Written By Patricia Rouzer
Relatively modest houses that 15 years ago may have fetched $100,000 now command two or three times that– sometimes more in the coveted Mt. Airy, Finksburg, and Sykesville-Eldersburg areas, now bedroom communities for metro Baltimore and D.C.
A visual stroll through the real estate section of the Sunday newspaper can make the uninitiated browser’s jaw drop. A listing of recent Carroll home sales shows 29 properties; only three sold for less than $200,000. Fully one third sold for $310,000 or more, with several in the $400,000 to $500,000 range. The week’s price winner was a modest little fivebedroom, three and a half-bath colonial in the Finksburg zip code that went for $649,000.
Prices in some new developments can be even more astounding. Consider these recently advertised bargains. “Upper $670’s LAST CHANCE! Single-Family Homes on 2 Acres +” and “Low $690’s PRECONSTRUCTION PRICING! Estate Single-Family Homes on 1-Acre+ Homesites.”
The average price for a single family home in Carroll County is now about $300,000–and rising, estimates Rita Zimmerman, Deputy Director of Carroll County Citizen Services. According to a recent housing study underwritten by that agency, as Carroll’s population doubled to about 170,000 over the last 20 years, real estate prices have doubled, too.
“Affordable housing for lower income people just starting out is very difficult to find,” Zimmerman said, adding that the current Carroll real estate market is distinctly geared to affluence. “Many people employed
here cannot afford a home here,” she said. “And, conversely, about 60 percent of county residents work elsewhere.”
Scott Lederer, owner of the Westminster-based Lederer & Co.–
with 44 agents, the county’s largest nonfranchise real estate agency–estimates that the current middle market price for a single family home is considerably higher than Zimmerman’s calculation–between $400,000 and $500,000. And he agrees that entry level homes are scarce, indeed.
“Townhouses are a traditional way for first-time buyers to get into the market. There are a limited number of townhouse developments in the county. Existing townhouses are generally priced around the mid $200’s,” said Lederer. “They don’t come on the market that often and when they do, they are snapped up quickly. They are the closest thing to a starter home here and at these prices, many people just can’t afford them. There are literally no starter homes being built in Carroll County today.”
Tom Kasper, a state-certified real estate appraiser who lives in the Eldersburg area, said even townhouses in South Carroll routinely fetch more than $300,000. Condominiums, another kind of traditional entry-level housing, are still relatively scarce in the county, Kasper said. “There are some condominium developments, but many are restricted to senior citizens.”
Real estate in the entire South Carroll area–from Finksburg to Eldersburg to Mt. Airy–commands prices unheard of just a few years ago. “Prices have gone up so dramatically that sometimes it is hard to keep up,” Kasper said, adding that buyers and sellers alike often push appraisers to maximize a home’s value to reflect rising real estate costs in the area. It is a practice appraisers resist. “Banks want to know what the property is worth on the market today, because current value is what they base their loan decision onÉwhat a property will be worth a year from now is speculation,” he said.
Even the once-popular “fixer-upper” or in extreme cases the “fallerdowner” has become increasingly scarce–and more pricey. “It used to be that people just getting into the market who had energy, the interest, and limited resources could buy a Ôfixer-upper.’ They’d spend their time and their money, as they could afford it, to get the property in shape,” Lederer said. “Now Ôfixer-uppers’ attract investment buyers–often contractors who can afford to buy and quickly fix up these houses. They resell them at a profit or rent the properties for income.”
Both Lederer and Kasper see the boom in Carroll real estate prices as a function of several influences. The first is the ever-decreasing pool of available, developable land. The second is the tight restrictions imposed on development by the county commissioners. The commissioners initially invoked a complete moratorium on development. They later loosened restrictions to allow staged development, but only in areas that have adequate pubic facilities–schools, roads, sewer, and water–to support the resulting population growth.
“It is a simple matter of economics–of supply and demand. When you choke off or limit the supply of housing in the pipeline, the value of existing housing goes up,” said Lederer. “When inventory is low, prices are high.”
Surprisingly, although real estate prices are high and still climbing in Carroll County, million dollar properties remain relatively rare here. “There are someÉ and, of course, there are a number of large farms in the county that would be worth millions if they were available for development,” said Kasper, adding, “Million dollar homes aren’t that common here yet.”
But, considering the pricing trends in custom-built homes, that situation may change dramatically over the next few years if current economic and governmental conditions hold and the escalation of home prices continues.
“I haven’t built a house for less than $500,000 in the last three years–and that price excludes the cost of the property the house is built on,” said Mark Koski, owner of GYC, Ltd., a Westminster-based custom builder. He notes that housing is particularly expensive in the Sykesville area, where demand is high and inventory low.
Koski said that among those who can afford a custom-built home, bigger is definitely regarded as better–and fancy options are highly desirable. “The average size of the custom homes we build is about 4,000 square feet. That is about double what it was 15 years ago,” he said.
Koski adds that even production builders who construct larger developments are offering more high-end accoutrements like granite countertops, premium appliances and detailed masonry work. “Buyers expect those kinds of options now,” he said.
So from whence cometh these migrs with deep pockets and expensive tastes to buy Carroll’s pricey real estate? Many flee from higher-priced areas in Baltimore and Baltimore County, traditional origins of new Carroll residents. But, Koski, Kasper, and Lederer agree, increasingly they come from the D.C. Metropolitan area–particularly Howard and Montgomery counties.
“As expensive as housing is here, in Howard and Montgomery counties it is even higher,”said Lederer. “The inventory of available housing there is more limited and developable land is getting scarce. People from the D.C. area still see Carroll County as a bargain.”
“People from the D.C. area are willing to trade a longer commute for life in a less developed county where home prices are lower,” agrees Kasper. And what about those who can’t afford to buy a house in Carroll County? “First-time home buyers stay in their cars and keep driving–to Pennsylvania where homes are more affordable, there is more developable land and the commute is still reasonable. The Hanover area, for example, has been a very hot market,” said Lederer. But even Pennsylvania prices are beginning to rise as demand increases and the mass migration continues north.
Pundits of all varieties have made a sport over the past several months out of predicting the impending collapse of the real estate bubble. The pundits have, so far, been embarrassingly wrong. Housing starts continue to be strong, recent government reports say consumer confidence in the economy is high, and the available inventory of existing housing remains relatively lean.
Lederer and Kasper agreed that the upward price spiral in the real estate market will eventually find its ceiling–but neither can or will predict when that will come.
“Frankly, I thought we would see a slow down this year–but it hasn’t happened,” said Lederer. “I have seen a bit of slowingÉhigh end properties stay on the market a little longer now–but not much longer–just a matter of days. I attribute that primarily to the (summer) season. As long as the economy is strong–and interest rates remain relatively low– people will be willing to buy at these prices.”
“From what I have seen, prices are still escalating, and houses that are in good shape are commanding top dollar,” he said. Some homeowners contemplate cashing in on their investment by selling their current home for a profit, then moving where prices are lower. “The problem is, if you want to stay in this area, you’ll have a hard time finding something less expensive.”
“There is always a ceiling,” said Kasper. “And prices cannot continue to increase at the rate they have over the past several years. In the early 1990s we hit the end of a cycle. Higher-end properties lost some of their value, then stabilized and slowly began to increase in value again. I hope when we hit the ceiling this time, it will be that kind of gentle correction.”
