Baltimore-area home prices rose in July to their highest level in five years as buyers competed for a limited supply of homes on the market, the region's multiple listing service said Monday.
The median sales price grew 5.6 percent to $264,062 last month, from $250,000 in July 2012, in the city and five surrounding counties, according to housing data from the Metropolitan Regional Information Systems Inc. The median price for the region reached its highest level since summer 2008. Prices rose in all jurisdictions, including the city and Howard, Anne Arundel, Carroll, Harford and Baltimore counties.
Demand has remained strong this summer, with the number of properties sold growing to 3,006 last month, up nearly 30 percent from 2,322 in July 2012, according to the report by RealEstate Business Intelligence and the Center for Regional Analysis at George Mason University. The number of sales contracts signed but not yet settled also increased to 3,123 from 2,883, signaling future sales growth.
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"We've seen showings increase, and even with increasing mortgage rates, we're seeing a lot more activity," said Steve Meszaros, executive vice president of Prudential Homesale YWGC Realty in Timonium. "But it's not bonkers like it was six or seven years ago. It's steady growth.
"As you see interest rates start to climb, buyers are saying, 'I'd better jump in there now,' " he said.
Mortgage rates have been rising over the summer but still remain relatively low, with rates on 30-year, fixed-rate loans averaging 4.58 percent, according to HSH Associates.
Buyers have come into the market as employment and consumer confidence improved and rents rose, making home ownership a better deal for many, said Daraius Irani, director of the Regional Economic Studies Institute at Towson University.
"People are feeling more confident about their prospects," he said.
While demand is picking up, the inventory of homes for sale has declined to 11,308 active listings during the month, 924 fewer than in July last year.
That means more desirable homes are getting multiple contract offers, and the sellers are getting close to their asking price, agents said. Homes in July sold for an average 95 percent of the listing price, up from 92 percent in July 2012.
"There's a lot of competition for good and priced-properly properties," Meszaros said.
Homes listed for $200,000 to $400,000 that are well maintained are selling well, said Sally Griffin, branch vice president at Coldwell Banker Residential Brokerage in Catonsville.
"Those houses are the ones that are getting more attention from the buyers, and we're seeing multiple contracts," Griffin said. "The houses have to be in shape and ready to sell. If not, they're not going right away."
When a new listing comes on the market, buyers "have to be ready to move," she said. "They have to be pre-qualified by a lender."
The competition has pushed up prices in Baltimore and the surrounding counties. Howard County had the highest median price, at $414,450, but the smallest year-over-year gain, at 1.1 percent. The city had the lowest median price, $148,450, but the biggest gain, of 10 percent, RBI said.
Prices may begin to rise more slowly and supply may start to increase as a backlog of previous foreclosure properties begins to come on the market, Irani said.
"The concern has been not enough product on the market, and prices have been pushed up," Irani said. "People have been losing out on the opportunity to buy."
Now, homes are staying on the market less than a month on average, only 26 days, compared with 45 days in July a year earlier, the statistics showed. The time on the market is the lowest for any July since 2005.