In a sign that more homeowners are lowering their expectations to sell in a difficult market, house prices in the Baltimore area fell last month to the lowest level in more than three years.
And the drop in home sales, which had been leveling off, accelerated in November, sliding nearly 33 percent on a year-to-year basis, according to numbers released yesterday by Rockville-based Metropolitan Regional Information Systems Inc.
Experts said the turmoil in the economy and tighter credit markets over the past few months continue to take a toll on housing values and sales, with rising joblessness adding to buyer anxiety.
In November, the U.S. lost the most jobs in a single month in more than three decades, and local employers have announced hundreds of layoffs in recent weeks.
"If people were nervous in August, they're now really, really nervous. Each month you hear about new job losses and people wonder is it going to be me," said Daraius Irani, director of applied economics for the RESI consulting arm of Towson University. "Everything is being driven by a lack of consumer spending, and housing is no different."
The average price of a home sold in November decreased nearly 8 percent to $284,129, the lowest monthly average price since spring 2005 and the largest percentage drop since the housing slump began.
"The real question is at what point does that price drop mean people start moving off the sidelines, because affordability has definitely improved," said John McClain, a senior fellow at the Center for Regional Analysis at George Mason University. He said he doesn't foresee an upturn in sales until at least spring.
In sheer numbers, fewer sales overall are occurring than at the height of the housing boom. Total home sales slid to 1,270 in November, down from 1,892 in November 2007, statistics showed. That contrasts with a peak of more than 5,000 sales in a single month in June 2005.
"It's a bigger decision than buying a flat-screen TV," Irani said. "When times are uncertain, people are not thinking about diving into the housing market."
With housing inventory at more than 19,000 properties across the metro area, the average time it took to sell a house lengthened to just over four months, a 21 percent increase in the average days on the market recorded in November 2007.
Real estate agents said they've seen sellers become more willing to accept offers well below asking price. The MRIS statistics show that November's sellers got, on average, 89 percent of their asking price.
"It's astounding what sellers are willing to take," said Patty Birth Kallmyer, an agent with Prudential Carruthers Realtors, noting that several recent sales had home sellers agreeing to accept as much as 15 percent below list price. She said the sellers who are finding buyers faster - and attracting more than one offer - are those who have priced at about 10 percent below market rate.
Many of the buyers out there now are first-time buyers taking advantage of lower prices and the many incentive programs to help people buy a first home, she said.
"Certainly the pricing is very attractive," Kallmyer said. "People are still trying to get deals," with buyers often looking at homes well above their anticipated price range with the hope of negotiating a lower price. "We have a huge pipeline of buyers contacting us, saying, 'We see these prices and can't believe it. I think we should start looking.' "
Other potential buyers are waiting for mortgage interest rates to drop further, after the Federal Reserve announced last month intervention designed to make financing less costly and more readily available for borrowers with good credit.
"There's a lot of tire-kicking going on," but many who want to buy simply don't have good enough credit to qualify for loans, said Meg Bober, an agent with Long & Foster Real Estate. "It's not a fun market by any stretch of the imagination."
Despite the market, Kevin Maggio and his wife, Karen, decided to put their four-bedroom Colonial in Eldersburg up for sale and move up to a larger home to accommodate their six children.
Because they have lived there eight years and upgraded with an addition and other features, the home has appreciated in value. Still, they didn't expect to bring in the average $550,000 that sellers in their neighborhood were getting a couple of years ago. They priced the home at $515,000 and recently lowered the price to $505,000.
"I'm not concerned so much" about the housing market, Kevin Maggio said. "I don't have to move, per se, but for me it's an opportunity to move into something larger."
He's also not too worried about finding a larger home whenever his house sells.
As a buyer, "there's a lot of deals because of what has happened with the mortgage crisis," he said. "There are a lot of short sales and foreclosures, and that's where the deals are. We're finding that out."
In the metro area, the average sales price fell the most in Baltimore County, which saw a 12.2 percent decline to $278,591. The average sales price rose only in Baltimore City, by 1.1 percent to $179,716.