The severe slump in homebuying in the Baltimore metro area did not let up in April, sobering news for the 20,000 local homeowners who are trying to sell and were hoping for a spring pickup.
Home sales last month were down 31 percent from a year earlier, to just shy of 2,000, Rockville-based Metropolitan Regional Information Systems Inc. said yesterday. The average price was essentially flat, at about $310,200.
MRIS, which runs the region's multiple-listing service, counts a home as sold once the deal has settled - typically a month or two after the contract is signed. But the pipeline of likely and potential sales is smaller, too. Just over 2,600 deals were pending last month, including sales contingent on financing and other issues, compared with more than 3,500 a year earlier.
April was the eighth straight month that sales have dropped 30 percent or more from the previous year. That began in September as lenders, battling rising foreclosures and a slumping market, increased qualification standards for loans. Restrictions continue to mount: Nearly two-thirds of banks surveyed said they tightened criteria for prime mortgages in the past three months, the Federal Reserve said Monday. Even more banks tightened requirements for so-called "nontraditional" and "subprime" loans.
It's not just that borrowers are expected to have higher credit scores. They're also frequently being asked to make a bigger down payment because their lenders or mortgage insurers consider the area a "declining market," said Joseph Child, director of Step One Mortgage in Greenbelt, who does most of his work in the Baltimore metro area.
"It's exceedingly difficult to tell a buyer or tell the buyer's agent whether they're going to qualify or what they're going to qualify for," he said. "I'm seeing probably greater than 50 percent of buyers who could have purchased as little as eight weeks ago not being able to purchase, or having to make drastically different transactions."
As a result, more buyers are turning to loans insured by the Federal Housing Administration, which still allows as little as 3 percent down. That option worked for Chinyere Azuogu, a doctor moving to Baltimore next month. "It allowed me to put money down but still have money to furnish the home and have a life," she said.
Azuogu, who is finishing her residency at a hospital in Boston, paid $220,000 for a three-bedroom home in Baltimore's Ednor Gardens neighborhood and got her closing costs covered by the seller.
"I definitely think I got a good deal," she said. "Even with my mortgage and insurance and everything, I'm still paying less than what I paid in rent here [in Boston]."
Megan Richardson, her agent, said buyers are looking for "great value" and sellers need to react accordingly.
"It is very hard for them to accept what's going on in the market," said Richardson, a Realtor with Long & Foster in Baltimore. When she represents sellers, her suggested asking price is usually 10 percent to 15 percent lower than what the sellers had expected. But that can pay off. Twice recently, homes she had priced "aggressively" - as in low, not high - quickly drew competing, higher offers.
Starting too high and then reducing, on the other hand, can leave homeowners worse off, she's found. "Sellers are chasing this ball that's kind of dropping," Richardson said.
Bob Giglio never dreamed it would take him more than a year to sell. He and his wife put their three-bedroom Ellicott City house on the market in March 2007 after buying a condo to downsize; they're finally scheduled to settle on a deal this Monday. Sales price: $460,000, down from the original asking price of $575,000.
It wasn't for lack of buyers looking. "We had 70 showings," said Giglio, a semiretired barber who also has experience as a real estate agent. "Unbelievable."
He thinks he could have gotten his price had he tried selling it just a bit earlier. "The market drifted down tremendously - boom, just like that," he said.
The smallest drop in metro area sales came in Baltimore County, down 27 percent from a year earlier. Sales dropped most - 42 percent - in Carroll County, which also had the biggest decline in average price, down 7.6 percent. Most of the metro area recorded modest price drops, but Baltimore City's average rose 3.7 percent.
"We expect prices to bottom out pretty soon, certainly in the second half of 2008," said John McClain, a senior fellow at the Center for Regional Analysis at George Mason University. "We are seeing sales traction right now in Northern Virginia, where things [in the Baltimore-Washington region] are the worst. So prices have gotten down low enough that buyers are moving in."