By ARNOLD S. PLATOU
6:00 AM EST, February 10, 2013
Washington County was king of the region’s real estate market before the recession, posting more in total sales than any Tri-State-area county west of Frederick.
But in the past two years, Washington County has lost its crown, with sales growing more slowly than in Franklin County, Pa., which has taken the lead, according to data from Metropolitan Regional Information Systems Inc.
In 2012, Franklin widened its lead and Berkeley County, W.Va., muscled into second place, MRIS data shows.
Now, for the first time in at least 10 years, Washington County’s housing market is only the third largest in the region.
The question is: Why?
Top leaders of the region’s two Realty associations whose members handle virtually all of the thousands of property sales in the area every year cite three main reasons — price, job growth and tax benefits for retirees.
“I think a large part of (what’s happening) is jobs,” said Betty Hays, president of Pen-Mar Regional Association of Realtors.
“I love Hagerstown. I love Washington County. I think it has a lot to offer,” Hays said.
But she noted that more jobs have been created in the Chambersburg area of Franklin County and the Martinsburg area of Berkeley County in the past few years than in Washington County.
“Macy’s went in over there in Martinsburg, and there’s new development going up around Chambersburg, but here, all we seem to get is big warehouse facilities,” Hays said. “People generally want to work close to where they live now. They don’t want to spend money on gas.”
The MRIS data is worth watching, but by itself, it doesn’t say anything conclusive about Washington County’s economy, said Brien J. Poffenberger, president of the Hagerstown-Washington County Chamber of Commerce.
“There are a number of ways to measure growth, including household income, property turnover, building permits,” he said.
Ten years ago, in 2003, property sales in Washington County totaled $291 million. That was almost a third of the $920 million in deals posted that year in the six-county Tri-State area west of Frederick.
Washington County was the region’s sales leader from at least 2003 through 2006, during the economic boom fueled by subprime mortgage lending that sent home sales and prices soaring.
In 2006, the last full year before the nation sunk into recession, Washington County’s sales totaled $415 million of the region’s $1.4 billion housing market. By comparison, Franklin County’s sales that year reached $365 million and Berkeley County’s topped out at $339 million.
In 2007 and 2008, as the new mortgages adjusted to ever-higher interest rates, homeowners began struggling to pay them, foreclosures became more common, credit tightened, demand for housing fell, unemployment increased and the nation soon was deep in economic recession.
Although Franklin County’s sales dropped to $320 million in 2007 and to $239 million in 2008, it became the region’s market leader because Washington County’s sales fell even more steeply. Washington County’s market reached just $291 million in 2007, followed by $226 million in 2008.
Berkeley County’s market was the third largest, with sales totaling $270 million in 2007 and $224 million in 2008.
Nationally, the recession ended in mid-2009.
As it did, Washington and Berkeley counties edged into the lead.
Washington County posted $211 million in sales in 2009, compared to Berkeley County’s $210 million and Franklin County’s $205 million. In 2010, with sales still falling in the three counties, Washington County held the lead at $206 million, compared to Franklin’s $201 million and Berkeley’s $184 million.
Then came 2011.
In that year, the total sales in the six-county region — Washington, Franklin and Berkeley, as well as Jefferson and Morgan counties in West Virginia and Fulton County in Pennsylvania — hit bottom.
The region’s sales plunged to $707 million.
Just five years before, the region had posted a record-high of $1.7 billion in sales throughout the six counties.
The same sort of decline was happening in neighboring Frederick County, Md. There, the housing market is much larger in volume, prices and overall sales, in comparison to any of the six Tri-State counties, MRIS data shows.
During 2005’s boom, housing sales in Frederick County alone topped $1.6 billion.
As here, Frederick County’s market hit bottom in 2011, with sales plummeting to $635 million.
The median price of homes fell in each of the seven counties, including Frederick, during the recession. Even after it was officially determined to have ended nationwide in mid-2009, the prices kept falling.
In general, the median price measures the midpoint in the range of selling prices each year, so a few high- and low-ticket deals don’t skew the result.
Among the seven counties, Frederick County has had the highest median price through the ups and downs of the 10 years and Fulton County has had the lowest. In 2012, for example, the median was $241,950 in Frederick County and $110,000 in Fulton County.
The prices in the other five counties have been spread out in the middle throughout the 10-year period and, since 2009, more tightly bunched.
Notable, too, is that in 2012, the median prices in six of the seven counties rose for the first time since before the recession.
The exception was Fulton County, where the median rose in 2009, fell in 2010, increased in 2011 and held steady through 2012. As the region’s smallest, the market in Fulton County can rise or fall with just a few properties.
In 2011 and 2012, market dominance was shifting in the six-county, Tri-State region as new strengths emerged north and south of Washington County.
In 2011, the markets in Franklin and Fulton counties began something of a recovery, while sales in the four other counties were slipping to new lows, MRIS data shows.
Washington County’s market-leading $206 million sales total in 2010 dropped to $183 million in 2011.
In Franklin County, however, the market seems to have found stability, with $201 million in homes sold in 2010 and again, in 2011. In Fulton County, just west of Franklin County, sales rose to $7.6 million in 2011, after reaching $6.8 million in 2010.
In comparison with the other counties, Franklin County’s median price has stayed relatively constant over the past 10 years.
As a result, while the median still was falling in Franklin County, the price was higher than it was in Washington, Berkeley, Morgan and Fulton counties in 2010 and 2011. Ten years ago, Franklin County’s price was higher than only Fulton County’s.
Dropping to third
If you were selling or buying a house during 2005’s record-setting economic boom, the median price in Washington County was $225,000. That was $61,000 higher than the $164,000 median in Franklin County then.
Five years later, with the recession having sapped prices in both counties, Franklin County had the higher median. Its price had slipped only to $154,900 in 2010, while Washington County’s had fallen more steeply to $149,900.
With an almost identical number of sales — 1,215 in Washington County and 1,211 in Franklin County — Washington County still had the larger market in 2010, according to MRIS data.
In 2011, Franklin County took the lead.
A total of 1,287 properties with a median price of $145,000 were sold in Franklin County that year. During the same time, a total of 1,210 properties with a median price of $138,000 were sold in Washington County.
This past year, Franklin widened its lead and Berkeley County, which had been in third place, moved ahead of Washington County into second.
With sales of 1,346 properties and a median price of $146,000 in 2012, Franklin County’s overall market jumped to $214 million. In Berkeley County, 1,435 properties were sold, setting a median price of $129,900 and a total market of $194 million.
In Washington County, meanwhile, the median price rose to $149,000, but sales fell to 1,145 properties, the data shows. The county’s sales totaled $187 million.
Berkeley County’s rising strength wasn’t unique in West Virginia’s Eastern Panhandle this past year.
In Jefferson County, just east of Berkeley County, the market jumped from $110 million in 2011 to $135 million last year. In 2012, a total of 724 properties were sold in Jefferson County, with a median price of $174,451.
In Morgan County, just west of Berkeley County, the market increased from $23 million in 2011 to $27 million last year. In all, 202 properties were sold in Morgan County in 2012, with a median of $120,950.
Looking for reasons
So why are the housing markets in some of Washington County’s neighbors making a stronger comeback?
Leaders of the region’s Realty associations cited a longtime strength of the lower prices in Pennsylvania and in much of the Eastern Panhandle that they said seem to be more attractive now to consumers emerging from the recession.
“Our prices are a little bit cheaper,” said Toni Carone, president of the Eastern Panhandle Board of Realtors. “I do a lot of business with people who relocate from Maryland and Virginia, too.”
With the recession still affecting many, it’s hard to explain why in 2012 and now, in 2013, “we’re seeing more and more (people) looking for investment properties, looking for second homes,” she said. “We’re selling more and more cabins and second homes than we have in the past couple of years.”
“People are wanting to spend money. It’s really odd. I don’t think people are as scared (about the economy) as they were the past couple years,” Carone said.
Jim Crumrine, vice president of Pen-Mar Regional Association of Realtors, said price and a tax incentive are proving key as people who have lived through the recession now make more of their home-buying decisions based on finances.
“I sell in Maryland as well as in Pennsylvania. And Washington County, typically, has a high price point because it’s in Maryland and there’s maybe a bigger city atmosphere than you’d find around Franklin County,” Crumrine said.
“And we still have people who are drawn to Franklin County because Pennsylvania doesn’t tax retirement income,” he said.
That’s true, but Maryland doesn’t tax Social Security income and neither state’s tax incentive is new.
So why the stronger interest in Franklin County now?
“Where are the boomers and where are they retiring?” Crumrine replied, referring to the millions of people born after World War II who now are at or nearing retirement age.
“Believe me, we want both areas (Washington and Franklin counties) to be very successful, but I think the boomers have a lot to do with what’s happening here. Everybody’s retiring and, particularly, with the way Congress has been acting lately, saving every bit you can seems to figure into everything,” Crumrine said.
Pen-Mar association president Hays said she studies the MRIS data regularly and has noticed the growing shift to Franklin and Berkeley counties. A key is the job growth in those areas, she said.
The decisions often are subjective, too, relying on impressions about school districts or, as with a current client, “they kind of like the ambiance of Frederick because it has the restaurants,” she said.
“I had one couple, they started looking in Maryland, then we went up in Pennsylvania and looked, and then they ended up in West Virginia,” Hays said. “Price, yeah, was the biggest reason. There is some good value over in West Virginia.”
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