Homes Sales Rise Amid Economic Uncertainty in Baltimore County

Values continue to decline in the county, while sales in Essex-Middle River dropped off slightly between June and July.

According to data provided by MRIS, Inc., July brought with it an increase in overall sales volume (616 closed units) in Baltimore County. This is compared to July of the previous year, when only 481 homes exchanged hands.

In the Essex/Middle River area, on the other hand, there were 38 closed transactions this past July, compared to 43 a year earlier. July 2010 figures were without a doubt somewhat deceptive given the fact that now-expired home buyer tax credits gave incentive to a lot of buyers to purchase before the end of April and thus deflated the sales figures in the following months.

When compared to June 2011, the sales figures in July decreased both in the county by 3 percent, and in our region by 17 percent.

Newly pending listings—those that went under contract during July 2011—decreased by almost 6 percent from the previous month in Baltimore County, signaling perhaps the beginning of a light slowdown in the market’s activity despite the historically low interest rates. Comparison with July 2010 is omitted given the perceived influence of the home buyer tax credit.

On a somewhat positive note, new listings also decreased from June of this year for the fourth month in a row. In July, only 951 new homes were put on the market by Baltimore County listing agents, compared to 1,119 a month earlier and 1,285 in March of this year. 

Decrease in new listings should allow for faster absorption of current inventory.  At the end of July, there were 4,350 actively marketed homes in Baltimore County, and at current sales level, present approximately seven months of housing inventory.  A year earlier, the inventory stood at almost 10 months.

Prices continued to slide in the area. In July, the median sales price in Baltimore County was $190,000 compared to $204,900 a month earlier, and $225,000 in July 2010.  As mentioned in previous columns, we can expect the overall trend of price declines to continue over the coming months as the market continues its path toward stabilization.

Bank-owned (REO) and short sale properties in the Baltimore County continued to make up roughly 20 percent of total sales level. In July of this year, 90 bank-owned and 44 short sales exchanged hands. During the same time period, only 84 new REOs were listed and 93 new homes were put on the market by Baltimore short sale specialists. These numbers come as no surprise as banks delay foreclosing on distressed homeowners and short sales are presented as a better alternative.

It is interesting to point out that inventory of REOs has been shrinking dramatically since the beginning of the year. By the end of December, there were 412 bank-owned properties active on the market. Seven months later, there were less than half (194). At the current rate of absorption, there are approximately two months of REO inventory in Baltimore County.

Short sales are a different story. Short sale inventory in Baltimore County is on a slow rise. At the end of 2010, there were 499 active short sale listings in Baltimore County. At the end of this past July, there were 553—approximately a 10 percent increase. The current inventory of short sales in our region is at a high, over 12 months. Highly complex short sale process in Maryland accounts for most the differences in disposition rates.

Distressed properties, both REOs and short sales, are continuing to be a great option for anyone looking for a good deal. Depending on the time period, these properties sell for 30-50 percent less than their non-bank mediated counterparts. Real estate investors, in particular, are drawn to these properties as a potential income generator as rentals or re-sales.

Overall, questions about the economy and the stock market continue to hinder the potential performance of the national real estate market. With a high level of uncertainty in the air, potential buyers may remain renters for longer than expected, even though it may make economical sense to purchase now. The recent stock market turmoil will most likely prolong the much-needed path to recovery. Even the decreased long-term interest rates may not have enough power to sustain the activity of 2010 and first part of 2011. 

The first month of the second half of the year is already behind us and winter is around the corner. Will the real estate market freeze up? We’ll know soon enough.

In such uncertain times it is important to deal with a qualified professional when engaging in real estate transactions. Short sale specialists are most qualified to help owners of distressed properties, while an experienced local realtor will be able to best accommodate real estate investors and home buyers.

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