Housing indicators reflect strong seller's market in Baltimore region
By Reema Amin
For The Baltimore Sun|
Jul 13, 2018 | 5:00 AM
The listing for Michael Rothmeier’s Parkton home went live on a Thursday. It sold four days later for $17,000 above the list price.
The home’s quick sale reflects a regional housing market that is heating up as household incomes and jobs grow.
Homes are selling faster than they have been in a decade and for more of the asking price than in years. The median days on the market for homes listed for sale in the Baltimore region was just 15 days in June, “by far” the fastest in the last decade, according to monthly data provided by MarketStats by ShowingTime based on listing activity from Bright MLS.
And buyers purchased homes, on average, at 97.4 percent of the seller’s asking price in June, the data shows. That’s close to 1 percentage point more than June 2017 but down from 97.5 percent in May.
The data indicates a growing, strong market for sellers — and a race to the finish for buyers.
“It is a hot real estate market now,” said Daraius Irani, chief economist with the Regional Economic Studies Institute at Towson University. “It is a seller’s market in the sense that, you know, you put a house on the market, it’s likely to be sold. And from a buyer’s point of view, they’re really competing against a really diminished inventory.”
Rothmeier initially tried to sell his two-story, four-bedroom house on his own. He and some friends painted the bedrooms neutral colors and did some routine maintenance on the 20-year-old property.
“It’s way out in the country, lots of trees, lots of grass,” Rothmeier said. “There’s a creek that runs down the side of the lot, bunny rabbits running around, you name it.”
But when he put it up for sale in late-April, he got few bites and none serious. One response came from real estate agent Beth Engel, whom Rothmeier hired on June 18.
“As soon as we flipped the switch, things happened fast,” Rothmeier said.
Engel had photos taken of the house and listed it June 20. By the next day, showings and an open house were scheduled.
Rothmeier had four offers in hand by June 25 — four days after the first showing.
The lowest bid was his list price of $535,000. He accepted an offer that day of $552,000 from a young couple with a child, he said.
Young buyers from the millennial generation are stepping off the sidelines now, representing a significant chunk of the buyer market, said Ross Mackesey, manager of the Lake Roland office for Long and Foster. This is important because first-time buyers are less likely to have a ton of cash on hand, so some are offering to buy closer to a list price in exchange for the seller covering costs for inspections and repairs, he said.
“They didn't feel comfortable they had job security, they weren't getting paid as much as new people in the workforce had in the early 2000s, so they delayed getting married, they delayed having children,” Mackesey said.
So as many millennials pushed back forming families, they also delayed the need to buy a home, he said.
Marie Cutler, 25, and her fiance, Clay, 27, started searching for their first home in February with the help of a real estate agent, but had no luck.
There appeared to be many homes on the market, but they were either selling quickly or not worth buying, Cutler said. They found a house that was almost perfect and were willing to pay beyond their budget for the list price of $325,000, but it was taken off the market as the couple took a few days to decide.
They found a home in a new development, paying $364,000, and moved into it in June. The price “was way over what we were trying to spend,” she said, “but I don’t know, we knew it was going to be a good investment because we weren't going to have any surprise costs.”
Irani does not think this hot market is a “short-term phenomenon.” He thinks the housing market will remain fairly strong if economic conditions such as increased hiring and rising wages stay on track. But it’s a “big if,” he said, noting rising gas prices and the potential for inflation tied to tariffs.
Dean Cottrill, who worked in Baltimore real estate for almost three decades, warned that a bubble may be forming. Lots of buyers paired with a small housing stock means prices will keep rising, said Cottrill, now president of the consulting firm T3 Sixty Brokerage Division.
“It might be another year or so before we get to another point where the market is really pressed with the appreciation, where buyers are apt to hold off,” Cotrill said.
No matter what the market looks like, sellers can’t afford to get too comfortable, said Alyssia Essig, associate broker for Berkshire Hathaway HomeServices PenFed Realty and president of the Greater Baltimore Board of Realtors.
Essig said she thinks the report’s findings are too low on the median number of days it takes to sell a house. Even with a small stock of homes, she has found that buyers “want what they want.”
“Right now, the trend is white kitchens, so homes that have darker cabinets or oak or natural wood also take longer to sell because it is perceived that there is a lot of work to do,” Essig said.
Dan Verch, his wife and their two teenage daughters experienced both ends of the spectrum. They sold their 70-year-old Towson home in May, within five days of putting it on the market.
Verch said they regularly maintained their former home, brought in new appliances, added fresh paint, finished some landscaping and had an agent put it on the market.
Several offers rolled in right away, and after a bidding war, the house sold for $238,000 — $8,000 more than the asking price. Verch said they did cover the cost of a radon inspection and some maintenance for the house.
On the flip side, it took the family two months before they found their new home in Carroll County, which Verch’s wife and father-in-law discovered while driving around one day. They bought it for $289,000; the asking price was $315,000.