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I'll be out of town from Thursday through Tuesday without regular Internet access -- yes, I'm already hyperventilating, thanks -- but you'll get your How-to Monday, never fear. All hail the power of scheduled posting.
Try to keep the housing market from doing anything interesting while I'm gone, OK?
Ohio and Michigan make the top three, as one would expect, but No. 1 might be a surprise. Here's the top 10 on Lansner's misery index:
1. Mississippi
2. Michigan
3. Ohio
4. Indiana
5. Wisconsin
6. Georgia
7. South Carolina
8. Kentucky
9. Louisiana
10. Arkansas
U.S. District Court Judge Paul L. Friedman’s ruling will keep the regulation banning seller-financed assistance from going into effect today as planned, according to the court filing. AmeriDream's press release is here.
AmeriDream is one of the nonprofit organizations that offers down payment help to low- and moderate-income buyers getting mortgages insured by the Federal Housing Administration. The nonprofits get their money from the homes’ sellers, which HUD has criticized because a higher-than-average percentage of the borrowers end up in foreclosure.
This comes despite a 20 percent drop in residential construction. BusinessWeek has an on-the-one-hand, on-the-other from economists:
Back-to-back GDP gains of nearly 4.0% for the past two quarters show "the economy is incredibly resilient" in the face of the credit problems that rocked the markets in August, Edward Lazear, Chairman of the Council of Economic Advisors, said on CNBC. The impact of rising oil prices was mitigated by a strong labor market and, most importantly, by particularly strong growth in U.S. exports, which has been aided by expansion in the global economy, he said.However, "while the economy statistically looks very good, it feels much worse than the numbers indicate," writes Ken Kim of Stone & McCarthy Research Associates. "The headwinds the economy faces grew stronger in the third quarter and show no signs of abating anytime soon. The economy continues to be supported by solid consumer spending and booming exports, but we wonder how much longer the consumer can continue to carry the load."
Economic growth was solid in the third quarter, and strains in financial markets have eased somewhat on balance. However, the pace of economic expansion will likely slow in the near term, partly reflecting the intensification of the housing correction. Today’s action, combined with the policy action taken in September, should help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and promote moderate growth over time.
The benchmark interest rate that the Fed can lower, raise or leave be affects what banks charge other banks for overnight loans, and therefore what people and businesses pay for loans and mortgages. That rate is at 4.75 percent now.
A survey released this month found that agents are rushing to try blogs -- online journals -- and social-networking sites such as Facebook for advertising purposes. Coldwell Banker Real Estate announced in March that it had opened an office in Second Life, the online "virtual world." There are firms that send listing information to prospective buyers' cell phones and give the agent a heads-up.
I quote Joel Burslem, founder of the Future of Real Estate Marketing blog, but could fit only a fraction of the interesting things he said into the story. Herewith are some of his answers to my questions about what people are (or should be) doing to market homes:
--Get the listing information in as many places as you can. "Now there's multiple destinations where people are going to find real estate online these days, anywhere from Trulia to Zillow to Realtor.com to Craigslist," Burslem said.--Create a video tour. "You don't even necessarily have to hire a camera crew and do any kind of professional editing," he said. "Most people's pocket digital cameras shoot decent enough web video."
--Blog. Whether you're an agent or a homeowner, you can blog about your community -- your block, even. For Realtors, there's the benefit of being able to "demonstrate that they're the expert without having to say it outright," Burslem said. On a related note, Realtors can also Be The Expert by answering questions on sites like Trulia and Zillow.
--Experiment. Realtors are trying social-networking sites, for instance. "I can't point to any particular success stories yet, ... because it seems like it's a fairly new thing that most of us are trying to wrap our heads around," Burslem said.
Of course, marketing can do only so much. Lenn Harley, broker at Homefinders.com, which works with buyers in Maryland and Virginia, says the key nowadays is choosing the right asking price. "That's critical," she said. "That's absolutely critical."
Live Baltimore, the nonprofit that promotes city living, is holding a renovation seminar this Saturday from 10 to 11:30 a.m. at the Enoch Pratt Free Library at 1251 Light St. You can see more details here, along with the other free seminars it offers.
Keep in mind you'd have to pre-register.
The rally is scheduled for 11:30 a.m. on Lawyers Mall in Annapolis.
EDIT on 10/31: It's been changed to 9:30 a.m. See new post.
The index, as Wonk readers will recall, measures 20 large metro areas and Baltimore is not among them. But Washington is, and the index shows prices there falling 7.2 percent year-over-year. That's seventh-worst among the 20 metros.
“At both the national and metro area levels, the fall in home prices is showing no real signs of a slowdown or turnaround,” Robert J. Shiller, chief economist at MacroMarkets LLC, said in a statement.
The Fed surprised financial markets Sept. 18 by making a larger-than-expected half-point cut to its benchmark federal funds rate, the rate banks charge each other for overnight loans. It serves as the basis for a wide array of lending rates in the broader economy.
The Fed funds rate is 4.75 percent now.
Paulson said authorities have been successful in containing the subprime crisis and that its impact appears to have been limited.But he acknowledged that the subprime crisis was not yet over.
"Six months ago people were more optimistic that in the housing market we have hit the bottom. We haven't hit the bottom yet," he said. It's going to "take a while to work our way through this."
Of course, a complicating factor in all this is the huge uncertainty over where people will settle when the jobs relocate here. Some may choose to commute long-distance or work via telecommuting for a while, easing the strain on gridlocked highways and crowded classrooms. Where the newcomers end up buying or renting homes ultimately depends on the cost and availability of housing, the quality of schools, job opportunities for other household members and other factors.
Tim Wheeler, who's been answering the questions, will take more as they come in. You can email brac@baltimoresun.com.
Since the 110th Congress opened for business in January 2007, the largest subprime lenders and their trade associations have spent nearly $29.4 million lobbying the federal government. In addition, they have donated $2.4 million in political action committee (PAC) contributions to Members of Congress and the national political parties.Mortgage industry donations have moved toward the Democrats since they took control of Congress. From January to June of this year, the industry gave $1.23 million to Democrats and $1.21 million to Republicans.
No surprise that home sellers trying to drum up interest are offering to pay some of that expense: It's thousands of dollars. And those costs are higher than average here, according to a survey by Bankrate.com. Read on for details ...
Bankrate.com's survey of states measured costs in a ZIP code in each state's largest city -- in our case, Baltimore.
The company estimates closing costs on a $200,000 home at just under $6,260 here, vs. $3,680 nationwide. The difference? Taxes.
Ryan W. James, senior mortgage banker at First Horizon Home Loans in Timonium, says the survey results sound about right for the Baltimore area. He finds that closing costs add up to about 3 percent of the sale price in the suburbs and 3.5 percent in the higher-tax city -- with an important caveat.
City buyers can bring down their closing costs if they qualify for one of the various tax credits in Baltimore, such as historic or new-construction. (Live Baltimore lists some here.)
"If you shop smart, it can really make a huge difference in your closing costs and your monthly payments," James said.
Speaking of shopping smart: Beware if your closing costs are way above that 3 to 3.5 percent mark. It could be that you have an "exorbitantly high" property tax bill, or your lender might be hitting you with a lot of points and fees, James said.
Housing Development Finance Corp., the Indian lender part owned by Citigroup Inc., said second-quarter profit rose 76 percent on demand from homebuyers in the world's fastest-growing major economy after China. ...Borrowers have withstood nine increases in interest rates since October 2004 as salaries rise in the $906 billion economy and the government offers tax rebates to homebuyers. Wages may grow about 15 percent this year, the fastest in the Asia-Pacific region, according to Hewitt Associates Inc., a U.S.-based human resources company.
The recent survey shows that bathroom and kitchen remodelings and additions remain highly valued by buyers. But the survey also shows returns on recent home improvements at the time of resale have dropped dramatically in the Baltimore area.Overall, the return in 2005 - when home values skyrocketed without home improvements - averaged 99 percent in Baltimore. That's down to 68.8 percent in the 2007 survey, said Sal Alfano, editorial director of Remodeling magazine.
It's part of a national trend in which the average cost recouped nationally was 70 percent, down 12.5 percent since 2003.
"With the downturn in late 2005 and 2006, it affected the resale value," Alfano said. Remodeling costs went up. House prices went down. "You put those two things together and the resale value drops," he said.
Bart Harvey, chairman of Enterprise Community Partners, covered the spectrum of affordable housing when I interviewed him for my story about the Columbia nonprofit, in today's paper. Alas, I only had 30-or-so inches of space to play around with. Here, the sky's the limit.
So, dear Wonk readers, I bring you one of the more interesting -- and controversial -- ways Harvey suggested the government could ramp up its funding for affordable-housing development: Stop handing out so much in mortgage-related tax breaks.
"If you look at the mortgage interest deduction over time, ... it's up to $80 to $100 billion, depending on what you include," Harvey said.
Seventy percent of Americans don't file for that tax break, he said. Most of the benefits go to the comfortably -- or very comfortably -- affluent, he said.
It's seen as one of the untouchables in the tax code. Harvey knows this. But he notes that Britain got rid of theirs. He figures the U.S. could take the lesser step of erecting a ceiling on the value of that break.
"Why couldn't we apply this toward our housing needs?" he asked. "If you limited it to some reasonable level and allowed for high-cost areas across the country, you have $40 to $50 billion a year -- which is about what you need if you want to solve affordable housing [problems]."
I've got a story running in Sunday's paper about Columbia-based Enterprise Community Partners, the affordable-housing giant. Here's a tidbit I couldn't fit in: Jim Rouse, who founded the organization with wife Patty, originally intended to call it something else.
The Robin Hood Trust.
As chairman Bart Harvey tells the story, the longtime developer went with Plan B because John Gardner, founder of Common Cause, said: "I'll go on your board if you change your name."
The first one does seem like classic Rouse, doesn't it?
Jumping on the bandwagon in true lemming fashion: The Wonk has a Technorati Profile now.
You can put the blog in your favorites, if you'd like. Just click here:
You know you want to.
What is a reasonable yield spread premium?Warren: Around 1 percent. Well, it depends on your loan amount. Generally, $2,500 to $3,500 is a good fair commission -- you can see the commission by adding the yield spread premium plus the origination fee. Maybe double that for a million-dollar loan. ...
The way to shop is to make three phone calls and ask just one question, one smart question: Can I get a Good Faith Estimate? Tell them please be sure to include the yield spread premium.
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