Shrinking Baltimore Metro Inventory Persists in May; Condo Market Gains Strength

Rockville, MD – (June 11, 2012) – The following analysis of the Baltimore, MD Metro Area housing market has been prepared by RealEstate Business Intelligence (RBI), and is based on May 2012 MRIS listing data.

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OVERVIEW

The Baltimore Metro Area housing market continues to see declining inventory and median sale prices that are trending upward. As the shrinking supply lingers, upward pressure on pricing should continue, as evidenced by the fourth consecutive year-over-year median sale price increase in May for the region. Rising demand is also driving up prices, as new contracts and closed sales continue to increase, following seasonal patterns. Notably, the condo market is picking up strength with seven consecutive year-over-year gains in closed sales, and a 21.5 percent increase in new contracts compared to May 2011. Current trends also point to a diminishing supply of foreclosures and short sales in the market, which now account for 17.1 percent of all active listings, the lowest percentage in two years.

CLOSED SALES

Sales volumes continue to climb. The region had 2,361 sales close in May, up 13.3 percent from May 2011, and only seven closings shy of the highest volume in 23 months. This is the fourth consecutive year-over-year gain for closed sales in the region, and is driven mainly by continued growth of single-family detached and condo sales. There were 1,333 closings of detached homes, a 17.8 percent increase from May 2011. With 791 units closed, townhome sales increased 5.6 percent from May last year. Condos continue to post gains as 237 units closed in May, up 16.7 percent from May 2011, the seventh consecutive year-over-year gain. Year-to-date condo sales in the metro area are now 103 units higher than in the same period in 2011.

Closed sales of bank-mediated properties (foreclosures and short sales) continue to trend downward. There were 443 bank-mediated closings in May, a 23.9 percent drop compared to this time last year, and the 12^th consecutive year-over-year decline. Proportionally, foreclosures and short sales make up 18.8 percent of all closings, down from 27.9 in May 2011. Within the bank-mediated property segment, a shift from foreclosure to short sale is clearly evident. Foreclosure sales declined 50.8 percent in May compared to this time last year, the 12^th consecutive month-over-year decline. Short sales on the other hand grew 59.0 percent compared to May 2011, the eighth consecutive year-over-year increase. Much of this shift from foreclosure to short sale reflects a change in how banks deal with their distressed assets.

PRICES

Median home prices remain unchanged from last month, but are up from this time last year. The median sales price in the Baltimore region is steady at $237,500, but is still 7 percent higher than May 2011. This is the fourth consecutive year-over-year price gain, which is the longest streak since 2007. Median sale prices are up in all jurisdictions compared to May 2011 with the exception of Howard County, which remains unchanged at $365,000. The most notable price movement can be seen in Baltimore City, which posted a year-over-year gain of 42.1 percent, and a year-to-date appreciation of 64.5 percent compared to 2011.

The median sales price of foreclosures in the region is $109,500, up 4.4 percent from May 2011. Notably, the median price on short sales dropped 10.3 percent, from $195,000 in May 2011 to $175,000 in May 2012. Median sales prices in the short sale segment have experienced year-over-year declines 20 out of the last 21 months, dropping nearly $50,000 in value. The persistent decline in short sale pricing indicates that many banks have an increasing loss tolerance on these properties. The $262,250 median sale price for traditional listings, or those not involving short sale or foreclosure, was up 2.7 percent year-over-year.

NEW CONTRACTS

Newly signed contracts are on the rise for all dwelling types; condos continue to surge. The Baltimore Metro Area had 3,086 new contracts signed in May, up 13 percent from the previous year. This metric continues to fuel the housing market, as there have been 12 year-over-year increases in the past 13 months. New contracts on single-family detached homes rose 10.6 percent from the previous year. Townhomes also fared well with 1,054 contracts signed, up 14.6 percent from May 2011. The condo market posted the strongest growth with 322 contracts signed, 57 more than May 2011, a 21.5 percent increase. This is the 13th straight year-over-year increase for this segment.

The proportion of new contracts on bank-mediated properties is down to 26.1 percent in May 2012 from 29.1 percent in May 2011. Within the bank-mediated segment, new contracts on foreclosures continue to dwindle, dropping 30.6 percent from May 2011, the 12^th consecutive year-over-year decline. The shift from foreclosures to short sales continues as new contracts on short sales rose 42.1 percent, the 21^st year-over-year increase in a row.

INVENTORY

Inventory continues to plunge, new listings entering the market at historic lows. There were 12,683 active listings in the Baltimore Metro Area at the end of May, a 25.8 percent drop from May 2011, and the lowest total May inventory since 2005. The low volume of new listings is even more pronounced and well below the seasonal norm. In fact, the 3,997 new listings in May represent the lowest May volume since 1998. While some of the drop in new May listings can be attributed to an unseasonably mild winter season that likely prompted sellers to list properties earlier than normal, lingering financial uncertainty is probably more of a factor.

The inventory of bank-mediated properties is also in decline. There were 2,173 active foreclosure and short sale listings at the end of May, 27.4 percent below the previous year, and the 12^th consecutive year-over-year drop. The bank-mediated inventory now represents 17.1 percent of all active listings, which is the lowest percentage in two years.

About the RBI Metro Housing Market Update

The Baltimore Metro Area Housing Market Update provides unique insights into the state of the current housing market by measuring the number of new pending sales, trends by home characteristics, and key indicators through the most recent month compiled directly from Multiple Listing Service (MLS) data in RBI’s proprietary database. The bulk of this report’s content is readily available, down to the ZIP code level of granularity, via interactive charts and reports offered via rbiEXPERT, a premium subscription service offered to real estate professionals interested in growing their business with the help of industry-leading and user-friendly analytics. The Baltimore Metro Area housing market includes the City of Baltimore, Anne Arundel County, Baltimore County, Carroll County, Harford County and Howard County in Maryland.