Home sales in the Baltimore metro area appeared to rise in 2009, ending a protracted slump that began after the frenzied buying of the housing bubble peaked in 2005.
Buyers closed deals on almost 22,200 homes last year, up 3 percent from the year before, according to preliminary numbers provided Friday by Metropolitan Regional Information Systems and analyzed by The Baltimore Sun. Those numbers could change when the multiple-listing service revises its figures next month, but early trends suggest the final figure for home sales will go up.
"I think that what we're seeing is the housing market is definitely bottoming out," said Andy Bauer, regional economist at the Baltimore office of the Federal Reserve Bank of Richmond.
The rise in activity meant more homeowners could sell and move on, but they did so at a cost. Average sale prices for homes fell 9 percent compared with a year earlier, the largest annual drop since the bubble popped. Sellers got $280,000 on average for their homes last year.
Sales began to pick up in June after plummeting for 3 1/2 years, a turnaround many economists and real estate agents attributed to the lure of the $8,000 first-time buyer tax credit. Local buyers surged to the settlement table in October and November, trying to close their deals before the credit expired. Instead, Congress extended the credit into the spring and also instituted a $6,500 credit for some repeat buyers.
The momentum carried into December, the seventh straight month of rising home sales compared with the year before. Sales were up about 10 percent last month, and the number of new pending deals also increased.
Joseph T. "Jody" Landers III, executive vice president of the Greater Baltimore Board of Realtors, said first-time buyers were driving the market. In a survey, the trade group found that 60 percent of the buyers in Baltimore County last year were first-timers, up from 40 percent the year before. Baltimore's share rose less sharply, with first-time buyers making up 80 percent of the market.
"I have a lot of friends who have purchased in the last year or so, and the only reason they cited besides 'My parents said real estate was a good investment' was 'I can get $8,000 back on my tax return,' " said Stephen Hall, 26, a certified public accountant who is trying to sell his Parkville town house.
Buying rose across the region last year except in Baltimore, at least according to the preliminary numbers. Carroll County saw the largest increase in sales - up 11 percent.
That moved homes off the market at a faster clip. At the end of 2008, 44 percent of Baltimore-area home sales came after the properties languished on the market for more than four months. Last month, it was less than 30 percent.
Nonetheless, plenty of sellers are still waiting for their turn. Even with more buying, the number of homes sold last year was down about 50 percent from the 2005 peak. In fact, more homes changed hands in every other year except 2008 since MRIS began tracking the region in the late 1990s.
Tina Sherman has been trying to sell her Harford County home for about two years, since she and husband, JR Sherman, decided to look for a larger property. They had an offer for $379,000 in early 2008, but didn't accept it because the contract they had written on another house fell through. Now their asking price is $329,900, and a sign in their yard promises that they'll consider any offers.
"I'm kicking myself," Tina Sherman said. "I could have rented for a few months."
She loves the three-bedroom, two-bath Cape Cod near Kingsville, which she renovated after buying it in 2003. It has a finished basement, a one-car detached garage, a motorcycle garage and just over an acre of land. But the Shermans have three full-size horses and three miniature horses and needed more space. As they continued to try to sell their Cape Cod, they moved to a 10-acre spread last summer.
Tina Sherman thinks the extension of the first-time homebuyer tax credit hurt rather than helped, at least in her case. A "very, very interested" buyer decided to hold off on making an offer after the credit was extended, she said. It meant more time to think, and to look elsewhere.
"There was no urgency anymore," she said.
Eligible buyers can get the credit as long as they sign a contract by April 30 and close by June 30. What happens to the housing market when the credit is gone is a pressing question for economists, politicians, housing industry workers and sellers alike.
The Federal Reserve, meanwhile, has been purchasing vast amounts of mortgage-backed securities to keep mortgage rates at record lows as a way to help the housing market. That effort is scheduled to end in March.
"It's very evident that the housing market and the mortgage market are extremely dependent, if not entirely dependent, on government support," said Greg McBride, senior financial analyst at Bankrate.com. "This is going to be a very telling year on a number of fronts. What path does the economy take? Does the recovery continue, or does the economy stumble along the way?
"That fork in the road is really going to dictate whether some of these programs sunset as intended," he said. "At some point, the economy and the housing market will have to stand on their own two feet."
Hall, the Parkville seller, bought his town house in early 2007 - "the perfect wrong time," he said, since that's around the time prices peaked. He didn't intend to be a short-term owner, but his mother-in-law in Pennsylvania is ill, and he and his wife want to move in with her to help.
They started marketing their home themselves in November. They're asking $247,500 for the three-bedroom, 2 1/2 -bath unit, exactly between the listing prices of the two other homes for sale in the neighborhood.
He's seeing more signs of activity in the housing market, and he thinks 2010 will be better than 2009. But he's not counting on a quick sale.
"I think a lot of people need to be patient and hope for the best," Hall said. "Realistically, we know it may not sell for a long time."