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February 29, 2008

The frustrations of mailbox ownership

If you live in a rural or semi-rural area, you probably know about -- or have personally felt the effects of -- "mailbox baseball," that nighttime vandalism of stand-alone mailboxes with bats and other battering weapons. It's difficult to prevent: Years ago, I wrote a story about a Clarksville man who had encased his in concrete, so tired was he of continually replacing it. (No, it didn't work.)

Now comes the Fisher family of Hatley, Wis., as reported by the Associated Press:

Fed up that their mailbox was smashed four times in two weeks, Greg Fisher and his son set up a middle-of-the-night stakeout to catch the vandals -- and it worked. Four teens were caught after a high speed chase.

Lt. Randy Albert of the local sheriff's department in Wisconsin does not recommend trying this at home.

Posted by Jamie Smith Hopkins at 7:48 AM | | Comments (0)
        

February 28, 2008

Foreclosures of the rich and famous

Sign of the times: Michael Jackson's Neverland spread is scheduled for foreclosure sale next month, and the 52-room mansion of Randolph Hearst's widow was recently auctioned off after failure to pay.

From Reuters:

Michael Jackson's famed Neverland Valley Ranch in California will be foreclosed and sold on March 19 unless the pop star pays a balance of nearly $25 million, property records showed on Tuesday.
Veronica Hearst, wife of the publishing heir, lost Villa Venezia in Florida this week. It went for $22 million, the Palm Beach Post reports:
The buyer is New Stream Capital, the plaintiff in the foreclosure action. It lent over the past two years slightly more than $40 million to Veronica Hearst, stepmom to famous kidnap victim Patty Hearst.
Posted by Jamie Smith Hopkins at 6:24 AM | | Comments (1)
        

February 27, 2008

A drop -- or not

In today's story about the recent decline in home prices, Celia Chen with Moody's Economy.com said the company is now predicting a 20 percent price drop when all is said and done. That's nationally, though she expects a similar result in the Baltimore area.

But Motley Fool contributor Marko Djuranovic has a piece this week arguing against such a swoon. He thinks "most homes are probably priced near their fair value." He says housing costs have risen in large part because new homes are bigger and generally more expensive to construct than they were a generation ago, not because builders are taking huge profits:

This is important because it creates a floor for the price at which homebuilders will be willing to create additional inventory. Buyers will thus be faced with builders willing to slash prices drastically on existing inventory but unwilling to offer similar discounts on future projects.

One thing seems certain: The debate over prices -- whether they're artificially high, and if so, how much -- won't be resolved soon.

Posted by Jamie Smith Hopkins at 10:46 AM | | Comments (15)
        

February 26, 2008

State, loan services hammer out a deal

In trouble on your mortgage (or helping someone who is)?

The state Department of Labor, Licensing and Regulation said that loan servicers made several promises today about moves to help cut down on the rapidly rising number of foreclosures. The services said they would within 10 days provide information "about what is required from borrowers to access real loss mitigation solutions," meet again next month "to continue work on a streamline triage system for Maryland homeowners" and attend a training event for housing counselors.

State officials said the following servicers are participating in the effort (and all but two were at today's meeting):

Countrywide
Ocwen
CitiFinancial/CitiGroup Inc.
AmeriNational
GMAC ResCap
Option One
PHH Mortgage
Indy Mac
Wells Fargo
Litton Loan Servicing
Posted by Jamie Smith Hopkins at 4:50 PM | | Comments (0)
Categories: Foreclosure help
        

Numbers, numbers, numbers

Those of you who can't get enough of housing-market data will be delighted to hear that not one but two major indexes of housing prices are out this morning.

The Office of Federal Housing Enterprise Oversight's house price index, which you can find HERE, shows prices rising slightly in the Baltimore metro area -- just under 2 percent -- in the final three months of 2007 vs. the same period a year earlier. Prices in the Washington area, by contrast, fell almost 3 percent.

Standard & Poor's Case-Shiller index, also released today and available HERE, shows much bigger price drops in the metro areas it tracks. Washington, which is as close to Baltimore as Case-Shiller lets us get, dropped 9.4 percent from December 2006 through December 2007 -- not as steep as the worst-hit areas, such as Miami and Los Angeles, but not one of the better performances, either.

Why the big difference?

Both measures attempt to weed out apples-to-orange comparisons by tracking the values of the same houses over time, but they're not measuring exactly the same thing. OFHEO's index tracks only the so-called "conforming" mortgages financed by Fannie Mae and Freddie Mac, which cuts out pricey jumbo loans and almost all subprime mortgages. Also, OFHEO's main index includes refinancing as well as sales.

Posted by Jamie Smith Hopkins at 10:45 AM | | Comments (0)
        

February 25, 2008

Homestead credit redux

Maryland legislators seem poised to go back to the old way of doling out the homestead property tax credit to homeowners -- automatically rather than by application. They've gotten a lot of complaints about the new law, which is designed to weed out landlords and others getting the credit improperly. (Only owner-occupiers qualify.)

But Tim Wheeler reports today that a significant number of landlords appear to be getting the benefit of the homestead tax break:

A spot check by The Sun of about 90 homes listed online for rent in Baltimore and Howard counties found that 1 in 3 is identified in state records as the owner's principal residence. That means the owners of those rental properties claim to be living there, potentially allowing them to get a Homestead Tax Credit they don't deserve.

State officials say "there's no easy way to check" who's honestly qualifying for the credits, Wheeler reports.

I know some of you folks out there are very interested in this issue. What do you think the state ought to do?

Posted by Jamie Smith Hopkins at 1:12 PM | | Comments (2)
        

Maps of the most and least expensive areas

A clever Wonk reader (who doesn't want credit) has taken my lists of the most and least expensive communities in the Baltimore metro area and mapped them.

Want to see where these places are? Then click ... 

--HERE for the most and least expensive ZIP codes in the region

--HERE for the most and least expensive city neighborhoods

--HERE for the least expensive suburban ZIP codes

Posted by Jamie Smith Hopkins at 12:56 PM | | Comments (12)
        

How-to Monday: Choosing an agent, part I

handshakeStockxchng.jpg

Photo courtesy of Stock.XCHNG

 

There's no law that says you must get a real estate agent if you're buying or selling a house, but many do. Like any profession (particularly one that's not hard to get into), you can find great Realtors, middling ones and some who are worse than none at all, so you'll want to choose well. 

I'll address agent-shopping for buyers next week in Part II. Here's what the Consumer Federation of America thinks sellers should keep in mind before making a choice:

Interview several, asking about their experience, representation policy, commission rate and marketing plan, says Stephen Brobeck, executive director of the Consumer Federation of America.

--Experience: How many homes have they sold in the past year? In their career? Ask for the names of a few past customers and call them, Brobeck suggests. "There's no perfect indicator of quality here, but experience and the experience their customers have had are important," he said.

--Representation: Do they plan to represent potential buyers of your house? "The goal of most agents is to work with a buyer and a seller, thereby being able to retain the entire commission," Brobeck said. "It's called in the trade 'the double dip.' It's not pernicious, but people ought to understand that it does affect representation."

You can go with a double-dipper, though the commission rate ought to be lowered, Brobeck said. (If 6 percent is typical, he says "you should be able to negotiate it down easily to 3 1/2 to 4, depending on the price of your home.") Or you can ask the agent you choose to represent your "fiduciary interests" and yours alone -- and get it in writing.

--Commission: As the example above shows, it's negotiable. And there are a wide range of commission rates out there now, what with discount brokerages competing with the traditional set. But Brobeck says you should be sure to ask about the typical commission split in the area -- that is, how much usually goes to the buyer's agent.

Why? Because you might not want your house showing up in the multiple-listing service with less than the going rate. Especially now that buyers have tons of choices, there's nothing keeping their agents from deftly avoiding showings on your cheap-commission house.

If 3 percent is typical, you can probably get the commission down to 5 percent, Brobeck said, but make sure that's laid out as 3 percent for the buyer's agent and 2 percent for yours.

John F. Sullivan, an exclusive buyer's agent with Buyer's Edge in Bethesda, looked up a bunch of listings for me to see what buyer's agents are being offered. He says there was an almost equal number of 2 1/2 percents and 3 percents.

--Marketing plan: What do your potential agents plan to do to sell your house? Don't assume they'll pull out all the stops. Ask. Also ask for help preparing your house so it looks saleable and pricing it right so it will attract interest, Brobeck says. He cautions against putting much weight on open houses: "Open houses are mainly for the benefit of the brokers to get other clients," he says.

Interested in what others are saying? Click HERE to check out "The Real Estate Consumer's Bill of Rights" written last year by agents at Redfin, an online real estate brokerage. Click HERE to see what the Maryland Real Estate Commission suggests you keep in mind. Or click HERE to see criticism by Brobeck of traditional real estate brokers.

Have anything else to add? Chime in.

EDIT at 2:30: Thanks for all the feedback, guys. Here's the lowdown on the representation question:

Commission double-dipping may be common in America, but Maryland law prohibits an agent from representing both the buyer and the seller in the same transaction, says Katherine Connelly, executive director of the Maryland Real Estate Commission. If a buyer comes to an open house and asks the seller's agent to represent him or her, that agent's broker has to designate another person in the firm to work with the buyer.

I checked with Brobeck, the Consumer Federation of America official, and he suggests a Maryland seller ask potential agents how their firms would handle such a situation to ensure that the seller's best interests are upheld.

Sullivan, the exclusive buyer's agent, notes that a seller's agent will get the entire commission if the buyer is unrepresented.

As always, keep those comments coming. The How-to posts are frequently used for the Wonk column in Friday's paper, so it's a real benefit to everyone when you point out something I should have included.

Posted by Jamie Smith Hopkins at 4:00 AM | | Comments (8)
Categories: How-to Mondays
        

February 24, 2008

Tomorrow's How-to

Topic: What to consider when choosing a real estate agent.

You've got plenty of choices: Membership in the National Association of Realtors wasn't far from 1.3 million in January. The number of NAR members has been dropping in recent months, but it's still far above the 750,000 or so at the start of 2000.

Posted by Jamie Smith Hopkins at 2:59 PM | | Comments (1)
        

The clientele that's still buying

Home buying and home improvement alike have taken a hit in the slump, but some companies hawking the expensive stuff say they're doing fine. So reports Tyeesha Dixon, who was at the Howard Live! Luxury Home Show this weekend:
Exhibit fares ranged from custom bedding to portable Jacuzzis to in-home elevators.

"This hits a demographic," said Stacy Pesacov, president of Full Potential Marketing, a firm that helps run the show. The economy "has not impacted us at all. Attendance is as high as it's ever been. Our shows are bigger than ever."

I hear mixed things about how well super-pricey houses are selling. Perhaps some folks who could afford such properties are opting to install Jacuzzis and elevators in their existing homes?

Posted by Jamie Smith Hopkins at 2:43 PM | | Comments (1)
        

February 23, 2008

Putting those home sales into perspective

As I was squinting at home sales records for a story, I noticed something about the city's drop in home buying: It hasn't been quite as dramatic as the slump in the metro area as a whole.

I mean that in a relative sense. Sales dropped about 30 percent in both the city and the metro area from 2005 -- the height of the boom -- through 2007, but city sales rose so much faster during the boom years that they're not back to pre-boom numbers.

Metro area sales last year fell just below the number of homes sold in 2000. City sales, on the other hand, were between '01 and '02 levels. That seems worth noting. I remember a housing advocate commenting during the boom that the real test of the city's new real estate strength would be a recession.

Read on -- or, rather, look on -- for visuals.

Here's what happened in the Baltimore metro area (statistics from Metropolitan Regional Information Systems):

RegionSalesResize.jpg

 

Now compare that with home buying in Baltimore City:

CitySalesResize.jpg

 

Posted by Jamie Smith Hopkins at 8:33 AM | | Comments (1)
Categories: Number-crunching
        

February 22, 2008

Sign? What sign?

This isn't strictly housing-related, but it is real estate, and more importantly it made me laugh.

Lorraine Mirabella reports today that an attorney for the developer of the mixed-use McHenry Row project in Locust Point refused to confirm to the Baltimore Planning Commission that it had signed an upscale grocer even though the project artwork "depicted a large sign bearing the Harris Teeter name" on one of the structures.

"With regard to the grocer, that has not been announced yet," the developer's attorney, Stanley Fine, said to the commission, Mirabella reported.

"Well, it has now," Commission Chairman Peter Auchincloss shot back.

Posted by Jamie Smith Hopkins at 8:53 AM | | Comments (3)
Categories: Housing humor
        

More affordable 'burbs

You've seen the most and least expensive ZIP codes in the metro area and the most and least expensive neighborhoods in the city. You might think that covers it. But wait, there's more!

When I sliced and diced the 2007 sales figures, I did some suburbs-only calculations. I went so far as to slice-and-dice the ZIP codes that are part-Baltimore, part-'burb.

That means I can reveal to you the most affordable suburban ZIPs. If you're set on suburban living but can't spend $300,000-plus on a house -- or if you're just curious -- then read on.

Below are the 20 least expensive ZIP codes in the Baltimore 'burbs by average sales price in 2007. Some ZIPs are called "Baltimore" because they're partly or mostly in the city, but the prices are calculated off the suburban side only. (And as usual, ZIPs had to have at least 10 sales last year and the year before to make my cut.)

Baltimore (21224) -- $164,083
Baltimore (21215) -- $179,759
Dundalk (21222) -- $180,487
Edgewood (21040) -- $185,514
Baltimore (21206) -- $207,599
Brooklyn (21225) -- $212,085
Aberdeen (21001) -- $215,267
Baltimore (21229) -- $216,804
Essex (21221) -- $223,201
Belcamp (21017) -- $224,288
Gwynn Oak (21207) -- $230,375
Halethorpe  (21227) -- $230,428
Parkville (21234) -- $242,142
Middle River (21220) -- $243,093
Windsor Mill (21244) -- $250,631
Rosedale (21237) -- $254,737
Nottingham (21236) -- $260,179
Baltimore (21239) -- $264,344
Randallstown (21133) -- $265,948
Abingdon (21009) -- $269,796

EDIT: That clever Wonk reader who mapped the most and least expensive ZIPs for the region has done it again for these communities. Click HERE to see the Google Maps mashup.

Posted by Jamie Smith Hopkins at 8:34 AM | | Comments (0)
Categories: Number-crunching
        

February 21, 2008

Speaking of energy efficiency ...

The Urban Trekker blog has a post about energy-efficient windows, including tax incentives for buying them. Click HERE to read it.

This has been on my mind whenever I use my home computer, which is near a window that is certified energy inefficient, judging by the draft. Hand me a blanket, will you?

Posted by Jamie Smith Hopkins at 6:12 PM | | Comments (1)
        

Spending less on energy

The Fuel Fund of Maryland, which helps people with utility costs, has begun releasing energy-efficiency tips for people looking to trim some of those big increases from their bills. It's conducting the campaign with Blue Dot of Maryland.

Click HERE for a PDF file with suggestions about lighting and refrigeration.

Its featured tip this week: programmable thermostats. The Fuel Fund says such thermostats can be bought for $25 and cut utility costs up to $150 a year. It also notes that the environmental benefit is the same as "taking one car off the road for three weeks every year."

Posted by Jamie Smith Hopkins at 10:17 AM | | Comments (0)
        

Watch those property tax rates

What would your local jurisdiction have to charge in property tax rates to bring in as much money next fiscal year as it's getting now? The state Department of Assessments and Taxation figures that out every year and has put those rates online for all to see. Click HERE to check it out. (Tip of the hat to Adam Meister for noticing.)

This calculation, called the "constant yield tax rate," is a popular one for those frustrated that reassessments mean higher tax bills. I've already received two emails this morning pointing out that Baltimore's rate would drop from $2.268 for every $100 in taxable assessed value to $2.079 if city leaders go with the constant yield rate.

All the counties' rates would decrease, too. That's what happens when the assessable base expands.

As the state notes: "If a jurisdiction plans to set a tax rate higher than the constant yield rate, the jurisdiction must advertise the tax increase and hold a public hearing before setting the tax rate for fiscal 2009." (Fiscal 2009 begins July 1.)

If my math is right, the constant yield rate is truly constant -- no adjustment for inflation. Governments always see that as a cut because they say it means less in the way of services. City tax protesters, on the other hand, have argued that the revenue increases from property taxes have been well above inflation in recent years.

Property taxes are bound to be an issue this year as the city considers changing its tax structure. (Click HERE for an earlier post on the city's blue-ribbon tax reform committee.)

Meister, who ran for city council last year, said in an email on the subject: "The 2.079 rate is an 8.33% cut from the current rate of 2.268. We get an 8.33% cut by simply following what the state says. There is no need for changing the homestead tax credit, creating blue ribbon committees, legalizing gambling, or raising income taxes!"

Posted by Jamie Smith Hopkins at 9:59 AM | | Comments (3)
        

February 20, 2008

Foreclosure help coming to an arena near you

Looking for a mega foreclosure prevention event? Put March 5 on your calendar, because that's when one will be coming to the Show Place Arena in Upper Marlboro, sponsored by Prince George's County, HUD and several other agencies and groups. You don't have to be a county resident to attend.

Tommie Thompson, director of the county's Department of Housing and Community Development, says 13 national loan servicers will be on hand to talk to people about foreclosure prevention and refinancing. The event is also geared toward homebuyers who want extra information about mortgages -- to avoid getting into a loan they're ill-suited for, as so many have before them.

To register: 800-CALL-FHA.

Thompson said workshops for residents will run from 2 p.m. to 8 p.m. Servicers will be meeting with government officials in the morning.

Posted by Jamie Smith Hopkins at 4:21 PM | | Comments (0)
Categories: Foreclosure help
        

O'Malley to servicers: Pick up the phone

Laura Smitherman reports today that Gov. Martin O'Malley "called on more than two dozen loan servicers to meet with him in Annapolis next week" because he said he's hearing from homeowners and advocates that people trying to avert foreclosure are getting busy signals and long waits on hold when they call the companies.

It's the latest salvo in a tug-of-war over foreclosure prevention. Mortgage servicers say they're doing all they can, have helped many borrowers and could help more if their overtures weren't often ignored. Housing counselors say it's hard to get past the collections department to the people who can actually assist, and they argue that the help -- when offered -- isn't always very helpful.

Posted by Jamie Smith Hopkins at 8:47 AM | | Comments (1)
        

February 19, 2008

Color them green

The Greater Baltimore Board of Realtors, which is 150 this year, is marking that anniversary by holding what it says will be the "first eco-friendly" gala at the Hyatt Regency Baltimore in April. (What does that mean, you ask? The Realtors say “'green' cuisine" such as locally and organically grown food.)

The group also says it's promoting an EcoBroker certification program that teaches agents about green building products and how to deal with environmental issues like mold; is working to get an option on the local multiple-listing service for noting green features in homes for sale; and is collaborating on efforts to improve mass transit.

This was, believe it or not, the second green real estate announcement I've had today -- so far. The Home Builders Association of Maryland says it will hold a "green building" class next month.

All you homeowners and prospective buyers out there: Are green features -- energy-efficiency or otherwise -- on your radar? Does this matter to you?

Posted by Jamie Smith Hopkins at 3:57 PM | | Comments (2)
        

Most and least expensive -- city

If you glanced at the most and least expensive local ZIP codes in my post last week, you might have noticed that none of the priciest and almost all the cheapest were in the city. But here's the thing: Though ZIP codes are pretty good stand-ins for communities in the 'burbs, Baltimore is all about small neighborhoods. There are quite a few packed into most ZIPs.

So, without further ado, here are last year's most and least expensive city neighborhoods:

The most expensive city neighborhoods, by 2007 average sales price:

North Roland Park/Poplar Hill -- $614,846
Inner Harbor -- $604,796
Homeland -- $582,500
Guilford -- $561,268
Roland Park -- $543,773
Little Italy -- $543,460
Bellona-Gittings -- $506,208
Otterbein -- $442,236
Fells Point -- $411,373
Federal Hill -- $370,239
 
... and the least expensive city neighborhoods: 
 
Broadway East -- $38,884
Shipley Hill -- $39,113
Penn North -- $39,952
Milton-Montford -- $44,842
Midtown-Edmondson -- $45,610
Oliver -- $48,088
Carrollton Ridge -- $50,467
Mondawmin -- $50,732
Darley Park -- $51,673
Mosher -- $51,988

As usual, the neighborhoods needed 10 sales last year and 10 the year before to make my cut.

EDIT: The clever Wonk reader who mapped the most and least expensive ZIP codes in the region has also mapped these city neighborhoods for your edification. Click HERE to see the Google Maps mashup.

Posted by Jamie Smith Hopkins at 11:57 AM | | Comments (0)
Categories: Number-crunching
        

February 18, 2008

How-to Monday: Mortgage insurance

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Photo courtesy of Stock.XCHNG

 

So much attention has been paid lately to the travails of short-term homeowners that longer-term homeowners probably feel a bit left out. "What do I care?" you grumble. "Why don't you cover something that affects me, dagnabbit?"

All right. How about getting that private mortgage insurance premium off your monthly mortgage bill?

Private mortgage insurance, for those of you short-termers and renters following along, is something homebuyers need if their down payment on a non-government loan is less than 20 percent of the property value. Lenders insist on it to protect them if you go into foreclosure.

It's in an effort to avoid this bill that many buyers opted for two mortgages during the housing boom. Now, an increasing number of new borrowers are finding their way back to PMI -- by choice or default.

The Mortgage Insurance Companies of America, an industry trade group, said the number of new PMI policies increased nearly 40 percent last year.

Not sure whether you're paying for private mortgage insurance? Check your monthly mortgage bill, or look at the "HUD1" form with the paperwork you signed to close the loan. (Or call your lender.)

If you have it, there are three ways you can qualify to cancel: Make enough payments, raise the value of your property with home improvements or (rarer and rarer nowadays) live in an area that's seeing strong gains in sales prices. One or more of those options can get your loan balance down to 80 percent of the value of the home when you got the loan.

There's a checklist about next steps at Mortgage Insurance Companies of America's website, with a more detailed Q&A HERE. Here's what the association says:

--Contact your loan servicer. You should be able to find the contact information on your monthly mortgage bill. Be prepared to provide your Social Security and loan numbers.

--Tell the servicer you'd like to cancel your private mortgage insurance and ask about its requirements to do so. That could mean gathering additional information and paying for an appraisal. (Let the servicer arrange for the appraisal, the insurer association says, so you don't end up on the hook for two bills.)

--After you've jumped through the necessary hoops, send in a written request to cancel.

Katie Monfre, a spokeswoman for Mortgage Guaranty Insurance Corp., says your private mortgage insurance will generally get canceled automatically once your payments equal 22 percent of the original home value. (Federal law requires it for most loans taken out by borrowers after July 29, 1999.)

But now you know how to move things along sooner if you think you qualify -- or get the ball rolling if you suspect it's long overdue.

Click HERE for a calculator that helps you figure out when you might be able to cancel.

Posted by Jamie Smith Hopkins at 4:00 AM | | Comments (2)
Categories: How-to Mondays
        

February 17, 2008

Close to home

Some people try to move as far away from their childhood homes as possible, but Andrea Siegel reports today on those doing the reverse:
Patrick Bollinger, who last fall moved from Delaware with his wife, Brooke, said he can't explain why it feels right to be a stone's throw from the Timonium house he grew up in and where his parents still live.

But he fondly recalled a childhood filled with friendly neighbors and a sense of security. ... Their real estate agent, Trish Denny, of Long & Foster in Bel Air, agreed: "It's kind of that Linus-and-his-blanket thing."

Anyone here live very close to your first home? I don't -- though I'm not far away by car -- but one of my brothers-in-law bought the house next to the one he grew up in.

Posted by Jamie Smith Hopkins at 1:53 PM | | Comments (0)
        

Stay tuned for tomorrow's How-to Monday

... featuring a way to save money.

No, I'm not going to say any more than that until tomorrow morning. Today isn't How-to Sunday, after all.

Posted by Jamie Smith Hopkins at 12:45 PM | | Comments (0)
        

February 16, 2008

Another sensationalist post

In the blame-the-messenger category, herewith is the beginning of a Q&A -- entitled "Real Estate Leaders Explain How to Combat Negative Media Coverage" -- in RISMedia, the "premier source for news and information to the residential real estate, relocation and home services industries." Question by Alex Perriello with the National Association of Realtors and answer by Ron Peltier, president and chief executive officer of HomeServices of America in Minneapolis:
Alex Perriello: What impact has media coverage of the housing market had on the market and your business?

Ron Peltier: The media likes to create sensationalism, but the fact is we’re going through a national correction. What they’re doing is sort of like trying to predict or explain a national weather forecast. But there is no national weather forecast. There are only local stories, and they’re more relevant. Still, negative press frightens potential buyers. If they think housing is going to fall by the wayside, informed consumers will sit on the sidelines. The impact on our business, the net result today, is that we have homebuyers who have not lost their belief in homeownership or their desire for a home, but they are waiting on the sidelines for the media or our industry to convince them to buy.

Posted by Jamie Smith Hopkins at 9:53 AM | | Comments (8)
        

February 15, 2008

Trump says: Hooray for foreclosures

Trump University -- the real estate mogul's "world-class real estate and financial education" organization  -- is coming to Baltimore next week to tell you that "Investors Nationwide are Making Millions in Foreclosures ... AND SO CAN YOU!"

Oh, the TU folks are also coming to sell you things. Don't forget about that part.

Tip of the hat to biz reporter Tricia Bishop, who noticed the full-page ad (complete with photograph of a flinty-eyed Donald Trump) on page 23 of The Sun's A section today.

Other words of wisdom from Trump University:

--Foreclosures "are the new 'it' investment."

--"But like all good things, this window into big-time wealth won't be open forever."

--"Investing in foreclosures could make you a millionaire by this time next year."

 

Posted by Jamie Smith Hopkins at 3:21 PM | | Comments (5)
        

2007 in the rear-view mirror

As you know if you're a wonk, the year-end figures we've reported about price and sales in the Baltimore metro area from Metropolitan Regional Information Systems have been preliminary, calculated by The Sun by tallying the monthly reports. MRIS releases the official, revised numbers in mid-February.

Well, mid-February is now. The Rockville company has put online its year-end summaries of local jurisdictions and the region as a whole. Click HERE to check them out. Some highlights:

--Average prices in the Baltimore metro area rose 2.3 percent to about $316,900. That's very close to the preliminary figure.

--Sales fell almost 18 percent, also a minor change.

--Median price (impossible to calculate from the monthly reports) was $273,000, up almost 2 percent.

--Reported average days on market rose from 60 to 92.

--Average sellers got 94 percent of their list price, vs. not quite 96 percent a year earlier.

At a more local level ...

--All jurisdictions in the Baltimore area managed a gain in average price besides Anne Arundel, down half a percent. Baltimore's 6 percent increase was the biggest.

--Baltimore also saw the largest drop in sales, just over 20 percent. The smallest was Howard's at almost 15 percent.

Wait a minute, you say: Isn't there a story in the paper today that says prices in the Baltimore metro area fell? Yes indeed. But that's in the last three months of 2007, which was worse from a seller's point of view than earlier in the year.

Posted by Jamie Smith Hopkins at 9:15 AM | | Comments (0)
        

Most and least expensive places of '07

Where was the most expensive ZIP code to buy a house in the Baltimore metro area last year? What about the least?

Why yes, I am going to tell you. But why don't you guess first. Go on ... I'll wait ...

As usual, my figures include only those ZIPs with at least 10 sales in '07 and also '06, which means a few super-expensive areas -- like Gibson Island -- don't make the cut. Without further ado, the top 10 ZIP codes by average sales price, as measured by Metropolitan Regional Information Systems:

Fulton (20759) -- $858,522

Glenelg (21737) -- $844,814

Highland (20777) -- $837,863

West Friendship (21794) -- $806,500

Davidsonville (21035) -- $799,773

Glenwood (21738) -- $778,742

Dayton (21036) -- $733,875

Clarksville (21029) -- $668,797

Phoenix (21131) -- $657,663

Woodbine (21797) -- $643,458

And the 10 least expensive ZIP codes by average sales price:

Baltimore (21205) -- $68,187

Baltimore (21223) -- $89,813

Baltimore (21213) -- $92,299

Baltimore (21216) -- $93,335

Baltimore (21215) -- $122,009

Baltimore (21217) -- $136,255

Brooklyn (21225) -- $165,004

Baltimore (21229) -- $167,434

Baltimore (21206) -- $177,406

Dundalk (21222) -- $180,157

Kudos to you if you made any correct guesses. I'll put up some other stats later that didn't make it into my ZIPs-and-neighborhoods story last Sunday.

UPDATE: Want to see where all these communities are? Click HERE for a nifty Google Maps mashup made by a clever Wonk reader.

Posted by Jamie Smith Hopkins at 8:30 AM | | Comments (1)
Categories: Number-crunching
        

February 14, 2008

A new tally for days on market

Metropolitan Regional Information Systems, which runs the local multiple-listing service, said today that it is changing the way it tallies the number of days certain properties have been on the market. Follow along, because if you judge the health of a housing market by the number of days it takes homes to sell, you may soon be comparing apples to oranges.

Currently, a home pulled off the market and put back on less than 180 days later doesn't show up as a new listing -- its running total of days on the market includes the earlier stint. Tomorrow, Rockville-based MRIS says, that waiting period drops to 90 days. It said a majority of agents surveyed were in favor of the change.

"This just seems to be regarded by those in the industry as ... a more accurate gauge of what would connotate a new listing," said Mary Jo Powell, a spokeswoman for MRIS. She said sellers who pull their homes off the market to fix them up and try again have been at a disadvantage because buyers concentrate on new listings.

Powell said MRIS estimates that 20 percent of the currently active listings will be affected by this change, meaning they were on the market, then off, and were put back on again sometime between 90 and 180 days later. That seems significant enough that it's worth keeping in mind if you track changes in days on market in MRIS's online statistical reports by county and ZIP code.

There's a bone of contention about this change:

MRIS says its property history on each home for sale will note how long it was listed previously, so "it doesn't deceive anyone," Powell said. But John F. Sullivan, a buyer's agent with Buyer's Edge in Bethesda, thinks the move will benefit sellers to the detriment of buyers.

"It does nothing but disguise the real, true condition of the property," said Sullivan, president-elect of the National Association of Exclusive Buyer Agents. "Your major brokers ... are not going to be going into history files to show the consumer anything because it would hurt their business. ... Their business is representing sellers."

In his opinion, the change creates a false sense of urgency. Agents can, as of tomorrow, honestly tell buyers that 123 Main Street just hit the market two days ago, so hurry up and offer the full asking price! -- even though 123 Main Street was also on the market for a long while with no bites until three months earlier.

What do you folks think?

Posted by Jamie Smith Hopkins at 4:48 PM | | Comments (4)
        

Prices down in Baltimore, but way up in Cumberland

The sales price of the typical home fell 1 percent in the Baltimore metro area at the end of last year, the National Association of Realtors said today. That probably doesn't come as a shock to you Wonk readers.

But here's something less expected: Prices are still going gangbusters in the Cumberland metro area. The 19 percent gain during the final three months of last year outpaced the rest of the country -- or at least the 149 other metro areas the Realtors track. (EDIT for those who have never heard of Cumberland: It's in Western Maryland.)

You can see the press release HERE and Excel files with lots of crunchable numbers HERE. I'm busily working on a story for tomorrow, so stayed tuned.

Posted by Jamie Smith Hopkins at 12:06 PM | | Comments (2)
        

February 13, 2008

Toll relative to Toll: No thanks

Builders frustrated at buyers extricating themselves from contracts to buy new homes probably can't top Toll Brothers' tale of woe: A Toll family member is trying to join the walk-away fray.

Reuters reports:

The daughter of Vice Chairman and co-founder Bruce Toll informed the company last month that she and her husband "did not intend to make settlement" on a $2.47 million home they had previously agreed to purchase, the company said in a regulatory filing.

 

Posted by Jamie Smith Hopkins at 5:32 PM | | Comments (0)
        

Live York?

Tracy Gosson, you may recall, ran Live Baltimore Home Center until a year ago, marketing Baltimore City living to one and all -- especially people in the pricier Washington area. Since then, she's run her own marketing and economic development consulting firm.

At the moment she's working with the city of York, Pa., which might make one wonder: Will we soon be seeing, say, you-can-live-better-in-York ads on D.C. Metro trains?

"No, that will not be in the plan," Gosson, president of Sagesse Inc., said by phone recently. "No, no, no, no, no," she added, for good measure. "But I would say if people from Maryland are thinking about getting out and moving to Pennsylvania, definitely get them to look at York."

York, she said, struggles with the same aren't-the-'burbs-better reputation that Baltimore has. But she insists it's low-crime and the worst part of town is nothing more than "some trash on the street, some boarded-up houses." ("I was like, 'That's it?'" she said.) She said the city is, on a smaller scale, seeing some of the same development and redevelopment activity that Baltimore has enjoyed in recent years.

The typical home sales prices in York: Not quite $70,000 in the first nine months of last year, up 14 percent from a year earlier, according to the Realtors Association of York & Adams Counties. (Sales are up, too.)

So perhaps the question should be: Any plans to recruit people from Baltimore (typical price: $145,000) to York?

"I don't know," Gosson said, laughing. She thought about it, noted that homes cost a lot more in Baltimore than they did five years ago, and added: "You've got people now in Baltimore that are getting priced out of the market."

Posted by Jamie Smith Hopkins at 12:40 PM | | Comments (1)
        

Counseling group criticizes foreclosure-help hotline

The National Foundation for Credit Counseling said this morning that the widely publicized HOPE hotline for foreclosure help -- 888-995-HOPE -- isn't helpful enough. In a statement, the Silver Spring group said the hotline isn't keeping up with demand because too few housing counseling agencies are permitted to participate. The foundation said:
At one point, 26 percent of the calls to the Hotline were abandoned. Homeowners whose calls were answered were frequently given minimal counseling or simply told to call their mortgage lenders.

I heard this complaint from a Midwestern homeowner, too, as it happens. 

I looked for a response from the Homeownership Preservation Foundation, which runs the hotline, but it may be a while before I hear back. It says on its website that it generally needs 24 hours to respond to media inquiries. (No, I'm not going to insert a joke here. Honestly.) The hotline is getting a lot of calls because President Bush has pointed struggling homeowners there.

This is as good a time as any to remind folks in trouble on mortgages that if you need help and don't get it in one place, it doesn't hurt to try another.

UPDATE at 12:45: The Homeownership Preservation Foundation has responded with a statement that calls the NFCC's accusations "false and misleading." The preservation foundation said it is reviewing its legal options.

It said its counselors are doing real counseling -- an hour on average to 19,558 homeowners in January. It said the remainder of the callers had "other questions which included: questions about the rate freeze program, calls on behalf of family and friends, inquiries about grant funds, basic information about the HOPE hotline, calls from brokers and realtors, etc."

Posted by Jamie Smith Hopkins at 10:52 AM | | Comments (1)
        

February 12, 2008

New restrictions on mortgage insurance

If you read Sunday's story about the housing market, you know that mortgage lenders are increasingly requiring bigger down payments in markets they consider "soft" or "declining" -- Baltimore among them. Some lenders have compiled lists. 

The Baltimore metro area is on another sort of list now: a mortgage insurer's.

Mortgage Guaranty Insurance Corp., best known as MGIC, says mortgage insurance applicants in the metro area and every other market on its "Restricted Markets" list must abide by a variety of new rules as of March 3, including:

--No loans above 95 percent of the home's value

--No loan-to-value between 90.01 and 95 percent without a minimum credit score of 680

--No loan-to-value more than 90 percent for condos

--No cash-out refinances

--No investment property loans

Besides Baltimore, there are 25 metro areas on the list -- including Washington -- plus the entire states of Arizona, California, Florida and Nevada. 

See the restricted-market rules HERE and the list of restricted markets HERE. MGIC offers this explanation:

In determining whether to place a market on the restricted markets list, MGIC uses both external and internal information sources including OFHEO Home Price Indices, National Association of Realtors change in median home prices, Moody’s Ecomony.com home price projections and MGIC’s own proprietary business mix and performance data. 
Posted by Jamie Smith Hopkins at 10:50 AM | | Comments (2)
        

More people expect falling prices

A new Gallup poll shows growing pessimism among Americans about home values. Just three in 10 expect prices in their area will rise in the coming year, vs. seven out of 10 at the height of the boom in mid-2005.

How many expect prices to fall, as opposed to stagnate? Thirty-five percent. (It was five percent in mid-2005.) In other words, Gallup says:

More Americans now expect housing values to decrease in their local residential real estate markets than expect them to increase.

This might explain the 40 percent drop in home sales in the Baltimore metro area last month, or perhaps there are other factors at work. Either way, you can read today's story about our housing market HERE.

Posted by Jamie Smith Hopkins at 9:21 AM | | Comments (4)
        

February 11, 2008

January home sales: Insert gloomy adjective here

January home sale figures are out today for the Baltimore metro area, and -- if you're a seller -- they bode ill. Sales dropped 40 percent from a year earlier, the biggest decline since Metropolitan Regional Information Systems started keeping track in 1999. Fewer than 1,300 homes were sold, the lowest number on record.

To put that in perspective: Sales are now half what they were in January 2005, near the market peak.

Average sale prices in the metro area dropped 2.6 percent. (The median, or typical, home dropped 5.7 percent.)

Click HERE to check out the numbers -- including jurisdiction-by-jurisdiction -- at MRIS. And stay tuned for a full story tomorrow.

Good news for buyers? That depends wholly on whether and/or how much prices will drop in the future. Naturally, dueling predictions abound. But last month's price decline does start to close the gap between average incomes and average prices.

Posted by Jamie Smith Hopkins at 6:14 PM | | Comments (4)
        

How-to Monday: Foreclosure help

MortgageLateAdSmaller.jpg

Baltimore Homeownership Preservation Coalition public-service ad 

 

More than 50,000 Marylanders were behind on their mortgage payments at last count in September. Homeownership advocates fear that even more will be this year, with thousands of adjustable-rate mortgages scheduled for their first resets to higher payments.

If you're worried that foreclosure could be in your future, you're not alone -- and you do have places to turn for help.

Recommendation No. 1 from everyone: Don't sit idly by, hoping things will improve or fretting that nothing can be done. There's hope if you don't wait too long. But fees really add up the longer you're behind on your payments, particularly once the lender sends your file to an attorney to start foreclosure proceedings.

First, call your lender. That's what lenders always recommend, and they're more open to working something out than they were even several months ago, whether that's freezing your interest rate or temporarily forgiving payments you missed. Ask for the loss-mitigation department -- you don't want to be shunted to collections.

But homeownership groups say you would be well-advised to look for help from a third party, too.

"The loss-mitigation departments of these lenders are tough to navigate because they're overwhelmed," said Sally J. Scott, co-chair of the Baltimore Homeownership Preservation Coalition. 

You can get connected with free foreclosure prevention counseling by calling 888-995-HOPE. That's the number President Bush suggested people try if they thought they might qualify for a rate freeze on their subprime loan. At this point, the administration says, servicers handling about 95 percent of the subprime loans are participating in the HOPE NOW alliance that has signed on to the plan to freeze some borrowers' rates.

You can also call a local housing counseling agency directly. The HUD-approved list, with contact information, is HERE.

Anne Balcer Norton, director of the foreclosure prevention division for housing counselor St. Ambrose Housing Aid Center, said you should prepare yourself by gathering the documents you got before and at closing for your loan. Your most recent mortgage statement and any correspondence from the lender or the lender's attorney would also be useful.

If you're hoping to get a payment plan or loan modification, you'll need documentation to prove that you can keep up with the payments if they're adjusted, Norton said. Pay stubs, tax returns, etc., can help you here.

Norton thinks it's also worthwhile to write a "hardship letter" that explains when and why you fell behind on payments, and how the situation has changed or will change to allow you to get back on track.

St. Ambrose, which is based in Baltimore but works with homeowners statewide, believes it's good for everyone when lenders agree to modify loans. People don't lose their homes, and the institutions avoid thousands of dollars in costs to foreclose.

Other options to consider:

--The state of Maryland has a new program called Bridge to HOPE, which offers loans of up to $15,000 to qualifying homeowners with subprime or exotic loans. It's a no-interest loan due at sale or refinancing, and requirements include being behind on your mortgage or in imminent danger of becoming so. Go HERE to see if you qualify, or call 877-462-7555. (To actually get the loan, you'll need to be referred by one of the state-approved housing counseling groups on this list HERE.)

--If you live in Baltimore City, you might be able to qualify for a $5,000 loan from Neighborhood Housing Services of Baltimore to catch up with your past-due mortgage payments. Like the state loans, these are no-interest and due at sale or refinancing. Felix Torres, executive director of the nonprofit, said you should seek counseling first and let the counselor refer you to his group for a loan.

--Want to refinance? The federal FHASecure program is one option for homeowners with adjustable-rate mortgages that have their first reset between June 2005 and the end of this year. Get more details by clicking HERE.

--The state also has a refinancing program, called Lifeline. Go HERE for more details.

Sometimes, though, the best option is to sell. If your house is worth more than you owe, great -- just make sure your asking price will attract buyers. If you owe more than it's worth, you can ask your lender if it would approve a "short sale" and forgive the difference between the loan and the sales price.

Whatever you do, be wary of unsolicited offers of "help" from individuals. They might suggest you pay them to negotiate with your lender. (You can get much better assistance for free, the counselors insist.) They might suggest that you sell the house to them and rent with an option to buy it back. (That often turns out badly, attorneys say.) They might even give you paperwork to sign up for a fabulous refinance deal. (That could be your deed you're signing over to them.)

If you think you've been had by a foreclosure-rescue scammer or you need foreclosure-related help that's too technical for a counselor, you'll want an attorney. Local nonprofit groups with legal expertise include St. Ambrose Housing Aid Center, the Legal Aid Bureau (for low-income residents only) and Civil Justice.

Posted by Jamie Smith Hopkins at 4:00 AM | | Comments (0)
Categories: Foreclosure help, How-to Mondays
        

February 10, 2008

Location, location, location

The metro area's modest increase in average home sale prices last year hid a lot of variation, which is why I spent time crunching and squinting to find out how 2007 treated individual ZIP codes and city neighborhoods. (Three cheers to our cartographer extraordinaire, Christine Fellenz, for plotting every city sale on a map to determine which of the many, many Baltimore neighborhoods it fell into.)

You can read the story HERE. Check out the interactive maps, too -- HERE for the metro-area ZIP codes and HERE for city neighborhoods.

As you know if you've been following along for a while, I fear the apples-to-kumquats comparisons that can happen when the homes that sold in a community last year are very different than the ones sold the year before. You can end up with a huge change in price just because it was all older rowhomes one year and newly built condos in the other, for instance.

So as usual, I threw out any ZIP or city neighborhood that didn't have at least 10 sales each year, figuring that would help. I also -- for my peace of mind -- did a separate analysis of all the areas with a large number of sales, just to see if the overall trend remained the same. It did. (Cue the sigh of relief.)

Just remember when you're checking out individual ZIP codes or city neighborhoods, though, that there could be factors at work more complicated than simple gains or losses in value. Some of that could be related to the market: A drop in a pricey area might signal that homes that were average in 2006 are sitting on the market now, having trouble finding a buyer, while less-pricey homes are getting contracts.

Overall, expensive areas were more likely to drop in average price last year while cheaper areas were more likely to rise.

Posted by Jamie Smith Hopkins at 9:10 AM | | Comments (4)
Categories: Number-crunching
        

February 9, 2008

Survey says ...

Atlanta-based Beazer Homes, which has new-home projects in Maryland, said this week that 64 percent of Americans it surveyed think it's "an ideal time to buy" if you have good credit and a down payment.

If this sounds like deja vu, it's because "great time to buy" has become a mantra with homebuilders and the National Association of Realtors.

Beazer said it surveyed 548 people ages 25 to 72 with a household income of at least $40,000. Other findings from the survey, which the company says has a margin of error of plus or minus 3 percentage points:

--Though nearly two-thirds think it's an ideal time to buy, just 39 percent agreed with this statement: "Home buyers who are waiting for prices to go lower are missing out on one of the greatest home-buying markets in recent history." Perhaps that's because 70 percent don't think prices will begin to stabilize in the next 12 months.

--4 percent said they were "currently looking" for a house; 7 percent intend to buy within the next 12 months. (Thirty-five percent said they "don't ever" expect to look for a home to buy, presumably a mix of eternal renters and people who own a home and don't want to move.)

--50 percent said homeownership, land and/or real estate was the safest form of long-term investment, compared with "fully funded 401(k)," government bonds, stocks and "other." The next highest was fully-funded 401(k), with 28 percent.

--71 percent agreed with this statement: "For those with a good credit history, there are plenty of home mortgage options available."

--55 percent agreed with this statement: "The negative publicity surrounding the housing market has kept many potential home buyers from purchasing a home." Thirty-four percent think the media has "over-inflated" that negative publicity. (Speaking of negative publicity ... oh, and this too ...)

--"The survey found 70 percent of experienced homebuyers -- those who have purchased at least one home -- urging renters to purchase a home as soon as he or she is financially able to do so," the press release notes. It doesn't mention whether some of those experienced homebuyers are hoping to sell their homes to said renters. (Local agents say that some of the housing slowdown is the result of sellers waiting for a buyer before they themselves buy, a domino-effect situation.)

--Half the respondents said their homes have increased in value over the past two years. Thirty percent believe their values haven't changed over that time, and about 20 percent say their homes are worth less.

Posted by Jamie Smith Hopkins at 8:53 AM | | Comments (3)
        

February 8, 2008

Dealing with a tired-looking bathroom

Are your bathrooms turning off potential buyers -- or you, if you're not going anywhere? Momentive Performance Materials Inc., a specialty materials company, offers tips for low-key upgrades:

--Recaulk the sink, toilet and shower or tub.

--Replace the shower curtain. ("The curtain is often the first thing people see when entering the bathroom, so a new curtain can really change the room’s look," the company says in a press release.)

--Buy new faucets.

--Replace the drawer pulls.

Surely some of you have done your own refits -- what did you find useful?

Posted by Jamie Smith Hopkins at 1:49 PM | | Comments (0)
        

February 7, 2008

Don't put off that call

A multi-state foreclosure prevention task force said today that 70 percent of U.S. borrowers who are seriously delinquent on their subprime mortgages "are not on track for any loss mitigation option" such as loan modification.

The group, organized by Iowa Attorney General Tom Miller, released a report that called the "lack of interaction between mortgage servicers and homeowners ... a major problem." (The Baltimore Homeownership Preservation Coalition launched an ad campaign recently to urge borrowers not to put off calling for help.)

Almost half of delinquent borrowers who have contacted their servicers are working on a loan-modification plan, the report noted.

Other findings:

A significant percentage of subprime adjustable rate loans are delinquent before they experience payment shock from their first adjustment, reflecting weak underwriting or fraud in the origination of the loan.
Posted by Jamie Smith Hopkins at 3:45 PM | | Comments (0)
        

Housing and the self-employed

You may have noticed that the country's unemployment rate is hovering around 5 percent -- or at least heard the recession worries prompted by it. New government numbers show it's at least partly the result of fewer people working for themselves, Bloomberg notes.

Yes, this does have something to do with housing. Honest:

Hours worked by the self-employed dropped at a 15.5 percent annual pace in the last three months of 2007, the biggest decrease in 15 years, according to Labor Department data.

The decline "is probably related to the housing downturn, since one in six workers in construction is self-employed, twice the average for all industries," said Patrick Newport, an economist at Global Insight, a Lexington, Mass., forecasting firm.

So are a variety of others in real estate, for that matter.

Posted by Jamie Smith Hopkins at 10:02 AM | | Comments (0)
        

February 6, 2008

FHA loans may be expanding

Loans insured by the Federal Housing Administration, ignored during the boom for subprime mortgages with whiz-bang features, are looking a lot better to homebuyers and refinancing owners nowadays. The thing is, you're out of luck if you want an FHA loan for more than $362,790. That's the limit.

Maybe not for long, though. The proposed economic stimulus package would temporarily raise the limits to as much as $729,750 in very high-cost markets.

The U.S. Department of Housing and Urban Development told me this week that -- so far -- the proposal would cap loan amounts at 125 percent of the local median sales price or $729,750, whichever is lower. In a metro area, that would mean 125 percent of the median sales price in the most expensive county.

Howard, where the typical home sold for $380,000 in December, is the most expensive county in our metro area. So we could be looking at an FHA limit in the general neighborhood of $475,000.

Congress is also trying to hash out permanent increases to FHA-insured loans as part of FHA reform legislation.

Posted by Jamie Smith Hopkins at 6:25 PM | | Comments (1)
        

February 5, 2008

Q: What happens when there are fewer home sales?

A. Fewer people move.

The parent of Allied Van Lines, which knows this all too well, said today that it has reached a deal with lenders to restructure its debt through Chapter 11 bankruptcy to be "better positioned to weather the continuing weak U.S. housing market." Sirva Inc. also handles other moving-related businesses, including home purchase services, mortgage services and settlement services, which have also felt the pain. Read Sirva's announcement HERE.

Other companies affected by the sales slump range from the obvious -- homebuilders -- to the trickle-down, like retailers dependent on consumers with less money and less ability to borrower post-boom.

Posted by Jamie Smith Hopkins at 10:13 AM | | Comments (0)
        

February 4, 2008

How-to Monday: Short sales

LenderForeclosureSignAP.jpg

Associated Press photo

 

If you're looking for a house to buy or checking out your competition because you're selling, you've probably started seeing these words: "Short sale." It sounds like a wish to sell quickly -- and in essence, it is -- but more importantly, it means the seller is trying to get rid of the house for less than he or she owes on it.

When they work out, short sales can be a deal for buyers and a relief for sellers in danger of foreclosure. But they're complex. Short sales require the lender's OK, and there's no incentive for the lender to approve an offer if it thinks it can do better by foreclosing and selling the house itself.

Negotiating short sales isn't like negotiating regular sales, said Andrew Lehr, an agent with ReMax Signature in Baltimore. He can't simply take buyer offers to the seller. These are called "third-party approval" transactions for a reason: The lender looms large.

"You're ... dealing with a third party that can be in a whole different time zone, so the communication is not as effective," said Lehr, who's representing a short-sale seller in Dundalk and a variety of would-be short-sale buyers. "I always try to educate people putting offers in on short sales that it could be a drag-out process."

Yes, you heard that right. Short sales are not, on the whole, short. So many loans are owned by Wall Street investors nowadays that there are really four parties involved: The buyer, the seller, the mortgage servicer and the note holder.

The other wrinkle is that most anyone buying from a homeowner facing foreclosure must abide by the state's foreclosure rescue fraud law, said Phillip R. Robinson, executive director of Civil Justice, a nonprofit legal-help group in Baltimore that specializes in real estate matters. Resell the house within 18 months, and you must give at least 82 percent of your profit to the previous owner.

Speaking of foreclosure rescue fraud, Robinson says any homeowner in trouble should talk to a nonprofit housing counselor before signing anything. (You can find a list HERE.) There are a lot of scammers out there just dying to take advantage of you while you're down.

"Get a Realtor and go to one of the state-approved housing counseling agencies that will provide free advice -- independent advice," Robinson said. He recommends agent or legal representation for buyers, too. "Make sure you're not getting involved in a transaction that's illegal in some way."

Here's some good news for short-sale sellers and anyone else facing foreclosure: Thanks to a new law, you won't have to pay taxes on the amount of the loan your lender forgives in 2007, 2008 or 2009. Up 'til now, the IRS treated that vanished debt as income. (There are some exceptions -- it must be your primary residence, for instance -- so you'll want to get professional help.)

Have a short-sale story? Comment away. 

Posted by Jamie Smith Hopkins at 4:00 AM | | Comments (7)
Categories: How-to Mondays
        

February 3, 2008

Another look at affordability

Homes for Working Families released a housing affordability -- or rather, unaffordability -- report last week and shared with me the figures it calculated for the Baltimore metro area. This is such a hot topic that I thought you'd be interested, even though we've trod similar ground in the last few days.

The Washington-based group, which says it wants to raise awareness about "the crippling nationwide home affordability gap that is keeping working families out of homes," produced the report with Moody's Economy.com. They said the area's median house price is about $278,000. But the median household can't properly afford the monthly payment, even with 15 percent down, they said. (They define affordable as monthly mortgage and property-tax-related costs that add up to no more than 28 percent of income.)

Here are some other statistics from Homes for Working Families:

Median household income for the Baltimore metro area: $63,006

Home price that household can afford: $219,432

Household income that's 60 percent of the median: $37,803

Home price that lower-than-typical-income household can afford: $131,657

Household income that's 120 percent of the median: $75,607

Home price that higher-than-typical-income household can afford: $263,318

Yes -- by this group's calculation, even a household making about $13,000 more than typical for the Baltimore metro area would have to stretch to pay for the typical house. 

This is what Homes for Working Families assumed, besides the unusually high (for recent years) 15 percent down payment: 

--30-year fixed-rate mortgage

--6.5% mortgage interest rate

--0.45% annual mortgage insurance premium

The monthly payment calculation also includes property taxes and insurance. 

Posted by Jamie Smith Hopkins at 7:43 PM | | Comments (2)
        

February 2, 2008

New home, new baby?

In the "things that make you go hmmm" category: The New York Times mused this week on rising fertility rates in the U.S., wondering if the "wide-open mortgage climate early this decade" that pushed homeownership numbers to record levels encouraged more people to have kids:
Social scientists have long traced a connection between housing and fertility. When homes are scarce or beyond the means of young couples, as in the 1930s, couples delay marriage or have fewer children. ...

Several population specialists emphasized that housing is just one influence on fertility, and difficult to tease out from other factors, like income or optimism. “If you lower the cost of housing, you’re going to lower the cost of raising a child,” said Seth Sanders, director of the Maryland Population Research Center at the University of Maryland. “But if you look at how much it costs to raise a child, only one-third of the cost is housing. So my guess is that the impact is not very large.”

Posted by Jamie Smith Hopkins at 9:03 AM | | Comments (0)
        

February 1, 2008

Can't sell? Rent

Add one more to the group of would-be sellers putting their homes up for rent instead: Somerset Development Co., developer of the Station North Townhomes near Baltimore's Penn Station. Lorraine Mirabella reports today that 14 of its 32 units are unsold, and it's offering them for rent or lease-to-own:
Somerset's sale prices, which started at a range of $280,000 to $300,000 in summer 2005 and climbed in a matter of months to the high $400,000s for the largest corner units, have already been reduced. They now range from $300,000 to $450,000. [Developer James D.] Campbell said additional price cuts were not an option.

This is an interesting residential development because it's in what is often called a "transitional" neighborhood, a place with potential but also a lot of boarded-up homes. It appears that some of the buyers saw it as an investment rather than home: One of the residents estimates that just 10 or 11 of the 18 sold units are actually occupied by the owners.

On another note, click HERE to read about Sun parent Tribune Co. buying the paper's headquarters on Calvert Street -- a dozen blocks south of the Station North Townhomes -- and the printing plant in South Baltimore. Real estate experts have speculated that some of the unused building space or land could be tapped for mixed-use development.

Posted by Jamie Smith Hopkins at 9:36 AM | | Comments (2)
        
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About Jamie Smith Hopkins
Jamie Smith Hopkins, a Baltimore Sun reporter since 1999, writes about the regional economy. Her reporting on the housing market has won national and local awards. Hopkins is a Columbia native and has lived in Maryland all her life, save for 10 months spent covering schools in Ames, Iowa.
She trained to become a wonk by spending large chunks of time as a geek and an insufferable know-it-all.
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