Baltimore's overheated housing market may be showing some signs of cooling, with buyers appearing less willing to enter bidding wars, spend more than the asking price or snap up homes in days.
But cooling is relative for a market that still outpaces many parts of the country in terms of demand and price appreciation. Baltimore's housing market remains healthy thanks to the area's job growth, real estate experts said yesterday.
If the latest trend continues, experts said, it likely will mean a return to the more normal real estate market of five years ago as opposed to some kind of crash. Potential buyers are once again daring to include some of the standard contingency language like home inspections and the sale of their home that had fallen by the wayside in the competitive seller's market.
Statistics released yesterday show continued sales gains with price appreciation at record levels. But sales in the Baltimore area rose by slightly more than 3 percent in July - the lowest pace in three months.
The average sales price in Baltimore and the five surrounding counties jumped nearly 20 percent to $311,093, compared with July 2004, according to Metropolitan Regional Information Systems Inc. The average sales price of a house in the Baltimore area had raced across the $300,000 mark for the first time ever in June, hitting $309,090 that month. This past month, Baltimore prices showed the biggest gain in July, leaping 27.18 percent to $181,546.
Still, the market is showing some signs of continuing at a less frenzied pace. For one thing, the number of new listings on the market outpaced the number of signed home sale contracts in the region and in each jurisdiction, leading to increased inventory, and more choice for buyers. Homes stayed on the market an average of 35 days - two days fewer than in July 2004.
"At the beginning of spring, we were used to seeing homes get on the market one day and in two days, it was gone," said Melvina Brown, an agent with Re/Max 100 in Ellicott City. "These are going, but they're taking 30 days. Sellers are wondering what's wrong with the house, but we're just getting back to the norm."
Real estate experts predict that housing sales nationally will fall next year after four years of record spending. That's in part because mortgage rates are expected to keep rising.
Thirty-year fixed-rate mortgages rose to four-month highs last week and averaged 5.91 percent. That has helped drive down applications for home mortgages, the Mortgage Bankers Association said this week.
Even if homes aren't selling as fast as they once were, they're still moving sooner than in many other parts of the country. Places with more housing inventory include areas such as Raleigh, N.C.; San Antonio and Dallas, said Ken Wenhold, director for Maryland and Virginia for Metrostudy, a national real estate consulting firm that tracks market trends.
"We have an incredible amount of job growth, with low unemployment rates, and people are moving into the area following these jobs," Wenhold said, "and the people moving in need housing."
Besides an influx of buyers from out of the area, demand is coming from buyers able to move up to larger or newer homes thanks to the equity in their houses, he said.
But real estate agents say buyers are not willing to go to nearly any lengths for a house, in some cases because sellers used to rapid appreciation are overpricing homes.
In July, the average sale price as a percentage of the list price was 98.07 percent, showing that sale prices are not going higher than what sellers are asking.
In the market's most heated days, buyers were forgoing home inspections, making cash offers and adding escalation clauses stipulating how high above the asking price they would be willing to go, all in the hopes of getting a serious look from a seller.
"We're not seeing five or six contracts on a property," said Jim Parks, an owner broker of Century 21 Realty Mount Vernon. "The most we're seeing is two at a time. We're also not seeing as many escalation clauses and overbidding of the price as we were.
"People are trying to get more for their homes, so there are fewer buyers for them."
His agency represented the seller of a Fells Point rowhouse that had been rehabbed with Corian countertops and additional baths.
The seller wanted $365,000, but was forced to drop the price to $309,000. The house took six months to sell, for slightly less than $300,000.
"The longer they keep it on the market overpriced, the less money they end up getting for the property," Parks said. "Buyers question why it's been on the market so long. If they price it correctly from the beginning, they end up making more money."
Bill Miller, owner of an auto parts store in Pasadena, wanted to avoid making the overpricing mistake when he decided to sell his house and move to a larger one.
So he took note of sales of his neighbors' similar, four-bedroom Colonials and priced his just under those at $459,000.
"I wanted to price it for a quick sale," said Miller, who is moving mostly to take advantage of equity built over the six years he has lived in the home.
In its first three days on the market, Miller and his wife, Denise, have had appointments to show the house each day. Miller expects to sell it by the end of the month.
But he's still in the market for a larger home - in part because he refuses to bid above asking price, camp out at new home sites or put an escalation clause in his contract.
"I won't get into bidding," Miller said. "I'm hoping when it's right, it's right."