Happy New Year! (And, Happy Birthday, Angela Toner!).  With the new year comes the inevitable questions: Will Ellicott City home sales and home prices increase for 2011? No one knows for sure, but  market factors seem to indicate that Ellicott City home prices will remain flat – or even dip a bit more – in 2011, but the pace of home sales may kick off the new year with a bang.

So, what are the factors that will influence Ellicott City home prices, and home sales, in 2011?

RISING MORTGAGE RATES. Mortgage rates have been on the rise the past 90 days, and are predicted to continue to rise through year’s end.  Rising rates are good/bad news for home sellers.  Good news, because rising rates give buyers a sense of urgency – they want to buy quickly, before rates rise again.  But, rising rates decrease the amount of home they can afford – putting downward pressure on prices.

SUPPLY AND DEMAND. Because of excellent schools like Centennial High School, demand for homes for sale nearby Centennial has always been relatively strong from potential home buyers.  However – home buyers’ enthusiasm level in 2011 is tempered by the knowledge that Ellicott City home prices have fallen steadily for four years in a row. In 2011, more than ever before, Ellicott City home buyers have a cautious, “I can wait” attitude.  If you know the sale price and date of  Ellicott City home, this government website lets you calculate it’s approximate value today. Or, for a more accurate valuation of your specific Ellicott City home’s value – free – click here.

While demand is a bit dampened overall, there is a constant supply of homes hitting the market every week.  Not just “willing” sellers, but “unwilling” ones too – as with Ellicott City foreclosures and “short sales”. The good news is that Howard County MD home foreclosure rates – and Ellicott City foreclosure rates in particular – are well below national averages (see prior blog). But – even at these lower rates, they still increase the “supply” of homes, putting downward pressure on prices.

TIGHT BANK APPRAISALS. The collapse of housing prices affects everyone, but banks most of all, with total bank losses estimated anywhere from $1 Trillion up to $4-5 Trillion.   When banks lose that kind of money, it’s understandable they’re now a tad “over-cautious” to approve new loans.  Appraisers are under pressure from banks to come in with low appraisal values – so even if 2011 home buyers were willing to pay higher prices (which they’re not), the banker-appraiser-Federal regulator cartel wouldn’t let them.

TEMPORARY “SPIKES” AND “DROPS” DURING 2011. The above indicators tell us that Ellicott City home prices will not increase anytime this year – or, frankly, anytime for the next 3-5 years – and they could dip another 2-5% this year.  However, we see rising interest rates, plus the threat of possible lowering of conforming loan limits [reported in the Wall Street Journal] as leading to an “early spring.”  Ellicott City home sellers contemplating a sale in 2011 would do well to get their home on the market early – even February – rather than the typical April listing time frame.  [And, with interest rates rising, Ellicott City home buyers would also do well to act quickly].

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.

We’ve all seen a barrage of “shocking” headlines on foreclosures, including this Reuters posting declaring September 2010 set an all time record with 100,000+ foreclosures nationwide. Howard County home buyers and sellers want to know what impact are foreclosures having on our local market?  Are foreclosure homes in Ellicott City above, below, or equal to the national average? And, how are prices of non- foreclosure homes in Columbia, Maryland affected by foreclosure homes in Howard County Maryland?

A foreclosure certainly decreases the value of the foreclosure home itself, estimated to be an average of 27% according to a posting by Molly Line.  But studies on the affect foreclosure homes have on other homes’ values are less clear and vary in their conclusions, but one study impressed me personally.  A Federal Reserve Bank, Cleveland, Sept 2010 report suggests that where foreclosure rates are “moderate” the impact on housing prices is just -1.6%.

So – do we have “moderate” rates of home foreclosures in Howard County, Maryland?  Are home foreclosure rates in Ellicott City above or below the Howard County average?

For the second quarter of 2010 foreclosures represented 24% of all home sales nationwide.   Statistics from our local Realtor® database of homes (“MRIS”) shows that there were 430 foreclosure home sales in Howard County Maryland from January to September, 2010.  Out of  2,140 total home sales, foreclosure home sales in Howard County represented 20.1% of all home sales.  (Find all Howard County MD or Ellicott City homes for sale here, or search specifically for foreclosure homes in Howard County MD or Ellicott City here).

While every foreclosure is a heartbreak for the family involved, it is partially good news to know that the Howard County rate of foreclosure home sales is less than the national average.

We have broken down statistics even further, to show the impact of foreclosure home sales by neighborhood (Centennial High School area home sales had fewer foreclosures, by far, than the county average) as well as by price range (you’d be shocked to see which price range had a 48% foreclosure average vs. which had a 0% average).

You can request our full analysis of Howard County Foreclosure Homes – By Region And Price Range here.  We hope to publish bits and pieces of the full report, by area, in future blogs.   As per usual, you can call 410-772-5400, M-F, 9-5 with any questions about Howard County real estate, or send us an email here.  Blessings