Md.'s 2005 Property Values Increase in Last
Throes of Boom Market
By Alia Malik
Capital News Service
Monday, Oct. 2, 2006
WASHINGTON - Property values and mortgage costs throughout Maryland
rose in 2005, according to U.S. Census Bureau data released to the
public today, but rents fell, signaling the beginning of the end of the
housing boom.
"What they don't capture is the changes since then, which is that
things are cooling," said Gerrit Knaap, executive director of the
National Center for Smart Growth based at the University of Maryland. "I
wouldn't explode this to the end of the world. This is normal
housing-market-cycle stuff."
In 2005, at the pinnacle of a flourishing market that drove housing
costs up, the median value of housing units that were mortgaged or owned
outright, not rented or provided free of charge, was $280,200. The
median, or the point at which half the values are higher and half are
lower, rose 18 percent from 2004 after adjusting for inflation.
That jump caused mortgage costs in Maryland, combined with other
monthly costs of living like insurance, utilities and fuels, to increase
7.4 percent over 2004 with inflation adjustments, to reach a median of
$1,561.
The numbers are consistent with a national housing boom that started
with the new millennium, but stringent controlled-growth policies
throughout Maryland further fueled the increase in property values,
experts said.
"It's a combination of very strong demand and supply not being able
to meet that demand," said Maryland Department of Planning economist
Mark Goldstein.
Although the Census Bureau increased its sampling sizes from 2004 to 2005,
which can affect accuracy, the numbers reflect the dynamics of the
state's housing market, which has seen an increase in value of nearly 70
percent since 2000, Goldstein said.
The market has begun to slow nationwide because of recent increases
in federal interest rates, causing failed speculation that Goldstein
blamed for the 13.7 percent decline in median rent between 2004 and
2005.
The 2005 median cost of renting a home, apartment or condo in
Maryland, including utilities and fuels, was $891 monthly.
"A lot of homes were bought up in this speculative fever," Goldstein
said, adding that when no one bought the homes, they were often rented
out.
Maryland's housing costs were particularly high compared to other
states in 2005. The state ranked seventh in owned or mortgaged property
values, in a statistical tie with Rhode Island and Connecticut. It tied
with New Hampshire for the 10th-highest mortgage cost and had the
fifth-highest rent.
That's no different from previous years and not particularly
disturbing, Goldstein said.
"Relatively speaking, especially for homeowners, we're really not out
of line at all," he said. "The prices are high, but the incomes are
high."
Montgomery County, which enjoys proximity to Washington and a large,
high-income technology sector, had the highest property, mortgage and
rent costs in the state in 2005, with the median value of an owned or
mortgaged property at $466,100.
Francis DeSouza, a real estate agent who owns property in
Gaithersburg and Germantown, also had a house custom-built in Olney in
2000 for $350,000. Now, he says, its appraised value is $900,000.
"As a Montgomery County resident, this is the greatest county you
could be in if you could afford it," DeSouza said. "The taxes are high,
the properties are high, the mortgages are high, and if you're not
making enough to compensate for that, yeah, you're biting off more than
you can chew."
At the other end of the spectrum, Allegany County trailed the rest of
the state in housing costs. The county's median owned- or
mortgaged-property value was $83,600, making it the only county in
Maryland not to break the $100,000 median mark.
Property values in Allegany County have been low since its
manufacturing industry failed decades ago, but it has seen a comeback in
recent years, said Marty O'Toole, a 61-year-old broker for Century 21
Potomac West who has lived in the Cumberland area his whole life. He
sold his own three-bedroom house in Cumberland for $130,000 last year.
"It's still a blessing in that people still can afford housing up
here and people can still invest up here, and we don't have to drive to
work every day in bumper-to-bumper traffic," O'Toole said. "When I drive
down to Annapolis, I go down Route 32 and I look over and see signs that
say, 'We start low-600s' and I go, 'Oh my goodness.' "
Copyright ©
2006
University of Maryland College of
Journalism
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