The average home price in the Baltimore region fell for the first time in six years last month, reflecting a sputtering housing market that continues to lose momentum.
The decline was small - just a notch more than 1 percent - and prices fell from year-earlier levels in only half the region's six jurisdictions, according to statistics released yesterday by Metropolitan Regional Information Systems Inc. But the decrease, accompanied by a nearly 17 percent drop in the number of homes sold and a surge in listings, signals that an end to the housing slump is not yet in sight.
"Clearly things are going to get worse, with prices likely falling somewhat, new housing starts slowing and days on market increasing. We're in for a bumpy ride, but not a fall off the cliff," said Richard Clinch, director of economic research at the University of Baltimore's Jacob France Institute.
The average price of a house sold in Baltimore City and the five surrounding counties dipped 1.11 percent in May, to $312,617 from $316,123 a year earlier. The decline was the first for the region since a 0.08 percent dip in June 2001 - before the housing boom began - when prices averaged $173,008.
The area's most affordable jurisdictions, Baltimore City and Harford County, had the strongest price gains - 7.2 percent and 5.15 percent, respectively, the MRIS data showed. Anne Arundel County sustained the biggest drop, with the average price skidding 6.75 percent, the most since the market started to turn down in the last half of 2005.
In all, 3,030 homes were sold through the multiple-listing service in the metro area, MRIS reported. Sales fell in every jurisdiction, with the biggest declines in the two priciest counties - Anne Arundel and Howard.
May's price decline - which reflects contracts largely signed in April and March - comes at the start of the crucial spring and summer selling season, when more people typically put their homes up for sale. In May, the number of listings soared to 18,870, the highest since the slump began. New listings outnumber contracts by more than 2-to-1.
Flood of listings
The flood of new listings, on top of a bloated inventory of unsold homes, has squeezed prices, economists said yesterday.
"Traditionally, this is a time when houses get put on the market, but the fact that there is a huge active inventory from homes that haven't sold is putting downward pressure on home prices," said Daraius Irani, director of the applied economics group at RESI, Towson University's research and consulting arm. "Baltimore is not immune to any kind of real estate home price adjustments that are going on in the rest of the nation."
Just this week the National Association of Realtors predicted that the median price of an existing home would fall this year for the first time since the 1960s, when the trade group began keeping tabs. The NAR also said it now expects sales to drop 4.6 percent, more than double the 2.2 percent decline it predicted two months ago.
Still, the Baltimore region has continued to outperform the nation as a whole. In the first quarter, the median price gained nearly 5 percent, putting it in the top quarter of 145 metro areas surveyed by the NAR.
Clinch said that's thanks to the area's strong job base, relative affordability and fewer speculators - factors that should help the housing market recover once jobs expected from the federal base realignment process (BRAC) start coming.
William L. Yerman, president of the Greater Baltimore Board of Realtors, said he was encouraged by the price gain in the city and Harford County and the essentially unchanged prices in Baltimore and Howard counties.
'Values are holding'
"I still think we're close to a flat market, and not a downward trend," Yerman said. "The values are holding in the Baltimore metro region and, if you price a house right, it will sell."
Home sellers are finally beginning to understand the market and price homes accordingly, said Wanda Lehman, a real estate agent with Long & Foster Real Estate in Timonium.
With more inventory on the market, homes in May took an average of nearly three months to sell, compared with just under two months in May 2006 and 39 days in May 2005, the MRIS statistics showed.
"Sellers had been over-ambitious with their expectations after five years of double-digit appreciation," Lehman said. "The sellers that really want to sell are becoming realistic. "
Sometimes that means reducing the price, offering to help buyers with closing costs or making additional repairs or renovations.
Cindy Stewart first listed her renovated 1923-era farmhouse on 1.2 acres in Lutherville in January for $720,000 after getting it appraised, but has had no offers. She has since reduced the price twice, first to $699,000, then to $675,000, added another bathroom and switched real estate agents, to Lehman.
Stewart, who has relocated to start a new job in Florida, said she feels encouraged about the increased interest she's seen and is hopeful the right buyer is out there.
"I'm trying to stay calm, and I'm trying to be understanding about the market," a vastly different market from three years ago, when she sold her last home in three days. "This is a beautiful house, and we've done a lot of work. "