Another month of rising sales of existing home and higher median home prices in August has many in the Maryland residential real estate industry believing they have seen the market’s low point.
“I think we’ve reached the bottom, and now it’s going up,” said Franco Saladino, an agent for Long & Foster Real Estate in Rockville who has sold homes in Montgomery County for seven years. “I can’t classify it as a seller’s market yet. It has seemed more like a seller’s market the last few months, but it is still good for buyers.”
The median price of existing homes sold in Maryland rose to $255,498 in August, up 6 percent from a year ago, according to the Maryland Association of Realtors. That was the seventh consecutive month of year-over-year price increases. The number of sales jumped almost 10 percent to the highest level in the month of August since before the Great Recession started in late 2007.
Since May, the inventory level statewide has remained below six months — the level considered a hallmark of a healthy housing market, said Patricia A. Terrill, board president of the Maryland Association of Realtors.
“We continue to be encouraged,” said Terrill, manager at Prudential Carruthers Realtors in Ocean City. “The gains in average and median price statistics signal an overall market stabilization, which is promising not only for housing but also for the overall economy.”
In addition, new residential construction is picking up in Maryland, with the value of single-family permits authorized from January through August rising to $1.2 billion, the highest level for that time period since 2007, according to U.S. Census Bureau figures.
The housing sales increase this year is driven by historically low interest rates that have remained below 4 percent for months, Saladino said.
“No one expected them to be this low,” he said.
Boost to other industries
Housing is a key segment in the economy that affects many other industries, from sellers of major appliances to moving companies, economists say. New construction especially is important, with three jobs in areas such as construction and manufacturing created for each new single-family home, according to the National Association of Home Builders.
In 2005’s fourth quarter, new home construction and remodeling accounted for 6.3 percent of the U.S. gross domestic product, according to the Bureau of Economic Analysis. That fell to 2.2 percent in the third quarter of 2011.
Bargain Movers, for one, has been busier, with business up about 15 percent so far this year from last year, said Luis Cardenas Jr., general manager of the Gaithersburg moving business.
“I would say this not only has to do with the increase in home sales in Montgomery County, but also return customers and our referral business has grown to about 55 percent of our annual volume,” he said.
August typically is the company’s busiest month “as everyone tries to get moved before school starts,” he said. Bargain Movers has had to turn down more business this year than last year because of the limited size of its truck fleet, said Cardenas.
“We would have seen a larger increase. However, I manage a small fleet of only five trucks,” he said.
Still, housing sales are not seeing the kind of pop that would be expected with GDP annual growth rates averaging about 3 percent per quarter in 2010 and 2011, said Daraius Irani, director of the Regional Economic Studies Institute’s applied economics and human services group at Towson University. Economic growth has slowed this year, to 1.3 percent in the second quarter.
“There is still uncertainty about jobs,” Irani said. “People are more confident than they were in 2008, but there is still concern over what’s happening with the economy. That is probably having some impact on housing sales.”
Certain areas such as Montgomery County have not been hit as hard by joblessness and haven’t seen housing values dip as much as have many regions, Saladino said. Montgomery’s median home sales price of $374,728 in August was 16 percent below what it was five years ago, compared with declines of 34 percent and 23 percent in Somerset County on the Eastern Shore and Baltimore city, respectively.
Fewer foreclosures in most months
Foreclosure filings have continued to decline overall, dropping 57 percent in Maryland in the second quarter from the same quarter in 2011, according to RealtyTrac of Irvine, Calif. But they jumped 54 percent in August from August 2011 in the state.
The state still has a good number of short sales, which are distressed sales in danger of going to foreclosure.
“I’m seeing slightly fewer short sales than a year ago, but they continue to be a pretty strong contender,” Saladino said.
Homes in the suburban Maryland counties that include Montgomery, Prince George’s, Frederick and Charles tended to sell fairly quickly in August, within two or three months of being listed, according to a Long & Foster report. In Montgomery County, homes averaged 47 days on the market, with homes in the other counties in the 60-day range.
“Many buyers are finding they can purchase more house for their money while sellers who price their home appropriately continue to experience quick sales in this market,” Jeffrey S. Detwiler, president and COO of Long & Foster Cos., said in a statement.
A number of sellers still are “underwater” or “upside down,” meaning they owe more on their mortgage than what their homes are worth, said Nick Chaconas, a Redfin agent who sells homes throughout much of Maryland.
“It should be a seller’s market, but we still have sellers who are upside down,” he said.
Reached the bottom?
The number of existing homes sold in Maryland in August rose to the highest level for that month since before the Great Recession began in late 2007. The value of new single-family permits authorized in the state from January to August also grew to the highest level for that period since 2007.
Year, Existing home sales, August New single-family permits value*, January-August
2012 5,230 $1.23
2011 4,758 $1.06
2010 4,578 $1.10
2009 4,838 $1.02
2008 4,259 $1.22
2007 5,756 $2.16
* in billions of dollars
Sources: Maryland Association of Realtors, U.S. Census Bureau