Housing rebound: County home prices rose in January

By Ed Waters Jr., The Frederick News-Post, Md.

Feb. 24--Home prices in Frederick County increased in January after falling during the final month of 2009, according to the Maryland Association of Realtors.

Nationally, home prices were up from November to December, according to a report released Tuesday.

"2010 will remain flat, but I think the bleeding has stopped," said Carlton Boujai, treasurer of the Maryland Association of Realtors.

"Even foreclosures are down," said Boujai, an agent with Exit Realty Prosperity Group in Frederick and a former president of the Frederick County Association of Realtors.

Distressed properties -- foreclosures and short sales -- have pulled down the price comparison for traditional sales, according to many real estate professionals.

"Banks are finally realizing that it is better to do a short sale than to let properties sit," Boujai said.

In a short sale the lender agrees to accept less for the house than what the borrower owes on the mortgage. Boujai warned, however, that more distressed properties could be coming as homeowners face the challenging economy.

Bob Sawchuck, an agent with Mackintosh Inc. Realtors, thinks home prices have stabilized for the existing home market and he anticipates price increases for new home construction.

"The inventory is down," Sawchuck said. The supply of existing homes has shrunk and that could lead some potential buyers to look at new homes.

Sawchuck said, besides other listings, he sells new homes at the Canal Run community in Point of Rocks . He is getting serious home shoppers, he said, many of whom are eligible for the first-time buyer tax credit.

That credit, launched early last year, gives first-time homebuyers an $8,000 tax credit for purchase.

In November, the program was expanded to include those who previously owned homes, giving them a $6,500 tax credit for a purchase.

The deadline for the program is April 30 -- a home must be under contract for purchase by that date.

Nicole Lapera-Holler, president of the Frederick County Association of Realtors, said the tax credit is a major factor, not just with first-time buyers, but also "move up" buyers.

"Someone may have a townhouse, sell it for $200,000 and move into a $400,000 home," she said.

Lapera-Holler said sales in the $300,000 or less range are stabilizing, largely because of first-time buyers.

Lapera-Holler and Stephen Mackintosh, co-owner of a real estate office, said in talking with sources in Annapolis and Washington, they do not anticipate another extension of the tax credit program.

Mackintosh said the Federal Housing Administration, one of the main mortgage lenders, is tightening its requirements, lowering the percentage of the purchase price a seller can give to a buyer to help with closing costs and increasing insurance premiums for buyers.

But Mackintosh said he has seen a pickup in sales. "I think the spring market started in December," he said.

"People are feeling better about the economy," said Sawchuck, adding that he has been surprised by the number of lookers, considering the heavy snows. "The next two weeks will tell a lot."

Boujai said he expects interest rates to rise as well. Now at around 5 percent to 5 1/2 percent, he said he expects rates to hit 7 percent. "Of course that is still good. When I bought a house in 1987, I paid 10 1/2 percent. If people are considering buying and wait six months, it could be too late to get those good interest rates."

Unemployment and job uncertainty remain obstacles for the market, Lapera-Holler said. "We are in a unique market because of the federal jobs and federal money, but there is still that uncertainty."

She agreed with Boujai that rising interest rates, as well as the end of the tax credit programs, will hit the market. "We may even see some slowdown in sales. We may be seeing the light at the end of the tunnel, but we are not there yet."

The Maryland Association of Realtors monthly reports show the average price for a house sold in Frederick County in November was $259,688.

That fell in December to $251,193, but picked up in January to $253,863. Those reports include new and existing home sales.

Realtors said a major factor in looking at overall price is lower-priced distressed homes.

In 2009, the average price of a home sold in the county was $265,808, down 13 percent from the average home sold in 2008.

The national report, from Standard & Poors/Case-Shiller, looked at home price increases in major metropolitan areas and showed a 0.3 percent increase from November to December, but still down about 3 percent from December 2008.

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