Housing prices in the Baltimore metropolitan area rose more than 11 percent in 2002, and sales reached a record for the second straight year.
The average sale price of homes sold in Baltimore and the five surrounding counties was $183,309 - up 11.47 percent from a year earlier and 23 percent since 1998. Sales rose 4.27 percent to 37,118 houses, according to figures released by Metropolitan Regional Information Systems Inc., the Rockville-based listing service used by agents and brokers.
Housing continued its record-setting pace in part because of low interest rates, a dwindling inventory of homes for sale and stock market investors looking elsewhere for a place to put their money.
At the peak of the market last summer, sellers in certain parts of the region entertained several offers on their homes and often received more than the asking price.
"It's the best year we've ever had," Jan Hayden, president of the Greater Baltimore Board of Realtors, said yesterday. "I've seen other peaks and all, but this has just been phenomenal because it has been sustained for such a long time."
The increased values have raised concerns among some housing experts that homes may be overvalued and buyers may be paying too much despite 30-year mortgage rates that have stayed below 6 percent during the past several weeks. Others insist that prices have been stable for years and the Baltimore area continues to see an influx of buyers from Washington, where the average price hit $347,718 last year, a 14.05 percent increase.
New construction and existing home sales posted records last year across the country. Most economists expect housing sales this year to be healthy, primarily because interest rates are not expected to rise above 6.8 percent for a 30-year loan, but they do not expect another record. Several agents and brokers said they anticipate strong sales this year, but they are not expecting to match last year's.
And many are grappling with how to sell homes with the backdrop of an impending war.
The National Association of Home Builders predicts that this year's new-home sales will be second only to last year.
Home values rose in most parts of the country, with 39 metropolitan areas registering double-digit increases in the final quarter of 2002, according to the National Association of Realtors. Experts said the value increases helped stoke the slumping economy as a record number of homeowners refinanced their mortgages to capitalize on the newfound wealth in their homes and interest rates that hit 40-year lows.
The Realtors' group projects that the national median sale price for homes will rise 4.7 percent this year compared with last year's 7.1 percent increase, the highest since 1980. Freddie Mac, the No. 2 buyer of U.S. mortgages, projects that home prices in the Maryland area will rise between 3 percent and 5 percent during the next two years.
Anne Arundel County saw the largest percentage price increase, 15.94 percent, to $245,212. Sales rose the most in Baltimore - 8.73 percent - to 8,541 houses.
Inventory remains an issue: There were 6,864 homes available last month for sale in the region - a nearly 20 percent decline compared with January 2002.
Shoppers like Artanya Mills, a first-time buyer who is expecting to settle on her Baltimore County home tomorrow, said the search can be frustrating.
"I was more or less worried about finding something in my price range," said Mills, who decided on a three-bedroom home near Milford Mill for $86,000 after shopping for more than a year. "That made it difficult."
New-home builders also face tight supply, a factor they said will continue to drive prices higher. Builders said growth controls have restricted the number of building permits in the region and raised land values.
"There are more people coming into the market than there are lots available to build on," said Earl Robinson, vice president of sales and marketing for Ryland Homes' Baltimore division.
Some housing experts said that even with the double-digit increases, home prices in the area remain a bargain since the values did not grow drastically until the past year. The Baltimore area's 11.47 percent increase last year was preceded by 3.56 percent in 2001; 3.02 percent in 2000; and 3.49 percent in 1999.
Live Baltimore Home Center, a nonprofit group that began an advertising campaign last year to target Washington commuters, believes the average sale price in the city broke $100,000 last year for the first time. The group's figures include "for sale by owner" homes not studied by MRIS, which placed the average sales price in Baltimore at $91,208.
"We have had a very slow and steady increase in the last five years, and there are no high spikes here," said Tracy Gosson, Live Baltimore's executive director. "It's just that confidence continues to grow in Baltimore City, and that's always a good thing."
Several agents said their job in the coming weeks is to work with buyers and sellers who are getting increasingly nervous about the country's safety.
"We realize that if we do go to war, people are going to be glued to their televisions for a while and they're not going to be calling," said Pat Hiban, an associate broker with Re/Max Advantage Real Estate in Columbia. "We're just going to have to go to the business rather than waiting for the business to come to us."