Baltimore Metro Real Estate

Each month, Realtor.com surveys up to 250 Metro Service Areas throughout the nation and monitors real estate trends including consumer search behavior, median list prices on for sale homes, active inventory counts and median age of inventory.

The July 2011 real estate search results are in and Baltimore, MD was the #18 most searched market in the country in July 2011, based on data released today by Realtor.com.
 
Median list prices for homes in Baltimore, MD hit $244,500 in July 2011, a -5.60% decrease from one year ago this month, and 0.74% increase from June 2011.   The national median list price in July 2011 was $189,900, a 0.00% increase compared to July 2010.
 
Active for sale inventory of homes in Baltimore, MD in July 2011 leveled out at 18,459, a -11.55% decrease compared to July 2010.   National inventory counts for July 2011 were 2,311,279, a -17.60% decrease as compared to a year ago.  
 
The median age of inventory Baltimore, MD in July was 98 days, a 7.69% increase compared to June 2011.   Nationally, the median age of inventory was 97 days, 4.30% increase compared to June.

The Federal Reserve™s Monetary Policy Committee met this week  and, as expected, decided to leave the federal funds rate in the 0 to 1/4 percent range.  That means mortgage interest rates could remain low for awhile. Consider this a ‘grace period’ and use it wisely.  

I run into buyers who want to buy, but don’t really have themselves “together” to do so.   Well, here is your incentive.

For every 1/4 percent the interest rate rises, you lose serious buying power.   How much?    

Let’s say you’re considering a $300,000 price range with a 30 year loan at today’s 4.75% interest rate.   That would make your principal and interest payments $1564.94/month.       If rates went up just a quarter point, to 5%, you can only afford $291,520.   At 5.25% your ability to qualify drops to $283,339.

Let’s say interest rates hit their average from 2005, which was 6.5%   Forget   looking at the $300,000 homes, because  your buying power  has been  reduced to $247,590.   In 2007 rates flitted around at 7% which would leave you looking at houses under $235,222, a $64,778 decrease from your  hoped for  price range.

Buyers often wish that they could afford “just a little more.”   If you’re playing chicken with interest rates, take  the Fed’s ‘grace period’  to get your finances in order, and be ready to buy before rates climb.

Attracted  by lower prices, one in four U.S. consumers with annual income of $150,000 or more have bought a residential property since 2008. Most new residences (83 percent) are single-family homes and two-thirds of these are in suburban settings. Seventeen percent plan to purchase additional property this year, while 23 percent of those younger than 50 plan to buy in 2011.

That’s quite an active market, and it backs another study I’ve seen this month, which states that homes valued over a half a million a selling faster than they have in more than a year, and prices are holding steady, according to the Institute for Luxury Home Marketing™s weekly report.

œLuxury home buyers recognize that many premium homes are available at relative bargains, says Milton Pedraza, CEO of the Luxury Institute. œSimilar to the luxury retail landscape, luxury home sales provide more evidence of durability at the high end of the market.

The National Association of Realtors™ statistics show that national home sales at $1 million and above were up more than 18 percent year-over-year in 2010.

According to Realtor.com, the most used real estate search web site:  

June 2011 real estate search results are in and Baltimore, MD was the #19 most searched market in the country in June 2011, based on data released today by Realtor.com.  

Median list prices for homes in Baltimore, MD hit $242,700 in June 2011, a -7.72% decrease from one year ago this month, and 1.55% increase from May 2011.   The national median list price in June 2011 was $189,900, a -0.05% decrease compared to June 2010.  

Active for sale inventory of homes in Baltimore, MD in June 2011 leveled out at 18,802, a -7.49% decrease compared to June 2010.  

National inventory counts for June 2011 were 2,339,395, a -15.78% decrease as compared to a year ago.    

The median age of inventory Baltimore, MD in June was 91 days, a 2.25% increase compared to May 2011.   Nationally, the median age of inventory was 93 days, 1.09% increase compared to May.

It’s a video worth  watching – among the highlights,  RE/MAX CEO Margaret Kelly says:

“What we™ve found is right now 20 percent of the buyers out there are investors. Of the investors, 75 percent of those are all-cash deals.”

She added, “A lot of the investors are normal people who are going out and maybe buying their first investment home that they™re going to fix up to rent. They have a very full renters market.”

You can watch the video here: http://www.youtube.com/embed/KG6BDEcLnQo?fs=1

It would take more than a decade for the median American family to save enough for a 20 percent down payment on even a modest home, according to the National Association of Realtors, and yet, there is proposed regulation that would require it.  

Read the NAR position here: http://www.realtor.org/press_room/news_releases/2011/06/qrm_reconsider

 Interesting commentary, stats and figures have been published in The Washington Post:        http://www.washingtonpost.com/proposed-20percent-down-payment-rule-could-put-owning-a-home-out-of-reach-for-many/2011/06/15/AGDJIhaH_story.html

MSNBC:   http://today.msnbc.msn.com/id/43316132/ns/business-eye_on_the_economy/

The Atlantic:  http://www.theatlantic.com/business/archive/2011/04/will-20-down-require-waiting-14-years-to-buy-a-home/237155/

A new national survey of real estate investors released today by Move, Inc.  shows some interesting (and potentially disturbing) trends.   Among them:

…investors are positioned to compete vigorously with traditional first-time homebuyers for hot deals. Two-thirds of investors (65.5%) said they expect the problems first-time buyers are having in getting mortgages will make it easier for them to compete for properties. One in five investors (18.5%) say they™ll be cash-only buyers, a strategy that™s out of reach for most first-time buyers. Eight out ten (80.5%) expect cash discounts from sellers.

…Only 43.5 percent say it will be harder to find bargains and 41.5 percent expect it™ll be easier to sell their properties in the next six months. Meanwhile, 22 percent of investors are bullish and expect prices to rise in the next six to 12 months, and 53.5 percent expect prices to remain relatively the same. Twenty-three percent (23%) expect prices will fall in the next six to 12 months.

Read the survey here:
http://www.pitchengine.com/moveinc/new-survey-shows-local-real-estate-markets-heat-up-with-investors/148993/

The media quotes the  Case-Shiller housing report as the “last word”  on the health of the real estate market  so often that I have to wonder if it isn’t actually having an impact on sales.   The report only covers 20 markets nationwide, so should it really have the media  coverage, and impact, that it does?     I found the following  commentary to be entertaining and sensible:

So many of us giggled nervously as we thankfully avoided the end of the world a couple of weeks ago. But judging by the continued “end of the world” type coverage the Case-Shiller housing study got recently, maybe we are nearing the end.Yes. I am joking, but I am amazed at the attention this report gets. It covers 20 markets-yes only 20-and that is just one of its many flaws. Yet many consider it “the be-all-and-end-all” economic indicator that defines our entire national housing picture. As we know, all real estate is local, and it is unfortunate that the reporting on a 20-city “national” index can have such a jarring impact on otherwise rational people.

It seems Americans aren™t just attached to their homes, we™re also attached to our own perceived value of our houses. In a study titled œLoss Aversion and Seller Behavior: Evidence from the Housing Market, economists David Genesove and Christopher Mayer examined the spectacular bust in condominium prices in the early 1990s in downtown Boston. When a market drops, as the housing market has, it only makes sense that sellers should align their expectations and behavior with the current market, knowing  their home is  worth less¦ or does it?

The study shows we’re susceptible to loss aversion, in which we feel losses much more sharply than we feel gains. Instead of setting the price of our property by what the market will bear, we set it by what we paid and what we think we “have to” get.

People who bought at or near the peak of the Boston condo boom listed their properties for 25% to 35% more than others. Those overpriced properties sat on the market; and fewer than 30% sold after 180 days. In the end, sellers who overprice by such a dramatic amount generally end up with less than they could have sold for had they just faced the facts of the market from the start.