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Despite National Media Coverage to the Contrary Maryland Real Estate...

Despite reports of a real estate bust throughout the US, Maryland residential property sales have continued an upward trend during the first half of 2006. This report provides an analysis of YTD property sale prices and forecasts what might be an exciting spring season.



Based upon a consolidated summation of closed sales prices for condominiums, townhomes and single family homes in 8 of 9 central Maryland counties, prices rose during the first half of 2006. As of the end of July, the following locations have experienced positive YTD growth: Baltimore City (13.4%), Baltimore County (13.4%), Harford County (5.5%), PG County (3%), Frederick County (2.8%), Montgomery County (2.3%), Howard County (2.1%) and Anne Arundel County (1.5%). Closed prices in Carroll County fell by 4.5% during this period, however.



Alan Ingraham, President of the Maryland Association of Realtors, commented, The market has cooled, but it'ss progressing very nicely. Big companies have very vibrant activity levels. He added that the surge in prices from 2003 through 2005 is not sustainable long-term. Transaction activity has slowed, but values are holding their own - up 6% over 2005. He compared this rise to the 18% increase from 2004 to 2005, indicating a flattening of prices.



This overall trend is contradictory to what the national media has been reporting elsewhere, and can be tied, in part, to Maryland'ss relatively robust business economy and the upcoming impact of BRAC (base realignment and closure program).



BRAC will present the region with a big infusion of [housing demand over the next 10 years, said Michael Sarbanes, executive director of the Citizens Planning Housing Association. Real estate goes through up and down cycles, and prices are coming down in most parts of the country. Because of BRAC, pressure and tightening will continue in this region.



Further enhancing the prospect of a returning market to central Maryland (did it really ever leave) are comments from David Lereah, Chief Economist for the National Association of Realtors posted in the August 16 issue of the MRIS Quarterly Economic and Market Watch Report. He stated, Half of the nation is warming, not cooling. Mortgage rates remain below 7 percent, while the supply of homes for the nation as a whole is at a balanced 6.5 months's supply. In addition, the economy remains healthy, creating job and income gains, providing consumers with the confidence and wherewithal to purchase homes. Looking ahead, I believe the current correction in most of our cooling real estate markets will be short lived. This is because there is an army of households and investors waiting to get back into the housing market. Remember, today'ss housing correction is unlike previous ones. There is no recession; no net job losses; and interest rates are not rapidly rising to historically high levels. Households possess the desire and financial ability to purchase real estate - they are only waiting for the right opportunities to present themselves.



In conclusion, this might be a good time to consider entering back into the market. We'sre exiting the peak summer activity and entering into what has traditionally been slowing winter months. Truly sincere sellers may be ready to pull back slightly with prices and/or offer other concessions, especially with the hefty inventory of unsold homes. Couple this with the pent-up demand of buyers who sidelined themselves for a full year, and we'sre looking at an active market early in 2007, provided that the Federal Reserve continues with policies that do not over-tighten the economy and drive interest rates up significantly. My advice is to shop, but shop wisely for reasonably priced properties. Come spring, there could very well be another round of buyer frenzy.

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