ANNAPOLIS – Parts of Maryland’s real estate market might be showing preliminary signs of turning around, with the state’s Washington suburbs leading the way, according to the most recent available statistics.
Maryland’s D.C. suburbs showed a year-to-year increase in home sales but the Baltimore-metro area and other parts of the state are still lagging behind, leaving analysts unsure if the market is really on the upswing.
“It’s starting to stabilize,” said Kenneth Wenhold, Mid-Atlantic regional director for the Houston-based Metrostudy real estate consulting firm. “It definitely hasn’t bottomed … but this is the first step toward that process.”
The most recent statistics from the Maryland Association of REALTORS show the state as a whole saw a 43 percent increase in homes sold from February to March. And from March 2008 to March 2009, Montgomery, Prince George’s and Frederick counties all saw increases of more than 10 percent in the number of homes sold.
But the Baltimore-metro area experienced an 18.5 percent decrease over the same 12 months, according to the Metropolitan Regional Information Systems, Inc. And the state as a whole saw nearly a 10 percent drop in homes sold during that time period, according to the Maryland Association of REALTORS.
Washington, Howard and Dorchester counties were the only other counties besides the D.C. suburbs to see gains in homes sold over the last year.
Analysts say it’s too early to tell if the positive news is the beginning of a turnaround, particularly in places like Harford and Carroll counties, which saw 28 and 23 percent decreases in home sales over the last year.
Wenhold sees at least a bit of positive news in the recent monthly improvements.
He points to decreasing the number of houses currently on the market as a critical factor in determining when Maryland’s real estate market will truly rebound.
Fewer houses for sale would increase competition among buyers, which could drive prices up.
“Once we see that supply start to decrease we’ll see some more stability,” Wenhold said.
The number of houses under contract but not officially sold in the state this March surpasses last March’s total, signaling buyers could start cutting into that housing supply.
Real estate agents seem more upbeat about a potential turnaround.
“Things are picking up in general,” said David McIlvaine, president of the Greater Baltimore Board of REALTORS and an associate broker with Keller Williams Realty in Ellicott City. McIlvaine has noticed increases in his showings and phone calls from potential buyers.
Low interest rates, sellers being more willing to negotiate and an $8,000 federal tax credit for first-time homebuyers have helped boost buyers’ confidence and interest.
“All those things just add up to, ‘why wouldn’t you buy?'” McIlvaine said.
Antoinette Guy-Wharton, a consultant who lives in Randallstown, is one of those first-time homebuyers who McIlvaine called a “driving force” in the market.
“I needed a bigger house and this was just a prime opportunity to go out and do it,” Guy-Wharton said.
She called the tax credit “an additional incentive” and is looking to take advantage of lower prices for area homes. Foreclosure properties are often particularly good bargains now, she said.
“For first-time buyers, the market is great,” Guy-Wharton said.
The National Association of REALTORS estimated the tax credit could fuel up to 300,000 additional home sales nationwide.
Lawrence Yun, chief economist at the National Association of REALTORS, said first-time buyers are driving the national market, which he believes is stabilizing and could receive a bump in the near future.
?Buyer traffic has been rising, and real estate offices are getting phone inquires about the tax credit,? Yun said in a recent statement. ?By early summer we should be seeing a positive impact on home sales from record-low mortgage interest rates in addition to the stimulus provisions.?
While the tax credit and low interest rates are helping to spur sales, unemployment remains critical to the market’s long-term prospects.
“Rates don?t mean anything if you don’t have a job,” McIlvaine said.
Maryland’s unemployment rate hit 6.9 percent in March — nearly a 17-year high — but is still far below the national average of 8.5 percent, according to U.S. Department of Labor statistics.
Experts point to the Washington area’s insulation from job losses as a reason for its real estate market performing better than Baltimore’s.
“Baltimore now has significant job losses on a year-over-year basis while Washington, D.C. is at least stable,” said Wenhold.
“We’re seeing a little bit more strengthening in Frederick, Montgomery, Prince George’s counties because we’re not seeing as significant job losses,” Wenhold said.
Maryland’s D.C. suburbs might also be leading the way in reversing slides in home sale prices.
The median prices for homes in Montgomery, Prince George’s and Frederick counties rose between 5 and 7.5 percent each from February to March. Baltimore-area sale prices remained stable from February to March, falling just 1 percent.
However, D.C. suburb prices are still down at least 15 percent from last March, while Baltimore-area home prices have only dipped 8 percent over that period.
The area real estate market is expected to get a boost from the up to 48,000 people the state expects to move into Maryland by 2011 through the federal Base Realignment and Closure, or BRAC, initiative.
And judging from the response to an upcoming free bus tour of Baltimore County for people potentially moving to Maryland as a result of BRAC, the impact could be significant.
A 100-person, two-bus tour taking families from Fort Monmouth, N.J., to Baltimore County organized by The Greater Baltimore Board of REALTORS and Baltimore County filled up in a few days, said Amy Baird, director of communications for the Greater Baltimore Board of REALTORS. The tour will highlight available housing options within a reasonable drive of Aberdeen Proving Ground and provide information on local educational opportunities.
But even if BRAC produces the 60,000 direct and indirect jobs some estimate, it can’t turn around the market without help from the broader economy. Maryland lost 58,200 jobs since March 2008, according to seasonally-adjusted preliminary statistics from the U.S. Department of Labor.
Still, adding any number of jobs will have a positive effect.
“Every job helps,” Wenhold said.