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Home sales rose, prices fell in Baltimore area in July

As if foreclosures, high unemployment and tight credit weren't enough, would-be homebuyers in the Baltimore region got more fodder for wariness Wednesday as the Dow Jones industrial average plunged more than 500 points and a new local report showed housing prices continued to fall last month.

The stock market gyrations — stoked by global economic concerns — also come on the heels of the Standard & Poor's credit-rating downgrade of mortgage financiers Fannie Mae and Freddie Mac and the U.S. government, a move that helped push already low mortgage rates lower but also added to uncertainty about housing.

The regional housing market that has struggled to right itself saw prices fall in July, as they have with little interruption for the past several years, according to figures released Wednesday. The report also shows some signs of stabilization as sales rose in July, with the number of newly signed contracts in the Baltimore area rising compared with the number a year ago — and for the eighth time in the last nine months.

But now some are seeing stock market and economic forces throw a new wrench in the housing market.

Mike Sloan, a real estate agent based in Howard County, said two cash investors withdrew offers on property Tuesday. Another client liquidated a retirement account to get money for a purchase, only to come up $5,000 short when the paperwork was processed late Monday.

The turmoil makes "people want to hop up on the fence and see what happens," said Sloan, a partner with the Pat Hiban Real Estate Group at Keller Williams Crossroads Realty in Columbia. "It just makes people nervous."

Robert Reagen, who is trying to sell so he and his wife can retire to Florida, wonders if economic worries help to explain the fluctuations in foot traffic through his Lutherville-Timonium house. Visits stopped for about a week and a half in July, as contention in Washington ratcheted up over the debt ceiling negotiations. And no one showed up for an open house on Sunday, after the stock market tanked and the S&P downgraded the nation's credit rating.

Reagen, who put the four-bedroom house on the market for $335,000 last year, says he's had a good number of prospective buyers through, but no bites so far. He has been aggressively dropping the price since February. First $299,000. Then $287,900. Wednesday, he knocked it down to just under $280,000.

"I'm at the point now where I think I have the house at more than a reasonable price," said Reagen, 59. "If it doesn't sell at this level, I might have to turn around and rent it … even though I don't want to do that, and just wait the market out."

Throughout the Baltimore region, sales rose 12 percent, Metropolitan Regional Information Systems reported Wednesday. That's compared to a slump in settlements in July 2010 as the effect of a temporary federal homebuyer tax credit that stimulated sales waned. To be eligible for that break, buyers had to sign contracts by April 2010, which led to sales that closed mostly by June.

The number of contracts signed in July in the Baltimore area rose 24 percent, deals that will turn into sales within a few months if all goes smoothly.

The average home sold in the Baltimore region last month went for 5 percent less than the average home sold a year earlier, dropping to just under $279,000. Four years ago, before the worst of the financial crisis and the credit crunch, the average sale price was $330,000.

Home prices didn't fall as fast in the Baltimore area as the nation as a whole earlier in the housing bust, but that upside for the region's sellers — and downside for buyers — has ended. The median price for single-family homes sold in the Baltimore metro area from April through June fell almost 7 percent compared with a year earlier, a drop more than twice as steep as the nationwide decline, the National Association of Realtors said Wednesday.

Cindy Ariosa, senior vice president for Long & Foster's Baltimore, Southern Pennsylvania and Western Maryland regions, said she regularly hears of sellers having to bring money to the settlement table to cover the difference between the sales price and what's owed on the mortgage. But many homeowners simply don't have the money. That's translated into short sales, in which banks are asked to eat the difference. Foreclosures — also known as "real estate owned," or REOs — are another sign of financial distress.

"There's pockets of Baltimore City where 60 percent of the properties are REOs, short sales," Ariosa said.

Short sales and foreclosures have accounted for at least 25 percent of home sales so far this year in every jurisdiction in the region except Howard County, according to the Greater Baltimore Board of Realtors.

It's not just modest homes, either. Ariosa is increasingly seeing luxury houses listed as short sales.

"There are some great opportunities if you are in the high-end market now to get some fabulous deals," she said.

Indeed, some market observers say real estate can be considered a haven for stock-weary investors.

Prices decreased in most of the region in July with the exception of Carroll County, where prices remained steady, and Howard County, where they rose 2 percent.

The biggest average price drop in the region last month hit Harford County, according to Metropolitan Regional Information Systems, which runs the multiple-listing service used to buy and sell homes in the area. Prices in Harford were down 14 percent.

The county got a boost last year not only from the homebuyer tax credit but also from an acceleration of families moving to the area as the nationwide military base realignment brought expansion to Aberdeen Proving Ground.

Harford also was the only county in the region to see sales drop in July. Buyers there purchased 5 percent fewer homes compared with a year earlier.

The approximately 2,400 new contracts in the Baltimore region represent the largest number signed in the month of July since 2007. But a consultant for Metropolitan Regional Information Systems noted that contract activity — typically lower in July than in June — tapered off more than usual over the month, with a drop of almost 7 percent.

"The likely cause of the larger than normal decline was a consumer pause during the heated .. debt ceiling debate" in Washington, Jonathan Miller of real estate consultancy Miller Samuel wrote in a research note for the multiple-listing service.

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