the promise of revitalization during boom times truly was a mirage, a Baltimore Sun analysis found.

More than 40 percent of the metro area's ZIP codes saw homebuying increase last year. Most of the rest lost ground.

For buyers trying to determine where home prices and mortgage rates are headed, these neighborhood-by-neighborhood differences add another layer of uncertainty to the decision about whether to purchase or wait. After all, no one will know a community's housing market has hit bottom until it comes back up.

Donna Spare thought she got a good deal on a townhouse — she bought a foreclosure in Middle River for $190,000 last June after being outbid on three others — but the neighborhood hadn't bottomed out after all, she discovered.

"There's two foreclosures in my neighborhood that are $40,000 less than I paid," said Spare, a real estate agent with Advance Realty in Timonium. "I don't know when the price drops are ever going to stop."

The calculus has become much more complicated than buying and assuming values will increase. While foreclosures hurt a neighborhood's values, rising rents can make tenants decide to take the leap. Mike Kaspar made up his mind to purchase a home in Parkville last fall after crunching the numbers.

The townhouse he bought in November for under $170,000 costs him $265 less a month than the house he had rented in the same community. He thinks he got a great deal. But even if prices continue to fall, he figures he'll be OK: He could turn a profit by becoming a landlord if he needed to move and couldn't sell.

"I kind of look at it as an investment property," said Kaspar, 35, an information-technology worker. "As long as the area maintains, I don't see it ever being a problem."

While sales gyrate, declines in value remain the norm. Most suburban ZIP codes and city neighborhoods had falling average sale prices last year, according to The Sun's analysis of data from Metropolitan Regional Information Systems. The Rockville-based company runs the local multiple-listing service used to buy and sell homes.

Even in some areas that did post price gains, sellers aren't actually making out better than people who sold similar homes a year earlier. An area's average price can easily be skewed as the mix of properties sold — condos, townhomes, small houses and large ones — changes from one year to the next.

That was true in the past two years in part because of a federal tax credit for first-time homebuyers, which brought more purchasers of starter homes into the fray in 2009 but expired in mid-2010. After that, move-up buyers accounted for more of the market in some communities, pushing up average prices.

Nonetheless, some Realtors see pockets of hope. Dorian Keydash, owner of ReMax Experts in Federal Hill, said prices in the city neighborhoods he focuses on near the Inner Harbor seem to have stabilized for homes that aren't foreclosures or short sales.

"We're seeing those values slowly, slowly starting to move in an upward direction," he said. "It's slight, it's real slight, but it's something."

Economists are cautious about where prices are headed, and not just because unemployment and mortgage defaults remain elevated. Moody's Analytics sees Baltimore as a market that is still overpriced — the most overpriced in the country when compared with household incomes and apartment rents, in fact.

Baltimore-area prices have fallen about 19 percent since peaking at the beginning of 2007, compared with a 30 percent decline nationally since the U.S. peak a year earlier, according to the company's calculations.

"Baltimore's at the top of the list in part because many other places have collapsed," said Mark Zandi, chief economist at Moody's Analytics, a Pennsylvania-based economic consulting firm. "Prices have completely cratered in Miami, Las Vegas and San Diego."

Baltimore-area prices could fall further. Or, Zandi said, they could stay put for at least several years as incomes and rents catch up.

"I think they'll basically be flat-lined through that period," he said.

Past experiences with regional housing downturns, such as the oil-patch busts in Texas and Louisiana in the 1980s, suggest that homeowners shouldn't count on values returning to previous highs anytime soon, said Sam Khater, senior economist at real estate data firm CoreLogic in California.

Khater expects more price declines this year, in Baltimore and nationally, as values are pressured by large inventories of homes for sale and continued waves of repossessed properties with cut-rate prices. The cost of getting a mortgage is also likely to rise, even if mortgage rates don't climb, as the government moves to gradually phase out financiers Fannie Mae and Freddie Mac, he said.

But he believes aggregate sales activity in the region won't retrench further. That, at least, should provide some comfort to homeowners who must sell.

"I think we're now at the bottom and will be there for a while," Khater said.

The downward spiral came in several phases. Baltimore-area sales, pumped up in the early years of the decade by loose lending and speculative buying, started dropping in late 2005. Prices stopped escalating at a double-digit clip and crossed over into outright declines in many communities in 2007, and then gathered speed downward as the country's mortgage-fueled financial crisis deepened.

In nearly half the Baltimore region's ZIP codes — urban, suburban and rural — average prices have fallen 20 percent or more in the past four years.

Two-thirds of ZIP codes saw the number of homes sold plummet at least 40 percent since the 2005 buying peak. Though the federal credit of up to $8,000 for first-time homebuyers goosed sales activity in 2009 and part of last year, it wasn't enough to make up most of the lost ground — and buying slumped again when the credit expired last summer.

An upturn in sales and new contracts in January is giving the industry hope that the market might be gaining some traction. The momentum has continued into February, real estate agents say.

"There's a lot, a lot of activity," said Cindy Ariosa, vice president of Long & Foster's Baltimore and Western Maryland regions. Ariosa credits more affordable prices, still-low mortgage rates and mostly mild weather: "The buyers are out early for the spring market this year."

If the past few years are any measure, some communities will fare much better than others. Consider Havre de Grace and Edgewood in Harford County.

Both are close to Aberdeen Proving Ground, the Army base gaining thousands of civilian workers from the soon-to-close Fort Monmouth installation in New Jersey.

Havre de Grace, with its historic district, ample waterfront and new construction, saw 2010 home sales rise past their bubble peak while home prices also began to rebound. However, in Edgewood, which has struggled with violent crime and gangs, sales and prices fell. All told, average prices are down 27 percent in that community since peaking in 2006. The number of homes sold is down by more than 60 percent since 2005.

And two-thirds of the homes that did change hands in Edgewood last year were foreclosures or short sales, according to the Greater Baltimore Board of Realtors. By comparison, such distress transactions made up 28 percent of sales last year across the metro area, the trade group said.

Baltimore also has areas at both extremes.

There's Lake Walker, a close-knit North Baltimore neighborhood of single-family homes and townhouses right along the city-county line. Sales jumped last year, topping buying activity there in 2005 — and few were distress deals. Buyers paid about the same amount on average in 2010 that they did in 2005, just under $200,000.

"It's affordable, and it's a nice area," said Christine Gumenick, a real estate agent with Coldwell Banker in Roland Park.

Then there's Fells Point, the trendy gathering spot overflowing with pubs. Despite its harborfront draw, the neighborhood's sales dropped more than 70 percent in the past five years. Meanwhile, the average price was $285,000 last year, $80,000 less than in 2005. Keydash, the ReMax agent, suspects the neighborhood is losing prospective buyers to nearby Canton, where sales also have dropped, but less precipitously.

Some areas that seemed to be speedily revitalizing during the housing boom are awash in foreclosures and dashed hopes.

Average prices have dropped nearly 40 percent since 2005 in Pigtown, also known as Washington Village, which was a hot spot for rehabbers during the market's upward spiral. The 100 homes sold last year represent a more than 60 percent drop from sales numbers in 2005. And last year alone, lenders moved to foreclose on 70 properties there, according to the Baltimore Neighborhood Indicators Alliance at the University of Baltimore.

A seemingly contradictory picture has emerged in some higher-end neighborhoods. Buying activity has fallen off a cliff, but prices — at least on average — have not followed suit. Half as many homes sold in Baltimore's Roland Park last year as they did in 2005, but average prices actually rose — to more than $500,000.

There is price pressure. It's just not fully reflected in the figures because more homeowners at the upper end are opting not to accept what the market is offering, economists say.

"They're not selling," said Khater of CoreLogic, who calls this refusal to settle a national phenomenon. "On the upper end, they can hold on; they've got more financial resources."

The still-high number of homes sitting on the market gives buyers the edge when it comes to price. But getting from contract to settlement isn't as easy as it once was — especially when the seller is a bank or other large firm.

Kaspar, the buyer of a Parkville townhouse, said a relocation company acting on behalf of the seller waited so long to turn over key paperwork that the settlement had to be delayed. It almost killed the deal. "Just a mess," he said.

Spare, the real estate agent who lives in Middle River, said mortgage difficulties crop up on just about every deal she works on. That's why she's grateful for her home even though it has lost value since she bought it last summer. With all the talk about more expensive mortgages and higher down-payment requirements, she's happy she got the loan when she did.

"Being self-employed and trying to get a mortgage is the hardest thing," Spare said.

jamie.smith.hopkins@baltsun.com

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