Home sales in the Baltimore metro area rose in December, breaking a five-month streak of plummeting activity as buyers were enticed back into the market by competitive mortgage rates and prices.
But it is unclear whether the 8 percent increase in the number of homes sold last month signals a bottoming out of the struggling housing market. For all of 2010, the number of homes sold in the Baltimore region fell 3 percent from the year-earlier period, according to figures released Monday by the area's multiple-listing service.
"Just to get it to stabilize is a better market," said Kevin Anselmi, owner of Cornerstone Real Estate, which has Baltimore-area offices. "I've seen more buyers in the market in December and into January. They're getting the better prices."
Real estate experts attributed the bump-up in sales in December to a number of factors — increased confidence about the economic recovery, greater selection and pricing as inventory has piled up and low interest rates. Buyers raced to lock in more affordable mortgage loans before rates rise, as they are expected to do. Fixed rates on 30-year mortgages averaged 4.77 percent last week, near historic lows.
"As interest rates continue to climb, more buyers will get off the fence," said Cindy Ariosa, who manages the Baltimore and southern Pennsylvania region for Long & Foster. "The first quarter is going to be fine because of interest rates."
But at least one tailwind in the housing market's favor has disappeared — a federal tax credit designed to spur home buying. Sales were stronger in the first half of the year thanks to the tax credit. But buyers began pulling back in May, when the credit phased out, and sales plummeted each month from July through November.
Some say the surge in December activity was likely driven by distressed sales, such as foreclosures, which negatively affect prices.
"It's just a mixed bag in terms of what it tells us going into the new year," said Joseph T. "Jody" Landers III, executive vice president of the Greater Baltimore Board of Realtors. "These distressed sales are continuing to have a negative impact on pricing in the market."
But even the depressed home values have a positive side — for buyers, Landers added. "Housing is a lot more affordable today than it was three or four years ago," he said. "From a buyer's standpoint, there's a lot of inventory in every county and the prices are lower than they've been, in some cases, in a decade."
Overall, some market observers say they are seeing a housing recovery. Joe Schultz, president of Schultz Development in Baltimore that renovates and sells homes mainly in Canton, Butchers Hill and upper Fells Point, has seen a marked difference in the past year compared to several years ago, when business came to a virtual standstill.
He said he sold twice as many homes in 2010 as he did the year before, many to professionals in the medical field who want to live in newly rehabbed houses in the city. Many of those buyers had been hesitant during the recession to make the jump from renting to buying, he said.
"They were just scared, just scared to buy, and the last two to three years they were renting because they were not sure how this would shake out," said Schultz, who said he has seen a pick-up in the sale of homes in the $300,000 to $500,000 range. "Now they're buying, and now the deals are good, too."
"It's more affordable in the Canton neighborhood than it was two or three years ago," Schultz said, "and that's given the opportunity to buy in the Canton area at a decent price. It's a matter of people feeling confident again."
Metropolitan Regional Information Systems, the Rockville company that runs the area's multiple-listing service, reported that 1,755 homes changed hands in Baltimore and the five surrounding counties in December, compared with 1,624 homes in December 2009.
The average price on 2010 transactions, at $278,810, changed little from 2009's average sale price of $280,084. The average sale price fell more sharply in December than during any other single month last year on a month-over-month basis, statistics showed. The $264,500 average price tag on December transactions was down nearly 7 percent compared to the price tag a year earlier.
Homes that sold in December stayed on the market an average of nearly four months. And on average, home sellers last month got about 88 percent of their asking price, less than the average 90 percent of the list price that sellers got in December 2009.
Baltimore's market last year mirrored national trends, with sales tumbling during much of the second half as the federal tax credit was phased out, said Celia Chen, a housing economist at Moody's Analytics.
"Since then, there's been no real upward movement in sales," she said. "Home sales nationally have been close to the bottom; they haven't gone anywhere for almost the last 18 months. Mortgage rates are attractive, but it's still hard to get a mortgage for those people trying to trade up … because so many people are in negative equity," owing more than their house is worth.
Moreover, with employment and income growth remaining weak, "people are less likely to purchase, and those who are employed are worried about their jobs."
But, Chen said, "it seems like the economy is entering a self-sustaining recovery, which is positive for housing."