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Is Baltimore’s Housing Industry Entering a Catfish Recovery?

Published: 07/05/2011 02:15:02 PM

The recovery from the latest recession is taking a slow path through murky waters with no clear indication as to when new growth and prosperity are going to occur. Most areas of the country have experienced stagnant sales with a huge inventory of foreclosed properties and little growth in the “new construction” segment of the housing market. However, according to Altos Research, a real estate market research firm based in California, Baltimore has recently encountered higher-than-average increases in median asking prices along with an increase in the number of real estate properties for sale.

Real estate prices in most areas of the country are at record lows, remaining at the bottom of potential selling prices. Even so, isolated spikes in selling prices, bursts of sales, or declines in selling can occur and do so. Although this type of fluctuation in real estate prices occurs without regularity, it backs up the belief that the housing market has entered a new phase, referred to as the catfish recovery.

With its recent influx of homes entering the selling market and a higher-than-usual asking price appearing on much of the new inventory, one has to wonder if Baltimore real estate is entering this phase in housing known as the catfish recovery. At the very least, one can see that selling homes in Baltimore and nearby areas, including Fells Point and Canton, is a slightly more profitable one at the moment than in the recent past.

What is a Catfish Recovery?

The phrase “catfish recovery” refers to a pattern of behavior exhibited by catfish, one that the current housing market is emulating. Living on the bottom of streams or lakes, catfish tend to randomly bob up-and-down without moving in a steady path in any given direction. Catfish are content to spend the majority of their time at the bottom of their lake or stream.

Currently, housing prices are stuck in record lows. Despite the fact that the median housing price remains fairly stable across the entire industry, occasional spikes upward or dips downward in asking prices have occurred across the country. In essence, the housing market appears to be moving up one moment and down in the next.

If Baltimore real estate is also entering a catfish recovery phase, it isn’t following in the footsteps of other areas of the country. According to Altos Research, Baltimore real estate has seen a 12 percent increase in sales of single-family homes that is coupled with a 4 percent increase in asking prices. While this is a positive uptake for selling homes in Baltimore, it is unlikely to continue for several reasons.

First, as the real estate industry is well aware, the spring and early summer months generally see a slight increase in home sales. With school winding down and landscaping coming into bloom, the idea of buying homes in Baltimore or anywhere for that matter becomes more enticing at that time of year.

Secondly, a small increase is bound to occur occasionally as some prospective home buyers find themselves in good financial situations. Upwardly mobile couples tend to be in a good position to buy a home when both individuals are working. Hence, the market can bear slightly higher-than-usual prices and a small, temporary spike in sales and prices occurs.

Thirdly, real estate investors need to look at the existing listings in order to determine whether or not the current availability of homes is pushing prices upward due to the size or condition of the homes. It is possible that a larger number of single-family homes or new construction is pushing median prices up.

Each of the above factors can lead to a temporary influx of sales as well as an increase in the price attached to buying homes in Baltimore, Fells Point, or Canton. As you can imagine, this “bob” upward may soon be followed by a “bob” downward, emulating the swimming path of the catfish.

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