The average sale price of homes in the Baltimore area jumped almost 20 percent last month, the highest year-over-year price increase in at least five years and another jolt to the region's torrid housing market.
Sales of existing homes in Baltimore and its five surrounding counties jumped 10.62 percent to 3,354 compared with sales in March last year, according to figures released yesterday.
The average sale price rose 19.96 percent to $221,812 compared with the price in March of last year, according to statistics compiled by Metropolitan Regional Information Systems Inc., the Rockville real estate database used by brokers and agents.
Low mortgage interest rates and a scant supply of homes have continued to fuel the hot market. But prices are rising so fast that some real estate agents are growing concerned about the frenzy.
"I was kind of surprised [at the price increase]," said Gilbert Marsiglia, president of the Maryland Association of Realtors. "As much as I like seeing these price increases, I guess I look at them and say to myself, how long can this continue?"
Average prices rose by double digits in every jurisdiction compared with prices in March last year. Prices were highest in Howard County, rising 25.18 percent to $339,202, followed by Anne Arundel County at $298,047, up 17.23 percent; Carroll County, $291,672, up 29.71 percent; Baltimore County, $207,924, up 16.14 percent; Harford County, $201,211, up 16.4 percent; and Baltimore, $119,830, up 22.41 percent.
Benchmark 30-year interest rates have remained below 6 percent for much of the past year and have helped sustain the three-year housing boom, during which sales grew at a record pace each year.
Average sale prices in the Baltimore area rose 15.34 percent last year and 11.47 percent in 2002.
But interest rates have been rising during the past three weeks as the economy has shown signs of improvement. That has pushed down bond prices and inched long-term interest rates higher. Rates remain below those at this time last year, but many economists expect them to rise, making it more difficult for buyers to afford more-expensive homes.
"Many folks are worried that rates may head back up," said Brian Sacks, branch manager of Integrity Home Funding in Owings Mills. "We've had several shocks over the last six months. A couple weeks ago, rates went up a quarter of a percent. But ... we're still at phenomenal interest rates."
Despite concerns about pricing, real estate professionals such as Marsiglia think the housing market will remain relatively hot for the next year or two. They point to expectations of a stronger job market, favorable interest rates and homebuilders who don't have enough land to meet demand.
Lawrence Yun, an economist with the National Association of Realtors, said that even with the price increases, the Baltimore area is still cheaper than Washington.
"Baltimore is playing catch-up to D.C.," Yun said. "With the tight supply situation, those two scenarios will cause Baltimore to easily outpace the national home price appreciation. Nationally, we're projecting 4.4 percent appreciation in 2004. Baltimore could easily double that."
It took an average of 56 days to sell a home in the Baltimore area last month, 10 days fewer than in March of last year. Pending contracts, which offer a glimpse of future sales, were 17.52 percent higher, at 4,494, than in March last year. Some agents said the inventory of homes for sale is improving, but the numbers were 18 percent lower last month, at 5,596 listings, than in March last year.
Some agents think frustrated buyers can still find the homes they want at prices they can afford.
"It's just the luck of the draw for buyers; eventually they're going to win," said Henry Strohminger, president-elect of the Greater Baltimore Board of Realtors and an agent for Long & Foster Real Estate Inc.
Sellers, too, said they're having a hard time deciding what to do about the sparse inventory.
Scott Eschbach is looking to sell his townhouse in Ellicott City and move to Rodgers Forge. He expects to sell for between $280,000 and $300,000 and buy a home for the same price.
But Eschbach hasn't found a house he likes or can afford. And he won't put the Ellicott City home on the market until he finds something to buy. "Prices have jumped $20,000-$30,000 in the last month or two," he said. "But I'm more concerned about availability."