The lowest-valued homes in the Baltimore-Towson statistical area saw the biggest price gains last year while homes in the middle price band declined more than the area average, according to a report released Tuesday.
Homes valued at less than $138,000 saw a median gain of 8.8 percent in value last year from 2006, according to the report from online real estate database Zillow.com. Homes in the middle of five price categories, those valued at between $233,000 and $297,499, saw the biggest year-over-year decrease, falling 4.3 percent. Overall, home prices in the Baltimore area fell 1.4 percent last year, according to the report.
Last year, buyers in the lower-middle bracket ? between $138,000 and $232,999 ? owned just 2.8 percent of their homes, the lowest among the categories. Nearly 40 percent of those buyers had negative equity, meaning they owed more on their mortgage than their house was worth, and made a median down payment of less than 1 percent, according to the report.
“With 1 percent down, you?re paying more than that in closing costs,” said Cathy Werner, president of the Greater Baltimore Board of Realtors. “We used to tell people you need to stay there five years to recoup settlement costs, gain tax benefits and get some appreciation. During the appreciation of a few years ago, it became two or three years. Now, we?re going back to the five-year scenario.”
Not surprisingly, most of the sales below $138,000 came from Baltimore City, said Ross Mackesey, sales manager for Coldwell Banker Federal Hill. Mackesey attributed the price increase to activity among young professionals.
“[They?re] buying their first home, they don?t have a home to sell, they embrace urban living,” he said. “It brings down those homes in the middle bracket.”
