When Carlton J. Boujai Jr. surveys the Frederick County housing market, he finds it hard to contain his enthusiasm.
“In seven years, I haven’t seen our inventory level this low,” said Boujai, an agent at Exit Realty Prosperity Group in Frederick and board president of the Maryland Association of Realtors. “We are starting to see multiple offers on a lot of homes. … I’ve had two homes in the past 30 days that have had multiple offers.”
Sales of existing homes during January and February in Frederick were up 16 percent from the same two months in 2012, according to figures from Metropolitan Regional Information Systems and the Maryland Association of Realtors. That’s better than the jumps of 4 percent in Montgomery County and 7 percent statewide for the same period.
The rise so far this year continues the trend in 2012, which saw a 6 percent sales increase in Frederick and Montgomery from 2011, also higher than the statewide average.
The inventory level in Frederick County was down to 3.0 months in December — meaning that it would take only three months to sell the 658 homes that were on the market at the current pace. A year earlier, 954 homes were on the market in the county, and the inventory level was 5.5 months. While the inventory level rose to 3.8 months in February, the average time an existing home stayed on the market before selling in Frederick last month fell by 36 percent during the past year to 72 days.
The scant inventory, continued low-interest rates and high demand are key factors for the sales jump in Frederick, as well as in Montgomery and other counties in Maryland, Boujai said.
“People have been holding onto their money for the past five years and are now getting back into the market,” he said.
Montgomery also is seeing multiple offers on numerous homes these days, said Michael McGreevy, a manager for Long & Foster Real Estate offices in downtown Silver Spring and Potomac-Cabin John. The inventory level in Montgomery was a Maryland-low 2.6 months in February, down from 4.6 months a year earlier. The average home sold last month was only on the market for 62 days, 34 percent less than a year ago.
“Consumer confidence plays a big part,” said McGreevy, who also is board president of the Greater Capital Area Association of Realtors. “There is a sense of stability among buyers now. They have greater confidence that the market will increase after they buy, and the investments in their homes will be positive.”
Sellers in Montgomery are not seeing huge escalation clauses in the bids as some in Washington, D.C., are, he said. Buyers are willing to pay 3 percent to 4 percent more than the list price, but not many go 10 percent to 20 percent higher, McGreevy said.
Besides giving a boost to the industry, the increase in home sales in recent months provides a good indicator that the general economy is rebounding, Boujai said. “Wheels and real estate run the country,” he said, noting that auto sales also have risen lately.
But the tight inventory, along with restrictive mortgage underwriting standards, are limiting sales in many markets nationally, Lawrence Yun, chief economist of the National Association of Realtors, said in a report. He projected that home sales and prices will continue to rise this year.
Low inventories and multiple bids can turn the housing market into more of a seller’s one with prices rising. The median price of a home sold in Montgomery last month increased by 10 percent from a year ago to $347,000. That was the second-highest average in the state with Howard County at $352,500.
While prices have been increasing in Montgomery for more than a year, McGreevy hesitates to declare it an outright seller’s market.
“Many people perceive a seller’s market as being one where sellers pretty much dictate the terms,” he said. “That’s not always the case.”
A home has to be positioned right, which is not just about price, McGreevy said. Factors such as its condition, upgrades, neighborhood quality and more come into play.
“I’d say it’s more like a seller’s market that we have not really seen before.” McGreevy said.
Montgomery has only seen one month of a year-over-year decline in median prices in the past year, and that was a mere 1 percent drop last August. The county also saw nine-consecutive months of year-over-year sales hikes before a 2 percent decline in January.
Coming off a national election year could have something to do with January’s decline in Montgomery, or it could have just been a month when people were slowing down “to catch their breath” after numerous months of heavy activity, McGreevy said. The actual decline in the number of homes that sold in January was not large — just nine fewer than in January 2012.
The median price in Frederick, which only saw two months when prices declined in the past year, rose 17 percent in February to $252,500. The county went through a growth spurt from November through January when home sales spiked 32 percent, about triple the state rate. Sales leveled off in February.
Permits issued for new single-family homes also are rising, up 17 percent in Frederick last year from 2011, according to the U.S. Census Bureau. That’s higher than the 15 percent statewide increase and 6 percent hike in Montgomery, but below the 24 percent rise nationally.
NVR is among the builders that have opened new housing developments in Frederick recently. Three-bedroom, 1,700-square-foot townhomes at Linton at Ballenger south of Frederick city start around $250,000. A clubhouse, two swimming pools, walking trails and sports fields are planned there.
Frederick and Montgomery are still seeing a fair amount of short sales and foreclosures. In fact, foreclosure filings in those two counties about doubled in February from a year ago, according to the latest figures from data company RealtyTrac.
While selling a foreclosure or short sale takes more work, Realtors didn’t see much that was slowing down the market.
“As long as we don’t see a hiccup in the economy, we should be fine,” Boujai said.
The Pentagon base realignment process in which thousands of federal jobs moved to Maryland during the past few years hasn’t brought as many people picking up and moving to the state as some thought, he said. But he hadn’t seen a big effect of the latest federal budget sequester cuts on the housing market.
“Even the stock market has continued to rise,” Boujai noted.