As housing price appreciation continues to slow across the country, the Washington area is still posting some of the strongest gains in the nation. It’s one of the few areas where sellers - and not mortgage applicants - are in control.
A quarterly report from the Office of Federal Enterprise Housing Oversight says home prices nationwide in the third quarter were up 7.73 percent from the same quarter a year ago. However, prices rose less than 1 percent from the second quarter of this year, the smallest quarterly increase since 1998.
The Maryland housing market ranked 10th nationally for year-over-year housing price appreciation last quarter, with average prices up 13.2 percent from a year ago and 1.84 percent from the previous quarter.
D.C. ranked 13th, with prices up 11.3 percent from a year ago and 1 percent from the second quarter.
Virginia was 17th, with year-over year and quarterly gains of 9.9 percent and 0.7 percent apprecation.
National trends varied widely by region last quarter. The report says Idaho now tops all states for one-year prices gains, up 17.5 percent. In positive news for those seeking a Michigan mortgage, that region became the first state in more than six years to post year-over-year price declines, down 0.6 percent.
Quarterly housing price figures are considered a more accurate reflection of price fluctuations than monthly figures, although the OFHEO this week said October housing prices nationally were down from year-ago levels, the first decline in 13 years.
The Maryland Association of Realtors wants affordable housing to be a top priority for Maryland’s new legislature and governor - and it is hoping the state’s homeowners and aspiring homeowners will help.
The association has formed the League of Maryland Homeowners, which it hopes will be a grassroots group that helps educate the public and government about obstacles to home ownership.
The association has sent letters to its 34,000 members asking them to encourage clients who are concerned about home affordability in Maryland to join the group, says President Ilene Kessler.
The league’s newly launched website includes an open letter to Governor-elect Martin O’Malley, urging him to take action to mitigate the rising cost of homes for those seeking a Maryland mortgage. Priorities for the league will coalesce more after the legislative session starts in January, Kessler says, but some of its early suggestions include:
- A state income tax credit of up to $5,000 for first-time home buyers, and a tax credit for employers who provide or match employees’ down payments and rental security deposits.
- Better coordination among state agencies overseeing transportation, development and economic planning to ensure that people have opportunities to live near their work.
- Waiving certain fees for developments that incorporate work force housing.
- More funding for existing state work force housing initiatives, such as help with bad credit mortgages.
The association’s housing affordability index shows that recently the average cost for a typical starter home in Maryland was $260,000. Factors pushing up home prices include high demand, a strong economy and a restricted supply of houses, Kessler says.
That’s a problem for real estate agents, Kessler says, because “housing is a feeding chain. You start out at one level and you move up. Without an entry level, there is no feeding chain” - and no homebuyers for Realtors to serve.
In Baltimore’s Pigtown, rehabbers and speculators alike are snapping up properties, driving up prices, and selling to buyers who can afford to pay $200,000 or more, the Baltimore Sun reports.
But the people laying down new floorboards in the 1100 block are fixing up a home specifically for someone who couldn’t dream of taking on such a Maryland mortgage. Whoever buys it when it’s finished will pay $100,000.
This isn’t the easiest place for an affordable housing effort — precisely why Chesapeake Habitat for Humanity is working there.
It wants its home buyers, working poor who usually earn about $20,000 a year, to move into improving neighborhoods with an established social network.
“We’re making sure that low-income families are going to be able to live where folks of means are going to live,” said Mike Mitchell, director of Chesapeake Habitat for Humanity, an affiliate of Habitat for Humanity International.
After years building in struggling neighborhoods, it is now in gentrifying territory: Patterson Park, north of the popular Canton, along with Pigtown, which is west of downtown and also goes by the more affluent-sounding “Washington Village.” And with that comes challenges: Average home prices in both neighborhoods tripled between 2000 and early this year.
Such hurdles are far more prevalent — locally and nationally — than they were a few years ago. As prices skyrocketed in many metro areas during the housing boom, even middle-class buyers were pinched.
Though the U.S. housing market is in a slowdown, prices have continued to rise in Baltimore, pressing the average to more than $170,000 last month, according to multiple listing service data. The city’s average was under $100,000 as recently as 2002.
“The cost of property in so many urban areas has risen dramatically, much faster than in many cases our ability to raise the funds to acquire those parcels,” said Stephen Seidel, director of urban programs at Habitat for Humanity International. “Even the midsized cities that have traditionally been really quite affordable are seeing their costs go up.”
In Patterson Park, a non-profit development group that formed a decade ago to revive what was then an ailing neighborhood has decided to move on to parts of the city where acquisition costs aren’t so high. The Patterson Park Community Development Corp.’s most recent gut home remodeling efforts range from $250,000-400,000, thanks in part to soaring shell prices.
Pigtown, with a location near Interstate 95 and Route 295, is attracting buyers from nearby Washington and Northern Virginia — who typically have higher salaries than Baltimore workers and can outbid them. Newly constructed townhomes in the Camden Crossing development are on the market for more than $400,000.
Chesapeake Habitat sells its homes for their appraised value — avoiding complaints about dragging down values in the neighborhood and to keep buyers from flipping the property for an instant profit.
Anything above $100,000 is rolled into a “silent” 2nd mortgage that the homeowners don’t pay unless they sell, and that amount decreases over time (the city tacked a similar mortgage onto the homes it sold Habitat, in exchange for discounting their price).
Funding for this work comes largely from companies, non-profits and home mortgage payments made by earlier home buyers — Habitat finances the deals itself. Because it charges no interest, payments on the special loan are less than half what they would be with a conventional mortgage.
That works for custodian Lynn Carey, 47, who is buying a Habitat home a few blocks to the south of the Hamburg project. As she helped prime the walls, part of Habitat’s “sweat equity” requirement, she smiled broadly at the thought of moving in shortly after New Year’s Day.
“I’ll finally have my own place,” said Carey, who believes her block is nicer and quieter than the area near North Avenue where she lives now.
It’s becoming a disturbing trend - at least for sellers in the state.
But Maryland home sales dropped for the 13th straight month in October amid a massive supply of inventory, as home prices posted slight year-over-year growth.
Statistics were provided by the Maryland Association of Realtors.
Realtors reported 6,076 sales last month, down 26.1 percent from October 2005 when 8,217 homes were sold. Statistics include new and existing single-family homes, condos and townhomes.
The overall median price for single-family homes and condos was $307,135 in October, mostly unchanged from September, but up 3.2 percent from the year-ago median of $297,682. Until this figure falls, there’s a good chance applications for home loans will not exactly pour in.
Among the areas reporting the steepest declines in sales compared to a year ago were:
- Anne Arundel, down 28.5 percent
- Baltimore (city), down 26.7 percent
- Montgomery County, down 26.2 percent
- Prince George’s County, down 24.2 percent
Active inventory at the end of October totaled 40,531 units, down slightly from 41,405 units at the end of September, but up 63.5 percent from 24,795 units a year ago.
The good news, in that case, falls to buyers. They have plenty of properties from which they can choose and make a reasonable offer on within the Maryland housing market.
Posted by Jed Moss on Nov 14 2006 under Maryland
Case Handyman and Remodeling is looking for new franchise operators in the Dallas/Ft. Worth and San Jose, Calif., markets, citing growing demand for remodeling in what has become a buyer’s housing market.
The 45-year-old Bethesda, Md., company already has franchise operations in more than 60 cities, including locally in Baltimore and Arnold.
In addition to its Maryland operations, increasing Pennsylvania mortgage activity and demand for home renovation services led the firm to set up franchises in Philadelphia this summer.
“All signals indicate there is growing demand for home improvement services,” said Mark Richardson, president of Case. “As the housing industry cools and shifts towards a buyer’s market, home staging, home improvement and remodeling services will continue to increase.”
Home renovation companies like case hope that a home improvement loan surge will spur business even amidst what can best be described as uncertain market conditions.
Case already has one franchise in San Jose, and its first in Dallas/Ft. Worth will start business next year. In addition to its corporate headquarters, Case also has three local offices in Maryland.
Posted by Richard Barber on Nov 09 2006 under Maryland
