Home sales, prices drop

Friday, Feb. 27, 2009

The number of homes sold dropped and average homes prices dipped slightly in St. Mary's County in 2008 compared to the year before, but the decline was far less drastic than in neighboring counties and the rest of Maryland.

Foreclosures were up in St. Mary's, but remained below the levels elsewhere in Southern Maryland and the state as a whole.

Charles County ranked second in the state when ranked by percentage of total housing units that are distressed properties — about 2 percent, according to RealtyTrac, a company that tracks foreclosures nationwide. In St. Mary's that figure was 0.9 percent, 12th highest in the state.

Declines in home prices mean buying a home is more affordable than it has been in many years, now in line with average rents for first-time homebuyers who qualify for financing. And local real-estate and mortgage professionals hope new federal stimulus initiatives and low mortgage interest rates will restore confidence to potential homeowners.

"The prices are coming down and affordability is at a five- or six-year high. I think affordability will climb much more. They can only get so bad," said Jonathan Benya, a real-estate agent with Century 21 New Millennium in La Plata, who tracks local, state and national market trends on his blog, TeamBenya.com.

The number of homes sold in Charles County dropped 33 percent in 2008 from 2007, to 1,269, 32 percent in Calvert to 705 and about 19 percent in St. Mary's to 958, according to statistics from the Metropolitan Regional Information Systems. The state drop was 26 percent, to 46,897 homes sold in 2008.

The average sales price dropped much less drastically — 11.7 percent in Charles to $313,328, 12.6 percent in Calvert to $349,455 and 0.3 percent in St. Mary's to $349,762.

That's compared to the statewide drop of 5.8 percent to an average home sale price of $341,116.

"Truthfully, the good news is houses are very cheap, interest rates are great and there's a huge amount of selection," said Steve Meszaros, president-elect of the Maryland Association of Realtors, who said he's not surprised by year-end home sales results. "We expected them to be that. Real estate is really local. Foreclosures have a lot to do with it. I think the biggest reason our volume is down so drastically is because they think they're going to pay too much for a house and they think we haven't hit bottom yet."

Foreclosures continue to rise in Southern Maryland and in the state. By the end of 2008, foreclosures were up 26 percent in Calvert, 29 percent in Charles, and 60 percent in St. Mary's. They were up 71 percent statewide, ranking Maryland as 18 in the country by percentage of total homes sold.

"The reason that we're seeing less units sold is because of the economy. We're seeing a drop-off in the number of listings … we're seeing a lot of movement in the market right now," Benya said.

Continued decline in starter home prices and falling mortgage rates have resulted in the highest level of housing affordability for new buyers in years, according to the Maryland Association of Realtors First Time Homebuyers Housing Affordability Index, which rose to 62.2 percent from 54.6 percent in the third quarter. This is measured by the percentage of income buyers who had to purchase a starter home.

That's compared to 2006 and 2007 levels of 46.6 and 49.3 percent respectively. For the five years that the Maryland Association of Realtors has calculated the index, it has never reached 100 percent.

Since the third quarter of 2008, starter home prices have declined by 9 percent, from $246,716 to about $227,833.

A first-time homebuyer also now qualifies for tax credit worth 10 percent of a home's purchase price up to $8,000 through the recently passed federal stimulus package. The credit applies until Dec. 1 and does not have to be paid back unless the homeowners sell within three years of purchase. This new initiative, low federally backed loan interest rates hovering at about 5 percent, in addition to replenished funds for the U.S. Department of Agriculture Rural Development loans, for which many Southern Marylanders are eligible, means Karen Pfeil, a loan officer with C&F Mortgage in Waldorf, has been working on more loans for homes priced at $250,000 and under.

"That's where we've seen a huge number increase," she said.

Last month, properties sold at $250,000 or less represented about 43 percent of all single family home sales in Charles, about 15 percent in Calvert and about 20 percent in St. Mary's, according to Metropolitan Regional Information Systems data.

Pfeil's clients now are typically teachers, firefighters and nurses, who have stable jobs that "aren't going anywhere" and who have seen mortgage payments level out to what they're paying in rent.

"The stimulus package will help. My personal opinion is we may not be at the bottom. But I would bet we're pretty close. The problem is the confidence of the buying public. I don't know what you do to fix that," Meszaros said. "Things could be good. But it depends on the individual. There's a great opportunity for someone that wants to buy. If a house is priced right, it'll sell. There comes a point where the sale price of a particular house is not going to get any lower."

Pfeil has been working to hold "lunch and learn" seminars for local real-estate agents in St. Mary's, Charles and Calvert counties to motivate them and promote education and new programs. Pfeil has also seen an increased number of investors in the marketplace looking in the starter home range.

"First quarter will [show] better numbers for home buys but it's all going to be in the lower end," she said.

kkulp@somdnews.com

Home not-so-sweet home

Home not-so-sweet home Number of homes sold 2008 2007 Change Calvert 705 1039 -32.1% Charles 1,269 1,895 -33% St. Mary’s 958 1,179 -18.7% Maryland 46,897 63,381 -26%

Average home prices 2008 2007 Change Calvert $349,455 $400,009 -12.6% Charles $313,328 $354,847 -11.7% St. Mary’s $349,762 $350,870 -0.3% Maryland $341,116 $362,304 -5.8% Source: Metropolitan Regional Information Systems

Foreclosures 2008 % of homes 2007 Change Calvert 442 1.38% 350 26% Charles 1,036 2.02% 804 29% St. Mary’s 361 0.9% 226 60% Maryland 32,338 1.41% 18,879 71% In the state, Charles County ranked second overall in foreclosures; Calvert was fifth and St. Mary’s was 12th. In the United States, Maryland ranked 18th overall in foreclosures. Source: RealtyTrac