Trend Chart of the Day: $10k homes in Baltimore

August 22, 2011

by Scott Sambucci

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Bad in the short-run, but a necessary market-clearing step… (see: REO & Foreclosure Investors – Scavengers or Saviors?)

From yesterday’s Baltimore Post:

One of every 10 city homes sold during the first half of the year — about 275 in all — fell in that price range. Twice as many sold for under $20,000.

Often foreclosures, these properties are usually in bad shape but seem like deals to real estate investors and the occasional hopeful owner-occupier — such as Wells.

“I don’t have to worry about trying to get a loan,” said Wells, 40, a bill-processing technician who works in Annapolis. “That was the purpose of me searching in that price range…”

… Still, both the city and suburbs have areas where sales are down sharply since the federal tax credit of up to $8,000 for first-time homebuyers expired last summer.

By clearing the market, these low-end/investor sales are pushing Baltimore’s minimum asking prices higher towards 2009-10 tax credit levels. Absolute sales are down, but adjusting for inventory changes, the Baltimore’s absorption rates are moving back to tax credit levels:

City of Baltimore: Minimum Asking Prices (black line, left axis) vs. the Altos Research Market Action Index (orange line, right axis) for single-family homes

While the absorption rate trend for condos is sustaining higher trough values since mid-2009:

City of Baltimore: Minimum Asking Prices (black line, left axis) vs. the Altos Research Market Action Index (orange line, right axis) for condos

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