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Housing market is 'pretty bleak'

The Baltimore Sun

March is usually the month when homebuyers get serious, when sales rocket out of the winter doldrums - but not this year.

Home sales in the Baltimore area last month fell 34 percent from a year earlier, the seventh straight month of declines roughly in that range, Metropolitan Regional Information Systems reported yesterday. The average sales price slid almost 3 percent to about $297,700, or $8,900 less than a year ago.

A larger-than-usual jump in area sales from January to February had fanned hopes that the housing market was approaching a bottom. But that was dashed by the latest data: The 22 percent increase from February to March was the smallest for that period since Rockville-based MRIS began tracking local sales nine years ago.

"Pretty bleak," said John McClain, a senior fellow at George Mason University's Center for Regional Analysis. "A lot of people are still on the sidelines. ... People think the economy's in a recession, and it probably is."

Tina Marine, a Realtor with Coldwell Banker in Annapolis, said she is seeing "tremendous traffic" at open houses. But buyers just keep looking and looking. "There's lots of activity, but we haven't seen it yet translate to sales," said Marine. "I think buyers are confused. They just don't know what end is up."

The slump began two years ago as skyrocketing home values increasingly priced would-be buyers out of the market. It deepened last year as buyers who had stretched to get homes during the boom began defaulting on risky subprime mortgages. Lenders, stung by rising foreclosures, yanked the reins on credit. Federal efforts to inject life into the mortgage market, particularly for large loans known as "jumbos," have yet to galvanize buyers here.

Last month, sales fell most sharply - 44 percent - in Baltimore City and Howard County. Those are the area's cheapest and costliest markets, respectively.

Average prices fell everywhere but the city, which saw an increase of 1.7 percent. The biggest drop came in Carroll County, down nearly 20 percent as buyers for pricier homes evaporated. Just 15 homes sold for $400,000 or more last month in Carroll, a third of the number a year earlier. None of the 126 homes listed for $700,000-plus in that county changed hands.

Brian McGeehan, a Realtor with Advance Realty Experts in Baltimore, said homes under $300,000 are the easiest to sell. The $300,000 to $700,000 range, he said, is "probably the toughest" in the city and Baltimore County markets he is most familiar with.

Like Marine, he is seeing buyers look long and hard. One property he represented was visited a dozen times by the same potential buyer, who decided not to make an offer.

His clients, Jason and Michelle Whitney, have been casually searching for a couple of years, but now they say they are closing in. They know they want a single-family house in Baltimore County, something under $300,000. They listed their Northeast Baltimore home three weeks ago for $219,900, preferring to sell first.

"It's been a long process," said Jason Whitney, a production manager. "As we started to narrow down what we wanted and get closer and closer to finding something that we actually could see ourselves living in, that's when we decided to put our house on the market. ... There's more to see now that's in our budget."

Because they bought their house six years ago, they are confident they have enough equity to "give a little more on the selling side in order to get a little more on the buying side," he added.

But plenty of sellers do not want - or cannot afford - to lower their prices to interest buyers, agents say. With 19,000 properties on the market in the metropolitan area, it would take 10 months to move everything at the current pace of sales. That is an improvement over the winter months, but markedly worse than usual for this time of year.

People pricing too high are focused on what their neighbors got several years ago, said Michael McGuire, a Realtor with ReMax Advantage Realty in Columbia.

Marine also sees sellers refusing to accept that their 30-year-old, original-roof homes need work.

"People have taken all this money out of their homes," she said, referring to home-equity tapping during the boom. "They haven't put any money back in."

But McGuire said homes priced to move are moving, regardless of condition. Some are getting multiple offers.

Mike and Colleen Sacca, who sold their Bel Air townhouse in January and moved in with relatives while searching for a single-family house, have seen both aspects of the market. In three months of looking in the $320,000 to $350,000 range, they checked out homes that were clearly priced too high. But they were outbid twice on homes that were "great deals," Mike Sacca said.

The Saccas, who got a contract on a Timonium rancher last week, think they came out ahead. The $193,000 price they accepted for their townhouse is less than they could have gotten a year and a half ago but close to their asking price - and more than they bought it for in 2004. They are happy with their new place, too.

"If you're aligned with the market, you're going to be able to buy and sell," said Mike Sacca, 25, who works in the insurance industry.

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