Sales ‘Plunge’ Amid ‘Flood Of New Listings’: Baltimore
A housing report from the Baltimore Sun. “Housing sales in the Baltimore area skidded more than 23 percent last month from July 2005 levels, and price appreciation slowed as a shift from a seller’s market to a buyer’s market took hold. That represented the biggest decline for any month since MRIS began tracking data in the region in March 1999. Sales were down by at least 20 percent in all jurisdictions.”
“Prices were reined in by the flood of new listings, housing experts said. While 6,230 additional homes went on the market in June, buyers signed contracts on 3,430 properties, swelling the total number of homes for sale to nearly 16,749.”
“Though the market in the Baltimore area has cooled, it remains healthy, said John McClain, a senior fellow at George Mason University. Other areas of the country are starting to see prices deflate. Statistics he compiled for July in the pricier metropolitan Washington area, including five counties in Maryland and 10 counties in Virginia, show the average price down 1.4 percent, compared with July 2005, he said.”
“That represented the first drop in average price in that region since the mid-1990s, he said. ‘Prices escalated so much over the last four years, there had to come a point where you begin to not have those 20 percent increases each year,’ he said. ‘People can’t afford it.’”
“With more than twice as many homes on the Baltimore market as there were last summer, sellers sought to entice buyers with incentives such as help with closing costs, reduced prices or giveaways. ‘There are a lot of houses that are sitting, so you have to get a little more creative,’ said Frank Lanham, a real estate agent in Baltimore’s Fells Point. ‘Everyone is trying to get creative and throwing certain things in to make the sale or to get people to see the property,’ Lanham said.”
“One of his clients, Danny Garrison, is hoping that throwing in ‘cool, lounge-y’ furniture, a grill and a bar on the rooftop deck of his Canton rowhouse will help it sell faster. Since the end-of-group house went on the market three months ago, Garrison has cut the price twice and is now offering it for $525,000.”
“‘We’re just trying to do everything we can to differentiate ourselves from all the inventory out there, so we came up with that idea,’ said Garrison.”
“The shift in the market has emboldened buyers to ask for concessions they would not have dreamed of last summer, when bidding wars erupted and buyers competed by offering well over the asking price. Where last summer’s buyer would handle a broken garbage disposal himself, ‘this year they want it fixed or repaired,’ said Ilene Kessler, an agent in Columbia.”
“Ilene Kessler, who is also president elect of the Maryland Association of Realtors, said sellers often still expect to sell homes for a hefty increase over last year’s prices. ‘Sellers still have not come to the realization that the market has changed,’ Kessler said.”
Sales have skidded by 25% or more, inventories are doubling….
and there is always some ‘expert’ to say that this is “healthy”.
This doesn’t just apply to Baltimore…scan the rest of Ben’s articles. Sales are down 25-40% in most of the articles I have read, and the inventories in many places have at least doubled.
Guess what is next???
PRICE REDUCTIONS….DUH!!!!
SoCalMtgGuy
http://www.housingbubblecasualty.com
These feels like March 2000, days before the dot.com crash, when the goof balls on CNBC could justify every negative report with something that said things were going to get better, until finally a -500 point day on the dow. As Labor Day approaches, and listings that have been around for 120 days or more are still for sale, and arms that will reset, fear will turn into panic. There is just too much inventory and not enough qualified buyers, to go into the fall non-selling season without a major correction
There is just too much inventory and not enough qualified buyers, to go into the fall non-selling season without a major correction
actually, i think the ‘qualified buyers’ ran out long ago; hence the arms and the resulting crash we are beginning to witness now.
“One of his clients, Danny Garrison, is hoping that throwing in ‘cool, lounge-y’ furniture, a grill and a bar on the rooftop deck of his Canton rowhouse will help it sell faster. Since the end-of-group house went on the market three months ago, Garrison has cut the price twice and is now offering it for $525,000.”
“‘We’re just trying to do everything we can to differentiate ourselves from all the inventory out there, so we came up with that idea,’ said Garrison.”
-He has “differentiate ourselves”… he is a dumb-ass that thinks his home will sell.
“Housing sales in the Baltimore area skidded more than 23 percent last month from July 2005 levels, and price appreciation slowed as a shift from a seller’s market to a buyer’s market took hold.
Again with the ridiculous “buyer’s market” statements! This isn’t a buyer’s market at all. Right now, there is no “market”. If there’s a market, it’s a renter’s market.
I posted this late yesterday and I’m sure most people missed it, so here it is again.
Just because people don’t like the definition of the term “buyer’s market”, doesn’t mean they can change it:
buyer’s market - A market which has more sellers than buyers. Low prices result from this excess of supply over demand. also called soft market. opposite of seller’s market.
http://www.investorwords.com/641/buyers_market.html
Just because the prices still don’t make sense does not change the fact that it is a buyer’s market. Yes, real estate agents are using the term to push property, but they are just taking advantage of the fact that most people don’t know what the term means. They think it means “a good deal for the buyer” (such as a lot of people on this board who say that it is not a “buyer’s market”) rather than that it means that there are more people selling than buying.
Semantics.
I agree that realtors use whatever term allows them to put a positive spin on this.
However, what did they call the market 2 years ago? Did they use the term “seller’s market”? I actually think they chose other terms like “if you don’t buy now, you’re stupid”.
If you’re a Realtor now, you’re stupid.
How’s that?
Accurate.
It’s a sucker’s market. I’m still waiting for a sucker’s rally.
I don’t even know what these ‘experts’ mean by the term ‘healthy’ when it’s applied to the real estate market. It’s hard for me to imagine a less healthy situation than buyers who are scared to buy because prices appear to be unsustainably high and sellers who are so overextended they probably will lose thier homes when rates adjust.
I mean if that’s healthy, what would be unhealthy?
These “experts” are just spinning in order to keep the party going as long as possible. In their true definition (which they wouldn’t reveal), healthy would mean they’re making money, they couldn’t give a rat’s a$$ if greater fools are setting themselves up for financial suicide. These past few years the RE market has been in a fever, unsustainable for a long period and not healthy at all, now the fever’s breaking but the market has a long way to recovery. Once the RE markets have stagnated for a while and agents realize they won’t be making many, if any commissions, and they might have to start working at the car dealership again, then they will deem the market “unhealthy” when actually it is on the way to recovery.
Something you’ll never ever read in a Sun article is that this is the 10th straight month of sales declines and the ninth straight with double digit sales declines. They hate to mention that fact. All the economists here are parroting that the BRAC jobs coming will save our housing prices, and the Sun even had a ridiculous series pumping that fact that we’re going to run out of houses. What they fail to realize is that BRAC jobs may increas home sales, but as far as prices, even the average wage of the BRAC transplantee isn’t enough to afford the median house without sucide lending.
MRIS stats for Northern Virginia:
Northern Virginia (Fairfax County, Fairfax City, Arlington County, Alexandria City, & Falls Church City, VA (NVAR))
Median Sales Price YoY: - 4.71 %
Average Sales Price YoY: - 3.94%
Total Units Sold YoY: - 39.31 %
Average Days on Market YoY: 262.5%
Active Listings YoY: 146%
and this area is 60% fed gov feed- others areas will really suffer as fed workers get raises and count up comp day/vacation etc………
You really hate those Gov. workers. Too much for their not to be a reason. The DC area is not all Gov. employees. Many are contractors and I believe at least 10% of the jobs are real estate related. DC area quit being a Gov. mill town in the early 80’s.
if you work for a gov contractor you’re still living out of the taxpayers pocket (parasite)
Err.. Don’t we pay taxes for government services? Someone has to work for the government to provide those services, n’cest pas?
What are you if you’re working for some evil greedy corporation that rips off and lies to common folk off everyday? Exxon, mainstream media, RIAA, are just a few that come to mind. Yes, there are a lot worse organizations to work for than the gov’t
Government is a criminal enterprise; taxation is theft and extortion. Anyone who supports the government is an enemy of freedom and me.
25% reductions in home sales is like 3% of the entire economy! I don’t think anyone is truly grasping that aspect. Present company excepted of course.
According to PIMCO’s Bill Gross, the Federal Reserve backed out from further raising interest rates to prevent a housing bubble blowout. It may already be too late. The housing market is like the Titantic ship, it takes a long time to sink, but once does, there is no stopping it. The US Economy will experience “stagflation” from collapsing housing bubble, but higher inflation from rising energy prices driven by China and India. Good luck to all of the Housing lemmings who took those adjustable rate mortgages to but their McMansions
No they don’t. Every 10% decrease in the value of real estate removes 1% of GDP. Think about that. They will eventually have to reflate the bubble to even crazier levels. They have no choice.
“Raise the Titanic”?
Can’t reflate a burst bubble.
Suppose the PTB flood the market with more money in a desperate hope to shore things up for the ‘08 elections (probably too late for ‘06). Besides interest rates there isn’t a lot the Fed can do but they don’t seem to have any problem with printing their way out of a problem. If so the money would have to work it’s way somewhere, maybe not RE once the psychology has changed, but there could be another bubble. Does this sound possible?
Stephen Roach from Morgan Stanley said that the Fed solves the problem of deflating asset bubbles buy blowing other bubbles - hence the stock market bubble deflation mitigated by the housing bubble. Any ideas on what the next one will be? I think now may be a great opportunity if you find the right one (of course totally screwed if you guess wrong).
George Mason is one of the few Austrian (economist) strongholds in the US. I am surprised to see a statement like this from one of their faculty.
These kinds of statements happen when your department is funded by the home builders, just like George Mason U’s department of urban planning.
Ah. He is in the Center for Regional Analysis, a.k.a. Urban Planning. I am very curious what the economics department there must think of that quote. I have some former students that went there for grad school…
As I said above, you will not find one local economist that will say anything bad about housing in the Baltimore area–if you can believe it, the statement from the MAR president about expecting price declines (Ben posted it last week) is the most pessimistic comment out there. I’m so tired of It’s Different Here (IDH) syndrome… Everybody overlooks Baltimore when talking about bubbleicious areas, but we’ve had an over 100% jump in prices since 2001, right up there with DC and the like–we just started lower, so people claim we’re just “catching up” to DC. What a joke.
So we were right all along. Now what? Is it time to tell my relatives who bought three rentals at the very top of the market using toxic mortgages: ‘I told ya so’???
If you do, you HAVE to record it somehow and post it here. At a MINIMUM you have to post a “blow by blow”. PS, make sure any firearms are locked up.
While it’s fun to laugh and point at FB strangers over the net, I would recommend against doing this to co-workers, friends, family, and other people who could conceivably be able to help you in a time of personal crisis. They tend to pissy and self-righteous when you find yourself in a bad spot, regardless of how you got there.
Want to see California-style pricing in Maryland? Go to realtor.com and do a search on Zip 21401 in the $800k to $1.2M range. Unbelieveable! One example is a tiny brick 50’s 2-story box, nowhere near the water, for over $900k. We used to live in that area (Annapolis). House prices are much saner where we are now. It’s nice to have no mortgage and a cash cushion as well. I’d be embarrassed to tell you what my property taxes are.
I especially think MLS ID#: AA6137117 is worth $835,000
Here’s the link
http://tinyurl.com/gxrxo
Here are the 4 options on an Option ARM-
1) Make the payment at the going market interest rate
2) Make less than the market payment and be forced to sell in a falling market
3) Make the minimum payment and be forced into a short sale or foreclosure
4) Throw the keys in the driveway and move in with mom and dad
“Where last summer’s buyer would handle a broken garbage disposal himself, ‘this year they want it fixed or repaired,’ said Ilene Kessler, an agent in Columbia.”
I love it how this agent makes it sound like such a request is just SO out there and insane.
I also love the implication that the challenge facing a seller today isn’t having no idea if you will EVER find a buyer, but just having to spend an extra hundred or two on repairs to the garbage disposal.
Is there a difference between “fixed” and “repaired”?
Fixed is when the homeowner somehow jury rigs it so it will appear to work long enough til the deal is done. Repaired is when it’s replaced with a new one.
appreciation didn’t slow- prices have gone down everywhere since may !
why do they keep saying that ? !
Prices haven’t gone down YOY in the Baltimore area. See the Baltimore housing bubble link for more info. Around here I see a lot of priced reducations of around 30000 but the original asking prices were so insane that these reductions don’t mean much.
Exactly—that’s why we haven’t yet seen price drops in our area overall, but they’re coming. One county had a 5% price decline and all but one of the rest had appreciation in the lower single digits. We don’t really have a glut of condos to pull down prices, and the list prices for all the inventory this summer were totally insane, as an above poster mentioned CA pricing in MD–it’s real. The few reamining GF’s see $20K off an insanely overpriced house and think they’re getting a deal ,but the reality is they’re not doing their research so they’re still paying 5-8% more than their neighbor did last year. It’s these suckers that will slow the decline.
#1 National Real Estate Investors’ Conference at BWI this week drew about 500 people, and many of them hopped on a bus to Baltimore for a tour of potentially lucrative investments
it seems like it was only yesterday.
‘Sellers still have not come to the realization that the market has changed’
That’s because people like you did such a great job brainwashing people into believing it wouldn’t change. Congratulations.
No doubt, Now they try to brainwash people to believing it is a buyers market just because there is ton of over priced inventory.
Seller - Mr Buyer please buy my house for a million dollars.
Buyer - Sure since it appears that I better buy now while I have a lot of choices.
Realtor - Yeah thats right now when I snap my fingers bark like a dog.
Bark, Bark, Bark, Bark
Buyer - What the hell happen I have million dollar mortgage for some rat trap house and a dog collar aorund my neck.
Right , it absurb to call a high inventory inflated market a buyers market . People were also brainwashed that a low inventory market means you had to pay the higher prices .
I don’t think it is wise to go on supply and demand when it comes to real estate . You go on rental ratios and ability to afford the payments .For instance when steak gets to high people just stop buying , no mather how big the supply is ,than the steak prices go back down again .Affordability supersedes the laws of supply and demand in the final analysis .
It’s just like how they control the prices in the diamond market by limiting the supply .
Does anyone agree with my point that supply and demand should not control the pricing on real estate ?
Does supply and demand controls the NASDAQ, the DOW and the S &P 500, the price of oil, gold or silver ? Markets mean nothing today.
They are all corrupted, manipulated by people like Fannie Mae management or the people at the FED. Phony inflation rates. Phony trade deficits. Phony budget deficits. Phony terrorist plots. Phony presidents. Phony accounting. Phony currency markets. Trust nothing what you see, what you read and what you hear. Psychopaths liars, gangsters, mobsters are in power. Real estate values are a joke like the rest.
Your example, in fact, demonstrates the law of supply and demand working. When the price for the steak gets too high demand disappears, so prices decline until demand and supply are back in balance. Under normal circumstances it’s a negative feedback loop since as prices rise demand declines and so prices are fairly stable.
However in a mania the increasing prices actually increase demand and declining prices decrease demand, creating the positive feedback loop that generates the wild price swings.
Normally, when prices go up things become less attractive and demand declines; but in a speculative bubble the fact that prices are going up so much causes more and more people to want the asset, creating artificial and unsustainable demand (as in one person buying 19 houses in Las Vegas). Since the only reason people want the asset is because it’s going up in value, once the mania has run it’s course demand disappears (as in plummeting home sales) and prices colapse.
I have always told people that a ’soft-landing’ was the least likely outcome from this bubble. Prices would go up until they stopped going up, and then they would go down, a lot! That’s how every bubble ends.
The only way to prevent this in the future is to have better control over the money supply, or abandon fiat currencies altogether, since easy money is the fuel for the speculative bubble. No amount of laws, regulations, or controls would work to prevent speculative bubbles because at their essence these things are caused by greed and fear, both of which are basic to human nature.
Right . Usually when prices start to climb to high the demand would of gone done ,(like in 2002/2003), but it didn’t . Instead we put people in loans they didn’t qualify for and flippers bought overpriced property .The laws of supply and demand didn’t work .
Asset’s going up in value, good.
Asset’s going down in value,bad.
Basic rules for the financially challenged capitalist mind.
Does anyone agree with my point that supply and demand should not control the pricing on real estate
Sir, that statement is an “outrage and a perpetration.” to quote Jackie Childs.
No, of course not. I’d be surprised if anybody agreed with that statement. Supply / Demand / Greed / Fear, they all play a factor.
From a truly rational point of view you or I would not overpay for a pos house like many have, but not all consumers are rational. There can and will be imbalances in supply and demand on occasion. You can see wild spikes, and deep cuts in prices. The market is not always perfect, but it’s the best way to price assets. Your free will to overpay and my free will to underbid.
I don’t think the Fed turning on the spigots helped. People were shopping for houses like they did for cars, via the payment. Well that’s nonsenese. In a million years, I will never understand that mindset, but the laws of supply and demand have not been repealed. They will work in your favor here shortly is my opinion, if you are a buyer.
amen!! good point.
So, about a month ago, my fiance and I decided to hit the local open houses. We aren’t thinking about buying now, but we just wanted to see what the insides of different places looked like and get a feel for the neighborhood options for a possible future purchase. We wandered around in one townhome and then the agent asked if he could get some feedback from us for the seller.
He asked what we thought. I told him we weren’t really looking to buy right now. It was cheaper to rent and the odds of prices continuing to go up was very low while the odds of prices going down was pretty high.
He asked me what I thought the house was worth and I told him my opinion, based on a generous (but normal) appreciation from 2000 prices.
The place was being offered at 370k and he said “oh that’s just an asking price. You could offer 340k or something.” I told him I thought it was worth at best 290-310k. I explained about the inflated market and that people would start dropping prices as hard, bleak winter came. And he said, “oh, you know what’s going on”!
Ha ha. As we left, another couple walked in and said “we toured it when it was 390, we’re just back to take another look”.
Two days later the asking price dropped to 340k, but it’s still sitting there a month later.
If you work downtown DC, it’s almost quicker to come in from Baltimore than the VA suburbs. So, for years Baltimore has been selling itself to DC commuters as a nicer city with more affordable housing. There are rowhouses right in not-too-bad neighborhoods of DC that are listed for ~$550K. Yet Danny Garrison wants $525K for his rowhouse that’s 45 minutes away? No wonder it’s not selling, not to DC folks anyway.
Quicker? Maybe - but its still an hour from Balto to Union Station on the Marc…. but around here two hours is an average commute….
I love my 20 minute commute.
“One of his clients, Danny Garrison, is hoping that throwing in ‘cool, lounge-y’ furniture, a grill and a bar on the rooftop deck of his Canton rowhouse will help it sell faster. Since the end-of-group house went on the market three months ago, Garrison has cut the price twice and is now offering it for $525,000.”
“‘We’re just trying to do everything we can to differentiate ourselves from all the inventory out there, so we came up with that idea,’ said Garrison.”
Translation: We are trying to unload this pig for a cool half-million and since there are lots of pigs out there to look at we ran out and bought some more lipstick to splash on her.
As always, lowering the price until you start garnering interest is not considered because of course they then wouldn’t capture the appreciation they so richly deserve for owning a friggin ROW house! I hope he likes the color of the bar furniture he just bought since he will be up there drowning his sorrows for the next ten years while his ROW house reverts to sanity pricing (assuming he can service the debt).
LEND down 25% in the last 5 days…
CFC down 10% in the last 5 days…
http://finance.yahoo.com/q/bc?t=5d&s=LEND&l=on&z=m&q=l&c=CFC
Looks like the lenders are starting to take their dive.
how can financials survive- they all hold mbs or have mort operations
If you goto open houses, check the fridge. If it is pretty bone dry, then the sellers are desperate. If it is packed with food then they are not.
The empty fridges are more open to lowball bids.
These people were long gone. Moved off somewhere. House still sitting.
Wasn’t it in Baltimore last year where they were driving in bus loads of ‘investors’ to buy houses to flip? Wonder how those deals turned out?
http://www.livebaltimore.com/home/
I think it was these folks who were doing those “baltimore neighborhood” bus tours. Last spring and fall sometime.
philly too- you had to be under 30 to get on the bus
Back around 7 years ago when I lived in Baltimore, I used to surf the net for real estate listings. There were places for sale as low as - get this right - three thousand dollars. I used to drive by these shuttered down houses. That part of the city could easily be rehabbed.
The early 1900s built 900sqft condo we lived in was on the market for 60k - no takers. This was on St Paul across from Hopkins. Parts of the city, especially near the inner harbor, were getting gentrified in front of our eyes.
My commute to work in the DC area (just inside the beltway) took all of 35-40 minutes each way, slightly off peak hours.
I 95 backs up alot earlier in the morning than it did just 5 years ago.
I just sold my Baltimore County townhouse in the 21212 zip. It felt long and torturous, but at least I got out — which never would have happened if I didn’t read this blog. We had one of the nicest units in the neighborhood (which is extremely well-established and renowned for its schools and high quality of life) - a meticulously kept end of group with a big yard, a kitchen that we did a couple of years ago, and an extra full bath.
And despite those amenities, I was extremely aggressive on price. I priced it slightly below the most recent comps, and then cut the price after 10 days, and then again after another week. It took us about 6 weeks to sell and I feel great about it. Our realtor is very shrewd and fully supported our strategy, while neighbors around us weren’t thrilled with our approach. Guess what? After 2+ months on the market, they’re finally beginning to lower prices, but nowhere near aggressively enough.
Right now, about 1 house a week in the neighborhood sells, and it’s always whatever is the nicest unit available. The people with run-of-the-mill interior units are never going to sell unless they drop their prices by at least 15 percent, because the people with the nicer units are showing willingness to drop their prices to what the run-of-the-mill owners are asking.
“Though the market in the Baltimore area has cooled, it remains healthy, said John McClain, a senior fellow at George Mason University.
—————————————————————–
Have they stopped teaching “critical thinking” at our institutions of higher learning? It seems like just about every week some University faculty “expert” comes out with another brilliant observation.
Sort of like saying “Though the body has cooled, it remains healthy.”
“The operation was a success, but the patient died.”
Baltimore rowhouses for half a million dollars? Ten years ago they couldn’t give them away. I have no sympathy for anyone hurt by this madness and will never, ever, EVER move back to the East Coast.
Does anyone know anything about Parkwood in north Baltimore? Just had a buddy buy a home there. First time buyer. And this is great. Guess who his new employer is?: Toll Brothers. The humanity…
Does anyone know anything about Parkwood in north Baltimore? Just had a buddy buy a home there. First time buyer. And this is great: guess who his new employer is? Toll Brothers. The humanity…
IMHO, Baltimore is about as far away from a nice place to live as one can get in this nation… it IS the second most violent large city in America, and it works hard to keep that reputation, and yet we now have CA-style pricing in that area… madness!?
I don’t get it. The Baltimore Sun ran a huge article several Sundays ago about the upcoming mega housing shortage in the Baltimore area. Talking about people will be (as they are now) commuting from York, PA to Baltimore. Made it sound like if you didn’t buy that day, you would be homeless forever. I have been to Baltimore many times. There really is nothing there. The inner harbor is a touristy joke.
Now prices are going down? Good thing I didn’t listen to the Sun and invest my life savings in property in Baltimore.