Low home prices, falling interest rates and financial help from Baltimore City have created a surge in city sales over the past few months, while the real estate market in surrounding counties has sunk into a deep slump.
June sales soared in the city, up 19 percent compared with last year, continuing to buck a regional trend, the Greater Baltimore Board of Realtors said last week. In May, city sales jumped 10 percent, while the number of contract signings awaiting settlement surpassed the previous May's figures by 14 percent, a greater jump than anywhere else in the region.
"When a portion of [buyers] are blocked out because interest rates are too high or prices are too high, you start to build up pent-up demand," said Adam D. Cockey Jr., president-elect of the Realtors board. "When some of those obstacles are relaxed, people come out."
By contrast, sales in June fell everywhere else in the region except in Harford County, where they rose 7 percent, compared with last June. And in May, sales plummeted in Baltimore, Carroll, Harford and Howard counties -- off as much as 29 percent in Harford from the previous year, the board reported.
May and June sales helped pull the city's totals up slightly, by 1 percent, for the first half of the year to 1,913. Meanwhile, sales plummeted in each of the counties, falling 16 percent for the region compared with the first six months of last year.
A number of factors contributed to the city's sales growth, real estate agents and loan officers say. City homes cost less on average, appealing to first-time homebuyers. The average price of a home in June was $97,839 in the city, compared with $146,616 in the region. And rates on 30-year, fixed mortgages, which peaked at above 9 percent in December, have dropped three-quarters of a percentage point since early May, allowing more people to qualify. Rates last week averaged 7.44 percent, according to HSH Associates Inc., which tracks mortgage rates.
In addition, during the first six months of the year, 180 city buyers made use of two programs that offer down payment and closing cost aid.
In October, Baltimore began offering financial assistance to employees buying first homes. Under two programs designed to work with Fannie Mae-backed mortgages, the city earmarked $2 million annually to lend workers who rent or haven't owned a home in three years up to $10,000 for down payments, closing costs and renovations.
Since October, 139 city employees have settled on homes under the program, 84 of them this year, said Thomas H. Jaudon, chief of the city's Home Ownership Institute development division. Sales prices have averaged $78,248, he said.
The homes "are not strictly inner-city properties," Mr. Jaudon said. "They are in circular neighborhoods around the inner city, in middle- and moderate-income neighborhoods."
So far, the city has spent $1.6 million, with $400,000 remaining, for settlement loans averaging $9,200. The city offers no-interest loans of $7,500, which shrink by 10 percent each year. A borrower who lives in a home five years must repay half the loan, while a borrower in the home the full 10 years owes nothing at the end of that time. The city offers additional loans of up to $2,500, matching a borrower's savings of at least $1,000.
The 139 families are among 360 applicants the city has processed since October, including 200 female heads of household, 75 percent minorities and a predominance of teachers, police, fire and public works employees, Mr. Jaudon said. Applicants who have not yet settled are either looking for a house or trying to clear up debt, he said.
Others bought homes in the city after qualifying for the Settlement Expense Loan Program, which also offers closing cost assistance. The city has made more than 1,200 loans in two years, 96 of which settled between January and June 30, Mr. Jaudon said.
In its latest effort to market homes, the city will kick off a one-time-only, $500,000 loan program Saturday at Morgan State University. The city and several sponsors have identified 85 homes in six neighborhoods that have been for sale at least 90 days. For them, the city will make no-interest, $7,500 loans to first-time buyers for settlement costs. The loans shrink by 10 percent each year for 10 years. Borrowers must meet income requirements; a family of four could earn no more than $39,500 annually.
The homes, in Baltimore-Linwood, Edgewood, Mid-Govans, Washington Square, Callaway-Garrison, Waverly and Better Waverly will be open from noon to 5 p.m. next Sunday. For a list of properties, lenders and information, call 396-8407.
"These are neighborhoods considered conservation areas, in need of city incentives to keep them strong and viable," Mr. Jaudon said.