Largest Annual Increase in Sale Prices in the Baltimore Metro Area since April 2006

Lowest April Inventory since 2006; Only One in Ten Sales Involves Foreclosure

Rockville, MD –(May 10, 2012) – The following analysis of the Baltimore Metro Area housing market has been prepared by RealEstate Business Intelligence (RBI), and is based on the April 2012 RBI Pending Home Sales Index™ released today.

Click here to view PDF version of the April analysis

OVERVIEW

The Baltimore Metro Area housing market saw the largest year-over-year gain in sale prices since April 2006, with a median sale price of $237,500 representing a 10.5 percent increase over April 2011. Contract activity was up 9.9 percent year-over-year, though down 3.8 percent from March 2012 levels. Active inventory is down to 12,627 listings and while this represents the lowest April level since 2006, there is a solid balance between supply and demand with 6.8 months of inventory based on the average sales rate of the last twelve months. With a Median Days on Market of 64 days representing a 29-day improvement over April 2011, properly priced homes are selling at a faster pace than last year.

KEY TRENDS

Closed Sales and New Contracts

Contract activity in April offers a mixed picture for the Baltimore Metro housing market. While the 2,981 new contracts written represent a 9.9 percent increase over April 2011, it also reveals a 3.8 percent decline compared to March, breaking from normal seasonal patterns.  Over the last ten years, new contracts have increased 5.4 percent between March and April. New contracts for detached properties were up 16.1 percent year-over-year (down 3.8 percent month-over-month) while new contracts on attached properties (townhome and condo/co-op properties) were up 2.8 percent year-over-year (also down 3.8 percent month-over-month).  The unseasonable dips in April contract activity relative to March could indicate a reduced level of closed sales in May and June than a year ago though a higher contract activity rate in May could offset the April decline.

As for closed sales in April, the 2,007 level was essentially unchanged from April 2011 (up 0.4 percent), but represented a 6.0 percent increase over March, consistent with the ten-year average increase of 6.1 percent from March to April. Detached and attached properties went in two different directions, however: Closed sales for detached properties were up 8.9 percent year-over-year while the level of attached properties sold was down 9.2 percent year-over-year. The 1,153 detached properties sold represented 57.4 percent of sales, up from the 53.0 percent level of April 2011. This shift in the composition of sold inventory is certainly a factor in the increase in the median sale price level.

Another factor impacting pricing is the decrease in the amount of distressed properties (foreclosures and short sales) included in the mix of sales and inventory. Only 1 in 10 sales (10 percent) were foreclosures, down from nearly 1 in 4 in April 2011 (23.3 percent), marking the lowest proportion of all sales since at least April 2009 (when MRIS started tracking foreclosed and short sale listings). The 201 foreclosure sales represented a 23.9 percent month-over-month decrease and a 56.8 percent decrease compared to the 465 foreclosed sales in April 2011. While the 184 closed short sales were down 6.1 percent month-over-month, they are 31.4 percent higher than the April 2011 total. The percentage of sales that were short sales rose only slightly from the April 2011 share, from 7.0 percent to 9.2 percent.  This is largely due to the 16.2 percent year-over-year jump in non-distressed sales to 1,622. 4 out of 5 sales (80.8 percent) were traditional, the highest proportion since MRIS began tracking distressed listings, and a marked increase from the 69.8 percent share in April 2011.

Pricing Gains in April

The shift in the composition of sold inventory toward a larger proportion of higher priced segments (e.g. more non-distressed sales, more detached property sales) is partially responsible for the highest year-over-year gain in median sale price in the Baltimore Metro Area since June 2006. While the April 2012 level of $237,500 is well below the 10-year April peak of $275,000 in 2007, it is 10.5 percent higher than the April 2011 level of $215,000. April was the third consecutive month with an annual gain and the year-to-date median sale price of $219,000 is 5.3 percent higher than the same period last year.  Pricing was up for both attached and detached property segments, the $299,000 median sale price for detached properties represented an 11.8 percent year-over-year increase, while the $179,000 level for attached properties was 8.5 percent higher than April 2011. The average percentage of Original List Price received at sale was 91.5% for homes sold in April, up from 89.3% in March and sharply higher than the Average Sale to Original List Price Ratio of 87.0% in April 2011.

The median sale price for distressed homes (foreclosures and short sales) was up 4.3 percent year-over-year to $146,000, the fourth consecutive month of annual appreciation for this segment. The median price for non-distressed sales was up 5.9 percent over April 2011 to $261,000, the first annual gain for this category of properties in eleven months. 

Time on Market

Homes sold in April had an Average Days on Market of 124 days, 9 days less than April 2011. The median DOM, or the number of days that half the homes sold in April were on the market prior to contract, was down to 64 days, nearly a month less than the April 2011 Median DOM of 93 days. At 52 days (40 days lower than April 2011), townhomes had the lowest Median DOM. Condo/co-op properties had a Median DOM of 58 days, but this represented a 62 day improvement over April 2011, in which half the homes sold in 120 days or less.  Detached properties had the longest Median DOM at 69 days.  Lower price segments are taking longer to sell based on Median DOM figures, with homes listed between $100,000 and $150,000 having an April level of 100 days. The Median DOM for homes listed between $400,000 and $500,000 was 37 days, the lowest of any price segment. 

Inventory

The 4,166 new listings entering the market in April were 9.2 percent less than the April 2011 level and are the lowest number of new listings in April since at least 1997, the extent of RBI’s historical database. The 3,418 new non-distressed listings represent a 9.6 percent decrease from April 2011, while the 454 new short sales added in April represent an 8.1 percent year-over-year increase. While the 4,166 new listings represent a 2.6 percent decrease from the number of new listings added in March, new foreclosed listings were up 22 percent compared to the March level. While it is worth keeping an eye on the distressed composition of new listings as reports of a looming shadow inventory continue to surface, only 7.1 percent of new listings were foreclosures, down from 8.5 percent in April 2011. 10.9 percent of new listings were short sales, up slightly from 9.2 percent in April 2011, an uptick likely the result of more lenders willing to go through the short sale process rather than foreclosure.  

With the declines in new listings coupled with gains in sales as a backdrop, active inventory to end April is in relative balance with the buyer demand – the 12,627 active listings represent 6.8 Months of Supply.  The price range segment most favorable to the seller is $200,000 to $300,000 – with 2,466 active listings compared to an annualized sales rate of 471 sales per month, this price range has the lowest months of available supply at 5.2 months.

82.8 percent of active inventory is non-distressed, the highest percentage since Jun 2010. The 430 active foreclosures and 1,748 active short sales represent year-over-year decreases of 54.5 percent and 15.2 percent, respectively. Foreclosures only represent 3.4 percent of the active market, down from 5.6 percent in April 2011. 13.8 percent of active listings are short sales, up slightly from 12.3 percent in April 2011, but lower than the 14.3 percent share to begin the month.

The RBI Pending Home Sales Index™ is a two-year moving window on the housing market using new pending sales (signed contracts) and median sales price (closed sales). It provides unique insight into the state of the current housing market by measuring the number of new pending sales for each month through the most recent month.The results include new pending sales through and including April 2012. The market area includes The City of Baltimore, Anne Arundel County, Baltimore County, Carroll County, Harford County and Howard County in Maryland.