Existing Home Sales Rise in February, but Prices Down

According to the National Association of Realtors, existing home sales jumped 5.1% nationwide in February, 2009, though prices were down 15.5% from the same month last year. Sales prices were unprecedented, falling to the same lows last seen in 1997, and economists are predicting that, nationwide, prices will probably fall well into 2009. Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies, noted:

The four-letter word in the housing market is “jobs.” If you’re worried about having a job tomorrow, you’re not likely to buy a home now.

In Maryland, the news is generally better than the nationwide picture, and certainly better than “toxic” real estate markets in Florida, Nevada, California and Arizona. To offer a correlary to Retsinas’ notion of employment rates functioning as a fulcrum to the real estate market, consider that the national unemployment rate is 8.1%, while in Maryland the number is just 6.2%. That’s high, to be sure, but clearly better than the nationwide picture, with the Maryland real estate market following suit, just as Retsinas would predict.

Generally speaking, the increase in sales and decrease in sales prices is being fueled by bargain hunters, foreclosures and the sale of distressed properties. Credit is so tight that many who would have been qualified for a mortgage just a year ago and no longer in the running. Investors are being asked to put down as much as 50% on commercial properties and those applying for non-conforming loans must often put down 20% or more. Indications are that 45% of sales nationwide are coming from the “distressed” sub-market, which typically sell at a 20% discount. That, in turn, is depressing the market for sales across the board and, as noted, it’s typically brutal in select states.

The number of homes for sale on the market in Maryland should give an indication of how confident home sellers are in getting their price. Howard County real estate shows us that there are just over 1,500 properties listed in the Maryland MLS at present, while there are currently over 5,000 Baltimore City homes for sale. Those numbers will probably have to fall in order get supply and demand back into some semblance of equilibrium - a fact that is not exactly good news for real estate agents in Maryland.

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