The average home sold last year in the metro area changed hands for about $262,000, down 4 percent compared with 2010, according to a Baltimore Sun analysis of preliminary figures released Tuesday by Metropolitan Regional Information Systems. Home sales also dropped 4 percent.
Area home prices are down about 22 percent since they peaked in the middle of the last decade, said Celia Chen, a housing economist for Moody's Analytics. The national price decline is a sharper 30 percent because big markets such as Florida and California have seen values plummet since the housing bubble ended, she said.
The Baltimore area is better off than those hard-hit regions, she said, but is not one of the stronger markets.
"It's right in the middle," Chen said. "And the middle right now is unfortunately not too great."
Moody's is forecasting more price drops for the region this year, though smaller than those in 2011. It expects the Baltimore area will see values fall 1.5 percent this year, followed by a 5.5 percent gain in 2013. Chen said the firm was counting on improvement in the economy helping to outweigh the effect of foreclosures, which in big enough numbers can press down home values across the board.
Foreclosures have proved a major wild card for the market.
Mortgage servicers hit the brakes on repossessions and resales in late 2010, when accusations of widespread improprieties and outright fraud in foreclosure processing nationwide prompted government inquiries. The effect of foreclosure slowdowns lasted throughout 2011.
In December, for instance, the number of bank-owned homes on the market in the Baltimore area was down nearly 70 percent from a year earlier, according to MRIS. Sales of bank-owned homes fell nearly 50 percent.
But both Baltimore and the state as a whole saw newly filed foreclosure cases rise in recent months, a sign that the supply of bank-owned homes on the market could increase this year.
"Foreclosures and short sales are going to be — definitely — a factor in the market for 2012, probably 2013," said Jonathan Hill, president of RealEstate Business Intelligence, the data analysis arm at MRIS. "If you have three economists in the room, they'll tell you it's going to be three years, it's going to be five years, it might even be 10 years before this is all worked through."
He added: "I think 10 years is a really long time for a real estate cycle. … Being a property owner myself, I like to think it's not going to take that long."
The temporary foreclosure pause has added to the competition among real estate investors trying to find deals to rehab and resell. Alan Chantker, president of the Mid-Atlantic Real Estate Investors Association in Owings Mills, said more rehabbers appear to be trying to buy even as there's less for sale.
"Everyone's scrounging," said Chantker, who said he was "constantly being outbid" as he looked for properties in the last few months.
That's not happening everywhere, he said. It's largely in neighborhoods attractive to first-time buyers. He said this focused demand has pressed him to hunt for homes beyond his normal Baltimore City and Baltimore County territories.
The shifting pattern of foreclosures isn't the only change that makes 2011 tricky to compare with the last few years. A federal tax incentive for first-time buyers gave home sales a bit of a boost in 2009 and part of 2010 before expiring that summer, leaving falling sales in its wake.
Economists believe the $8,000 tax credit essentially stole some sales from the future by giving buyers a reason to speed up purchases they otherwise would have made later.
Baltimore-area home sales rose in 2009, the first annual increase since the boom year of 2005, but fell 3 percent in 2010 before sliding further last year. All told, buyers purchased about half as many homes last year as in 2005.
MRIS, which runs the area's multiple-listing service used to buy and sell homes, expects to issue an official tally of 2011 data in February. Those statistics will include sales data entered too late by real estate agents to be picked up in earlier monthly reports. But the preliminary calculations are usually close to the final results.
December numbers, released Tuesday, showed falling prices, sales and new contracts in the Baltimore region compared with a year earlier, a largely downbeat ending to 2011. The average price decline — at nearly 1 percent — was one of the smallest decreases last year. But the number of newly signed contracts also dropped 1 percent, dampening the chances of a sales pickup in the near future — at least in some parts of the region.
The number of new contracts — which generally turn into sales in a month or two if all goes smoothly — fell about 4 percent in Anne Arundel County, 16 percent in the city and 18 percent in Harford County, while they rose in the rest of the area. Contract signing increased about 8 percent in Howard County, 17 percent in Baltimore County and 26 percent in Carroll County.