Realty agents hope to jump-start market IN SEARCH OF FIRST-TIME BUYERS


Late last year, Bob Amos started looking for his first house, making it clear to his agent he had no intention of buying before spring. But he liked the second home he saw -- a single-family house in the city's Hamilton area with a club basement and finished, walk-in attic.

The owners had dropped the price once but were still asking more than lenders would extend to the 29-year-old warehouse worker. Based on the amount Mr. Amos qualified for, he made an offer -- $7,000 below asking price. To his surprise, the sellers took the bid.

"I was feeling that I was ready to move, and I didn't like the idea of going the apartment route and paying all that money for rent," said Mr. Amos, who had been living with his parents. "But I hadn't planned on getting 100 percent into it until this time of year. I didn't expect [the sellers] to accept that."

With relatively few sales each month and an overabundance of homes for sale in the Baltimore region, the real estate industry is counting on first-timers like Mr. Amos to jump-start the market this spring. Typically, it's the hottest selling season.

But it could prove disappointing this year. Higher interest rates and job instability could keep the next few months on par or slightly below last spring, some in the industry believe.

For the eighth straight month, home sales in the Baltimore area have dropped, despite an easing in interest rates. Rates had edged up about 2 percent in 1994, with each increase disqualifying more potential buyers. An earlier wave of homeowners refinancing mortgages for lower rates also cut buyers from the market.

In February, sales of new and existing homes in Baltimore and Baltimore, Carroll, Howard and Harford counties plunged 24 percent to 784, compared with 1,026 homes sold in February 1994, the Greater Baltimore Board of Realtors reported this month. Pending sales -- new sales contracts accepted but yet to settle -- also dipped, declining 5 percent in February, from 1,426 to 1,353, the board said.

For the spring, the industry is focusing on first-time buyers, who help push sellers up the homeownership ladder and boost sales overall. First-timers have an obvious advantage in a slow market because they have no home to sell, agents say.

But having no home also puts them at a disadvantage. No house means no equity and more of a struggle in coming up with cash for a down payment and closing costs.

Recognizing that, lenders and agents are pushing the many programs available for first-time buyers. More of these programs are available than ever before, agents say -- for instance, banks financing closing costs or offering slightly higher interest rates in exchange for no points. And as rates on 30-year, fixed mortgages stabilize, hovering just below 9 percent, buyers should come out in greater numbers.

"There is a backlog of people waiting to buy and haven't because of the hype over rates," said Luciano Gargano, owner of Re/Max Classic Realty in Pasadena. "There is such competition among sellers that a lot of buyers are asking for closing help and trying to cut a lot of deals."

But the inventory is declining -- as some homes sell and others are taken off the market -- offering a ray of hope to some in the industry.

"I think the market is in the process of steadying itself," said James P. O'Conor, chairman of O'Conor, Piper & Flynn. "Right now, it's building up to a normal speed. But I don't know that there's going to be a surge like we had last March."

In Anne Arundel County, inventory peaked at more than 11,000 properties in May 1994 and in February fell to 8,372.

This spring, "it's not the worst market we've seen in regards to inventory," said Gary Kaukonen, president of Coldwell Banker Home Realty Professionals. "A number of people have elected not to move and have taken their home off the market."

Many sellers have done so because they failed to get the price they needed to buy another home and can wait to move, he said. But other sellers must move, for a job or to ward off a foreclosure. Those sellers find they must lower their price expectations, agents said.

"Some have owned a home three or four years, and it has not appreciated in value," Mr. Kaukonen said. "There's very little equity in [some] homes bought three or four years ago, so it's not unusual for a seller who has to sell to have to bring a check to settlement."

"Ten years ago, people saw a house as an investment," he said. "Appreciation was exceeding 10 percent a year, year after year. People said, 'Let's struggle to make the payment because it's a great investment.' Now that may not make sense."

If priced right, properties should bring in a written offer within 60 to 90 days, agents said.

"It's recent sales of similar homes that will determine the price, not what [sellers] paid or need," Mr. Kaukonen said. "The sellers who understand that don't have a problem."

Buyers have become savvier than ever about prices because they look at more than a dozen homes, on average, rather than three or four, before making a decision, brokers said.

It came down to price for Il and June Jee, owners of Andrew's xTC Deli in Towson, when they looked at several homes in Cromwell Station in Parkville. The couple wanted to stay in the area, where they'd been renting a townhouse, to keep their children at the same school.

"We were looking at several townhouses around this area, and the price we paid was reasonable," said Mr. Jee. Of several homes ranging from $128,000 to more than $140,000, they bid on the least expensive and bought it for $123,000.

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