The U.S. real estate market peaked between
2005 – 2007, depending on the exact locale. Since then nearly all national
reporting on real estate has been negative – with “Foreclosures“, “Short Sales“, “Falling Home Prices” and such dominating the headlines.

So, where is the good news about real estate? Apparently right here in Howard County, Maryland!

Howard County Home Prices “Stabilize”

As with the rest of the U.S., prices for Ellicott City, Columbia and other Howard County homes have fallen since the market’s peak. But, while average U.S. prices fell anywhere from 21% to 33%, depending on which reports you read, Howard County’s home prices had a “softer” drop: 17.8%.   Maybe small comfort to those who bought a home in Ellicott City or Columbia Maryland in ’06 or ’07, but still better than national averages.

Also, since 2009 Ellicott City and other Howard County home prices appear to have stabilized.  Average Howard County home prices peaked in 2007 at $455,464 and hit bottom (we hope) at $390,093 in 2009.  The past two years average Howard County home prices were up slightly in 2010 ($402,848, up 3.2%) and down slightly in 2011 ($401,535, down 0.3%).  (Statistics collected from Metropolitan Regional Information Services. Get more info on Ellicott City / Howard County MD homes for sale and Ellicott City real estate information from JohnAndAngela.com here).

BRAC Employment Helping

Over the past two years Howard County home prices had actually had a positive change in average prices – by 1.5% per year!  Not the stunning 23.7% increase we saw from ’03 to ’04, but still a danged sight better than the -11.3% from ’08 to ’09.  And better than the overall (continued) price declines most of the nation saw the past two years.

No doubt the beefed up employment at Ft Meade due to BRAC has been helping. While many area home owners had hoped BRAC would lead to huge increases in home prices, the overall slow economy and tougher lending standards just wouldn’t support this. But – any increase is better than what most of the nation has seen the past two years.

Near-term predictions?  One year ago I reported on the year/year 3.2% increase in Howard County home prices. At that time I made a “hopeful” pronouncement that we’d hit bottom, and predicted largely flat prices for the next few years.

For 2011 I was correct. The slight -0.3% decline is easily within my definition of “flat” prices (+/- 2%).  I believe we have another 2-3 years of continued flat home prices.  Yes, BRAC will continue to help on  the positive side, but a sluggish economy and restrictive lending standards will balance things out for continued price neutrality.

SELLER OR BUYER CONSULTATION – $349 VALUE – YOURS FREE. Click here to learn about our Free SELL-SMART™ Consultation [including our unique AccuPrice® market valuation of your home]. Or, request our BUY-SMART™ Consultation.  Including materials, both are valued at $349, and both are FREE as a courtesy to you for visiting the John And Angela blog.

Howard County Home Price Trends - 1978 to 2010

Howard County home buyers and sellers ask me all the time, “Where are home prices headed?” And, more bluntly, “When will Howard County home prices start going up again?”  All predictions are risky and, truth is, no one knows for sure. But I believe home prices in Howard County will  neither increase or decrease significantly over the next two to four years.  (We publish a print newsletter on Howard County real estate trends monthly. To receive future and/or past issues, FREE, click here).

There is downward pressure on our Howard County home prices based on history (this blog), and based on current and likely future mortgage changes (next blog).  However, the Baltimore/Washington regional economy is stronger than the national average, and the Ft. Meade economic boost to Howard County in particular (future blog) helps “balance” downward price pressure.

Howard County Home Prices – 1978 to 2010

To understand the future it’s good to know the past.  Using statistics from the Federal Housing Finance Agency, I developed the price chart above to track the change in home prices in Howard County from 1978 to 2010.  Using a base price of $100,000 in 1978, the wavy blue line tracts actual fluctuations, the thin red line tracts a fictitious straight-line appreciation rate of 5.6% per year (an average appreciation rate for the U.S. over the past 40 years).  Each of the colored panels represents a nine year period.

From 1981 to 1989 (the first green rectangle) Howard County home prices went both up and down. But, in the nine years overall actual price changes tracked perfectly with the 5.6% straight line appreciation level.

In the next nine years, 1990 to 1998, prices remained almost flat.  This was partly due to the recession of ’89 to ’93 as well as tax code changes affecting investment real estate.  In Montgomery county, to the south, homes lost value during this time – but Howard County merely had largely flat prices.

From 1999 to 2007 Howard County home prices shot off like a rocket, climbing 129.8% over nine years. In fact, in just six years ending in ’06 prices jumped 115%. If that rate of increase had continued another six years, the average home price in the county would have hit $1,000,000. This was obviously not sustainable.

The last pink rectangle shows Howard county home prices have falling 15.3% from the market’s peak in ’07 to ’10, which includes a slight uptick of 3.2% on prices in 2010.  While discouraging news to sellers, our decline has been less than the average decline in the U.S., estimated at 23.2%.  Our decline has also been softer than even some other local areas – parts of Prince George’s county have seen 45% – 52% price declines from the peak.

By the way, if you are “curious” about the current value and/or change in value in a particular Howard County home, either yours or one you are considering buying, you can get a general guestimate at FHFA.gov or get a more specific valuation free by email here.

History Will Repeat Itself… But Which History?

Will Ellicott City home prices repeat history from ’02 to ’05 in the next four years?  Will Columbia MD home prices repeat ’08 to ’10 the next three years?  The most likely “guess”, I believe, is that Howard County home prices in the next 2 – 5 years will look much like the 90′s in our area – with little up or down swing.

Even with the 15.3% drop already priced into today’s Howard County home prices, we are still above the staight-line 5.6% sustainable appreciation rate.  And, the types of mortgage changes being contemplated by the Feds (see my coming blog) will have, I believe, a stifling effect on potential price increases typical Ellicott City home prices similar to the effect the tax code changes had in the early 90′s.

Two additional factors keeping downward pressure on prices are present and future contemplated changes to the mortgage industry (my next blog).  But, the present and coming BRAC boost to Ft Meade employment, as well as the Balto/Washington regional economy in general, will have a positive impact on house prices (future blog) that will net out, I believe, to yield an overall flat home price picture over the next 2-4 years.

And, if you (or your FRIENDS!) are thinking of buying or selling a Howard County home in the near future, call me (410-772-5400 work, 443-420-7041 Google Voice) or click here.  Thanks for reading!

Finding, And Choosing, A Buyer’s Agent In Howard County Maryland

OK, so you want to buy a home in Columbia or Ellicott City or somewhere else in Howard County Maryland. And, you’ve decided you want “someone on your side” – a “buyer’s agent”. Great.  However, you have to realize there are different types of so-called “buyer’s agents.”

Types of “Buyer’s Agents”

The purpose of having a so-called “buyer’s agent” is to have that agent give YOU, the buyer, 100% loyalty. However, each real estate agent must work for a real estate broker, and the loyalty an agent can offer you is enhanced, or limited, by the business chosen by your agent’s broker. Since about 1995 Maryland real estate brokers have selected one of three types of practices: Exclusive Buyer’s Agency (“EBA”); Single Agency (“SA”); or Dual Agency (“DA”).

Exclusive Buyer’s Agency (“EBA”)

In an EBA firm the brokerage only represents home buyers – never sellers.  The advantage to a buyer is that the broker and your agent can give you 100% loyalty, with 0% chance of a conflict of interest of also representing the seller.

Today there are no firms offering Exclusive Buyer’s Agent service in Howard County.  (If you contact the National Association of Exclusive Buyer’s Agents for a buyer’s agent in Howard County, they’ll tell you there are no exclusive buyer’s agents here – and they’ll recommend that you contact John Toner of Providence Real Estate).

In the early 1990′s there were four Exclusive Buyer’s Agent brokers, but since then one went out of business, one moved out of state, and two (including our firm) converted to Single Agency practices.  (The website Buyers-Agents.com traces some of the history of buyer’s agents in Howard County Maryland).

Single Agency (“SA”)

A Single Agency firm represents both buyers (as buyer’s agents) and sellers (as seller’s agents) but never both at the same time (so-called “dual agents”).   Single Agency firms by definition tend to be smaller brokerages with a handful of agents and no more than, say, a half dozen buyer or seller clients at any given time.  Think “craftsman” vs mass-production.

A Single Agency brokerage can’t offer the 100% loyalty of an EBA but, because Single Agencies are small, the odds of an actual conflict of interest are low. Suppose the broker represents four sellers at the moment amidst 1200 homes currently for sale.  The odds that you, as buyer, want to buy one of these homes is just 0.3% (4 divided by 1200).

Most Single Agency firms use a “first in time” rule for representing clients. Say you come to our office today and want to buy a home in the $550,000 – $700,000 range, and of our current five listings one fits that description. We’d show you the home first. If you don’t like it, we’d sign a buyer’s agent agreement with you promising to give you 100% loyalty on all other homes on the market in your price range.  However, if you did like the home we have listed, we would have to represent the seller (he was our client “first”). At that point you could choose to work through us to buy the home, knowing we represent the seller, or you could hire a completely different buyer’s agent from another firm to represent your interests.

(Wow – that was weird, huh? A Realtor® actually honest enough to say that, on occasion, you might actually want to work with someone else!?)

Currently there are three Single Agency firms offering buyer’s agent service in Howard County Maryland that we are aware of: the John & Angela Team at Providence Real Estate, and two other small firms in Howard County.

Dual Agency (“DA”)

Dual Agency is what the overwhelming majority of all Maryland firms practice.  They work with buyers and sellers, but get all their clients to sign a “dual agency consent” form, which allows the brokerage and the agent to represent both the buyer and the seller in the same transaction.  The purpose for this is so that the company, and agent, can secure your loyalty to them 100% while they only “maybe” give you 100% loyalty back.

If you think you have a buyer’s agent in Howard County, but are working with an agent with one of the big firms, you probably have merely a dual agent.

If it is a firm that has a huge local market share, for example Long & Foster in our local market, it is difficult for them to offer true 100% loyalty to either buyers or sellers.  If Long & Foster has, say, a 25% market share of homes for sale in Ellicott City, then there is a 25% chance your agent can’t serve as truly your buyer’s agent in Ellicott City.  If Coldwell Banker has a 32% market share of homes for sale in Columbia Maryland, then there is a 32% chance your agent can’t be your buyer’s agent in Columbia Maryland.  In both cases, the agent would be a “dual agent” at best.

Is dual agency legal?  Yes, sort of.  Is dual agency right or fair?  Well, we don’t think so.   Maryland, like most states, passed laws in the 1990′s “legalizing” dual agency.  But the practice is prone to legal problems – for agents, brokers, buyers and sellers – that there is a network of real estate attorney who specialize in protecting the victims of dual agency after the fact – see Real Estate Lawyers.Com.

In essence dual agency is designed to protect the agent (making sure that you remain loyal to them) while allowing your so-called “buyer’s agent” to give you compromised loyalty if you happen to buy one of her firm’s listings.

Here is a simple test: Ask a prospective Howard County buyer’s agent to specify how their broker’s agency policy will allow them to provide you with the Six Fiduciary Duties of a Buyer’s Agent.   (My next blog will outline the Six Fiduciary Duties of a Buyer’s Agent).

If the agent squirms – or worse – looks confused, as if they’ve never even heard of the Six Fiduciary Duties, you might want to look for a different Howard County Buyer’s Agent.  Contact us by email for more information about homes for sale in Howard County and/or how our buyer’s agent services can help you get a great deal on a Howard County home.

Buyer’s Agents: Giving Howard County Home Buyers A Fair Deal And Honest Advice

I confess I’ve been asleep at the wheel on my own blog.  Over the past few months I’ve written about topics I thought Howard county home buyers were most interested in these days – foreclosures in Ellicott City, short sales in Columbia, Maryland, and current home price trends in Howard County.  (See prior blog entries, or click here for a list of current foreclosures and short sales in Howard County). But I’ve forgotten to speak about using a “buyer’s agent” despite the fact that for over 20 years I’ve been a pioneer of buyer’s agency in Howard County. 

Forgive me.  I’ll do my best to succinctly address key issues concerning buyer’s agents in Howard County and in Maryland in general in this and the next few posts.

Definitions: Buyer’s Agents, Seller’s Agents, And Dual Agents

Traditionally all real estate agents worked for the seller’s best interests, either as “listing agent” (with a written listing agreement between agent and seller) or as a “sub-agent” (working with buyers but as a “sub-agent” of the listing agent of the home the buyer purchased and thus a seller’s agent).  Crazy, huh? Your agent emotionally bonds with you as home buyer, shows you tons of homes owned by sellers she’s never met, yet she owes 100% loyalty to them, 0% to you.  Wikipedia.org partly explains this system here.

It’s unclear exactly how this agents-always-work-for-sellers system came about. At least, no one has offered an explanation which I find fully satisfying. But it must have been due in part to the fact that, generally, the agent’s best interests are more naturally aligned  with sellers than with buyers.  Both seller and agent want the highest price – the seller to receive more money, and the agent to receive a higher commission.  Both seller and agent want few, if any, “escape clauses” in a purchase contract – because, once a deal has been agreed to, they both want it to go through despite any buyer concerns.

Regardless of how it came about, the fact remains that the basic legal framework in U.S. real estate for nearly a century has been that all agents worked for the seller.  This was certainly true for Howard County Maryland real estate sales.

Then in the late 1970′s and 1980′s some upstart real estate brokers introduced the concept of “buyer’s agency”, where the agent would actually commit in writing to break with the traditional, sellers-only, system and work for the buyer’s best interests. 

This was risky at the time, because “dual agency” – the act of representing both buyer and seller on the same transaction – was completely illegal in all 50 states. If Agent-A with ACME Realty represented the buyer and Agent-B of ACME Realty represented the seller in the same deal this was considered dual agency – representing conflicting interests in the same transaction – and was completely illegal in all 50 states.  Both agents and the broker could lose their licenses for committing just one act of dual agency.

The biggest brokerages, then, never offered buyer’s agency. If the firm had, say, a 25% share of the home listings in an area, there would be a 25% chance of dual agency if that firm represented buyers also.  Since dual agency was blatantly illegal, big firms never offered it to buyers.

This meant that, initially, buyer’s agency was only offered through small, innovative brokerages. Some were “Exclusive Buyer’s Agents”, or EBA’s, where the firm only represented home buyers with a 0% chance of dual agency.  Other small firms practiced “Single Agency”, where they would represent a handful of buyers and sellers, but never both on the same deal. If such a Single Agency firm represented, say, three home sellers out of 1,500 homes for sale in the area, there’d be a 0.2% chance of dual agency.

(If you can’t tell already, yes, I was one of those “innovative”, upity brokers that practiced buyer’s agency in Howard County Maryland as far back as 1989).

However, these small firms offering buyer’s agency apparently posed a threat to the big firms. Over a matter of a few years, from 1991 to 1997, all 50 states made major changes to their dual agency laws and most repealed them. Why? Well, it wasn’t because consumers demanded the “right” to work with “dual agents.”  Rather, it was because the big firms felt threatened by “buyer’s agency” and they wanted to be able to offer something they called buyer’s agency, even if it was simply a repackaged version of the old dual agency that had been illegal for a century.

Locally us ‘little guys’ lobbied against such big boys as Long & Foster, ReMax and O’Conner, Piper & Flynn (now Coldwell Banker). We didn’t want dual agency legalized, as it seemed a blatant ripoff of the consumer.  Alas I found it’s true: you can’t fight city hall (or, in this case, the Maryland Legislature and big brokerage houses at the Maryland Association of Realtors®).

Result Today?  Virtually every agent in Howard County claims to be a “buyer’s agent.”  But precious few will GUARANTEE in writing to give you 100% loyalty.  We do.

For 12 years we practiced Exclusive Buyer’s Agency in Howard County Maryland and for the past eight years we’ve practiced Single Agency for our Howard County home buyer and seller clients.  For reasons I’ll state in a future post, I find Single Agency more beneficial to our clients than even Exclusive Buyer’s Agency.

If you’d like copies of any of our buyer’s agency forms, including a copy of our written loyalty guarantee, click here and we’ll be glad to send it to you.

You can check my OLD website for more info on Buyer’s Agency In Howard County Maryland here (with apologies, it needs a bit of updating), or request our “Home Buyer’s Guide To Maryland Real Estate” here.