Blueprint by jolinmilioncherie


									MARCH – APRIL 2005

                                          Blueprint Maryland                                  T H E STAT E ’ S H O U S I N G E CO N O MY I N R E V I E W                    VOLUME 2          ISSUE 3

                                                         Workforce Affordable Rental Housing Shortage in Maryland

                                                          T   here is an acute shortage of workforce affordable
                                                              rental housing for families, seniors and individuals
                                                          with disabilities in Maryland. This shortage has become more
                                                                                                                                      8 percent among households with 31-50 percent of the AMI,
                                                                                                                                      and by only 1 percent for households in the 51-80 percent of
                                                                                                                                      the AMI group. Among households with incomes below 30
                                                          concentrated among the low-income renter house-holds                        percent of the AMI, 70 percent reported at least one housing
                                                          despite improvements in income and housing conditions                       problem in 2000, while 54 percent paid more than 50 percent
                                                          across a broad range of income groups in the past decade.                   of their income for rent and utilities. The corresponding
                                                                                                                                      figures for households with incomes between 31-50 percent
                                                          Statewide, household income grew from an average                            of the AMI are 68 percent and 13 percent, respectively. Finally,
                                                          of $36,016 in 1990 to $52,310 in 2000, an increase of 45                    32 percent of the families earning between 51-80 percent
                                                          percent. The growth of household income was widespread                      of the AMI reported at least one housing problem, while 2
                                                          throughout Maryland, ranging from a low of 25 percent                       percent indicated severe housing problems.
                                                          for Baltimore City to a high of 47 percent for Worcester                             In Worcester County, 54.8 percent of the low income
                                                          County. This impressive growth of income, however, did                      households are cost burdened, the lowest rate in Maryland,
                                                          not significantly reduce the share of low-income renter                     while in Montgomery County, 74.2 percent are cost burdened,
                                                          households with housing problems.                                           the highest rate (See table on page 2). A family is cost
                                                             During the 1990-2000 period, the share of Maryland                       burdened if it pays more than 30 percent of its income for
                                                          households with severe rent burden, i.e., payment for rent and              rent. About 34.3 percent of Garrett County’s low income
                                                          utilities exceeds 50 percent of the family income, declined                 households are severely cost burdened, the lowest rate,
                                                          by only 2 percent among households with 0-30 percent of                     compared to Montgomery County’s 60.4 percent, the
                                                          the Area Median Income (AMI). The same share declined by                    highest rate.
                                                                                                                                                                                     ...continues on page 2

                                                         National Economic Digest
        1             workforce affordable
                      rental housing shortage
                      in maryland                         U.S. Economic Growth Expands at a Revised Quicker Pace                       from 0.9 percent). Consumer spending, however, was revised
        1             national economic digest            The U.S. Bureau of Labor Statistics revised up the fourth                    slightly lower (4.2 percent from 4.6 percent), due mainly to
                                                          quarter real GDP growth rate to 3.8 percent from 3.1                         downward revisions of durable goods spending. Finally, the
        3             residential construction
                                                          percent, thereby confirming that the U.S. economy is                         GDP price index was revised up moderately from 2.0 percent
                                                          advancing at a markedly above-trend pace. The faster pace                    to 2.1 percent.
        5             mortgage rate trends
                                                          of the GDP growth was due mainly to a sharp upward
        5             home sale trends                    revision of exports, i.e., a growth of 2.4 percent instead of                Beige Book Points to an Expanding Economy
                                                          an earlier reported decline of 3.9 percent. Other upward                     The Fed’s Beige Book for the late-November to early-January
        7             homeownership
                      affordability indices               revisions included residential investment (up 2.1 percent                    period was generally consistent with solid economic
                                                          from 0.3 percent), fixed business investment (up 14 percent                  expansion across most regions and industries. Most
                                                          from 10.3 percent), inventory change (up 0.6 percent from                    districts reported that manufacturers plan to increase
                                                          0.4 percent), and government purchases (up 1.2 percent                       capital spending in 2005, in part spurred by replacement
                                                                                                                                                                                 ...continues on back cover

                                                                                     This issue of Blueprint Maryland quantifies the shortage of workforce affordable rental housing
                                                                                     throughout Maryland communities. This issue was carefully analyzed in the final report of the
                                                                                     Governor’s Commission on Housing Policy. The Commission’s recommendations are practical,
                Blueprint Maryland is published                                      innovative solutions to our affordable housing shortage. I congratulate the Commission and the
                   monthly by the Maryland                                           hundreds of others who participated in this endeavor. The lives of many Marylanders will be positively
                  Department of Housing and
                   Community Development                                             impacted as a result of their commitment to address the difficult issues of affordable housing and
                                                                                     community revitalization. Please visit to read the full report.
                                                                                                                                       – robert l. ehrlich, jr., Governor, State of Maryland

                                                  BLUEPRINT MARYLAND      |   T H E STAT E ’ S H O U S I N G E CO N O MY I N R E V I E W   |    MARCH – APRIL 2005
...Workforce Affordable Rental Housing from cover

    In addition to the size and variation of household                 PROJECTED SHORTAGE OF WORKFORCE AFFORDABLE AND AVAILABLE RENTAL HOUSING
income overtime, the affordability problem depends                                          IN MARYLAND JURISDICTIONS, 2014
on the supply side of the rental market, i.e., higher
                                                                                                           % HOUSEHOLDS IN 2000             SHORTAGE OF AFFORDABLE UNITS
rates of growth in median rent and the slow growth of
                                                                                        50% of AMI           Cost        Severely      Low Income
multi-family residential structures. The rental housing             JURISDICTION      Threshold (2000)     Burdened   Cost Burdened      Families    Seniors   Disabled     Total

supply, in turn, can be measured by units affordable                Allegany           $ 15,411            64.8%         44.2%             700        300        300        1,300
                                                                    Anne Arundel          30,884           67.2%         54.7%            8,700      1,800      2,100      12,600
and available to a specific income threshold. Data from
                                                                    Baltimore             15,039           66.9%         48.8%           13,200      4,600      4,600      22,400
the 2000 Census shows that about 87 rental-housing
                                                                    Baltimore City        25,334           76.7%         63.5%           10,000      3,300      4,500      17,800
units were affordable for every 100 low-income renter
                                                                    Calvert               32,973           69.9%         46.1%             900        200        200        1,300
households in Maryland. This represents a shortage                  Caroline              19,416           61.4%         38.9%             300        100        100          500
of 13 units per 100 renter households. However, many                Carroll               30,011           70.4%         58.4%            1,900       500        500        2,900
units, nominally affordable to specific income groups,              Cecil                 25,255           67.7%         51.5%            1,300       300        400        2,000
are occupied by higher income households. In 1990                   Charles               31,100           71.2%         47.0%            1,900       300        500        2,700
and in 2000 alike, about 46 percent of the affordable               Dorchester            17,039           67.7%         48.6%             300        200        100          600
units, or 40 units per 100 low-income renters, were                 Frederick             30,138           69.1%         49.9%            3,300       700        800        4,800

occupied by higher income renter households. As a                   Garrett               16,119           55.9%         34.3%             200        100        100          400

result, only 47 affordable rental units were available per          Harford               28,617           68.6%         54.4%            3,300       700        800        4,800

                                                                                                                                                                                            Source: Maryland Department of Housing and Community Development
                                                                    Howard                37,084           66.1%         57.6%            6,700       900       1,100       8,700
100 low-income renter households in Maryland.
                                                                    Kent                  19,935           64.4%         48.4%             300        100        100          500
    This study, conducted at the request of the
                                                                    Montgomery            35,776           74.2%         60.4%           24,700      5,700      5,600      36,000
Governor’s Commission on Housing Policy, estimates
                                                                    Prince George’s       27,628           73.8%         58.1%           19,200      3,300      5,100      27,600
the shortage of affordable and available rental housing             Queen Anne’s          28,519           62.6%         43.4%             500        100        100          700
units for households who earn less than 50 percent of               Somerset              14,952           73.0%         58.7%             200        100        100          400
the AMI and pay more than 30 percent of their income                St. Mary’s            27,353           69.2%         46.3%            1,500       300        300        2,100
for rent. The Commission was established by Governor                Talbot                21,766           71.5%         50.5%             500        200        100          800
Robert L. Ehrlich, Jr. through an executive order in                Washington            20,309           65.8%         49.8%            1,800       600        700        3,100
March 2003 to develop new and innovative policies                   Wicomico              19,518           72.5%         56.9%            1,200       400        400        2,000

to expand home ownership, to ensure an ample                        Worcester             20,325           54.8%         41.0%             500        200        200          900
                                                                    Maryland           $ 26,155            70.0%        53.8%          103,100      25,000     28,800     156,900
supply of workforce housing, to address the needs
of seniors and individuals with disabilities, and to
enhance community revitalization activities to create
sustainable communities.
    Since the median household income varies                    The disabled households are defined as families                  to grow by an additional 25 percent, reaching a high
widely across the state, the use of a single statewide       with one or more disabled individual, where                         of 157,000 units by 2014. Our projections assume no
affordability threshold may distort the analysis as it       disability, as defined by the 2000 Census, is a                     new workforce affordable rental housing production
represents a different share of the local median income.     condition that makes it difficult for a person to do                by the Maryland Department of Housing and
For example, in 2003, the statewide median family            activities such as walking, climbing stairs, dressing,              Community Development (DHCD) beyond 2005.
income threshold (50 percent), as reported by the U.S.       bathing, learning, or remembering. The data include                 This allows us to estimate the impact of various
Census Bureau, was $26,155. This threshold represents        non-institutionalized individuals over five years                   production scenarios and policy options on the
only 35 percent and 37 percent of the median                 of age who live in households and group quarters                    projected deficit. According to our analysis, low-
household income in Howard and Montgomery                    such as college dormitories, military quarters, and                 income family units account for the bulk of the
counties respectively. The corresponding figure for          group homes. The disabled individuals (including                    projected deficit (103,100 units or 66 percent of the
Baltimore City is 87 percent. Thus, to account for these     the elderly disabled) are converted to the disabled                 total), followed by units accessible to individuals with
variations, this study estimates the magnitude of the        households using an average household size of                       disabilities (28,800 or 18 percent), and the elderly
rental housing shortage in Maryland by utilizing a           about 2.2 persons per family.                                       units (25,000 or 16 percent). Based on an estimated
different income threshold for each county. These local         Baseline shortage of workforce affordable rental                 cost per unit of about $114,000 and incorporating
income thresholds are equivalent to 50 percent of each       units for 2000 are based on the number of low                       future inflation, the estimated production cost of
county’s median household income.                            income families, elderly and disabled households                    meeting the expected 157,000 shortage of units over
    To estimate the shortage of affordable housing for       compared to the number of workforce affordable                      the next ten years is approximately $19.5 billion.
the state’s senior households, the elderly population        rental units available to them. The shortage                             Montgomery County with 36,000 units has
had to be converted into elderly households. Our             projections for 2014 are based on the forecast of                   the largest projected shortage, followed by Prince
conversion technique is based on the Census                  population growth. On average, the number of                        George’s County (27,600 units), Baltimore County
distribution of families (ranging in size from one           low-income families and the disabled households                     (22,400 units), Baltimore City (17,800 units), Anne
person to four or more persons) headed by an                 will grow by about 0.8 percent a year during the                    Arundel County (12,600 Units), and Howard County
individual 65 years and older. According to the 2000         projection period. The corresponding figure for                     (8,700 units). With the exception of Garrett County,
Census, about 68.3 percent of senior families consist        senior households is 2.0 percent a year.                            jurisdictions with the smallest projected shortage are
of one person, 26 percent consist of two persons, and           In 2000, Maryland had a deficit of about                         located on the Eastern Shore of Maryland and include
the remaining 5.7 percent consist of three or more           125,000 affordable and available rental units. The                  Somerset, Caroline, Kent, Dorchester, Queen Anne’s,
individuals.                                                 rental housing shortage in Maryland is projected                    Talbot, and Worcester counties. ■

 PAG E 2                                                           BLUEPRINT MARYLAND              |   MARCH – APRIL 2005
Residential Construction Trends
                                                                                                                                                                                                                           The January construction
                                                                                                                                                                                                                          spending in the U.S. was up
Construction Spending Continues to Grow                          builders’ expectations of future home sales and the                                                                                                      by 0.7 percent compared to
Construction spending in January was up 0.7                      traffic of potential buyers, remained unchanged.
                                                                                                                                                                                                                         last month and by 11 percent
percent from last month and 11 percent from
January 2004. Private construction (both residential             Mortgage Applications Index Edged Up
                                                                                                                                                                                                                          compared to January 2004.
and non-residential) increased by 0.6 percent                    The Mortgage Applications Index of the Mortgage
in January. Residential construction was up 0.4                  Bankers Association, a volatile leading indicator of
percent, as spending on single-family and multi-                 home sales and refinancing, edged up 0.5 percent
family structures increased by 0.9 percent and 0.2               in February. The Index, however, declined by 5.5
percent, respectively. Nonresidential construction               percent from February 2004. The purchase index
spending increased by 1.2 percent, while spending                component declined by 0.07 percent from last
on public construction rose by 0.8 percent. The                  month, but gained 4 percent from February 2004.
gains in public construction spending were due to                The refinancing application index component
increases in spending on educational facilities and              increased by 1.2 percent, but declined by 35 percent
on transportation infrastructure by state and local              compared to February 2004. The recent reading
governments.                                                     of the index suggests a decelerating demand for
                                                                 mortgage loans and specifically for refinancing,
Housing Market Index Declines                                    due to recent increases in variable mortgage rates.
The Housing Market Index (HMI) produced by the                   The average 30-year fixed mortgage rate declined
National Association of Home Builders, declined by               to 5.63 percent in February, down eight basis points
two points to 68 in January, the lowest reading in               from January and one basis point from February
the past five months. The decline was due to the                 2004. On the other hand, the average one-year
softening in the builders’ view of current home sales,           adjustable rate was 4.16 percent, up four basis
as the current sales component of the index declined             points from January and 61 basis points from
by three points to 74. Other components of HMI, the              February 2004.
                                                                                                                                                                                                                          The January building permits
                                                                                                                                                                                                                          issued in Maryland declined
                                                                                                                                                                                                                          by 23.6 percent to 1,525 units.
                                                                                                                                                                                                                         Single-family permits declined
                                RESIDENTIAL CONSTRUCTION – JANUARY 2005
                                                                                                                                                                                                                           by 12 percent to 1,373 units,
                                                                                                                                                                                                                            and multi-family permits
                                         PERMITS                       STARTS                          COMPLETIONS
         COUNTY                  Units    $ Value (‘000s)      Units     $ Value (‘000s)       Units     $ Value (‘000s)
                                                                                                                                                                                                                          decreased by 65.1 percent to
         Allegany                   12           973              6             698               7               953                                                                                                               152 units.
         Anne Arundel             169         23,030           222        26,541                211            24,762
         Baltimore                  84        10,106           251        21,168                 97            13,258
         Baltimore City             22         3,007            22          3,007                 0                  0
         Calvert                    53         9,090            53          9,090                30             4,674
         Caroline                   11         1,870            11          1,870                21             2,936
         Carroll                    51         7,209           145        13,384                 55             7,560
         Cecil                      78        12,099            74        11,779                 74             9,978
                                                                                                                                 Source: U.S. Census Bureau & Maryland Department of Housing and Community Development

         Charles                    94        15,711            69        13,999                 88            16,408
         Dorchester                  0              0             0              0               22             3,472
         Frederick                  79         9,503            79          9,503               122            14,369
         Garrett                     5           803              5             803              60            10,935
         Harford                  102         14,325            97        13,985                233            33,260
         Howard                     95        12,984           111        14,044                 78             6,662
         Kent                        5           886              5             886              24             4,684
         Montgomery               114         28,658           114        28,658                239            36,549
         Prince George’s          234         41,253           234        41,253                128            15,202
         Queen Anne’s               17         4,149            17          4,149                29             3,964
         Somerset                    3           422            12          1,044                12             1,053
         St. Mary’s                 73         9,272            68          8,906               108            13,497
         Talbot                     32         6,111            32          6,111                52             8,454
         Washington                 72        13,540            71        12,949                 82            12,408
         Wicomico                   51         6,192            51          6,192                58             6,333
         Worcester                  69         7,488            59          6,851               139            14,892
         Maryland               1,525    $ 238,682            1,808    $ 256,870               1,969      $ 266,263

                                                                                                             ...continues on page 4

                                                            BLUEPRINT MARYLAND             |   MARCH – APRIL 2005                                                                                                                                      PAG E 3
...Residential Building from page 3

                                                                                               RESIDENTIAL BUILDING PERMITS – ALL UNITS
Building Permits Down in the U.S. and Maryland
                                                                                                    Percent Change from Same Month Previous Year

                                                                                                                                                                                       Source: U.S. Census Bureau & Maryland Department of Housing and
but up in the South Region
In January, the U.S. Census Bureau reported that
privately owned building permits in the U.S. declined
by 9.8 percent to 137,559 units. The decline in building
permits was broad based, as single-family permits
declined by 5.0 percent to 105,147 units and multi-
family permits declined by 22.3 percent to 32,412 units.
Compared to January 2004, however, both single-

                                                                                                                                                                                       Community Development
family and multi-family permits were up, as they
increased by 8.4 percent and 17.0 percent, respectively.
 The January volume of building permits issued in
the South region increased by 5.3 percent to 74,400
units. The South region includes Maryland, Delaware,
Washington, D.C., Virginia, West Virginia, North
Carolina, South Carolina, Georgia, Florida, Alabama,          Housing starts in Maryland declined by 20.5 percent in January 2005 to 1,808 units.
Mississippi, Tennessee, Kentucky, Louisiana, Arkansas         Across product types, single-family housing starts declined by 12.0 percent to 1,373
and Texas. The region’s single-family and multi-family             units, while multi-family starts decreased by 39.0 percent to 435 units.
permits were up, as they rose by 5.6 percent to 57,300
units and by 4.1 percent to 17,100 units, respectively.
Compared to January 2004, residential building
                                                           residential building permits issued for all units                 However, compared to January 2004, housing
permits issued in the South region increased by 18.4
                                                           declined by 13.4 percent, reflecting declines of 15.6             completions were up by 12.1 percent.
percent, as multi-family permits increased by 29.2
                                                           percent for multi-family units and 13.2 percent for                    In the South region, housing completions
percent and single-family permits rose by 15.5 percent.
                                                           single-family structures.                                         declined by 27.1 percent to 60,700 units. Single-family
    The January building permits issued in Maryland
                                                                                                                             completions declined by 30.3 percent to 48,900 units,
declined by 23.6 percent to 1,525 units. Single-family
                                                           Maryland Housing Starts Declined                                  while the multi-family completions decreased by 9.9
permits declined by 12 percent to 1,373 units, and
                                                           Nationally, residential construction in January                   percent to 11,800 units. Similar to the national trend,
multi-family permits decreased by 65.1 percent to
                                                           grew by 4.6 percent to 141,000 units. Single-family               housing completions in this region were up by 16.5
152 units. Compared to the same month last year,
                                                           construction increased by 1.8 percent to 113,000 units,           percent compared to the January 2004 data.
                                                           while multi-family construction grew by 17.6 percent                   In Maryland, the number of housing units
                                                           to 28,000 units. Compared to the same month last                  completed declined by 27 percent to 1,969 units in
                                                           year, single-family and multi-family housing starts               January. The single-family completions declined by
         The January median sale                           were up by 17.2 percent and 12.0 percent, respectively.           18.2 percent to 1,779 units, while the multi-family

        price of existing homes in                             Housing starts increased in the South region                  housing completions decreased by 63.7 percent to 190
                                                           by 27.2 percent to 81,000 units in January, as single-            units. Compared to the same month last year, housing
         Maryland was $251,984,
                                                           family construction rose by 32.1 percent, while multi-            completions were down by 16.1 percent in Maryland.
        down 2.4 percent from last                         family starts increased by 7.7 percent. Compared to
        month, but up 16.3 percent                         January 2004, residential housing starts were up by               Residential Construction Activity in
           from January 2004.                              28.4 percent, reflecting increases of 1.4 percent in the          Maryland Counties
                                                           multi-family construction and 35.9 percent in the                 Across Maryland, the value of housing permits
                                                           single-family housing activity.                                   in January declined by 11 percent to $239 million.
                                                               Housing starts in Maryland declined by 20.5                   Maryland jurisdictions that reported gains in the
                                                           percent in January 2005 to 1,808 units. Across                    number and value of building permits issued for
                                                           product types, single-family housing starts declined              this month included Allegany, Garrett, Harford,
                                                           by 12.0 percent to 1,373 units, while multi-family                Howard, Prince George’s and St. Mary’s counties, and
                                                           starts decreased by 39.0 percent to 435 units.                    Baltimore City. Statewide, the value of housing starts
                                                           Compared to January 2004, housing starts were                     declined by 9.9 percent to $257 million in January
                                                           down by 13.6 percent in Maryland, due to declines                 2005. Overall, six Maryland jurisdictions reported
                                                           of 13.2 percent in single-family and 15.0 percent in              gains in the number and value of housing starts,
                                                           multi-family construction.                                        including Allegany, Carroll, Garrett, Harford, Howard,
                                                                                                                             and Prince George’s counties. The value of housing
                                                           Housing Completions Down                                          units completed in Maryland declined by 25 percent
                                                           The U.S. Census Bureau reported that in January,                  to $266 million in January. Maryland jurisdictions that
                                                           privately owned housing completions declined by                   reported gains in the number and value of housing
                                                           28.8 percent to 133,000 units, nationally. Across                 completions included Caroline, Garrett, Harford,
                                                           the nation, single-family and multi-family housing                Montgomery, and Worcester counties. ■
                                                           completions declined by 31.5 percent to 111,300 units,
                                                           and by 10.7 percent to 21,700 units, respectively.

 PAG E 4                                                          BLUEPRINT MARYLAND           |   MARCH – APRIL 2005
Mortgage Rate Trends                                                                                30-YEAR FIXED MORTGAGE RATES

T   he February effective 30-year fixed mortgage

                                                                                                                                                                                      Source: Freddie Mac & Maryland Department of Housing and
    rates -- rates that account for variations in
points – declined in the U.S. and the South region,
but edged up in Maryland.

From January to February 2005, Freddie Mac’s 30-
year effective fixed mortgage rates dropped from

                                                                                                                                                                                      Community Development
5.77 percent to 5.70 percent in the U.S., and from
5.73 percent to 5.66 percent in the South region. In
Maryland, however, the rates increased from 5.53
percent in January to 5.62 percent in February. The
Maryland commercial fixed mortgage rate is now
eight basis points below the national rate.
    The effective mortgage rate of the Community           mortgage loans to eligible homebuyers through
Development Administration (CDA), an arm                   private lending institutions throughout the State.
of the Maryland Department of Housing                      The CDA’s effective rate is now 25 basis points below                 The effective mortgage rate of
and Community Development, stands at 5.37                  the average effective commercial mortgage rates in                     CDA, an arm of the Maryland
percent. The CDA’s Maryland Mortgage Program               Maryland, and 33 basis points below Freddie Mac’s
                                                                                                                                  Department of Housing and
( provides low-interest             national average rate. ■
                                                                                                                                   Community Development,
                                                                                                                                     stands at 5.37 percent.

Home Sale Trends

New Home Sales up in January                               significantly higher than the January 2004 ratio of
                                                                                                                           inventory of existing homes available for sale dropped
According to the Census Bureau, new single-                3.8 months. Similarly, the number of new homes sold
                                                                                                                           from a low of 3.9 months last month to a record low
family home sales in the U.S. increased to 85,000          in Maryland increased to 1,231 units in January, up
                                                                                                                           of 3.7 months in January. The median price of existing
units in January, up 3.7 percent from last month’s         6.2 percent from last month, but down 12.3 percent
                                                                                                                           homes declined slightly to $189,000 in January, down
revised volume of 82,000, but down 4.5 percent             compared to January 2004. The healthy gains in new
                                                                                                                           one percent from last month, but up 10.5 percent
from January 2004. Nationally, the inventory of            home sales nationwide reflect the continuation of
                                                                                                                           from January 2004. Existing home sales in the South
new homes for sale increased to 440,000 units in           strong demand for homes, as both adjustable and
                                                                                                                           region declined to 145,000 units, down 31.6 percent
January, representing a growth of 2.1 percent over         fixed rate mortgages remain affordable.
                                                                                                                           from last month, but up 9 percent from January 2004.
last month and 17.0 percent over January 2004.
                                                                                                                           The January median price of existing homes declined
The supply of new homes for sale declined from a           Existing Home Sales Declined Sharply in January
                                                                                                                           in the South region to $170,000, down 2.4 percent
five-year high of 5.3 months in December 2004 to           Nationally, existing home sales declined to 380,000
                                                                                                                           from last month, but up 10.0 percent compared to
5.2 months in January. However, the January supply         units in January, down 30.5 percent from last month,
                                                                                                                           January 2004.
ratio was significantly higher than the January 2004       but up 8.0 percent compared to January 2004. The
                                                                                                                                                             ...continues on page 6
ratio of 4.2 months. The January median price of new
single-family homes was $199,400 in the U.S., down
13.2 percent from last month and 4.8 percent from
January 2004.
                                                                                                             NEW HOME SALES
   In the South region, 45,000 new single-family                                                  Percent Change from Same Month Previous Year
homes were sold in January, about 53 percent of all
                                                                                                                                                                                        Source: U.S. Census Bureau & Maryland Department of Housing and

new homes sold in the U.S. The region’s January new
home sales was up 12.5 percent from last month’s
revised volume of 40,000 units, but down 2.2
percent from January 2004. The region’s inventory
of new homes for sale increased to 207,000 units
in January, representing a growth of 3.5 percent
over last month and 18.3 percent over January 2004.
The supply of new homes for sale also declined
                                                                                                                                                                                        Community Development

in the South region, from a high of 5.0 months in
December 2004 to 4.6 months in January. Similar
to the national trend, the region’s supply ratio was

                                                       BLUEPRINT MARYLAND       |     MARCH – APRIL 2005                                                                    PAG E 5
...Home Sale Trends from page 5

    The volume of existing home sales in Maryland                                                          EXISTING HOME SALES
                                                                                                Percent Change from Same Month Previous Year
declined sharply to 5,797 units in January, down 31.1

                                                                                                                                                                                               Source: U.S. Census Bureau & Maryland Association of Realtors
percent from last month, but up 7.3 percent from
January 2004. The inventory of existing homes
available for sale in Maryland was 1.5 months of
supply, representing an increase of 4.8 percent from
last month, but a decline of 34.3 percent from January
2004. The January supply of existing homes in
Maryland was, therefore, 2.2 months, or 59.5 percent,
below the national average rate. The median sale
price of existing homes in Maryland was $251,984 in
January, down 2.4 percent from last month, but up
16.3 percent from January 2004.
    This month’s sharp decline in existing home sales
throughout the U.S. is due both to the softening of
                                                                            HOUSING UNITS SOLD AND HOUSING UNITS INVENTORY – JANUARY 2005
demand and to seasonal variations. While it might
                                                                                              HOUSING UNITS SOLD                         HOUSING UNITS INVENTORY
be correct to assume that rising mortgage rates are
                                                                                    Current     Change from Change From       Current      Months   Change From Change From
partially responsible for the slower pace of housing       COUNTY                   Month         Last Year  Last Month      Inventory     Supply     Last Year  Last Month

demand, the most likely explanation is the typical         Allegany                    49         63.3%       -22.2%            198          4.0      -56.2%        0.6%
                                                           Anne Arundel              523            7.4%      -32.3%            952          1.8      -32.5%       15.3%
slow down in the real estate market during the
                                                           Baltimore                 707            9.6%      -31.1%            910          1.3      -33.6%        -2.2%
winter months. Our analysis of historical data also        Baltimore City            744            5.2%      -27.1%          1,227          1.6      -45.9%        -8.7%
suggests that volatility in home sales during winter       Calvert                     81           0.0%      -33.1%            257          3.2        -4.5%      16.7%
months is not that unusual.                                Caroline                    32         14.3%       -11.1%            144          4.5      -25.9%       -12.9%
                                                           Carroll                   128           -0.8%      -37.9%            286          2.2      -34.3%       16.2%
                                                           Cecil                       84          -1.2%      -29.4%            306          3.6      -12.8%        7.6%
                                                           Charles                   164          10.1%       -33.9%            200          1.2      -26.1%        3.2%

   This month’s sharp decline in existing                  Dorchester                  26         -21.2%      -54.4%            193          7.4        4.2%       96.8%
                                                           Frederick                 258          13.7%       -21.8%            377          1.5      -46.2%       -13.0%
     home sales throughout the U.S. is                     Garrett                     32         77.8%       -49.2%            297          9.3      -39.3%       63.8%
   due both to the softening of demand                     Harford                   203           -4.2%      -35.8%            411          2.0      -18.4%        -3.1%

         and to seasonal variations                        Howard                    263          10.0%       -32.9%            328          1.2      -27.1%        2.9%
                                                           Kent                        20           0.0%      -44.4%            116          5.8        0.0%       49.1%
                                                           Montgomery                988            3.8%      -33.8%            897          0.9      -29.3%        5.5%
                                                           Prince George’s           934            4.9%      -31.4%            698          0.7      -55.8%        0.1%
                                                           Queen Anne’s                58         13.7%       -21.6%            271          4.7      -28.4%        6.4%
Maryland Counties

                                                                                                                                                                               Source: Maryland Association of Realtors
                                                           St. Mary’s                122          41.9%       -14.7%            219          1.8      -19.6%        -7.3%
In January, a total of 8,965 existing housing units        Somerset                    21         61.5%        -8.7%              0          0.0        0.0%        0.0%
were available for sale throughout Maryland. Of            Talbot                      53           1.9%       -3.6%            317          6.0      -15.0%        -9.4%

that total, 5,797 units, or 65 percent of the inventory,   Washington                141          42.4%        -9.6%            361          2.6      -39.2%       -15.4%
                                                           Wicomico                    64         20.8%       -37.9%              0          0.0        0.0%        0.0%
was sold in January, up 7.3 percent from last year,
                                                           Worcester                 102          -11.3%      -48.2%              0          0.0        0.0%        0.0%
but down 31.1 percent from the previous month.             Maryland                5,797           7.3%       -31.1%          8,965         1.5       -34.3%        4.8%
Montgomery County, with 988 units, and Kent County,
with 20 units had the highest and the lowest number
of home sales in Maryland. The January inventory of
existing homes was equal to 1.5 months of supply, up                                     REAL ESTATE TRANSACTIONS – JANUARY 2005
4.8 percent from last month, but down 34.3 percent
from last year. Garrett County, with 9.3 months supply
of existing homes, had the highest supply ratio in
Maryland. The suburban counties of Montgomery and
Prince George’s counties recorded the lowest housing
supply of 0.9 and 0.7 months respectively. Other
counties with less than 2 months supply of existing
homes for sale include Charles and Howard counties
(1.2 months), Baltimore County (1.3 months), Frederick
                                                                                                                                                                              Source: Maryland Association of Realtors

County (1.5 months), Baltimore City (1.6 months),
Anne Arundel and St. Mary’s counties (1.8 months).
Complete data are not available for Somerset,
Wicomico, and Worcester counties. ■

 PAG E 6                                                   BLUEPRINT MARYLAND            |    MARCH – APRIL 2005
Homeownership Affordability Indices

T   he Maryland Homeownership Affordability
    Indices for repeat and first-time homebuyers
provide a framework within which housing
                                                                     both repeat and first-time homebuyers decreased by
                                                                     2.4 percent to $251,984 and $214,186, respectively in
                                                                     January. Effective 30-year mortgage rates fell from
affordability in Maryland counties and Baltimore                     a national average rate of 5.87 percent in December
City can be traced over time.                                        2004 to 5.77 percent in January 2005.
                                                                         Across the state, Montgomery County had the
In January, the Maryland affordability index for                     highest median housing price of $369,925 for repeat
repeat buyers was 110, signifying the ability of a                   buyers and $314,436 for first-time buyers, up 15.6
typical repeat buyer to afford a house that is 10                    percent from a year ago and essentially unchanged
percent more expensive than a median priced home.                    from the previous month. However, Talbot County
The January index for first-time buyers stood at 71,                 was the least affordable jurisdiction in Maryland
indicating that the typical first-time buyer could                   with homeownership affordability indices of 63
only afford a home priced 29 percent below the                       for repeat buyers and 41 for first-time buyers. The                                                                             Homebuyers’ ability to buy
median priced home available to first-time buyers.                   median housing prices in Talbot County in January                                                                                a median priced home in
Homebuyers’ ability to buy a median priced home                      were $360,000 for repeat buyers and $306,000 for
                                                                                                                                                                                                      Maryland increased by 1.2
in Maryland increased in January as the statewide                    first-time buyers. Allegany County, on the other
                                                                                                                                                                                                       percent in January, but
index was up 1.2 percent from December 2004, but                     hand, with the housing affordability indices of 250
down 17.3 percent compared to January 2004. The                      for repeat home buyers and 161 for first-timers
                                                                                                                                                                                                       declined by 17.3 percent
increase in the affordability indices from last month                was the most affordable jurisdiction in Maryland.                                                                               compared to January 2004.
resulted from a modest reduction in home prices                      The median housing prices for Allegany County in
accompanied by a small drop in interest rates. The                   January were $65,900 for repeat buyers and $56,015
median sale price of existing homes available to                     for first-time buyers. ■


                                         MEDIAN HOME SALE PRICES                  HOUSING AFFORDABILITY INDICES
                                   Current Month           % Change From           Current Month         % Change From
                                Repeat      First Time                            Repeat   First Time
     COUNTY                     Buyers        Buyers     Last Year   Last Month   Buyers     Buyers     Last Year   Last Month

    Allegany                $ 65,900         $ 56,015     28.5%        -5.9%       250           161    -18.2%       10.1%
    Anne Arundel             300,000          255,000     22.4%         5.3%       112           72     -22.2%      -10.7%
    Baltimore                200,000          170,000     21.2%         0.0%       131           84     -15.3%        1.2%
    Baltimore City              95,000         80,750     28.6%         5.6%       156           100    -15.5%        1.5%
    Calvert                  295,000          250,750     35.9%        -5.6%       121           78     -31.2%       -2.3%
    Caroline                 162,850          138,423     31.3%         1.8%       122           79     -20.2%        1.6%
    Carroll                  299,700          254,745     16.6%         5.2%       108           70     -16.1%       -8.3%
    Cecil                    229,000          194,650     22.5%         1.8%       113           73     -23.7%       -9.5%
    Charles                  273,950          232,858     31.1%        -3.2%       120           77     -24.0%        1.5%
    Dorchester               163,750          139,188     31.0%        -9.0%       108           70     -23.4%        8.8%
    Frederick                278,000          236,300     35.0%         2.0%       121           78     -24.4%       -1.4%
    Garrett                  231,750          196,988     38.8%       -33.8%        73           47     -19.6%       66.1%
    Harford                  209,000          177,650     18.1%         4.4%       145           94     -16.8%       -7.2%
                                                                                                                                 Source: Maryland Department of Housing and Community Development

    Howard                   335,000          284,750     24.1%         1.2%       117           75     -23.8%       -7.9%
    Kent                     193,750          164,688      0.0%       -29.3%       103           67       0.0%       53.1%
    Montgomery               369,925          314,436     15.6%         0.0%       101           65     -14.2%       -2.2%
    Prince George’s          255,000          216,750     34.2%         2.0%       114           73     -24.8%       -2.5%
    Queen Anne’s             297,500          252,875      -9.6%       -9.3%       104           67      10.5%        8.7%                                                                              Existing home sales in
    St. Mary’s               260,841          221,715     26.8%        -4.6%       110           71     -17.2%        8.6%
                                                                                                                                                                                                     Maryland declined sharply by
    Somerset                    88,000         74,800     10.0%       -43.9%       174           112     -9.3%       75.5%
    Talbot                   360,000          306,000     22.6%         0.6%        63           41     -12.7%        4.8%
                                                                                                                                                                                                     31.1 percent to 5,797 units in
    Washington               175,000          148,750      6.1%       -12.0%       125           81       3.5%       23.0%                                                                           January, but increased by 7.3
    Wicomico                 143,000          121,550      0.0%       -15.9%       139           89       2.7%       20.4%                                                                          percent compared to the same
    Worcester                310,000          263,500      4.4%       -37.9%        71           45       1.1%       67.5%
                                                                                                                                                                                                            month last year.
    Maryland               $ 251,984        $ 214,186    21.1%        -2.4%       110            71     -17.3%        1.2%

                                                             BLUEPRINT MARYLAND              |    MARCH – APRIL 2005                                                                                                            PAG E 7
...Homeownership Affordability Indices from page 7


                                                                                                                                           Source: Maryland Department of Housing and Community Development
...National Economic Digest from cover
                                                                         housing-related components made the largest contribution
demand. Residential real estate markets remain strong, but               to the January Index. In particular, housing starts rose 4.7
several districts reported some moderation. House-price                  percent in January, a 21-year high. The Index’s employment-
appreciation is generally holding steady. Commercial and                 related component rebounded to +0.07 in January, from
industrial lending rose across most districts, consistent                the December reading of -0.01. The rebound was due to                                                                                  maryland department of
with strong capital spending and inventory building.                     increases in average weekly and overtime hours for the                                                                                 housing and community
However, residential mortgage lending was sluggish, due to                                                                                                                                                           development
                                                                         manufacturing sector, offsetting the weaker-than-average                                                                                   100 Community Place
the continuing decline in refinancing activity. Labor markets            job gain of 146,000.                                                                                                                       Crownsville, MD 21032
continued to firm up in a number of districts, but wage
pressures were modest. Most districts reported only slightly             Consumer Confidence Weakened in February
                                                                                                                                                                                                                      Robert L. Ehrlich, Jr.
higher price levels as inflation remains well contained.                 The Consumer Confidence Index of the Conference Board                                                                                             Governor
                                                                         for February declined 1.1 points to 104, as consumers’                                                                                        Michael S. Steele
Chicago Fed National Activity Index Up in January                                                                                                                                                                        Lt. Governor
                                                                         assessments of the future job markets declined by 5 points
                                                                                                                                                                                                                       Victor L. Hoskins
The Chicago Fed’s National Activity Index (CFNAI) for                    to 95.7. On the other hand, consumers’ assessments of                                                                                             Secretary
January posted above its historical trend reading of                     present conditions increased by 4.3 points to 116.4, as                                                                                      Shawn S. Karimian
                                                                                                                                                                                                                       Deputy Secretary
+0.29 for the 17th straight month, though considerably                   consumers became more optimistic about the current
below the December value of +0.59. The weakness was                      job situation. However, despite improving assessments                                                                                         Office of Research
due to a smaller contribution by the production-related                                                                                                                                                            Massoud Ahmadi, Director
                                                                         of current conditions, consumers’ buying plans for major
                                                                                                                                                                                                              Fereidoon Shahrokh, Deputy Director
indicators, from +0.36 in December to +0.01 in January.                  appliances significantly weakened in February. Similarly, the                                                                         Eric Van De Verg, Senior Economist
Nevertheless, all four broad categories of indicators that               Consumer Sentiment Index of the University of Michigan                                                                                   John Greiner, Senior Housing
comprise the index --production and income; employment,                                                                                                                                                                   Policy Officer
                                                                         declined by 1.3 points to 94.2 in February. The expectations
                                                                                                                                                                                                              Luisa Fernandez, Research Economist
unemployment and hours; personal consumption and                         component of the Index declined by 2.3 points to 83.4, while
housing; and sales, orders and inventories-- made positive               the present situation component remained unchanged                                                                                      Office of Geographic Analysis
                                                                                                                                                                                                                         and Mapping
contributions to the January CFNAI. The consumption and                  at 110.9. The two indices show that the consumers’                                                                                          Jason Mielke, Director
                                                                         expectations about the future job markets, income and                                                                                    Office of Legislative Affairs
   The Chicago Fed’s National Activity Index                             the interest rates are the driving factors for consumer                                                                               Jennifer Franks, Legislative Liasion
                                                                         confidence and consumer spending. The anticipated
 stood at +0.29 in January 2005, considerably
                                                                         higher interest rates will reduce refinancing and future
   below the December value of +0.59. The                                                                                                                                                                       Blueprint Maryland is published
                                                                         consumption expenditures. On the other hand, increases in                                                                                 monthly by the Maryland
  lower index value for this month indicates                                                                                                                                                                      Department of Housing and
                                                                         job opportunities, due to an expanding economy and rising                                                                                 Community Development.
 that the U.S. economy continues to expand,
                                                                         incomes, will stimulate consumption, thereby offsetting the                                                                   
 although at a slower pace than in December.                             negative impacts from rising interest rates. ■

                                   BLUEPRINT MARYLAND        |   T H E STAT E ’ S H O U S I N G E CO N O MY I N R E V I E W   |   MARCH – APRIL 2005

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