Average home prices in the Baltimore metro area dropped for a second straight month as sales continued to free-fall in February.
Prices were down just over 4 percent from a year earlier, the largest decline since the housing market turned from boom to slump, Rockville-based Metropolitan Regional Information Systems reported yesterday. The average home sold for $301,816, down from $315,578 a year earlier. In January, the average price fell 2.6 percent.
Sales in the metropolitan area dropped 33 percent, the second-largest decline since MRIS began tracking the local market in early 1999. The number of homes sold in the city and five surrounding counties - 1,559 - was the smallest on record for a February.
But the sales performance was an improvement over January, when the numbers dropped 40 percent from the previous year.
Anirban Basu, chief executive of Sage Policy Group, a Baltimore economic and policy consulting firm, said sales have been falling for months because sellers were reluctant to reduce their prices - or reduce them enough. That's changing now, he said, and he expects buying will eventually start to pick up as a result.
"This is exactly what the housing market needs," he said.
Sales declines ranged from 29 percent in Harford County to nearly 40 percent in Carroll County. Carroll saw a particularly sharp drop in sales of more expensive homes, $400,000 and up, which helped drag down the county's average price by about 20 percent.
Average prices fell 7.7 percent in Anne Arundel County, 10.4 percent in Baltimore City, 5.2 percent in Harford and 6 percent in Howard.
Baltimore County recorded a sizable increase in average price - 8.5 percent. But that's probably artificially high. Unlike most of the region, expensive homes were a larger percentage of the county's sales last month than they were a year earlier.
"I'm not seeing increasing prices at all," said Carl J. Galler, a Realtor with the Carl Galler Group at Coldwell Banker Residential Brokerage in Owings Mills.
Buying activity seems to be on the upswing as the housing market enters the important spring selling season, he said. "I'm seeing more contracts coming across the table and more showings on listings that had sat stagnant over the winter months," he said.
But a growing number of would-be buyers are coming in way below list price, he said. Some intend to live in the house they're low-balling, while a "whole slew" of others are real estate investors, Galler said.
Celia Chen, director of housing economics at Moody's Economy.com, suspects that Baltimore-area sellers have been less willing to settle for lower prices than U.S. homeowners on the whole. Prices haven't fallen as rapidly here as they have nationwide, but the sales declines have been worse.
In the end, she thinks the local housing market will follow the national trend. She expects more pressure on home prices everywhere as foreclosures rise, increasing the number of properties for sale.
"That will in turn result in more foreclosures, because as home prices fall, then homeowners who are having problems keeping current on their mortgages are more likely to default," she said. "It's a self-reinforcing spiral."
The local housing inventory is already high. The 18,300 homes on the market last month would take a year to sell at the pace they were going at in February - and that's if no more were listed.
Homes that sold last month were on the market for an average of 133 days, up from 93 a year earlier.
Basu anticipates that the housing market will be largely driven by investors, first-time homebuyers and vacation-home buyers, "people who do not have to sell an existing home."
"My guess is, there are many people who would like to move up, as there always are, but because they continue to view this as a disadvantaged time to sell their current home, they choose to do nothing," he said.
Chris Cooke, a Realtor with ReMax Sails in Baltimore, said the prospective first-time homebuyers he's seeing have months left on their rental leases and aren't in a rush.
"They're buyers that will buy if they find what they're looking for, but at the same time, they don't have to," he said. "Things that may not have been a 'must' in the past are becoming 'musts.' They're looking for a property in the perfect location."
Not all sellers are in a rush either. Marianne Downes is trying to sell her two-bedroom duplex in the Anne Arundel community of Arnold for $242,900 because she and her husband want to move to Delaware now that they're retired. They haven't bought yet; they're just looking.
"We have time," she said. "There's no pressure."