OCEAN CITY -- Gathered for a long and windy weekend in this seaside town, real estate agents from across the state are trying to get to the bottom of some nagging questions.
With a slow summer behind them and with rates still relatively low, whatever happened to the pent-up demand that had been expected from buyers? In fact, they've been wondering, where exactly are all the buyers?
It's not that business is as bad as two years ago, according to participants at the Maryland Association of Realtors annual convention here. It's just that a slower-than-expected economic recovery, attributed partly to the public's collective feeling of uncertainty, has left many in the industry clearly frustrated.
"People in our industry are still somewhat surprised by the non-activity of buyers," said Jean A. Thompson, an agent with O'Conor Piper & Flynn Realtors in Towson, who chaired the convention committee. "There are lots of sellers out there, but buyers aren't in the marketplace. They're few and far between.
"As long as the feds keep talking about inflation out there somewhere, but are not able to define where it is, it leaves uncertainty in people's minds," she said.
The gathering comes at a time when rates on home mortgage loans have risen steadily from 25-year lows of below 7 percent in August 1993 to nearly 9 percent -- still low by historical standards, agents point out. The Federal Home Loan Mortgage Corp. said Thursday that the interest rate on 30-year, fixed-rate mortgages rose to an average 8.73 percent. The average rate for adjustable mortgages rose to 5.56 percent.
Given that, Realtors worry how much more the market would slip if mortgage rates reach double digits, as some economists predict.
During the first two days of a conference attended by 1,100 at the Ocean City Convention Center, many echoed concerns about housing affordability in a state with some of the highest closing costs in the nation and about buyer indecision in the face of rising interest rates.
Douglas W. Poole, an agent with O'Conor Piper & Flynn in Hunt Valley, said buyers these days tend to be those who were forced to move, possibly by a job relocation. Most homeowners are staying put, rather than moving to a bigger house.
"People don't want to take on a greater debt when they don't know the future," he said.
"The industry is still recovering from the recession," said Jamie Gregory of the National Association of Realtors. "It's better than two years ago, but most people here would like to see more improvement. We're coming out of it slowly."
Some in the industry are already looking for legislative remedies.
The Maryland Association of Realtors' legislative committee expects to push for measures giving homebuyers some relief from high costs in the next General Assembly.
Under one draft proposal, first-time buyers would be exempted from the state's transfer tax, said Mr. Gregory, who directed government affairs for the state association before moving recently to the national association. To help offset that tax loss, the state would collect the transfer tax on the full purchase price of a home from all other buyers, rather than on all but the first $30,000 as is done now, he said. The current transfer tax is equal to one-half of 1 percent of the remaining amount.
Breaks like that could make the difference between owning and renting for many potential buyers in Sam H. Coates' Prince George's County real estate territory. The agent works with young families just starting out as well as older people who've struggled for years to save for a house.
The state association also hopes to encourage counties to let homebuyers pay the first year's property taxes semiannually rather than in advance at settlement. Now, only Harford and Frederick counties and Baltimore City permit payment that way.