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National study: Home prices to fall in Baltimore

A national study released Monday shows that even though national housing prices are expected to increase slightly in 2012, they will drop by 4.9 percent in Baltimore.

In its monthly Home Data Index, Clear Capital researchers found prices of U.S. homes are expected to climb by 0.2 percent this year, a reversal of last year’s figures where overall prices fell by 2.1 percent.

The report by Clear Capital, a California-based real estate asset valuation group, showed that in 2011, “micro-markets,” or individual cities surveyed, showed larger increases in housing prices when isolated.

For example, Dayton recorded an 11.5 percent increase in home prices, Orlando a 6.7 percent increase and Rochester a 4.7 percent increase. In Baltimore, housing prices last year dipped, the report said, by 6.2 percent.

Experts say this unstable trend is expected to continue for up to five more years.

“It’s just going to be sluggish for a long time,” said Deborah A. Ford, chairwoman of the Department of Economics, Finance & Management Science at the University of Baltimore’s Merrick School of Business. “I don’t think it’s a crisis. I’m surprised that they aren’t forecast to go down more.”

Ford, whose expertise is in real estate, said she expects banks to begin to sell or rent foreclosed houses during the upcoming year as a way of recapturing income from the properties. Housing prices overall won’t begin to climb again for another five years, Ford predicted.

“Banks have been holding off on trying to sell these foreclosed homes,” she said, adding that the local rental market today holds most of the housing action. “A lot of people are renting now who could buy but just don’t see anything worthwhile that benefits them from buying. Rental vacancy rates are low and rents are going up. The rental market is very tight.”

In the Clear Capital report, researchers found that U.S. housing prices declined by 2.1 percent in 2011 — the smallest year-end change in either direction since 2006, when market prices rose 1.7 percent.

Regionally, the Northeast recorded a 0.1 percent annual gain, while losses in the West totaled 4.4 percent and 3 percent in the Midwest. Housing prices in the South dipped 1.3 percent in 2011, researchers said.

“Overall, 2011 was a relatively quiet year for U.S. home prices compared to the last five years,” said Alex Villacorta, Clear Capital’s director of research and analytics. “With national prices down a little more than 2 percent for the year and sitting at their lowest point since 2001, our projections show that the current balance the market has found will continue through 2012.”

Villacorta said that even though the slight change in housing prices over the past 12 months amounted to zero growth, the trend could point to a uniquely positive outcome.

“Effectively it’s no change, nothing to celebrate,” he said. “But it’s very significant in the evolution of the markets … now that we’re entering this phase of stability, or stagnation, this is the transition a lot of market participants have been looking for to see if prices have hit the bottom.”

A report last month by RealtyTrac Inc. showed the number of foreclosed homes slowed in November 2011.

In Maryland, there were 1,301 foreclosures, or one in every 1,800 housing units, the RealtyTrac data show. The largest number of foreclosures was in Prince George’s County, where 280 foreclosures were filed in November, followed by Baltimore City, with 243. Baltimore County recorded 145. In all, Maryland has 10,745 homes in foreclosure with an average foreclosure sales price of $185,522.

Despite those statistics, Dwayne Carte, the new executive vice president of the Greater Baltimore Board of Realtors, said Friday he is optimistic that housing sales will continue to rise in the metropolitan area in 2012. The GBBR uses several data bases to compile its sales projections, Carte said.

“The prediction is that sales will continue to be strong into 2012,” Carte said. “Between interest rates remaining low at around 4 percent and housing volume available, the sales will still continue to be favorable and strong.”