Home prices in the Baltimore area took the biggest year-to-year plunge in almost a decade in January, falling more than 10 percent as rising joblessness and credit woes continued to batter the housing market.
The average sales price in the city and five surrounding counties fell to $265,768 last month, Metropolitan Regional Information Systems Inc. said yesterday.
Sales plummeted by more than 21 percent, to just over 1,000 homes sold during the month, the Rockville-based real estate listing service said.
Average sale prices in the area, which had jumped by double digits during the housing boom in 2004 and 2005, declined during most months last year.
In November, house prices fell by nearly 8 percent compared with a year earlier. Year-to-year home values have not fallen by more than 10 percent at any time since at least March 1999, when MRIS started tracking Baltimore area sales.
Real estate experts said sellers increasingly are convinced of the severity of the slump and are more willing to slash prices.
But "even though sellers are cutting prices, it is not enough to allow the market to reach bottom or equilibrium," said Anirban Basu, chief executive of the Baltimore economic consulting firm Sage Policy Group.
"As much as prices have been slashed, sales volume is down. That tells us prices are going to fall further in the months ahead. We are very much in the middle of this."
Sellers in January got, on average, about 88 percent of their asking price. The homes that sold had been on the market an average of 4 1/2 months, MRIS statistics showed.
"Buyers who are in the market and stable enough to know they will stay in a property five-plus years are getting into homes they wouldn't have been able to afford two or three years ago," said Alyssia Essig, an associate broker and manager of the sales team for Long & Foster's Canton office.
Katie and Daniel Elder, hairstylists at Grapevine Hair Studio in Canton who bought a house in Patterson Park seven years ago, were not even thinking about moving up to a bigger home.
But they reconsidered when they learned about a renovated house on the market just a few blocks away.
The couple's successful $204,000 bid was well below the listed price of the rowhouse, a foreclosed property. The Elders secured VA financing, went to settlement and moved into that house last month. They are rehabbing their first house and hope to rent it out.
"I don't think we saw ourselves as second-home buyers," Katie Elder said. "And when we looked at the home, we didn't even think it was something we could do."
Economists have said the housing market won't begin to recover until prices stabilize. Nearly three years into the national housing downturn, home prices have fallen in more than two-thirds of all metro areas, according to a report this month by Moody's Economy.com. By the end of 2008, construction had fallen to its slowest pace since 1959; homes listed for sale were at a record high and homes continued to depreciate.
Prices depreciated from the peak of the market - in the spring of 2006 for much of the nation - by more than 5 percent in 116 areas and more than 20 percent in 50 metro areas, Moody's said. In the Baltimore region, prices fell about 10 percent from Baltimore's peak in the first quarter of 2007 to the third quarter of last year, the report said.
"The housing market in Baltimore is lagging the national market," said Celia Chen, senior director of Housing Economics for Moody's. "Given the weakness with the recession coming on ... that market is going to correct much more than what we've seen."
Moody's is predicting that Baltimore metro area prices will depreciate about 31 percent from when the market peaked to when it bottoms, expected in mid-2010, Chen said.
Home prices had declined in the Baltimore area for the first time in at least a decade last year, according to preliminary figures from MRIS, with the average home price in 2008 down 3 percent to $306,500.
In January, MRIS said yesterday, Howard County saw the biggest decrease in sales price compared with a year earlier, with a more than 17 percent decline to an average $361,656.
Prices fell the least in Baltimore County, by nearly 5 percent, to an average $265,095, MRIS said.