The Baltimore region saw a double-digit jump in average home sale prices in April, the most in six years — but the gain was driven by a shrinking supply of cheap foreclosures rather than a resurgence in value.
Just one in 10 homes sold in the Baltimore area last month was bank-owned, down significantly from the nearly one in four a year earlier, according to numbers released Thursday by RealEstate Business Intelligence, a subsidiary of the regional multiple listing service.
That pumped up the average price for a home sold in April to $281,000, a 10 percent increase over a year earlier. Foreclosures typically sell for far less than owner-occupied homes.
Even though bubble-style price gains don't seem to be here again, the smaller pool of foreclosures — a trend that may be temporary — is improving sellers' odds of snagging a buyer. RBI, a unit of Rockville-based Metropolitan Regional Information Systems, said the number of sales in the region that weren't distress deals increased 16 percent over the year even as the total number of transactions remained flat.
That's creating a new sense of optimism among beleaguered sellers and real estate agents. But for buyers, it means fewer choices.
The number of homes listed for sale in the metro area declined 25 percent compared with a year ago, to about 12,600, RBI said.
"I hear buyers saying there's not enough for them to look at," said Patty Kallmyer, branch vice president of Coldwell Banker Residential Brokerage's 45-agent Timonium office.
The dwindling supply has sped up the pace of a market that has been slow for several years. More than a third of the homes that sold in April were snapped up within a month — some in the first few days after they hit the market.
But that doesn't mean every home for sale is getting attention. Buyers still expect a good deal, Kallmyer said.
"They want everything — and because they're not finding it, they're waiting," she said. "It's nothing to show somebody 60 houses or to work a year with them."
Agents and analysts think some of the drop in inventory reflects homeowners unwilling to sell at today's prices. The rest is the roller-coaster foreclosure story.
Foreclosures fell sharply after the robosigning documentation scandal prompted government inquiries in late 2010. But mortgage delinquencies remain high — more than 140,000 Marylanders were behind at the end of last year, according to the most recent data from the Mortgage Bankers Association — and more bank-owned homes are expected to hit the market later this year.
That's because the robosigning settlement between the nation's largest mortgage servicers and state attorneys general, announced in February, was approved by a federal judge in April.
Temporary or not, the drop in inventory has buoyed sellers' hopes.
Danny and Esther Chung put their Eldersburg home on the market in April, and the steady flow of prospective buyers coming to take a look plus signs of market stabilization gave them the confidence to turn down an offer $17,000 below their asking price. Danny Chung said he's paying attention to comparable sales and thinks the $347,650 listing price already is below market value.
"I think we have time on our side," he said. "It's a blessing to have so much traffic."
The Chungs paid $400,000 for the four-bedroom home in early 2007, before the market tanked, and then poured in $40,000 more to redo the kitchen and update other parts of the house. They're selling now because Danny Chung accepted a public relations job in California, where he and his wife both have family.
His new employer will cover some of the difference between the purchase and sale price. The rest he'll have to eat. He consoles himself with the thought of the price drops he can enjoy in the suburbs of Los Angeles. One house he checked out, listed for about $770,000, "previously sold for over $1 million."
Patrick Newport, an economist at IHS Global Insight in Lexington, Mass., said he expects home prices nationally will "move sideways" for a while.
The country is probably two or three years away from a more typical market, he said, meaning prices appreciating 3 percent or 4 percent a year, building recovering from its depressed levels and the number of delinquent mortgages falling to a "manageable size."
"It's going to take a long time until we're back to normal, but the worst is behind us — I think that's pretty clear," Newport said.