Here are two actual examples of how two very different families in Baltimore recently rented homes that they felt they couldn't afford to sell in the current market. The neighborhoods are different, the circumstances are different, but the end result was the same. Two homes that would have sold quickly several years ago were never offered for sale, and two other families that wanted to buy a home ended up renting instead.
Family A is a retired couple, both of whom enjoy substantial state and federal pensions. They lived in a spacious condominium in an area that was normally immune to swings in the housing market. They had purchased a second home at the beach in 2005, and decided to sell their Baltimore home and move to the beach permanently. When an adjacent condo sold for $50,000 under the asking price, they realized they would never get their price - but they didn't want to keep paying two mortgages and two condo fees. The answer: they rented their Baltimore condo to another retired couple who actually wanted to buy, but thought they couldn't get a mortgage for the amount Family A wanted. So renting was a short-term solution for both families, but neither one got what they really wanted, and the process will start all over again when the lease expires.
Family B is a couple in their mid-30's with two small children. When the husband got a promotion requiring relocation out of state, they wanted to sell their home and buy another in their new location. Unfortunately, they had purchased their Baltimore home at the top of the market, and couldn't afford the significant loss that would be entailed in selling at current prices. And because they had to relocate quickly, they didn't have time to negotiate a short sale. Instead, they rented their home to another young couple who really wanted to buy, but didn't have enough cash to get the type of home they wanted at a monthly mortgage payment they could afford. So Family B solved their immediate problem, but of course without selling their previous home they had to rent at their new location - so another potential sale was lost. Plus, they are now out-of-state landlords, which they definitely didn't want to be.
These are real-life examples that illustrate what's happening to many families right now. People still want to own their homes, but some are using a rental strategy to buy time until the housing market recovers. Admittedly, it's better to have homes rented than going into foreclosure - but it's still a short-term solution - both for the families and for the housing market. Neither party on either side of these transactions got what they really wanted, and from an industry perspective at least three home sales were lost.
What could these families have done differently to get what they really wanted?
Yerman Witman Gaines & Conklin Realty is one of six complementary business units that comprise The Strata Group, which is headquartered in Baltimore, and offers specialized products and services targeting the residential and commercial real estate sectors. Other divisions offer title and escrow, mortgage funding, law, financial and home sales marketing services and support.
The November market statistics for Baltimore City and Baltimore County from MRIS, as compared to same month last year, continue to show three trends:
Baltimore County Real Estate had 14% fewer listings come on the market in November, 23% more listings went under contract with 3,692 active listings-a 5 year low. Baltimore City Real Estate had 30% fewer listings come on the market in November, 12% more listings went under contract with 4,075 active listings-also a 5 year low.
This continues a seven month trend of decreasing inventory and increasing pending sales. Unfortunately, many properties that go under contract are not getting to the settlement table due to appraisal, buyer financing and unapproved or slow lender processing of short sales. So, in the County the settled sales gains are modest compared to last year (7% in November) and have slightly decreased in the City(-4%).
That said, all the trends would indicate that there is great interest in purchasing homes and that there will continue to be fewer homes to chose from which could set the stage for a favorable seller's market this spring.
So don't believe all the negative press you read and hear. If you want to buy, take a hard look at the inventory. Prices and interest rates are low. If you are thinking about selling, now may be the time to go to market with the least competition in 5 years. The market is still price-sensitive, so follow your real estate professional's guidance on pricing.
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Yerman Witman Gaines & Conklin Realty is one of six complementary business units that comprise The Strata Group, which is headquartered in Baltimore, and offers specialized products and services targeting the residential and commercial real estate sectors. Other divisions offer title and escrow, mortgage funding, law, financial and home sales marketing services and support.For additional information, visit www.ywgcrealty.com.