As published on Patch.com 5-17-2011
April 2011 turned out to be yet another month of solid activity for the region's real estate market and serves as yet another sign of highly anticipated and long overdue market recovery even as the market deal with continued declining home sale values.
In all, 512 homes exchanged hands in Baltimore County and 40 in the Essex-Middle River area in April 2011. Although these figures are dwarfed by the totals from April 2010 (681 and 56, respectively) when the homebuyer tax credits were driving the activity, it still represents a solid level of activity especially when compared to the bottom year of 2009. In April 2009, only 469 homes sold in Baltimore County and 37 in our area.
Also, 747 properties went under contract this past April in the county and 56 in the Essex-Middle River area - the highest totals, excluding over inflated 2010, since April 2007 for both jurisdictions. This phenomenon underscores the fact that those buyers who remained on the sidelines since the start of the downturn are now finally entering the market.
This past April, 1,217 new listings came on the market in Baltimore County and 104 in our area. Absorption of these and subsequent new listings will be one of the major determinants of market's recovery.
As expected, home prices in the region continued to decline despite increased level of activity. In Baltimore County, the median price in April 2011 was $184,000 compared to $215,000 in April 2010 and $220,000 in April 2009. We can certainly project this trend to continue at least for the near future as sellers price their homes to the current market and buyers scoop up the best deals with the best value available.
Homes sold in Baltimore County in April 2011, on average, stayed on the market for 138 days, the same as in March 2011. In the fast moving April 2010, the average stay was only 103 days; in April 2009 it was 116 days.
The sellers received approximately 87 percent of their asking price for all properties closed in April 2011. An interesting picture forms when we look at the sold-to-list price ratios broken down by days on the market.
For sellers that receive an offer within the first 30 days, the ratio is about 97 percent. Those properties that linger on the market for more than a month, the sellers can expect the ratio to drop less than 90 percent and for those on the market for more than 90 days to just around 80 percent. Pricing the property right from the start is essential for a successful sale.
Distressed properties such as bank owned homes and short sales in Baltimore County continued to comprise a somewhat large portion of the overall sales. Out of 512 closed transactions in the county, about 28 percent were in this category. Out of all newly listed homes, 18 percent were either listed by REO agents or Baltimore short sale realtors. As the economy and the Baltimore area's real estate market struggles towardsrecovery, we can expect more distressed homes in our area.
The prevailing trend since the start of the year has been a higher level of transactions while continually decreasing average and median prices. Although the former is welcomed, the latter, without a doubt, is causing a lot of unease in the media and in many local communities, as our personal balance sheets are, for a lack of a better phrase, getting more and more off balance.
It is important to realize, however, that this is the normal path toward the recovery. The prices must decrease low enough for buyers to consider them a great value and actually purchase.
Aside from an artificial stimulus such as another homebuyer tax credit, rebounding of prices will take time and patience. It will happen sooner or later.
The question is: once it does happen, how long will we keep the lessons learned over the previous decade in our memories? Or will we quickly forget and do it all over again?
About this column:
The ‘Real' Deal will examine real estate trends in the Essex/Middle River area. Vladimir Kats is an associate real estate broker with Passport Realty in Baltimore.
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