Stephen Howell's Blog

Real Estate Market Assessment - Annapolis, Maryland

2008-07-15T13:08:23Z

The buyers' market continues with no cooling in sight. Sellers, now facing the dog days of summer, are likely to see the inventory level reach new highs and falling prices hit new lows with no relief in sight.

In Anne Arundel County in June the total sold volume was down 31.8% from June 2007. The average sold price was down a modest 3.3%. The number of homes sold was down 29.4% and the average days on market was up 28.5%.

There were 477 units sold in Anne Arundel County in June 2008, up from 407 units sold in May. The number of active listings was 4,729 in June, up from 4,629. The number of new listings taken in June was 993, down from 1,080. The number of listings with pending contracts in June was 452, down from 509. The average sold price was $427,655 in June, up from $399,726. The average number of days on market was 125 in June, down from 144. The average list price to sold price ratio was 90.46% in June, down from 91.34%. Total sales volume for June was $204.0 million in June, up from $162.7 million.

In Annapolis the total sold volume in June was down 33.2% from June 2007. The average sold price was up 8.5%. And, the number of homes sold was down 38.9% and the average days on market was up 38.7%.

There were 77 units sold in Annapolis in June 2008, up from 64 units sold in May. The number of active listings was 967 in June, up slightly from 966. The number of new listings taken in June was 190, down from 218. The number of listings with pending contracts in June was 125, down from 144. The average sold price was $627,710 in June, up from $531,736. The average number of days on market was 160 in June, down from 189. The average list price to sold price ratio was 94.37% in June, down slightly from 95.15%. Total sales volume was $48.3 million in June, up from $34.0 million.

So what can we expect for the third quarter of 2008? Inventory will continue to increase. New listings will decline. Pending sales will decline. The ratio of pending sales to active listings will decline and prices will drop further. There's no tipping point on the horizon when sales might improve. What has to happen? While the number of buyers in the market remains relatively constant, they believe that homes are overpriced. Sellers must lower their asking price and do so before their competition. Sellers should take all competition seriously and must price below properties under contract. When the buyers' perception is homes are overpriced, sellers must price their home to look like a bargain. The lowest price and most favorable terms will result in the fastest sale!

While no one can predict the future with any certainty, one thing is certain; it's a buyer's market. A firm understanding of the market trends and forces is needed to make the best real estate decisions. So, if you are serious about buying or selling a home in today's real estate market, call Stephen Howell, Associate Broker, REALTOR^®, Coldwell Banker Residential Brokerage, at 410-923-3217.

Real Estate Market Assessment

2008-07-02T14:57:20Z

More of the Same for 12 to 18 More Months

The current real estate market is likely to continue to remain the same for the next six to twelve months. After the upcoming election it may take six to twelve months for the new President to implement policies that will have an impact and stopping the recession if we haven't plummeted into a depression before then. After the election, consumer confidence may return, but, not until oil prices ease (which are a large component of everything we purchase, from food to fuel). It is difficult to imagine that conditions are going to improve in the immediate future. So what is likely to happen in the real estate market over the next few months?

Home Prices To Decline

Home prices may fall another ten percent or more before buyers perceive there is value in the real estate market and start purchasing homes again. But lower home prices will not trigger a tipping point alone. Lower prices coupled with lower mortgage rates could stimulate home sales.

Mortgage Rates To Decline

Mortgage rates are and always have been market-driven. The real estate market - which depends heavily upon the availability of mortgage money - is slow because of fewer loan products, tighter underwriting, declining appraisals, high asking prices, and consumers' lack of confidence in the market. Interest rates below 6% and relaxed lender requirements might stimulate sales.

Activity Level To Decline

While home prices in our area have remained stable, volume is off from this time last year with one-third fewer homes sold in June compared to the same period in 2007. Until sellers stop holding onto high asking prices, until interest rates decline below 6%, until lenders ease borrower qualifications, home sales will remain sluggish.

In Conclusion

If you are selling you need to lower your asking price until showings increase and you get an offer. Then you'll need to run with it, no matter what the terms might be. If you are buying, you have many choices so look for a deal then negotiate hard.

If you are thinking about buying or selling a home or know someone who is, for a confidential, private, professional consultation without any obligation to discuss today's real estate market, please contact Stephen Howell at 410-923-3217.

Real Estate Market Assessment

2008-06-17T10:06:32Z

Active inventory continues to increase, while new listings continue to decrease and pending sales also decline. The trend established more than two years ago continues. Pending sales declined 22.6% from this time last year. While new listings declined 23.8% from last year and active listings were up 4.3% over May 2007. In May 2008, the ratio of active listings to pending sales was 11.0%, only a slight change from April when the ratio was 11.1%. The ratio was 14.8% in May 2007, 20.7% in May 2006, and 67.3% in May 2005. The declining ratio indicates that buyers perceive the real estate market as over priced. Resistant sellers are failing to get their homes sold. Those sellers that price below market are generating traffic and multiple offers while overpriced listings sit without offers.

In Anne Arundel County the total sold volume was down 19.7% from this time last year. The average sold price was down a modest 3.3% from May 2007. The number of homes sold was down 29.3% and the average days on market was up 42.4% from last year.

There were 407 units sold in Anne Arundel County in May 2008, down slightly from 420 units sold in April. The number of active listings was 4,629 in May, up from 4,563 in April. The number of new listings taken in May was 1,080, down from 1,236 taken in April. The number of listings with pending contracts in May was 509, about the same as 505 last month. The average sold price was $399,726 in May, up slightly from $398,231 in April. The average number of days on market was 144 in May, up from 137 in April. The average list price to sold price ratio was 91.34% in May, up from 89.79% in April. Total sales volume for May was $162.7 million, down from $167.3 million in April.

In Annapolis the total sold volume was down 21.4% from this time last year. The average sold price was down only 1.1% from this time last year. And, the number of homes sold was down 43.9% and the average days on market was up 62.8% from May of last year.

There were 64 units sold in Annapolis in May, up from 55 units sold in April. The number of active listings was 966 in May, up from 946 in April. The number of new listings taken in May was 218, down from 274 in April. The number of listings with pending contracts in May was 144, up slightly from 132 last month. The average sold price was $531,736 in May, up from $505,551 in April. The average number of days on market was 189 in May, up from 161 in April. The average list price to sold price ratio was 95.2% in May, up from 91.6% in April. Total sales volume in May was $34.0 million, up from $27.8 million in April.

According to www.BankRate.com, the average national rate for 30-year fixed rate mortgages is at 6.29%, up from 5.8% this time last month. The National Average Composite Mortgage Rate is 6.1% for May.

According to www.RealtyTrac.com, the number of pre-foreclosures in Anne Arundel County was 481 in May, up from in April. The number of auction properties in the county was 189 in May, down from 289 in March. And, the number of bank owned properties was 294 in May, up from 277 in April.

So what can we expect for the start of the third quarter 2008? Inventory will continue to increase. New listings will decline. Pending sales will decline. While the ratio of pending sales to active listings will continue to decline and prices will decline further. There's no tipping point on the horizon when sales might improve. What has to happen to increased sales? While the number of buyers in the market remains relatively constant, buyers believe that homes are overpriced. Sellers must make dramatic adjustments in asking price and do so before their competition. Sellers should take all competition seriously and must price below properties under contract and look only at property sold within the last 90 days when making pricing decisions. When the buyers' perception is homes are overpriced, sellers must price their home to look like a bargain. The lowest price and most favorable terms will result in the fastest sale!

While no one can predict the future with any certainty, one thing is certain; it remains a buyer's market. Buyers have large numbers of desirable properties from which to choose and sellers have lots of competition. A firm understanding of the market trends and forces is necessary for making the best real estate decisions.

So, if you are serious about buying or selling a home in today's real estate market, contact Stephen Howell, Associate Broker, REALTOR^®, Coldwell Banker Residential Brokerage, at 410-923-3217, www.LiveInAnnapolis.com.

Timing the Market or When to Sell?

2008-05-28T10:49:17Z

Now is the time to sell. If this was the stock market you would execute a stop loss order and lock in your profit before the price per share fell further. But this is the real estate market and not the stock market so it is not as simple as calling your stock broker or going online and placing the order to sell. Besides, if you could sell your home as fast as you can sell your shares of IBM online, where would you move? Furthermore, perhaps you should have sold in mid-2005 when the real estate market was up because now the real estate market is down. So timing the real estate market is more difficult than you think. But the writing was on the wall as we came out of 2005 and started the spring market of 2006.

Let's face it, we're in a declining real estate market. Prices continue to fall as more inventory comes to market. There is hope on the way but will it come soon enough? With elections in November and BRAC about a year away, we may have between 18 and 24 more months before the market starts a rebound. Until such time as more homes come off the market than come on, the current situation is likely to remain the same or worsen. During each of the last three years inventory levels declined as summer sales increased but not as deeply as the year before, thus, leaving more inventory on market that there was previously.

So, are you willing to wait several years for the market to recover before you sell your home? If prices trend down and we're not at the bottom of the market yet, how long will you have to wait in order to sell again at today's price? It could be several years, perhaps 2010 or 2011. You could be very lucky if you traded up or invested in rental property today rather than wishing later that you had done so back in 2008!

Now may be the very best time to purchase a new home if you are thinking about trading up because buying in a down market increases your purchasing power. And, you should be better off since you're likely to live in your home seven to eleven years and have all that time for future market appreciation to work its magic.

In Conclusion

Real Estate Market Assessment

2008-05-18T10:08:49Z

In April 2005 in Anne Arundel County the ratio of pending sales to active listings was 65.8%. In April 2007 the ratio was 11.1%. This ratio has been on the decline for the past three years. However, it appears that the ratio has bottomed out and is now nearly level for six out of the last nine months. So, we may be at the bottom of the real estate market. What has to happen before this ratio will start to improve? Prices will have to come down to the tipping point where buyers once again see value in the real estate market.

In Anne Arundel County the total sold volume was down 30.1% from this time last year. The average sold price remains about the same, however the median sold price is down 7.3% from this time last year. The number of homes sold is down 30.0% and the average days on market is up 28.0% from last year.

There were 420 units sold in Anne Arundel County in April 2008, down slightly from 418 units sold in March. The number of active listings was 4,563 in April, up from 4,219 in March. The number of new listings taken in April was 1,236, up from 1,101 taken in March. The number of listings with pending contracts in April was 505, up slightly from 483 last month. The average sold price was $398,231 in April, down slight from $391,756 in March. The average number of days on market was 137 in April, down slightly from 139 in March. The average list price to sold price ratio was 89.79% in April, down from 94.85% in March. Total sales volume for March was $167.3 million, up from $163.8 million in March.

In Annapolis the total sold volume was down 20.6% from this time last year. The average sold price is up 14.1% from this time last year. The number of homes sold is down 48.6% and the average days on market is up 54.3% from last year.

There were 55 units sold in Annapolis in April, down slightly from 57 units sold in March. The number of active listings was 946 in April, up from 852 in March. The number of new listings taken in April was 274, up from 222 in March. The number of listings with pending contracts in April was 132, up from 105 last month. The average sold price was $505,551 in April, up from $461,244 in March. The average number of days on market was was 161 in April, up from 148 in March. The average list price to sold price ratio was 91.6% in April, down from 95.5% in March. Total sales volume in March was $27.8, up from $26.3 million in April.

According to Bankrate.com, the average national rate for 30-year fixed rate mortgages is at 5.8%, up slightly from this time last month. The National Average Composite Mortgage Rate is 6.2% for April.

According to RealtyTrac.com, the number of pre-foreclosures in Anne Arundel County was 324 in April, about the same as 323 in March. The number of auction properties in the county was 289 in March, down from 342 in March. And, the number of bank owned properties was 277 in April, up from 246 in March.

So what can we expect for the end of the second quarter 2008? Sales will remain sluggish as more homes come to market than are sold. Although the number of buyers in the market remains relatively constant, buyers still believe that homes are overpriced. So, home prices will continue to decline as more homes come to market than go under contract. Sellers who adjust price downward could simply chase the market down or could make a dramatic adjustment and get there before their competition. Sellers must take all competition seriously and should price significantly below market comps and always below competition if they want to get their homes sold. When the buyers' perception is homes are overpriced, sellers must price their home to look like a bargain in today's real estate market. The lowest price and most favorable terms will result in the fastest sale at the best price!

While no one can predict the future with any certainty, one thing is certain - it remains a buyer's market. Buyers have large numbers of desirable properties from which to choose and sellers have lots of competition. A firm understanding of the market trends and forces is necessary for making the best real estate decisions.
So, if you are serious about buying or selling a home in today's real estate market, contact Stephen Howell, Associate Broker, REALTOR®, Coldwell Banker Residential Brokerage, at 410-923-3217, www.LiveInAnnapolis.com.

Current Conditions - Declining Market

2008-05-03T10:27:09Z

We need a new way of thinking about real estate. You see, our homes are a commodity - not a product. When the seller establishes the selling price it's a product, but when the buyer sets the selling price it's a commodity. And, the price of the commodity moves up or down as a function of supply and demand. In the real estate market, we call this appreciation or depreciation. Right now we have more homes on the market now than we did this time last year and more than the year before.
So you see, we've been in a depreciating market since mid-to-late 2005 and all the while home prices have been declining.

Buyers' perception of value in today's market is significantly lower than that of Sellers. Some Sellers, still living in 2005, believe that the market continues to appreciate while home prices fall as more homes come to market. Until such time as the inventory level declines and more homes come off the market than come on, we will not reach a tipping point where prices could start improve and the market appreciates.

When sellers aggressively position their property below market they can create conditions similar to those found in appreciating markets energizing the buyer pool, and create an environment whereby they can obtain the best price sales price in the shortest period of time.

In Anne Arundel County in April there were 4,309 active listings on the market, up 2.1% from last month. There were 1,239 new listings in April, up 12.5%. And, there were 691 pending listings, up 43.1%. There were 366 listings sold, down 12.4%. The average sold price was $399,191, up 1.9%.

In Annapolis in April there were 946 active listings on the market, up 11.0% from last month. There were 274 new listings, up 23.4%. And, there were 132 pending listings, up 25.7%. There were 55 listings sold, down 3.5%. The average sold price was $505,551, up 9.6%.
So, when will we see relief? Inventory levels will continue to rise and we can expect prices to decline for the foreseeable future. Sellers that want their homes sold today will need to position their homes below market and below any competition.

In Conclusion

Real Estate Market Assessment

2008-04-15T16:02:55Z

April showers may bring May flowers but is the real estate market is ready to bloom? While negative news coverage of the real estate market dominates the headlines well positioned sellers and ready willing and able buyers are making deals. Although the inventory of active units is up, the average sold price in Anne Arundel County is off a mere 0.8% from this time last year while Annapolis is off 14.4% form March of 2007. Pending sales - the best predictor of future closed transactions - are up modestly. Sold units this past month across the county were up in March by 26.3% but down from March 2007 by 34.1%. Sales are likely to remain sluggish for the next three months and this buyer's market could continue twelve more months.

In Anne Arundel County the total sold volume was down 19.6% from this time last year. The average sold price remains about the same, however the median sold price is down 4.5% from this time last year. The total units sold is down 34.1% and the average days on market is up 23.0% from last year.

There were 418 units sold in Anne Arundel County in March 2008, down from 331 units sold in February. The number of active listings was 4,219 in March, up from 3,993 February. The number of new listings taken in March was 1,101, up from 872 taken in February. The average sold price was $391,756 in March, down from 403,440 in February. The average list price was $431,775 in March, down from 444,730 in February. The average number of days on market was 139 in March, down from 147 in February. The average list price to sold price ratio was 9.0.73% in March, down from 97.6% in February. Total sales volume for March was $163.7 million, up from $133.5 million in February.

In Annapolis the total sold volume was down 20.0% from this time last year. The average sold price is down 14.4% from this time last year. The total units sold is down 52.1% and the average days on market is up 1.4% from last year.

There were 57 units sold in Annapolis in March, down from 58 units sold in February. The number of active listings was 852 in March, up from 802 in February. The number of new listings taken in March was 222, up from 179 in February. The average sold price was $461,244 in March, down from $558,979 in February. The average list price was $482,977 in March, down from $591,054 in February. The average number of days on market was 148 in March, down from 165 in February. The average list price to sold price ratio was 95.5% in March, up from 94.94% in February. Total sales volume in March was $26.3 million, down from $32.4 million in February.

According to Bankrate.com, the average national rate for 30-year fixed rate mortgages is at 5.63%. The National Average Composite Mortgage Rate is 6.7% in March.

According to RealtyTrac.com, the number of pre-foreclosures in Anne Arundel County was 323 in March, up from 257 in February. The number of auction properties in the county was 342 in March, up from 327 in February. And, the number of bank owned properties was 246 in March, up from 227 in February.

So what can we expect for the second quarter 2008? Sales are likely to remain sluggish despite improving weather. Inventory levels will remain high unless many more buyers enter the market. Prices are likely to soften as inventory levels climb. Sellers could be on the market for four to six months. Buyers will have choices in all price ranges. Sellers must take all competition seriously and should price below market comps and below direct competition if they want to get their homes sold soon. Where there are only a few buyers, sellers who want their homes sold now must get the serious buyers to look at their home FIRST! Lowest price, best condition, favorable terms will result in a faster sale.

The Buyer’s Market Maintains Momentum

2008-04-04T08:40:28Z

The trend is clear. It remains a buyer's market and home sales continue to be sluggish. While current economic conditions continue to deteriorate throughout the country, the metro Washington-Baltimore area - which has been relatively recession proof in years past - is suffering from lagging home sales, declining prices, and increasing inventory levels.

March, April and May are the months when many sellers bring their property to market and sales peak in June about 90 days after the inventory level peaks. While sellers can expect this trend to repeat itself again this year, the number of buyers remains fewer than the number of sellers sustaining the current buyer's market.

In Anne Arundel County this March there were 3,963 active units on the market, 8.4% fewer homes on the market than March 2007. The number of units sold in March was 349, down 45.0% from this time last year. March pending sales was 645 units, up 37.2% over February but down 12.6% from this time last year. The average sold price for March was $390,856, down 3.1% from February and down 1.6% from March 2007.

In Annapolis this March there were 852 active units on the market, 6.2% more homes than February but 2.4% fewer homes than March 2007. There were 57 units sold March versus 58 sold in February but down from 119 sold in March 2007, a 52.1% decline in sales. The average sold price was $461,244 in March, down 17.5% from the month before and down 14.4% from March 2007.

Interest rates which rose above 6% in February and again in March are now back in very favorable territory for buyers. The 30-year fixed rate national average is around 5.76%, a very favorable rate indeed.

So, when will sellers see relief? It is likely to be this time next year before market conditions improve to the point where there is some equilibrium in the marketplace. Until then, buyers rule the marketplace and they demand favorable pricing and seller concessions. Sellers wanting to get their homes sold will need to price accordingly.

In Conclusion

Real Estate Market Assessment

2008-02-16T15:28:37Z

While sellers wait for the housing market to thaw, buyers remain in hibernation. Will the spring market ever arrive? The housing slump isn't over yet and prices are likely to continue to tumble for the foreseeable future. However, market indicators are promising. Inquiries are up. Showings are up. Units Sold are down. Pending Sales are down. While these are only anecdotal observations, they are excellent predictors of next month's sales. While the Average Sold Price is up across Anne Arundel County and Annapolis by nearly five percent, Units Sold is off thirty-five and forty-two percent respectively from last month! Supply and demand economics continues to prevail; inventory levels remain elevated and are up nearly three percent from last month and are up nearly twenty percent from this time last year. It will take fewer homes coming to market and more buyers deciding to purchase before the downward pressure on prices is reduced.

In Anne Arundel County the total sold volume was down 41.7% from this time last year. The average sold price remains about the same, however the median sold price was down 4.4% from this time last year. The total units sold was down 41.9% and the average days on market is up 19.6% from last year.

There were 259 units sold in Anne Arundel County in January 2008, down from 401 units sold in December 2007. The number of active listings was 3,981 in January, up from 3,876 in December. The number of new listings taken in January was 972, up from 454 taken in December. The average sold price was $413,934 in January, up slightly from $395,990 in December. The average list price was $457,447 in January, up from $432,411 in December. The average number of days on market was 134 in January, up from 122 in December. The average list price to sold price ratio was 90.5% in January, down from 97.6% in December. Total sales volume for January was $107.2 million, down from $158.8 million in December.

There were 33 units sold in Annapolis in January, down from 57 units sold in December. The number of active listings was 799 in January, up from 735 in December. The number of new listings taken in January was 161, up from 64 in December. The average sold price was $617,390 in January, up from $591,643 in December. The average list price was $670,448 in January, up from $615,140 in December. The average number of days on market was 189 in January, up from 151 in December. The average list price to sold price ratio was 92.1% in January, down from 94.9% in December. Total sales volume in January was $20.4 million, down from $33.7 million in December.

According to Bankrate.com, the average national rate for 30-year fixed rate mortgages is at 5.76%, up from 5.5% reported this time last month. The National Average Composite Mortgage Rate is 6.6% in January, the same as December.

According to RealtyTrac.com, the number of pre-foreclosures in Anne Arundel County was 234 in January, up from 116 in December. The number of auction properties in the county was 344 in January, up from 312 in December. And, the number of bank owned properties was 191 in January, up from 154 in December.

So what can we expect for end of first quarter 2008? Sales are likely to remain slow until the weather starts to break. Inventory levels will start to climb as March and April approach. Prices are likely to soften as inventory levels increase. Sellers could be on the market until mid-to-late summer if they over price. Buyers should have lots of choices in all price ranges. Sellers must take any competition seriously and should price at or slightly below market and always below direct competition. Where there are only a few buyers, sellers who want their homes sold now must get the serious buyers to look at their home FIRST! Lowest price, best condition, favorable terms will result in a faster sale.

The Economy and Market Indicators

2008-02-03T09:41:28Z

Despite what Washington or the media says, all signs point to the fact that we are in a recession. The 2008 Presidential candidates claim we're in economic trouble. Recent bold moves by the President, the Congress and the Federal Reserve are aimed at halting further economic decline.

In an emergency session on Tuesday, January 22nd, the Federal Reserve cut the prime rate three-quarters of a point. A week later on Wednesday, January 30th, they dropped the rate another astonishing half point. The Feds' key rate now resides at 3 percent and there are signals that they are prepared to go lower if the economy continues to worsen while the nations' growth has all but stumbled to a virtual halt.

With the economy in crisis, President Bush proposed a $145 billion tax relief program aimed at preventing a recession that is already here. In the meantime the war in Iraq is estimated to cost $1.2 Trillion Dollars. According to Sen. Hillary Clinton "It did take a Clinton to clean (up) after the first Bush, and I think it might take a second one to clean up after the second Bush". McCain who is "pro-growth, less spending" has "...confidence in the economic future of this country."

There are several early indicators that might suggest we are beyond the bottom of the real estate market and starting to climb out. First, inquiries are up - calls and e-mails. Second, showings are up. Homes that sat dormant at the end of 2007 are getting action. Third, attendance at open houses is up. And fourth, Sellers are starting to see offers, some low-ball but others negotiable. The market may be responding.

Despite activity by buyers, sales lag. In Anne Arundel County in January there were 237 units sold, down 31.5% from 346 in December, down 46.9% from last year. Sales in Annapolis in January were 33, down 42.1% from 57 in December, down 58.8% from 80 last year. Across Anne Arundel County the Average Sold Price was $421,514 in January, up 1.4% from $415,771 in December, up 2.2% from last year. Across Annapolis the Average Sold Price was $617,390 in January, up 4.4% from $591,643 in December, up 24.0% from last year.

In Conclusion

The New Mortgage Crisis – S&L Revisited

2008-01-21T07:04:10Z

When things go wrong we sometimes look to blame someone else. When things go wrong for a company, it sometimes blames the government. But it's often the government that has to bale us out - take the mortgage meltdown we experienced last year. Perhaps this was the trigger that started the cascade of events leading to our current economic recession.

There are certain negative forces at work in the mortgage market, not all of which can be blamed on our government. Many banks are over extended with loans that are now less desirable than they were 12, 24, 36 months ago when they were originated. Perhaps they were anxious to please shareholders, avoid accusations of redlining, or any number of a dozen other reasons.

Those banks that made prudent lending decisions are more likely to be in better shape now than those that went out on a limb originated mortgages waiving sound loan-to-value ratios (for example 100% and 125% mortgages) and offering products like interest-only adjustable rate mortgages to borrowers and qualifying them on the lower monthly payment without consideration to future rate adjustments and income-to-debt ratios after the adjustment. This practice by some banks may have put borrowers in a position where they simply will not be able to afford the mortgage product when the rate increases.

Many prudent borrowers and lenders understood the risks and the rewards of these products. But many consumers did not and their lenders didn't clearly explain the risks to them - the risk should interest rates rise suddenly and sharply, the borrower might not be able to make the payment. It's almost as if the banks unintentionally set up these consumers for failure, default and foreclosure. As a result they set themselves up for increases in mortgage losses.

I'm not sure what it's going to take to turn this all around. Banks will need to return to making good lending decisions by tightening mortgage loan guidelines. Borrowers are going to have to buy lower priced homes using more conservative mortgage products - especially marginal borrowers who will need to just say no to interest only adjustable rates mortgages!!!

Like the S&L crisis of the 1980s and 1990s where more than 1,000 savings and loan institutions (S&Ls) failed resulting in a costly venture estimated at around $160-plus billion of which $125 billion was paid for directly by the U.S. Government. This resulted in a large budget deficit in the early 1990s - which we all paid for. The slowdown in the real estate market may have been the cause of the 1990-1991 recession. Between 1986 and 1991, new construction dropped 800,000 units to 1 million units per year, a historical low. Does this sound familiar? If not, perhaps it should.

The Wall Street Journal reported on January 17, 2008 that housing starts decreased 14% to a seasonally adjusted 1.006 million annual rate. The level of 1.006 million was the lowest since 996,000 in May 1991. The mortgage industry has been in melt-down mode for nearly a year. As stable economic conditions regress to recession (someday to be called the 2007-2008 recession), The President's agenda for tax relief is too little and too late. The 2008 Presidential candidates are too busy battling each other so their solution to our situation is not clear.

Are there parallels we can draw with the S&L crisis of the 1980s? Will the U.S. Government need to step in with a mortgage bail-out package? Will the government, the banks, the borrowers be able to halt our economic spiral downward? What would Alan Greenspan say about our current situation? Tune-in next week for the next episode to learn the answers to these and other important questions!!!

Real Estate Market Assessment - January 2008

2008-01-17T07:51:07Z

Are we already in a recession? The news commentators, politicians, and economic pundits won't say so until after the fact. News about the upcoming 2008 election continues to eclipse most news including economic news. A recession, no matter how weak or strong, is not likely to be openly discussed until the Democratic and Republican candidates are chosen. Home prices may trend downward. Homes will still sell but prices will be softer. Sellers that can price competitively and below direct and indirect competition should get their homes sold first and the quickest. January, February and March are often slow months and sales can be slow. Recent warm weather may encourage buyers to continue looking rather than hibernate. In commodity driven real estate markets, pricing is everything. Supply and demand economic principles rule. However, buying a home is a complex process and emotional investment and can never be effectively commoditized. We should remain optimistic about the overall real estate market and expect improving conditions throughout the year.

Inventory levels fell again last month for the third month in a row to 3,876 active listings in Anne Arundel County at the end of December 2007 - down from the peak in September when there were 4,646 active units on the market. The average sold price slipped 4.7% in December and was down 3.9% from this time last year. Total volume was up 10.4% from November and off 18.6% from last year. The average list price to sold price ratio was 91.6% last month.

There were 401 units sold in Anne Arundel County in December 2007, up from the 346 units sold in November. The number of active listings was 3,876 in December, down from 4,243 in November. The number of new listings taken in December was 454, down from 730 in November. The average sold price was $395,990 in December, down from $415,771 in November. The average list price was $432,411 in December, down from $461,138 in November. The average number of days on market was 122 in December, up from 120 in November. The average list price to sold price ratio was 91.6% in December, down from 97.6% in November. Total volume for December was $158,792,028, up from $143,856,708 in November.

There were 57 units sold in Annapolis in December 2007, down from 61 units sold November. The number of active listings was was 735 in December, down from 883 in November. The number of new listings taken in December was 64, down from 143 in November. The average sold price was $591,643 in December, up from $561,546 in November. The average list price was $615,140 in December, up from $606,151 in November. The average number of days on market was 151 in December, about the same as 150 in November. The average list price to sold price ratio was 96.2% in December, up from 94.9% in November. Total volume in December was $33,723,666 in December, down slightly from $34,254,306 in November.

According to Bankrate.com, the average national rate for 30-year fixed rate mortgages is at 5.5%, down from 5.8% reported this time last month. The National Average Composite Mortgage Rate is 6.6% for December, up from 6.4% as reported for November.

According to RealtyTrac.com, the number of pre-foreclosures in Anne Arundel County was 116 in December, down from 172 in November. The number of auction properties in the county was 312 in December, down from 393 in November. And, the number of bank owned properties was 154 in December, down from 167 in November.

So what can we expect for first quarter 2008? Sales are likely to remain slow as our attention is on the 2008 election. Inventory levels may decline while sellers wait until March or April to come to market. Prices are likely to trend down if sellers become impatient and make deals to get their homes sold before spring. Sellers should expect to be on the market for six to eight months. Buyers have many choices in all price ranges. Sellers should take competition seriously and should price below any direct competition. Where there are only a few buyers, sellers who want their homes sold now must get the serious buyers to look at their home FIRST! Lowest price, best condition, favorable terms will result in a faster sale.

While no one can predict the future with any certainty, one thing is certain - it remains a buyer's market. Buyers have large numbers of desirable properties from which to choose and sellers have lots of competition. A firm understanding of the market trends and forces is necessary for making the best real estate decisions. So, if you are serious about buying or selling a home in today's real estate market, contact Stephen Howell, Associate Broker, REALTOR^®, Coldwell Banker Residential Brokerage, at 410-923-3217.

Real Estate Market Assessment

2007-12-12T08:11:02Z

REAL ESTATE MARKET ASSESSMENT

Last week during the season's first snow temperatures plummeted and we had our first taste of winter. And it was chilly. But the cold snap was short lived unlike the current real estate market which appears to have frozen solid. While sellers wonder if the market will ever thaw, buyers seem to have gone into hibernation. With the holidays just around the corner, perhaps buyers are distracted. With all the negative press, perhaps buyers don't think that there are mortgage products available to them or that they will not qualify. However, there are very serious buyers who are actively looking for deals in the current market. Sellers that can undercut their competition are likely to attract those serious buyers out looking.

The supply of active listings has to some degree stabilized and prices should also stabilize in response. Supply and demand may now be in equilibrium. Basic economic theory cannot predict what will happen next. But, something must happen to encourage buyers to reenter the market - buyers earning more income, banks offering affordable mortgage products, or sellers lowering their asking price. Which will it be? Perhaps all three!

Inventory levels fell for the second month in a row to 4,243 active listings in Anne Arundel County at the end of November 2007 - down from the peak at the end of September when there were 4,646 active units on the market. Sold prices slipped less than 1% from last month but were up 3.6% from this time last year. Total volume was down 14.5% from October which was down 15.9% from September and off 18.3% from last year. More alarming for sellers is that the average list price to sold price ratio slipped to 90.2%.

There were 346 units sold in Anne Arundel County in November 2007, down from the 401 units sold in October. The number of active listings was 4,243 in November, down from 4,484 in October. The number of new listings taken in November was 730 in November, down from 927 listings taken in October. The average sold price was $415,771 in November, down slightly from $419,355 in October. The average list price was $461,138 in November, up slightly from $454,159 in October. The average number of days on market was 120 in November, down slightly from 123 in October. The average list price to sold price ratio was 90.2% in November, down from 92.34% in October. Total volume for November was $143,856,708 in November, down 14.5% from October.

There were 61 units sold in Annapolis in November 2007, down slightly from 64 units sold in October. The number of active listings was 883 in November, down from 954 in October. The number of new listings taken in November was 143, down from 186 listing taken in October. The average sold price was $561,546 in November, up 5.4% from $532,689 in October. The average list price was $606,151 in November, up 9.2% from $555,213 in October. The average number of days on market was 150 in November, up 13% from 133 in October. The average list price to sold price ratio was 92.6% in November, down from 94.9% in October. Total volume in November was $34,254,306, about the same as $34,092,066 in October.

According to Bankrate.com, the average national rate for 30-year fixed rate mortgages is at 5.8%, down from 5.9% quoted this time last month. The National Average Composite Mortgage Rate is steady at 6.4% for November.

According to RealtyTrac.com, the number of pre-foreclosures in Anne Arundel County was 172 in November, up from 116 in October. The number of auction properties in the county was 393 in November, about the same as 391 in October. And, the number of bank owned properties was 167 in November, up from 151 in October.

So what can we expect for December? Sales are likely to slow as our attention focuses on our families and the holidays. Inventory levels will decline as sellers wait for the spring market. Prices are likely to fall where sellers are ready to make a deal to get their homes sold before spring. Sellers should expect to be on the market for a year or more. Buyers have choices in all price ranges. Sellers should take all competition seriously and should price below any direct competition. Where there are only a few buyers, sellers who want their homes sold now must get the serious buyers to look at their home FIRST! Lowest price, best condition, favorable terms will result in a faster sale.

While no one can predict the future with any certainty, one thing is certain - it remains a buyer's market. Buyers have large numbers of desirable properties from which to choose and sellers have lots of competition. A firm understanding of the market trends and forces is necessary for making the best real estate decisions. So, if you are serious about buying or selling a home in today's real estate market, contact Stephen Howell, Associate Broker, REALTOR^®, Coldwell Banker Residential Brokerage, at 410-923-3217.

Anne Arundel County Housing Affordability Index Rises 2.1%

2007-12-10T14:36:04Z

Maryland Housing Economics

Anne Arundel County Housing Affordability Index Rises 2.1%

December 10, 2007 - The Anne Arundel County Housing Affordability Index rose 2.1% in November 2007 to 61.1 - up slightly from 59.9 in October 2007. In November 2007 the Average Sold Price of a home in Anne Arundel County was $415,771 - up from $419,355 in October 2007 as reported by the Metropolitan Regional Information Systems, Inc. ("MRIS", http://www.mris.com/). Assuming industry accepted qualifying ratios (28%) for conventional 30-year fixed mortgages with an 80% loan-to-value ratio and 6.5% annual interest rate, buyers needed approximately $108,024 in household income to purchase a home in Anne Arundel County last month (See Table 1, below). Their monthly mortgage payment is estimated at $2,521 (principal, interest, taxes and insurance).

Although it appears that prices remain stable as the year-end approaches, buyer's income has not kept pace with the increase in the cost of housing. Buyer's that didn't refinance and can use available equity from their home when they sell or had an income windfall sometime this year may be able to keep their mortgages affordable when purchasing more expensive homes. Everyone else may be out of luck. This is one explanation why so many homes remain unsold in the Anne Arundel County real estate market.

According to Stephen Howell - an Associate Broker with Coldwell Banker Residential Brokerage in Annapolis, Maryland "Many buyers, who own homes in our area today, couldn't afford to purchase the home they now live in at today's prices. They might not qualify for the loan. Banks with their interest only adjustable rate mortgage products enabled buyers to qualify to purchase more home on the lower monthly payment, but those days may be over. Sellers are going to have to wait until the banks and the buyers figure out what to do. But sellers who have to sell are going to have to lower their price to get their home sold this winter."

Anne Arundel County Housing Affordability Index
Month	Anne Arundel County Average Sold Price (Note 1)	Nat'l Avg Monthly Contract Mtg Rate	Monthly Payment PITI (Note 2)	Annual Income Needed to Qualify (28%)	Est. Median Household Income (Note 3)	Housing Affordability Index	Percent Change Month to Month	Percent Change From Last Year
Sep-07	$441,246	6.6	$2,708	$116,076	$66,050	56.9	-8.5%	-3.6%
Oct-07	$419,355	6.6	$2,574	$110,317	$66,050	59.9	5.0%	-0.9%
Nov-07	$415,771	6.4	$2,521	$108,024	$66,050	61.1	2.1%	-3.6%

Note 1 - Average Sold Price as reported by Metropolitan Regional Information System, Inc.
Note 2 - Monthly Payment PITI - This is an estimated mortgage payment amount comprised of principal, interest, taxes and insurance. The calculation is based on 80% of the Average Sold Price. Taxes are estimated at 0.891 per $100 per year. Insurance is estimated at 0.35% of the Average Sold Price. Your actual PITI will vary depending on many factors, including your Credit Score, the Loan Program, and the Lender you work with.
Note 3 - Source for County level Median Household Income includes The Maryland State Data Center, Maryland Department of Planning, and U.S. Census Bureau.

Table 1 - Anne Arundel County Housing Affordability Index

Across Maryland, Harford County was the most affordable location in Maryland in November 2007 with a HAI of 104.5 - and was barely changed from last month. Talbot County, on the other hand, was the least affordable location in Maryland with a HAI of 33.5 in November of 2007 - down from 37.2 in October 2007. Across the U.S. as a whole, the National Association of REALTORS^® ("NAR", http://www.realtor.org/) reports the September 2007 (revised) HAI as 115.8, up 8.9% from August when the Index was 106.3. The cost of the Median Priced Existing Single-Family home reported by NAR is $208,600 - almost half that of the $415,771 Average Sold Price reported by MRIS for Anne Arundel County in November 2007.

November 2007 Maryland Housing Affordability Index
County	Average Sold Price (Note 1)	Monthly Payment PITI (Note 2)	Annual Income Needed to Qualify (28%)	Est. 2006 Median Household Income (Note 3)	Housing Affordability Index	Median Multiple
Anne Arundel	$415,771	$2,521	$108,024	$66,050	61.1	1.6
Baltimore City	$177,753	$1,078	$46,183
Baltimore	$317,622	$1,926	$82,524	$63,150	76.5	1.3
Calvert	$391,194	$2,372	$101,639	$87,400	86.0	1.2
Caroline	$193,210	$1,171	$50,199	$47,200	94.0	1.1
Carroll	$341,319	$2,069	$88,680	$75,050	84.6	1.2
Cecil	$282,557	$1,713	$73,413	$62,100	84.6	1.2
Charles	$341,455	$2,070	$88,716	$78,450	88.4	1.1
Dorchester	$203,046	$1,231	$52,755	$42,500	80.6	1.2
Frederick	$341,285	$2,069	$88,672	$80,650	91.0	1.1
Garrett	$379,882	$2,303	$98,700	$40,850	41.4	2.4
Harford	$274,688	$1,665	$71,369	$74,600	104.5	1.0
Howard	$428,685	$2,599	$111,380	$93,050	83.5	1.2
Kent	$210,277	$1,275	$54,634	$49,750	91.1	1.1
Montgomery	$518,474	$3,143	$134,708	$87,500	65.0	1.5
Prince Georges	$314,577	$1,907	$81,732	$70,250	86.0	1.2
Queen Annes	$491,195	$2,978	$127,621	$73,800	57.8	1.7
Saint Mary	$340,130	$2,062	$88,372	$63,200	71.5	1.4
Talbot	$623,564	$3,780	$162,012	$54,350	33.5	3.0
Washington	$207,827	$1,260	$53,997	$51,650	95.7	1.0

Note 1 - Average Sold Price as reported by Metropolitan Regional Information System, Inc.
Note 2 - Monthly Payment PITI - This is an estimated mortgage payment amount comprised of principal, interest, taxes and insurance. The calculation is based on 80% of the Average Sold Price. Taxes are estimated at 0.891 per $100 per year. Insurance is estimated at 0.35% of the Average Sold Price. Your actual PITI will vary depending on many factors, including your Credit Score, the Loan Program, and the Lender you work with.
Note 3 - Source for County level Median Household Income includes The Maryland State Data Center, Maryland Department of Planning, and U.S. Census Bureau.

Table 2 - November 2007 Maryland Housing Affordability Index

According to Mr. Howell "Very few buyers bring a sizable down payment to the settlement table. During the last few years adjustable rate interest only mortgages have keep monthly payments inline with buyers' income. It's not unreasonable to think that some buyers purchasing in Anne Arundel County will have household incomes exceeding one hundred thousand dollars, but, many others will not. Income has not kept pace with rising home prices and housing affordability has fallen as a result."

Furthermore according to Mr. Howell "The glut of homes on the market may be due in a large part to the inability of buyers to afford a home. For sellers, when a buyer does make an offer on their home - if they're bringing twenty percent to the table - those buyers are gold plated and should be taken seriously. They might be first-time home buyers or transfers relocating from out of our area. Either way, they are serious and looking for deals."

Mr. Howell's sentiments about the market are backed up by the statistics published by MRIS. According to statistics released today, MRIS reported the Average Sale Prices as a percentage of Average List Price was 90.16% in November 2007 - nearly three percent worse than this time last year when the ratio was reported to be 93.06%. Sellers were accepting offers that were nearly ten percent less than their asking price on properties going to settlement in November. In the months leading up to these November settlements, buyers were negotiating excellent deals while sellers continued to hold onto their asking prices. In the end - at the settlement table - the buyers prevailed.

When the Housing Affordability Index ("HAI") rises, sales prices or interest rates are falling or median income is rising. When the Index falls, then prices or rates are rising or median income is falling. As with any mathematical equation, there is a fixed relationship between all the variables. The HAI is calculated first by computing an estimated mortgage payment amount comprised of principal, interest, taxes and insurance (often referred to as PITI). The calculation is based on 80% of the Average Sold Prices. Taxes are estimated at 0.891 per $100 per year of the Average Sold Price. Insurance is estimated at 0.35% of the Average Sold Price. A buyer's actual PITI will vary depending on many factors, including their credit score, loan program and the lender the buyer works with. Once you have computed PITI, divide PITI by 0.28 in order to obtain the income needed to qualify for the mortgage. Using an estimated 2006 Median Household Income of $66,050 for Anne Arundel County according to the Maryland Department of Planning ("MDP", http://www.mdp.state.md.us/), divide the income needed to qualify to calculate the Index. The lower the index, the more income buyers must have to qualify for the loan in order to purchase the house.

Mr. Howell operates a Maryland Econometrics website as a public service for use by real estate consumers and other interested parties. More about the Anne Arundel County Housing Affordability Index and other Maryland counties can be found on the Maryland Econometrics website located at http://www.marylandeconometrics.com/ or by contacting Mr. Stephen Howell at 410-923-3217.

NOTICE: The information included herein is deemed reliable but not guaranteed. Information and data reported may be revised when updates are available. The views expressed herein are solely those of the author and do not necessarily reflect the views or policies of, and should not be attributed to, Coldwell Banker Residential Brokerage or NRT Incorporated or any other companies or officials.

Real Estate Market Assessment

2007-12-06T03:22:21Z

Real Estate Market Assessment

The seasonal slump in the real estate market may already be upon us. As it does each year, home sales slow in late November and don't pick back up until January or February. And, it is likely to be slower this winter than in years past. Why? Well, there is still a lot of negative press about the real estate market and mortgages and it's the year before the election. Why just this morning there was a segment on the morning news "Foreclosure Corner". The anchor was discussing how to avoid foreclosure with a Prince Georges County judge - the steps to take and what not - and I thought to myself "has it gotten that bad?" Well, it might be.

But, there is a silver lining. There will be a gold rush. The real estate market will go through another boom cycle. The Base Realignment and Closure (better known as BRAC) process will result in twenty thousand plus jobs coming to our area and countless more support jobs. But, the realignment process hasn't started yet and sellers are not likely to see any real benefit from an influx of buyers until 2009.

Inventory levels reached a peak in September at 4,646 active units on the market and fell slightly to 4,484 in October while up 16% from this time one year ago. Sold prices slipped 5.4% from last month but remain level from one year ago. Total volume was down 15.9% from September and off 17.4% for the same period last year. More alarming for sellers is that the average list price to sold price ratio slipped to 92.3%.

There were 401 units sold in Anne Arundel County in October, down from 453 units sold in September 2007. The number of active listings was 4,484 in October, down from 4,646 in September. The number of new listings taken in October was 927, down from 956 listings taken in September. The average sold price was $419,355 in October, down from $441,246 in September. The average list price was $454,159 in October, down from $480,279 in September. The average number of days on market was 123 in October, up from 109 in September. The average list price to sold price ratio was 92.34% in October, down from 97.56% in September. Total volume for October was $168,161,351, down 16% from $199,884,468 in September.

There were 64 units sold in October in Annapolis, down slightly from 68 units sold in September. The number of active listings was 954 in October, down slightly from 966 in September. The number of new listings taken in October was 186, down slight from the number of new listings taken in September. The average sold price was $532,689 in October, down significantly from $617,421 in September. The average list price was $555,213 in October, down significantly from $643,968 in September. The average number of days on market was 133 in October, up from 126 in September. The average list price to sold price ratio was 95.94% in October, slightly better than 95.9% in September. Total volume in October was $34,092,066, down from $41,984,611 in September.

According to Bankrate.com, the average national rate for 30-year fixed rate mortgages is at 5.94%, down from 6.13% quoted this time last month. The National Average Composite Mortgage Rate is steady at 6.5% for October, down very slightly from 6.6% in September, and the same as October 2006!

According to RealtyTrac.com, the number of pre-foreclosure properties in Anne Arundel County was 116 in October, down from 192 in September. The number of action properties in the county was 391 in October, down from 525 in September. And, the number of bank owned properties was 151 in October, down from 108 in September.

The number of building permits was reported at 128 in September, down from 164 in August.

So what can we expect for the remainder of the year? Sales are likely to slow as our attention focuses on family and holiday activities. Prices are likely to fall where sellers are ready to make deals to get their homes sold before the end of the year. More homes will go unsold since banks have yet to relax lending guidelines. Sellers should expect to be on the market between 11 and 15 months. Buyers have choices in all price ranges from which to choose. Sellers should take competition very seriously and should always price below any competition. Where there are only a few buyers, sellers who want their homes sold must get the serious buyers to look at their home FIRST! Lowest price, best condition, favorable terms, will all contribute to achieving the fastest sale.

While no one can predict the future with any certainty, one thing is certain - it remains a buyer's market. Buyers have large numbers of desirable properties from which to choose and sellers have lots of competition. A firm understanding of the market trends and forces is necessary for making the best real estate decisions. So, when you are ready to get serious about buying or selling a home, please contact Stephen Howell, Associate Broker, REALTOR^®, Coldwell Banker Residential Brokerage, at 410-923-3217.

What is Affordable in Today's Market?

2007-12-06T03:19:01Z

What is Affordable in Today's Market?

What is affordable in today's real estate market? Using the classic definition affordable means the ability to purchase a home with a 20% down payment while qualifying for a conventional 30-year fixed rate mortgage under traditional lender guidelines where the borrower's mortgage payment does not exceed 28% of total household income.

Since 2000 home prices have risen and the Anne Arundel County Housing Affordability Index has fallen. Throughout most of 2001 housing was quite affordable. When the index is at or above 100, the typical borrower whose household income exceeds the median income level for that period will have enough income to meet the debt-to-income qualifying ratio of 28% to purchase an average priced home. In 2001 the median income was reported by the Maryland Department of Planning as $57,800. So for much of 2001 borrowers had sufficient household income to meet lender requirements to purchase a $210,000 home.

During the last six years lenders have relaxed guidelines and introduced new products whereby borrowers qualify for more expensive homes on the same or less income using, for example, an interest only mortgage. Borrower's income has not kept pace with the increase in the cost of housing. While the average sales price has doubled since 2001, the median income was calculated at $66,050 in 2006. Many borrowers no longer qualify for mortgage loans using traditional lender guidelines. Furthermore, lenders have tightened guidelines in response to the sub-prime mortgage meltdown.

The mortgage engine that has fueled the growth in local home prices - loan products requiring lower debt-to-income ratios - has stalled at today's prices. Until the lenders introduce new products enabling buyers to purchase more expensive homes on less income, or buyers bring more down-payment to the settlement table, sales volume and sale prices are likely to continue to loose traction and continue to fall.

More information about housing affordability can be found online at www.MarylandEconometrics.com.

In Conclusion