We believe in providing the public with good & accurate information that directly relates to our real estate market here in Owings Mills, Reisterstown, Westminster, and surrounding areas. Why? Because, we feel it is our job as the community experts, with our fingers on the pulse of the market, to be able to provide a FREE resource to our community. Informed buyers & sellers make good decisions, and good decisions result in a stronger, easier to work with market! With that, we proudly present a quarterly update on the Baltimore economy and outlook for our local real estate community. You can expect an analysis of the Baltimore Economy and an examination of the region's housing data. Just another outlet that you can use anytime for FREE to help you make informed real estate decisions! Of couse we are always here to help and warmly welcome your questions, concerns, comments, and suggestions! Thanks again for visiting and we look forward to hearing from you! 

Baltimore Area Economy & Outlook 

2007 4th Quarter Economy Report & Outlook: 

Despite much of the volatility throughout 2007 in the national economy, the Baltimore Metro area maintained steady. Through the end of '07, the Baltimore economy had added over 16,000 new jobs; led by Education/Health, Government, & Professional/Business Services. In addition, the area's unemployment rate was 3.6% at the end of the year. This is lower than the 4% rate from 2006 and below the national 4.7% unemployment rate. 

Even in the midst of slower conditions, the Baltimore Metro area is still a stable economy and is anticipated to expand during the rest of the decade. Specifically, job growth is expected to increase throughout 2008. The 15 year average of new jobs in the area is 9,200. 2008's anticipated to add 14,700 and 2009 predicted to add another 15,200 new jobs. The BRAC program will also have a profound impact on the growth of the Baltimore/Washington area's. An estimated 30,000 military jobs will be added creating 28,200 new households; of which 22,000 are expected to become homeowners. The areas that will be impacted the most by this realignment are those around Fort Meade and Aberdeen Proving Grounds. 

2008 Baltimore Area Housing Market Update & Outlook 

With a steady diet of gloomy media outlook regarding the increase in real estate inventories, time spent on market, the amount of foreclosures, recent stock market volatility, etc. no wonder there is uneasiness in the real estate market. The fact is, these market conditions make it one of the best times to buy in recent years. This negative outlook on how “terrible” the real estate market is, as being reported by the media, is only affecting consumer confidence. This pessimism leads to less buyer activity, which increases the amount of homes on the market. High inventory increases time spent on market; thus dropping home prices. Depressed home prices raise foreclosures and higher rates of foreclosures lead to even less consumer confidence, and here we go again! 

As Lawrence Yun, Vice President of NAR Research, states, “It is important to point out that times of crisis often turn out to have been times of opportunity in hindsight.” This couldn’t be any closer to the truth with our current real estate market. The government has just recently raised the loan limits that Fannie Mae & Freddie Mac can purchase and that FHA can insure. This adds some much needed help for the high cost housing markets. In addition, we still have interest rates below 6.5%, because more homes are on the market longer there is more leverage with buyers to purchase on their terms, and quite simply, there is less competition for new buyers. Many people are still fixated on the foreclosure “crisis” and “falling” home prices. Well, let’s address those two issues. 

Here is some insight on this foreclosure crisis. Yes, it is a problem, and, yes, it has increased. That said, we are looking at increases from numbers that were virtually non-existent. For example, the national foreclosure rate increased 79% from 2006 to the end of 2007. Wow, huh? Considering where the foreclosure rate was, that huge increase still only brought the national rate to 1% of all homes owned. To break that number down even further, you have to realize that an estimated 30% of owned homes in the US are mortgage free, so that 1% of US homes currently in foreclosure are actually closer to 0.7%. Also, of the top 100 US real estate markets, 51 of them have foreclosure rates below 1%. Locally, Baltimore area foreclosures are up a whopping 544%, but that moves it up to a miniscule 0.73% of all owned homes in the area are in foreclosure. True it is a problem, but far from a crisis and also proof that the foreclosure “crisis” is a regional, and not a national, problem.  

Now, for the issue of “falling” home prices, true, they have gradually decreased recently, but is this so terrible? Consider what real estate has always been, a long term investment. My point is, during the height of the real estate boom, people got into the frame of mind that buying a home is a quick way to make money. They could buy a home and in a year or two could turn around, sell it quickly, and make tens of thousands of dollars. Those market conditions were NOT the norm. We’re now experiencing a correction back to the norm. Real estate has, and always will be, a long term investment. If you have that frame of mind, then a short term declining market should not bother you. In fact, any savvy investor will say that you buy in a downturn and sell during in upswing. Also, through the power of leveraging your money, having a long term investment mentality when buying a home makes sense. For instance, take $10,000 you would use for a down payment on a $200,000 home. With the US average of a 5% appreciation rate over the course of 10 years, you have made over $125,000 or 12.5 times the amount of your original $10k investment. Compare that to taking that same $10,000 investment and getting a 10% annual return in the stock market and you’ve made over $15,000 or 1.5 times what you started with. Real estate creates individual wealth! In quarter 4 of 2007, the average home price in Baltimore County was $306,600 which is only 3.2% off of the average home price during the same time in 2006. So, yes, they have dropped, but to expect dramatic decreases would just be unrealistic. Lastly, point made by Yale professor, Robert Shiller, whose home price index has become an industry standard, “People shouldn’t fear gradually falling home prices.” He also goes on to point out that there is a misconception among the public that there can be high home prices and, at the same time, affordable housing. How can both happen at the same time? Because a home sale improves our economy, we should desire economic growth and affordable housing.  

In conclusion, in is projected that, locally, the 2nd half of 2008 will result in higher home sales than in the 1st half. Consistent national existing home sales statistics over the past 3 months suggest that we are at, or near, a more stable market. Pent up housing demands, an increase in jobs & wages, and improving affordability conditions should positively affect local home sales in the near future. If you have the financial ability and the long term outlook that buying a home requires, now may be a golden opportunity to take advantage of being a part of the American Dream.
 

If you have any questions regarding our local real estate market & how it may affect you, please don't hesitate to contact us anytime. We are hear to help provide good information, so you can make good, confident decisions!
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