Home-sale figures defy logic


The first six months of the year for the Baltimore area residential real estate market has been many things to many different people. If there is a common thread running through the industry for the first half of 1997, it's that it's not business as usual anymore.

"I don't know if there is ever again going to be a rhyme or reason to our marketplace," said Patrick J. Kane, vice president for Coldwell Banker Grempler Realty in Towson.

"In my years with national builders, big builders, the market is not cyclical [anymore]," said Ray E. Smith III, president of Marketing Ventures Group, a Virginia-based firm that handles research and marketing for new-home builders.

"The '90s have not been cyclical but now there is no reason for the hot and cold spots. Interest rates are fine," he said "It's not a spring market. It's not a fall market. There is no reasoning behind the cycles."

Overall for the first six months of 1997, these are conclusions drawn from data compiled from the Maryland Association of Realtors and from industry professionals:

* The number of existing homes sold in the Baltimore metropolitan region was down 5.5 percent from the same period in 1996. However, the average sales price of each unit rose in each jurisdiction, led by a 14 percent increase in Baltimore.

* New-home sales continue to be sluggish, according to Housing Data Reports, which reported in its July newsletter that year-to-date net sales for single-family, townhouses and condominiums in the region were all down.

* Mortgage rates are at 15-month lows. According to the chief economist for Freddie Mac, they are expected to remain well under 8 percent until the end of the year.

"It's been a very interesting year," said James P. O'Conor, chairman of O'Conor, Piper and Flynn.

Existing home sales

Sales for the first six months in the city and Baltimore and Harford counties were down compared to the same period last year. Howard, Carroll and Anne Arundel each showed slight increases.

The Harford market was down 9 percent, the city was off by 5 percent and Baltimore County was down 4 percent. Spurred by a strong February and June, Howard County sales grew by 4 percent, Carroll was up 3 percent and Anne Arundel had a 1 percent gain.

But though sales volume was down, sellers were beginning to see some appreciation.

The average sales price in Baltimore jumped from $71,601 for the first six months of 1996 to $81,323 for 1997, a 14 percent increase.

Similar, although not as dramatic price-paid increases were seen in the surrounding counties:

* Carroll County: Up 8 percent from $142,429 to $154,407.

* Anne Arundel County: Up 8 percent from $163,771 to $176,400.

* Baltimore County: Up 6 percent from $129,123 to $136,271.

* Howard County: Up 6 percent from $172,710 to $183,259.

* Harford County: Up 4 percent from $131,647 to $136,835.

"I see it in our numbers because we are slightly down in units, but are up in [dollar] volume, and that's attributable to price," said Kane of Coldwell Banker Grempler. "We haven't seen appreciation for some time."

For O'Conor, Piper and Flynn and Coldwell Banker Grempler Realty, 1997 started off with brisk January sales, but that was expected when compared to the blizzard that chilled sales in January 1996. But then 1997 sales slowed, and apparently the traditional spring market didn't start blooming until midsummer.

"February was flat," O'Conor said. "March and April and May were about the same as last year. But June and July have been very good months. As a result, we're a nice figure ahead of the same date last year."

In fact, O'Conor said, sales in July -- traditionally a slow month -- were so strong that it was the second most active month in company history. OPF sales in July were up 13 percent over July 1996.

Likewise, Kane said Coldwell Banker Grempler had strong January and February sales, but then business dropped off in key spring months of March and May, only to rebound in the past three months. "It looks like we are probably -- still for the year -- just slightly behind last year," but he added, "this is the first real strong July that we've seen. Typically, it starts slowing down in July and August. It hasn't been the best month of the year, but certainly better than a lot of past Julys."

A strong July

David Desser, an associate broker with Long & Foster in Pikesville, concurred, saying that 1997 started off slow, but the usual summer doldrums have been anything but dull.

"We go a couple of months without selling houses, then the next couple of months are good. I hope it stays that way," he said, adding that his office had a strong July with $11 million in sales vs. the typical "$7, $8 or $9 million" they would expect for a midsummer month.

Desser attributed the upswing in the past 30 days to declining mortgage rates, which are now hovering around 7.5 percent

J. Thomas Carruthers III, vice president and operating officer of Prudential Carruthers Realtors, sees steady mortgage rates as helping business even though he still characterizes it as a strong buyer's market.

"The barometer is certainly in favor of the buyer today. With the [low] interest rates, you'd think that sales would be better," Carruthers said and then explained:

"If you look back several years ago, we had a very strong market, that the threat of rising interest rates caused buyers to come out and make decisions to move forward and purchase property. But given the stability of interest rates, I'm not sure that we've got the same kind of pressure."

New-home sales

There were few bright spots when looking at statistics from Housing Data Reports, a Washington firm that analyzes new-home markets and trends.

In the metropolitan region, all aspects of new housing in year-to-date net sales were down:

* Single-family homes: Down 1.5 percent (1,934 units vs. 1,963 units in 1996)

* Townhouses: Down 15.5 percent (1,731 vs. 2,049)

* Condominiums: Down 22.4 percent (501 vs. 646)

Ryan Homes and the Ryland Group -- with 13.9 and 7.8 percent respectively of the market share -- remained the area's top two builders, followed by Bob Ward Homes (4 percent) and Pulte Homes (3.9 percent). But jumping in at No. 5 is Patriot Homes, which was nowhere to be found in the top 10 builders at the end of 1996.

For all the struggle builders have had in 1997, Patriot apparently has found a home in the Baltimore market, gaining 3.2 percent of the market share, up from 1.7 at the same time last year.

"What they have basically done is that they are one builder who has stayed in their niche," said Ray E. Smith, president of Marketing Ventures Group, which works with Patriot Homes and its upscale cousin, Williamsburg Homes.

"They haven't said, let's be everything to everyone. They basically said, we want to build starter, single-family homes with great architectural details," he said, adding that Patriot gears its pricing between $160,000 to $240,000, depending on the community, and it builds homes from 1,700 to 2,400 square feet.

Smith said Patriot has sold 142 homes this year compared with 100 at the same time in 1996. One of its more successful communities is Owings Meadows in Baltimore County, where it has 12 sales for 1997. It also has had strong sales at Lyndwood (13) in Howard County and Piney Orchard (13) in Anne Arundel.

"The most difficult thing about the Baltimore market is the different types of buyers," Smith said.

"You just can't come into Baltimore and make an impact. It helps to come in slowly, get a good reputation, and I think that's one of Patriot's niches.

Robert Van Order, chief economist at Freddie Mac, last week blessed the national housing market, citing the economy's "modest but steady growth, a very high level of consumer confidence and exceptionally affordable interest rates."

Overall, 30-year fixed-mortgage rates in the Baltimore area are at the lowest they've been this year, according to HSH Associates, a New Jersey firm that tracks 40 area lenders.

Rates peaked at more than 8 percent in April, but have been declining ever since. Thursday, the 30-year fixed-rate among area lenders was at 7.44 percent.

Top 10 builders

Top Baltimore-area builders through June 1997.

Builder... ... ... ... ... ... Net Sales... ... ... ... % Share of Market

1. Ryan Homes... ... ... ... . 581... ... ... ... ... . 13.9

2. Ryland Group ... ... ... .. 324... ... ... ... ... . 7.8

3. Bob Ward Homes... ... ... . 167... ... ... ... ... . 4.0

4. Pulte Homes ... ... ... ... 165... ... ... ... ... . 3.9

5. Patriot Homes... ... ... .. 135... ... ... ... ... . 3.2

6. PCS Homes... ... ... ... .. 109... ... ... ... ... . 2.6

7. Regency Homes... ... ... .. 104... ... ... ... ... . 2.5

8. Trafalgar House ... ... ... 102... ... ... ... ... . 2.4

9. US Home Corp.... ... ... .. 85 ... ... ... ... ... . 2.0

10. NVHomes ... ... ... ... .. 78 ... ... ... ... ... . 1.8

SOURCE: Housing Data Reports

Pub Date: 8/10/97

Copyright © 2021, The Baltimore Sun, a Baltimore Sun Media Group publication | Place an Ad