November isn't normally a popular month for home sales, but buyers - especially first-timers anxious that an $8,000 incentive might slip through their fingers - made an exception this year.
The number of homes changing hands last month in the Baltimore metro area was up 77 percent compared with a year earlier, Metropolitan Regional Information Systems said Thursday. That's by far the biggest jump since MRIS began tracking the region in the late 1990s, and it comes in a month that was supposed to have been the last opportunity for claiming the federal first-time home buyer tax credit. The credit, worth up to $8,000, has since been extended into next year and expanded.
Sales in October increased 36 percent from a year earlier - the previous record.
More Baltimore-area homes changed hands in November than in any month this year except the normally brisk June. Signed contracts, which for the most part were due to become sales this month or early next year, also rose.
"You don't [usually] see many people buying houses between Thanksgiving and New Year's, so it's a good sign," said Ron Howard, who runs the Ron Howard Group at Re/Max Sails in Canton and said all his buyers' agents are busy.
This isn't yet the recovery homeowners are counting on, because prices continue to fall. The average sales price in the metro area was about $260,000 last month, down 8 percent from a year ago and just about what the average buyer paid at the end of 2004.
And despite the big pickup in activity, the number of homes sold last month is still far below what it was five years ago, when lax lending terms helped create a frenzy. More than 3,700 homes changed hands in November 2004; last month, it was 2,247.
What will happen to sales and prices when the tax credit expires is one of the pressing questions facing the real estate industry here and nationwide. Dean Baker, an economist who follows the housing market for the Washington-based Center for Economic and Policy Research, expects sales will begin dropping again. Probably even before the credit expires, he added, because the original $8,000 incentive to buy got people who might otherwise have bought next year to buy this year.
"It's hard for me to see that we aren't going to take another hit," Baker said.
Steve Dutra, vice president of information at John Burns Real Estate Consulting, a California-based adviser to the home-building and real-estate industries, has a different forecast. He expects modest sales gains in the Baltimore area next year, with prices "a little bit down to flat." Proximity to federal spending helps, he said.
Some are feeling optimistic enough to come back into the market after a break. Alan Chantker, president of the Mid-Atlantic Real Estate Investors Association, hadn't bought Baltimore homes to rehab and resell for more than a year but picked up two - both foreclosures - in the past few weeks.
His plan is to renovate the properties and put them on the market in early March, with hopes of getting first-time buyers who want to beat the new deadline for the $8,000 credit. Contracts must be signed no later than April 30.
"I kind of got the inkling this past summer that things were turning around, so I decided to get back into the rehab game," Chantker said. He would have bought sooner, but "I was getting beat out on a lot of deals. Either I'd pick up the phone and it was gone, or there were 10 other contracts."
MRIS, which runs the region's multiple-listing service, doesn't track whether homes are sold to first-time buyers. But the big activity now is in lower price ranges, the ones first-timers are most likely to buy into. Twice as many Baltimore-area homes less than $250,000 sold last month compared with a year ago, according to a Baltimore Sun analysis. The number of homes selling for more than that amount rose 56 percent.
Even in pricey Howard County, one in four homes sold went for less than $250,000. In Baltimore, it was 80 percent.
"Our market needs those first-time buyers," said Judy Isom, a real estate agent with Keller Williams American Premier in Bel Air who has been in the business for 23 years. "The first-time buyer is the one on that first rung of that ladder, and you can't get anywhere else without them."
But there's a bottleneck further up the ladder. As of September, nearly 300,000 Maryland homeowners with mortgages owed more on those loans than the properties were worth, according to estimates by First American CoreLogic. That's 22 percent of borrowers - the eighth-highest share in the nation.
It's the reason so many sales are either to buyers who don't already have a home or to real estate investors, said Howard.
"Once the values go back on an upward climb, and people can get out of the houses they're in, that's when you're going to see the market get exponentially busier," he predicted. "A lot of people out there would love to sell if they could."
Because they can't sell, they can't move to a bigger place, which leaves homeowners in higher price ranges chasing a small pool of buyers. At the rate of sales last month, there were enough homes on the market priced between $1 million and $2.5 million to last for four years. In most price ranges, buyers have a lot they can look at and - unlike in the rapid-sales days of 2004 and 2005 - don't feel pressure to settle for something that doesn't suit them.
That's why Patricia Cardinale, who has been trying to sell a brick rambler in Ellicott City since July, decided to pull it off the market for a month. She's hoping for better luck if she replaces the kitchen appliances and faucet. The three-bedroom house belonged to a sister who died, and Cardinale - who lives in California - is the trustee. It's not in bad condition, she said, but she knows it could use sprucing up before it's back on the market with an asking price of about $360,000.
"We've had plenty of showings," she said. "Every comment was, 'It needs upgrading. Too much work.' "