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Home Prices in Md. Push Upward and Outward
This house on Castlefield Street in Ellicott City, listed for $2.2 million, is typical of recent high-end sales in Howard.
(By Tom Allen -- The Washington Post)
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But there is good news on the affordability front, according to a number of real estate agents. Condos, the object of fierce bidding wars just a year ago, are coming down in price. With more condos being built and apartments being converted to condos, supply is outstripping demand.
And that means more choice and lower prices.
The cooling real estate market gives buyers a little breathing room so they won't be forced to rush into a decision.
"New property availability across the board has helped affordability," said Michael Turk, managing broker with Weichert's Old Town Alexandria office. "In many areas, because inventories have increased, buyers are getting their dream townhome and not having to put in an escalation clause." In the hottest days of the real estate market, buyers commonly included such clauses in contracts, committing them to raise their offering price if there were competing bids.
Holmes said, "People are coming back and revisiting homes again. People now have time to step back and say, 'What trade-offs am I willing to make?' "
Adjustable-rate mortgages and interest-only loans -- which require the buyer to pay only interest and none of the principal, thus bringing down monthly payments -- also mean that buyers may be able to afford more house than they could under a traditional 30-year, fixed-rate mortgage, Lama said. "Financing plays a very important role in affordability. If you understand how the loans work, understand the risks, then you may be able to buy a house where you thought the prices were out of your range," he said.
But agents offer some caveats.
Think twice about interest-only loans if you're planning to stay in the house more than five years, Turk cautioned.
Fife worries that some buyers, feeling priced out of a neighborhood, have taken on more debt than they should, and if the huge price increases of the past five years suddenly come to a standstill, they will be left owing more than their house is worth.
"You have to realize you are not going to have 25 percent appreciation forever," she said. "And while that will be good for buyers, sellers with no equity may be hurt."
