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April 30, 2008

Fed cuts rates again

It's perhaps no longer news when the Federal Reserve cuts rates, but hey -- just to get it on the record: The Fed knocked down its benchmark "federal funds" rate a quarter-point to 2 percent. As the Associated Press notes, that's the lowest it's been since late 2004:
It marked the seventh consecutive rate cut by the central bank since it began easing credit conditions last September to combat the growing threat of a recession brought on by a deep housing slump and credit crisis.

You can read the Fed's statement HERE. A taste:

Financial markets remain under considerable stress, and tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters.
Posted by Jamie Smith Hopkins at 3:37 PM | | Comments (0)

Putting a dollar figure on the decline

Dean Baker, co-director of the Center for Economic and Policy Research, a Washington think tank, has an analysis today about the newest S&P/Case-Shiller home price figures. He notes:
The Case-Shiller data released yesterday indicate the rate of house price decline is accelerating. The 20-city index declined 12.7 percent over the last year, while the 10-city index fell 13.6 percent. However, the annual rate of price decline over the last quarter was 24.9 percent in the 20-city index and 25.8 percent in the 10-city index. At this rate of price decline, the excesses of the housing bubble will have largely disappeared by the end of the year. At the same time, the price decline implies an incredibly rapid loss of wealth. In real terms, the rate of price decline in the 20-city index would imply a loss of almost $6 trillion in real housing wealth over the course of the year, an average of $85,000 per homeowner.

In 2004, Baker was so convinced that a bust was coming that he sold his Washington home -- which had tripled in value in seven years -- and started renting.

Posted by Jamie Smith Hopkins at 1:20 PM | | Comments (2)

Latest personal info leak is mortgage-related

Liz Kay reports today that personal information -- including Social Security numbers -- "of about 56,000 Maryland consumers was compromised when several former employees of, an online mortgage lending exchange, gave three mortgage brokers unauthorized access to company databases."

The story, which you can read HERE, notes that the former employees gave company-database passwords to three California brokerages, which tried to sell loans to several thousand U.S. customers. (Or, as Hugh Williams of the Maryland attorney general's office's identity theft program puts it, they "illegitimately got their information for a legitimate business purpose.")

However, because the databases contained the names, dates of birth, Social Security numbers and income information for more than 56,000 Maryland customers who contacted LendingTree from October 2006 to December, the company sent letters to all of them about the security breach.
Posted by Jamie Smith Hopkins at 9:35 AM | | Comments (0)

April 29, 2008

Homeownership rate heading downward

The share of people who own their homes has been steadily falling during the slump as more turn to renting -- either by choice or necessity. The homeownership rate is now at 2002 levels, according to numbers put out this week by the Census Bureau:


In case you're squinting at the figures (sorry),  the chart follows the rate during the first quarter of the years 1968-2008. It peaked in 2005 at 69.1 percent and is now at 67.8 percent.

A variety of industry experts and economists have suggested that the homeownership rate got too high during the boom, pushed upward by loose lending and a political focus on turning renters into owners.

The downward trend of the last few years isn't as steep as the falloff during the early- to mid-1980s, when high interest rates (as in 18 percent in some months) made buying difficult. It's not over until it's over, of course.

Posted by Jamie Smith Hopkins at 5:22 PM | | Comments (0)

Fannie Mae weighs in

Daniel Mudd, president and chief executive of mortgage financier Fannie Mae, was in Baltimore today to speak to business journalists about housing and lending. Naturally we wanted to know where he thinks the housing market stands in the slump/recovery cycle, and this was his answer:

"It's very popular right now to say that we're in the third inning or we're in the fifth inning or we've in the seventh inning or all kinds of different places. And I think the reality of it is that nobody knows where we are right now. This is terra incognita. ... We think at Fannie Mae that '08 is going to be a tough year, kind of a continuation of the end of 2007. '09 will be similar, and we'll start to see some recovery and growth in '10."

More on this topic in tomorrow's paper.

Posted by Jamie Smith Hopkins at 4:36 PM | | Comments (1)

April 28, 2008

More vacant homes

The country's homeowner vacancy rate -- empty homes for sale -- hit a record in the first three months of this year, the Census Bureau said today. Some 2.9 percent of homes were vacant, the highest figure for a quarter since recordkeeping began in 1960.

The Census, perhaps expecting heart palpitations, notes that this isn't "statistically different" from the 2.8 percent rate in the first and fourth quarters of last year. But it's certainly a significant jump from the 1.8 percent vacancy rate in the beginning of 2005.

The vacancy rates range by region: 2 percent in the Northeast, 2.9 percent in the Midwest and 3.2 percent in both the South and West. Census counts Maryland as part of the southern region.

Posted by Jamie Smith Hopkins at 3:32 PM | | Comments (0)

How-to Monday: Homesharing


Photo of homesharers courtesy of St. Ambrose Housing Aid Center


For 20 years now, St. Ambrose Housing Aid Center in Baltimore has run a matchmaking service. Think empty rooms, not lonely hearts.

The nonprofit helps Baltimore and Baltimore County homeowners with space to spare find people looking for a room to rent, and vice versa. The program, launched by employee Mark Benson, was conceived as a way to get elderly residents some extra income and companionship but has proved to be popular with younger homeowners, too.

"It's one of the most creative things we do," says Vincent Quayle, executive director of St. Ambrose, which is best known for its housing counseling and foreclosure prevention work.

St. Ambrose Homesharing has made 1,180 matches all told -- about 60 a year. Room rent is typically $400 to $450 in the city and about $500 in the county.

Sometimes personalities don't mesh. But things usually work out pretty well, St. Ambrose says.

"Knock on wood, we have not had any serious problems," says Annette L. Brennan, the program director. "We screen very carefully from the outset."

The homeowner and home seeker can each ask for a criminal background check on the other party -- it costs about $15 to run one. Beyond that, St. Ambrose wants references, assurances that participants have been drug-free and sober for at least a year and a doctor's report from anyone dealing with a chronic condition. The nonprofit conducts interviews, too -- on site with homeowners so it can check out the property and neighborhood. (For its efforts, it asks for a $5 fee from the home seeker and $15 from the homeowner.)

Homesharing can be a flexible arrangement. Sometimes home seekers barter services in exchange for rent. Sometimes homeowners are willing to take people with a lousy credit rating. Sometimes folks stay together for just a few months while the renter sells an out-of-state house, and sometimes they live together for years.

A few times, St. Ambrose has helped match renters with homeowners who needed extra money to avoid foreclosure.

"Most of it is the universe just happens to smile on us," says Brennan, noting that homeowners might have to wait for a while until they find the right match.

Eileen L. Lewis, a Catonsville homeowner who has taken in renters for years through St. Ambrose, said she likes the experience. The renters' payments -- $375 for one room, $400 for the other -- help her financially, and she's happy to think that she's helping them avoid the much pricier cost of an apartment.

Sometimes it hardly seems as if she's sharing her house, her renters are so quiet.

"Everybody respects the space," she says. 

Want more information? Call St. Ambrose Homesharing at 410-366-6180 or email

Looking for other information on the topic? Click HERE for the National Shared Housing Resource Center.

Posted by Jamie Smith Hopkins at 4:00 AM | | Comments (1)
Categories: How-to Mondays

April 27, 2008

Mapping the ripple effects

Lorraine Mirabella reports today about the housing slowdown's impact on more than $1 billion worth of large-scale, high-profile developments planned for the city:
The projects, including towers that would be Baltimore's tallest, would swell the tax base and potentially attract new - and well-heeled - city dwellers. But the housing slump has dulled the market for new condominiums and houses, and the subsequent credit crunch has made financing difficult to obtain.

As a result, at least 11 major projects have been recast or are in limbo, waiting out the market. At the Inner Harbor, two sites planned for condominium and hotel skyscrapers are still parking lots. In Charles Village, the neighborhood's first proposed luxury condo building is on hold and likely to switch to apartments. And in Greektown, plans for 1,000 new residences on a gritty lot have been drastically scaled back.

It's full steam ahead for some large projects, though, including the Westport redevelopment.

Want more details? There's a map in addition to the story. Click HERE to see both. 

Posted by Jamie Smith Hopkins at 10:40 AM | | Comments (0)

April 26, 2008

Permit to build

Homebuilders have responded to the slump by pulling back on new inventory, as you all probably know quite well already. But they haven't done so in equal measure across the state and region.

So you can see that at a glance, I spent the morning making the Maryland Department of Planning's building-permit statistics more visual.

Here's the trend for residential permits statewide, first quarter 2000 through first quarter 2008:




Read on for the local experience ...















I'm figuring that the reason many jurisdictions saw a downward trend during the early boom years has more to do with zoning restrictions and crowded schools than demand. In any case, it's interesting to see how Baltimore City's permits peaked in '07, well into the slump. And how Baltimore County's permits in the first quarter of this year actually top -- by quite a bit -- the permits in the first quarter of 2005. And how Carroll's permits have dwindled away to a shadow of their former self.

OK, I've wonked away enough of my Saturday. If you care to pick up where I've left off, click HERE to see the state data.

Posted by Jamie Smith Hopkins at 12:59 PM | | Comments (0)
Categories: Number-crunching

April 25, 2008

State of Md. opens center -- in New Jersey

Hoping the housing market will revive when relocating government workers and contractors move in to the region as part of the base realignment and closure process? Then you'll be interested to hear that the state is having a grand opening today for its newest one-stop career center -- this one located at Fort Monmouth in New Jersey. That's one of the bases slated to send personnel here.

Not surprisingly, this is the state's first out-of-state center.

From the Department of Labor, Licensing and Regulation's press release:

The center will be staffed by professionals to serve New Jersey families moving from Fort Monmouth to Maryland. Resources available at the center include job search and training information, tools for professionals who will need to be registered or licensed to work in Maryland, community and housing resources, and a host of other resources to help prepare for the move.

It's an open question how many people will actually make that move. The Army addresses the issue in a BRAC Q&A:

How many Monmouth civilians are expected to refuse to move to Aberdeen? Has Fort Monmouth done any surveys that indicate what employees are thinking?

... [I]t is much too early to estimate with any accuracy how many employees may or may not go to Aberdeen. We did recently survey our workforce, however, and about 30% of our employees indicated they were likely to relocate to Aberdeen. However, this is at best a very preliminary estimate. What we can say is that based on the high number of personnel eligible for retirement in our workforce, we expect a lot of our employees to retire between now and the movement date, which will of course reduce the percentage of our current workforce who would relocate.

Of course, someone will have to fill those Aberdeen Proving Ground jobs. One assumes they'll either have to move here from somewhere (if not Fort Monmouth) or they're already living here now. And if they're already here now and aren't unemployed, they'll leave vacancies at their current jobs that will have to be filled, potentially by people from out of town ...

Oh the dominos.

Posted by Jamie Smith Hopkins at 3:07 PM | | Comments (0)
Categories: BRAC

A moving message

"BUY2DAY," said the license plate of a Range Rover driving up Calvert Street this morning. Yes, the driver does mean real estate, not stocks or bonds: "Consult a Realtor" was the message on the license plate frame.

Seen any other real-estate-related license plates lately? Or do you have a clever one of your own?

Posted by Jamie Smith Hopkins at 12:25 PM | | Comments (3)

April 24, 2008

New homes for Brewers Hill

A developer is planning to build up to 485 luxury apartments in Baltimore's Brewers Hill neighborhood, Lorraine Mirabella reports today -- though it's not as big a project as the city originally expected:
A Houston-based apartment developer has a site south of O'Donnell Street under contract and plans two four-to-five story residential buildings that would include street-level shops and parking.

The plan is scaled back from a much larger residential component envisioned when city planners approved development in Brewers Hill about five years ago.

Want to know more? Click HERE for the story.

Posted by Jamie Smith Hopkins at 10:22 AM | | Comments (0)

April 23, 2008

Sign of the times?

The Los Angeles Times reports on a tiny (but still depressing) trend:
In what appears to the latest symptom of the U.S. mortgage and credit crisis, insurers, law enforcement agencies and state agencies nationwide have reported a jump in the past year in home and automobile fires set by owners unable to pay their debts. The numbers are small but are leading the insurance industry to scrutinize more closely what seem to be routine blazes.
Posted by Jamie Smith Hopkins at 9:16 PM | | Comments (0)

No break in city property taxes

No new tax decreases: John Fritze reports today that Mayor Sheila Dixon "is abandoning a long-standing plan to cut 2 cents this year from Baltimore's highest-in-the-state property tax rate." Her administration blames the worsening economic situation, which hurts revenue collections.

According to the story:

The annual cut - which has been made each of the past three years - was supposed to knock 10 cents off the tax rate over a five-year period. The reductions have become a primary means to provide tax relief to city property owners.

Baltimore's property tax rate is by far the highest in Maryland - more than twice Baltimore County's - and a broad spectrum of city officials have acknowledged that the tax may be stifling growth and threatening homeowners on fixed incomes.

Opinions? Rants? Suggestions?

And yes, it was just a few hours ago that I got the time to look at my own paper's front page to see this story. Good grief, it's been a busy day.

Posted by Jamie Smith Hopkins at 7:02 PM | | Comments (3)

A blast from the -- er -- present

The headline reads, "Stretched buyers fuel boom in housing." A local one from three years ago? Nope. Today's headline in the Canadian Globe and Mail.

The story notes:

Legions of first-timers are adding years of extra mortgage payments so they can buy a house, or putting little or no money into a down payment, a Re/Max survey revealed yesterday. Nearly two-thirds of buyers in major centres now favour extended amortization periods of up to 40 years, while putting little or no money down was prevalent in 38 per cent of regional markets surveyed across Canada.

The country's real estate industry has played down any similarities to the U.S. when it comes to subprime borrowers. But as new segments of the Canadian population enter the market, the findings raise questions about what's been driving soaring house prices in recent years.

Posted by Jamie Smith Hopkins at 9:12 AM | | Comments (1)

April 22, 2008

Another day, another poll

Can't wait to hear what Americans -- or at least surveyed Americans -- think about the housing market? This is your lucky hour. A new AOL Real Estate/Zogby International poll says that 31 percent of people surveyed believe their home is worth more now than it was a year earlier and 56 percent "do not think their home will be worth less in five years."

Whether those figures suggest optimism or pessimism probably depends on your opinion of the market.

Other results from the poll, which was conducted with 6,678 adult participants in February and has a margin of error of plus or minus 1.2 percentage points:

--Thirty percent "are working paycheck to paycheck to cover housing costs"

--Thirty percent know someone who has lost a home to foreclosure "or is being forced to sell" due to mortgage troubles

--Sixteen percent of people who aren't planning to sell or buy a home this year are intending to embark on a "major" home remodeling project

Click HERE to see the results online, though be warned that not everything in the press release AOL sent us appears to be viewable on the site.

Posted by Jamie Smith Hopkins at 5:16 PM | | Comments (0)

Home sales, prices fall

The headline on our story about U.S. home sales in February asked a question: "A ray of light for housing?" Well -- the ray has disappeared for the time being. Perhaps it's resting up for later.

The increase in existing-home sales in February that the National Association of Realtors reported wasn't repeated in March, according to numbers released this morning. Sales fell 2 percent from the month before, the trade group said. (Condo sales rose while single-family home sales dropped.)

The median price fell 7.7 percent from a year earlier, the NAR said, though it noted (as it has for months) that it believes the drop is being exaggerated by sharply lower sales in expensive places. (Metropolitan Regional Information Systems, which has already reported local numbers for March, says median prices in the Baltimore metro area fell 3.2 percent from a year earlier.)

The Office of Federal Housing Enterprise Oversight, meanwhile, also released numbers this morning. It calculates that U.S. home prices fell 2.4 percent in February from a year earlier. OFHEO measures values differently -- wonk points to you if you knew that already. It looks at same-house transactions, and only those with loans purchased by Fannie Mae or Freddie Mac.

Posted by Jamie Smith Hopkins at 11:08 AM | | Comments (6)

April 21, 2008

How-to Monday: Mortgage fees


Image courtesy of Stock.XCHNG


Looking to get a mortgage or refinance an existing one? If you have the credit score to make it work, you shouldn't have trouble finding people who really, really want your business. The trick is deciding who should get it.

Christopher Cruise, a mortgage trainer in Silver Spring and a board member of the National Association of Responsible Loan Officers, suggests that you look carefully at the fees the mortgage broker or lender plans to charge.

"A reasonable markup is 1, 1 ½ percent for the typical mortgage of $250 [thousand] ... and above," he says. "And don't let them pad it with admin fees, doc-prep fees, processing fees. We're very creative, you know."

Determining how much you're paying in fees -- upfront or rolled into the interest rate -- isn't easy. But it's worth your time to hunt, negotiate and compare deals from both lenders and brokers.

"Everything is negotiable," Cruise says. "Credit report, appraisal, what are called 'junk' or 'garbage' fees, origination fees."

Look at all the lines in the 800 "block" of the good-faith estimate to see how fees under various names add up, Cruise says. Also find the "yield spread premium," often listed as "YSP POC," to see how much that will cost you.

A yield spread premium refers to a common practice in which the lender pays the broker because you've agreed to a higher interest rate than you could otherwise get. You might choose this path to lower the amount of money you'll have to cough up at settlement. But you don't want to pay top dollar on both ends, Cruise says.

Brokers have to disclose this premium. But here's the rub: You might get nothing more specific than, say, "zero to 3 percent" until you near settlement.

If you're using a broker, Cruise recommends that you keep looking until you find one willing to tell you the premium figure early on and explain how it affects your rate. Better yet, get a guarantee in writing that all the fees he or she has control over won't change at settlement. (If you know what your FICO score is, you can go to to see what interest rates lenders are offering people with similar credit scores, which will give you a point of comparison.)

Bottom line: Ask questions and don't take anything for granted. A fee might be pre-printed on the sheet and labeled "standard," but that doesn't mean you really should be paying it, he says.

And remember that comparing offers by total loan costs can be risky. That's because the figure includes the pro-rated taxes and insurance you'll have to pre-pay, says Holden Lewis at

"Depending on the date that you apply and the date of the closing that you set, those numbers can vary a whole lot and make that bottom line vary," he says.

Lewis also suggests that you ask people you trust -- family, friends, co-workers -- about their experiences in the mortgage market. You want referrals, of course, but anti-referrals are just as important.

"I hear stories about people who ... were told their fees were going to be X amount; they get into closing and it was twice that," Lewis said. "They're going to say, 'Hey, I was burned. Don't go to this broker, don't go to this loan officer.'"

Both Cruise and Lewis have useful advice about preparing for and dealing with settlement. But that will be for a later How-to.

Posted by Jamie Smith Hopkins at 4:00 AM | | Comments (1)
Categories: How-to Mondays

April 20, 2008

Buying or selling a condo? Read this

Columnist Kenneth Harney notes that private mortgage insurers and mortgage financing giants Fannie Mae and Freddie Mac are making it harder to get a condo loan, particularly in parts of the country with "declining" housing markets.

Click HERE to read more. Perhaps the most depressing comment in the column comes from Bruce A. Calabrese, president of Equitable Mortgage Corp. in Columbus, Ohio:

"Everybody is really backing off condos" because of all the restrictions and changes. He said he owns two condo units -- one in Florida, another in Myrtle Beach, S.C. -- and even though he is in the mortgage industry, "I don't think I could refinance either of them right now if I tried."
Posted by Jamie Smith Hopkins at 9:19 AM | | Comments (0)

April 19, 2008

Foreclosure help -- by mail

In my mailbox this week: A postcard from the state urging recipient to "Act NOW! Before It's Too Late!" if behind on mortgage payments.

It looks like a stepped-up response. The state has for a while offered foreclosure-help advice on a website, and a Baltimore nonprofit arranged for ads on radio stations, billboards and buses, but this is delivered directly.

The postcard recommends that if "you or someone you know is worried about losing their home to foreclosure or fraud ... Call The Maryland Hope Hotline At 1-877-462-7555 or go to for information on loan programs, counseling services and fraud intervention."

Anyone else get the postcard? (Or perhaps the state thinks my neighborhood is particularly at risk?)

Posted by Jamie Smith Hopkins at 11:31 AM | | Comments (0)

April 18, 2008

Another way of looking at affordability

The Center for Neighborhood Technology has a suggestion, one that will resonate with anyone who's moved far from work for less expensive home prices: Consider transportation costs along with housing costs when you're deciding what affordable means.

An interactive tool you can find HERE lets you see how much of various metro areas is "affordable" in the traditional sense -- housing costs don't top 30 percent of local median income -- vs. a different definition (no more than 48 percent of income spent on housing and transportation combined).

Looking for Baltimore? Scroll down to "W" for Washington. The two metro areas are shown as one region ... which, of course, they are in most senses of the word. 

Posted by Jamie Smith Hopkins at 6:34 PM | | Comments (0)

April 17, 2008

Report: Spending on remodeling will continue to fall

Contractors hoping that less home buying will mean more home improvement work this year are doomed to disappointment, predicts Harvard's Joint Center for Housing Studies. Its forecast calls for remodeling activity to fall 4.8 percent through the end of 2008.

From the center's press release:

“Spending on home improvements continues to be sluggish, as homeowners respond to falling home prices,” notes Nicolas P. Retsinas, director of the Joint Center for Housing Studies. “The fall-off in pending home sales suggests a long and slow recovery.”

“It looks unlikely that we will see any improvement in the remodeling market until 2009,” remarks Kermit Baker, director of the Remodeling Futures Program of the Joint Center. “Currently, the second half of this year is shaping up to be weaker than the first half.”

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

April 16, 2008

What homes have to do with cars

If you think the only connection between homes and cars is the garage, you're not considering the housing market's impact on lending.

Wachovia's economists write today that more people "are facing tougher financing terms for new and used vehicles" because the tighter lending standards for mortgages are finding their way to auto loans:

Auto lenders are competing for space on balance sheets at a time when nearly all lenders are becoming more cautious. As a result, lenders will make fewer and smaller loans, require higher credit scores and larger down payments. With greater constraint in auto financing and growing economic uncertainty, auto sales are weakening. ...

Manufacturers and dealers are responding to today’s tougher operating environment by lengthening the terms of loans and offering more aggressive lease terms. The problem with longer loan maturities is that many potential buyers are already in a position where they owe more on their car than they can sell it for.

Posted by Jamie Smith Hopkins at 4:34 PM | | Comments (1)

Energy-saving advice

The Fuel Fund of Maryland has put out more tips as part of its energy-efficiency campaign. Noting that hot weather is just around the corner, the group suggests that you clean or replace your air conditioning filters -- "failing to keep filters maintained can drive monthly bills up and eventually lead to the unit’s death."

The Fuel Fund also recommends getting a tune-up for your air conditioning system.

Have any useful (or amusing) tips for keeping air-conditioning bills down? Chime in.

Posted by Jamie Smith Hopkins at 12:04 PM | | Comments (0)

April 15, 2008

Worried homeowners

Housing and mortgage conditions are making Americans extremely nervous, or at least that's what a new Associated Press poll suggests.

The poll, conducted with AOL Money & Finance, found that 14 percent of homeowners with mortgages "worry that they might soon fail to make their monthly payments," nearly 30 percent are anxious that their homes will lose value within two years and 60 percent "said they definitely will not buy a home in the next two years."

The story notes: 

Eleven percent were certain or very likely to buy soon, down from 15 percent two years ago.

I'm sure there would be at least some variety in answers from state to state if the poll results could be broken down that way.

So -- in a completely unscientific way, of course -- feel free to put in your answers here. If you have a mortgage, do you think you might miss payments soon? Do you think your home will lose value in the next two years, maintain its current value or gain value? Do you think you might -- or do you plan to -- buy a home in the next two years?

Fair warning: I'll be away from a computer most of the day. I'll put up any responses tonight. 

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

April 14, 2008

How-to Monday: Rent-to-own


Photo courtesy of Stock.XCHNG


You can rent a house. You can buy a house.

Or you could do both.

Rent-to-own -- a contract that gives a renter the option to buy at a set price -- is a niche part of the housing market. But it's one that more would-be sellers might be pondering as they consider alternatives in these slow times.

Be aware that these deals offer a lot more complications (or, at least, issues to consider) than a straight rental or regular sale would.

You'll want a contract, most likely one written by an attorney, said Barbara Nichols, a California real estate broker who wrote The No Lawsuit Guide to Real Estate Transactions. In it, note the term of the lease option -- how long the renter can rent before he or she is obligated to decide whether to buy -- and the sales price. Normally, an agreed-upon portion of the rental payment is applied toward the down payment.

The renter/buyer should have a property inspection done in advance, she says. You don't want nasty surprises about the roof or the foundation after two years of accruing a down payment on the place.

For everyone's sake, agree in the contract who will be responsible for maintenance and repairs, she says. Note what recourse the landlord has if the renter damages the home and bolts, and what recourse the renter has if the landlord stops paying the mortgage. 

Reisterstown attorney Marc Appel suggests both parties decide whether the renter must go through with the purchase once exercising the option or whether it's contingent upon getting financing.

The handful of calls that Baltimore Neighborhoods Inc. gets about rent-to-own issues are from tenants upset that things did not go the way they had been led to expect.

"A lot of times, the lease agreement is not really that clear," said Stephanie D. Cornish, program manager for the nonprofit's tenant-landlord counseling department. There might be just a sentence to the effect of "you have the right to buy."

Appel, a partner with law firm Waldman, Grossfeld, Appel and Baer and a panel attorney for Baltimore Neighborhoods, thinks people should have a lawyer look over the contract before signing.

"Usually it's the landlord who's drafting the agreement, so they've already had it reviewed," he said. "Usually it's the tenant-buyer who has not."

So let's say you have a well-written contract. Is the rent-to-own concept a good idea for you?

"It won't make sense for a seller if the prices are going up, because obviously you're locked into a lower price," Nichols says. "It does make sense for a seller if the prices are going down."

In that sort of market -- namely, this one -- the renter will want to think twice, she says.

Opinions? Personal experiences? Type away.

Posted by Jamie Smith Hopkins at 4:00 AM | | Comments (16)
Categories: How-to Mondays

April 13, 2008

Things that make you go "hmm"

A potpourri of housing-related nuggets:

Columnist Jay Hancock has a piece today about home swapping -- for vacation purposes, not permanently -- and notes that it's becoming more popular as people battle rising costs. He writes:

The first question every home exchanger gets is: Will you really trust complete strangers to live in your house and drive your car?

It takes a certain faith. But I have yet to hear about a home swap that involved anything more negative than unreplenished toilet paper or divergent housekeeping standards.

Exchangers usually spend weeks or months communicating before the event, which builds trust and a mutual sense of responsibility.

Donna M. Owens writes about landscaping, noting that more sellers are concentrating on this aspect of curb appeal:

James McWilliams, a co-owner of Maxalea Inc., a landscape contractor in North Baltimore, says he often fields calls from homeowners desiring to spruce up their houses before putting them on the market. "They may need to clear plants that are overgrown near the house, or edge and delineate the flower beds. Sometimes we are checking for insects or diseased trees. We address all sorts of things."

... McWilliams says their clients typically spend between $5,000 to $50,000, but it's not unheard of, he adds, for higher-end clients to spend hundreds of thousands of dollars landscaping their mansions and estates.

Meanwhile, Fred Schulte and June Arney -- the duo who shed light on ground rent -- report on the city's looming tax sale. More than 20,000 property owners will be in danger of foreclosure if they don't soon pay their past-due tabs to the city, which range from property taxes to water bills:

One advocate for the poor said that tax sales - especially over debts for essential services like water - compound the foreclosure problem and create "a state-sanctioned, high-yield investment product" for investors who buy the liens.

"Low-income citizens of Maryland who are caught up in this problem bear the worst consequences, because they really have little choice in how they're going to be able to pay back these investors," said Louise M. Carwell, senior attorney at Legal Aid Bureau Inc. in Baltimore. She said she would like to see the city keep all water bills and alley paving fees out of tax sales.

Posted by Jamie Smith Hopkins at 6:37 PM | | Comments (2)

April 12, 2008

What's getting built

Permits are way down for new homes -- but not all sorts of housing.

The Maryland Department of Planning, which has data for the first two months of this year, notes that builders got permits in the Baltimore metro area for 85 percent more multifamily housing in January and February than they did in the first two months of last year. Permits were issued for 467 units this year in that category, which includes apartments and condo complexes, vs. 253 last year.

Permits for single-family units -- detached houses, townhouses and rowhouses -- are down 47 percent, dropping to 422 units from nearly 800 in the first two months of last year.

Yes, that's right: There were more permits for multifamily than single family in January and February. In the Baltimore metro area, where most building happens in the 'burbs, that's not an everyday occurrence.

Interested in earlier numbers? Click HERE

Posted by Jamie Smith Hopkins at 10:05 AM | | Comments (2)

April 11, 2008

A housing market that's not one flavor

In my story today about area home sales in March, agents and buyers talk about a dynamic in the market that one might assume had disappeared months and 10,000 headlines ago: Sellers asking for housing-boom prices. Yes, two years into the slump.

Some of it might be sheer stubbornness. People selling after a year-and-a-half or two of ownership, on the other hand, could be trying to avoid bringing money to the settlement table to cover the difference between what they owe and what a buyer will pay.

But the other side to this? Not everyone's pricing that way:

Mike and Colleen Sacca, who sold their Bel Air townhouse in January and moved in with relatives while searching for a single-family house, have seen both aspects of the market. In three months of looking in the $320,000 to $350,000 range, they checked out homes that were clearly priced too high. But they were outbid twice on homes that were "great deals," Mike Sacca said.
Posted by Jamie Smith Hopkins at 9:21 AM | | Comments (3)

April 10, 2008

March home sales

Hoping that the housing market would hit the accelerator to mark the start of the spring selling season? It was not to be. Home sales in the Baltimore metro area continued to drop precipitously last month vs. a year earlier, according to numbers released today by Metropolitan Regional Information Systems.

Sales fell 34 percent. That's the seventh straight month of declines at or above 30 percent.

Average home prices fell almost 3 percent in the metro area, though there was quite a range at a local level. Prices were down about 1 percent in Anne Arundel, 3 percent in Harford, 4 percent in Baltimore County, 8 percent in Howard and 20 percent in Carroll. Baltimore City posted a gain of almost 2 percent.

But the city's sales, like Howard's, were down 44 percent. Drops elsewhere in the region were not that steep.

I'll have more details in tomorrow's story. In the meantime, click HERE if you'd like to see the new statistics.

Posted by Jamie Smith Hopkins at 1:01 PM | | Comments (1)

April 9, 2008

Feeling left behind

About eight out of 10 Americans surveyed by the Pew Research Center and Gallup say that it's harder for middle-class folks to maintain their standard of living than it was five years ago, according to a poll released today.

I mention that here due to this aside by Pew:

A new single family house is about 50% larger and nearly twice as expensive now as it was in the mid-1980s. ... As expenses have risen, middle-income Americans have taken on more debt, often borrowing against homes that, at least until recently, had been rising rapidly in value. The median debt-to-income ratio for middle-income adults increased from 0.45 in 1983 to 1.19 in 2004. Ratios have also increased for upper- and lower-income adults, but not by as much.

More than half the people surveyed said they had remained stagnant financially or had fallen back in the past five years. Pew called it "most downbeat short-term assessment of personal progress in nearly half a century of polling."

Still, that doesn't mean the prevailing opinion is completely depressed. Pew said most of the middle-class people surveyed "are confident that their quality of life in five years will be better than it is now."

Posted by Jamie Smith Hopkins at 5:19 PM | | Comments (0)

Million-dollar listings

Add this to the growing list of sites that aggregate listings of homes for sale: The newly announced website lets wealthy buyers and curious onlookers see what pricey homes are on the market on the Eastern Shore.

Not everything is a million or more, actually. But some of the asking prices are multiples of that, like a Talbot County retreat that's nearly $20 million.

Posted by Jamie Smith Hopkins at 9:28 AM | | Comments (0)

April 8, 2008

Paying more for the loan

The Center for Responsible Lending, which predicted in 2006 that 2.2 million subprime borrowers were eventually headed for foreclosure, says in a report today that Americans are paying more for their subprime loans if they got them through a mortgage broker rather than the lender.

Subprime borrowers pay about $5,200 more in the first four years for broker-originated mortgages than loans direct from the lender, said the center. "Near-prime" borrowers pay a $1,300 premium. Prime borrowers, on the other hand, see a small savings. The center said it based its conclusions on an analysis of 1.7 million mortgages issued between 2004 and 2006.

From the report, which you can read HERE:

People with weaker credit scores naturally pay more for mortgages than people with strong scores. However, it is very difficult for borrowers with weaker credit or less experience in financial matters to know precisely how much more is appropriate, especially since, unlike prime rates, subprime rates are not generally publicly available. In addition, subprime loans tend to be much more complex than the fixed-rate mortgages that have long dominated the prime market, making their costs more difficult for borrowers to compare.

Accordingly, we hypothesize that brokers have been able to take advantage of this situation by emphasizing maximum revenues per loan for subprime borrowers. While retail lenders are probably not immune from these dynamics, we believe the effects on the costs of retail loans are less pronounced due to more regulation, better internal controls, and concerns about reputational risk.

UPDATE: Late Tuesday evening, the National Association of Mortgage Brokers issued a press release decrying the study.

The trade group's president, George Hanzimanolis, said in a statement that "we are greatly concerned by its misrepresentations of the broker compensation structure, the competitive nature of the mortgage business, and the over simplification of this complex industry. The researchers’ use of conjecture regarding broker behavior is ill-founded and unsupported, and raises questions about the methodology they employed to arrive at their conclusions."

Posted by Jamie Smith Hopkins at 1:26 PM | | Comments (2)

Can't get enough of foreclosure maps?

If there's a new housing-related mapping tool released every day -- and it sure seems like it -- then every other day there's one about foreclosures. Today's freshly announced map is brought to you by You can see the Maryland picture or look elsewhere in the country.

The maps use foreclosure data from RealtyTrac, which told me in December that it has a difficult time getting full numbers from Maryland, though it said it improved its coverage last year. Something to keep in mind as you look at the maps, in any case.

Posted by Jamie Smith Hopkins at 11:12 AM | | Comments (0)

April 7, 2008

How-to Monday: Home improvement


Photo courtesy of Stock.XCHNG


Home improvement isn't immune from the housing downturn, but the decline in upkeep and major work is modest compared with the slump in buying, according to Harvard’s Joint Center for Housing Studies

If you're thinking of hiring a contractor, the Maryland Home Improvement Commission urges you to keep these tips in mind: 

Vet the license. Don't assume the license number your potential contractor supplies is legit, says Steven Smitson, executive director of the commission. The state is seeing more contractors operating without licenses, and some of them are offering fictitious numbers or ones belonging to other contractors.

He advises that you look up the license number HERE or ask about it by calling the commission at 410-230-6309. If the names don't match or you have any doubt that it's the same person, call the company listed with the license information and ask to speak to your guy. One homeowner did that recently, Smitson said, and was told, "He doesn't work here."

Find out about the contractor's complaint history. Call the commission for information.

Don't judge a contractor by his or her advertising. That might sound like a no-brainer, but Smitson notes that it's cheap and easy nowadays to create the appearance of respectability with a website, snazzy business cards and slick handouts. Beware of companies advertising that they are "licensed and bonded" without noting the license number, he says. The law requires that those numbers appear on the ads.

Ask for references. Give the former customers a call to find out how satisfied they were and whether the contractor delivered on the agreed-upon price, deadline and other terms. Better yet: Visit them to check out the work yourself. "It's almost like test-driving a car before you buy it if you can actually go and look at a job," Smitson says. He cautions against relying heavily on websites that offer referrals because some don't check license status or complaint histories.

Seek out competing bids. "It's always a good idea to get at least three," Smitson says. Get everything in writing. He notes that the lowest bid isn't necessarily the cheapest, if it will mean substandard work that will have to be fixed later.

Don't pay too much upfront. "By law, contractors can only request one-third of the contract price as a deposit, and that's once the contract is signed," Smitson says. Anyone who asks for more to cover material costs might have financial problems, he adds. 

What if you get cold feet immediately after you've signed a contract? Homeowners have three business days to cancel without obligation if they negotiated it at their home, thanks to the state's door-to-door sales act, Smitson says.

As for fraud or shoddy work, you can complain to the home improvement commission. If he or she is licensed, you can also file a claim with the home improvement guaranty fund, which covers homeowners' losses of up to $15,000 per contract. (There's a cap of $100,000 per contractor, so you could end up with less if you're one of a long line of claimants.)

Over and above that fund, the state has recovered more than $1 million for homeowners through restitution payments and settlements since July, Smitson says.

Have other tips for cutting down on home improvement headaches? Chime in.

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

April 6, 2008

For sale -- sold

Andrea Siegel has a story today about homes that are sold before they're officially on the market, sans open houses, which does still happen in this market -- just not as much as it did during the boom.

She reports:

Such transactions sometimes take place when sellers want only serious buyers in their houses, in highly sought-after locations, with houses that are architecturally distinctive or for privacy, when agents are representing celebrity buyers or sellers.

But agents say they also occur with properties that have what specific buyers want -- typically, excellent condition, nice appearance, fair price -- with buyers who have told agents that they're ready to purchase a place that meets certain criteria, with motivated sellers and those who hope to sell with less marketing. Such transactions also occur in private deals among neighbors or friends.

It's difficult to track how often this happens. But Metropolitan Regional Information Systems, keeper of the multiple list, notes how many homes sell within 30 days. In February in the Baltimore metro area, it was 286 -- 18 percent of all sales.

Posted by Jamie Smith Hopkins at 4:02 PM | | Comments (0)

April 5, 2008

Biggest bubble country? Not us, IMF says

The International Monetary Fund's latest study of worldwide housing markets has an interesting argument about prices:
The countries that experienced the largest unexplained increases in house prices were Ireland, the Netherlands, and the United Kingdom—by the end of the decade, house prices in these countries were about 30 percent higher than justified by fundamentals. A group of other countries, including France, Australia, and Spain, have house price gaps of about 20 percent. Based on this measure, the United States is among the middle-ranked countries in terms of vulnerability to a housing correction, partly reflecting the fact that U.S. house prices have already declined ...

The report covers a lot of ground, including the impact of changes in mortgage financing that made it easy for anyone to get a loan for just about any amount they wanted. Mortgage debt equaled about 75 percent of the United States' gross domestic product -- a key measure of economic activity -- in 2006, according to the IMF. In 1990, it was about 45 percent.

Posted by Jamie Smith Hopkins at 6:19 PM | | Comments (0)

April 4, 2008

Mortgage vs. rent

In the Baltimore metro area, a cheaper-than-typical house -- 75 percent of the median price -- will run you about $1,800 a month if you have a mortgage with a 7 percent interest rate. But rent is just a shade over $1,000. 

So says a study released yesterday by the Center for Economic and Policy Research and the National Low Income Housing Coalition, which suggests that this difference, and the even starker gaps in markets like New York and San Francisco, is a problem for stretched homeowners.

From the press release:

According to the report, which analyzed data from the Census Bureau's American Community Survey (ACS), the most inflated markets currently see monthly homeownership costs outpacing rental costs by as much as 300 percent. ...

"This could mean that families may have to forgo health insurance or quality child care as they struggle to make their mortgage payments," said Dean Baker, Co-Director of CEPR and an author of the study. "Furthermore, since prices are still falling in these markets, many homeowners won't ever accrue any equity."

The study projects an equity loss of more than $30,000 in the Baltimore area after four years. It puts the figure at $100,00-plus in some markets.

Posted by Jamie Smith Hopkins at 6:34 PM | | Comments (6)

April 3, 2008

You're invited to a housing forum

Local and federal officials are using the 40th anniversary of the Fair Housing Act to talk about foreclosure issues in a forum this month. You can attend -- yes, you there, clutching your computer mouse -- though this is specifically geared toward housing counselors and other practitioners. 

"Celebrating 40 Years of Fair Housing: A Response to the Foreclosure Crisis" is scheduled for 9:30 a.m. to 12:30 p.m. April 18 at the War Memorial Building, 101 North Gay Street in Baltimore. (Registration starts at 9, but slots are filling up so you'll want to pre-register -- see below.)

Panelists will discuss the local, state and federal response to rising foreclosure numbers. The Baltimore Regional Fair Housing Workgroup, which includes government agencies at all levels, is putting on the event.

To sign up:

Posted by Jamie Smith Hopkins at 4:38 PM | | Comments (0)

Condo sales crimped

Delta Associates' new condominium report, released yesterday, noted a trend in sales that makes a marketer shudder: A grand total of 13 condos sold in the Baltimore metro area in the first three months of this year. The area had 263 sales in the first quarter of 2007, Delta says. (It defines the area as Anne Arundel County, Baltimore City, Baltimore County, Harford County and Howard County.)

That's actually not the worst quarter of the slump. July through September of last year, the metro area recorded -12 sales of condos. Yes, negative sales. 

Delta defines a sale as a binding contract with a deposit, but buyers have been backing out of contracts. The company, speaking of the Mid-Atlantic region as a whole, said in a press release that "projects are seeing buyers fail to settle -- back out of sales contracts -- from 15% to 50%."

Developers have dropped their listing prices but pulled back on other concessions, leaving the bottom-line price for buyers down only modestly from a year ago, Delta added.

Posted by Jamie Smith Hopkins at 2:32 PM | | Comments (3)

April 2, 2008

Jobs and housing

Ten of the 25 metro areas that lost the most jobs in the past year were in Florida, California and Arizona, according to an analysis by economist Charles W. McMillion. Why do we care, you ask? Because these were hot-hot states during the housing boom and are really feeling the slump. It's a reminder that the housing market does affect the job market, for good and bad.

One of the metros on the top 25 for job gains: York-Hanover, Pa. (No. 24, with an increase of 3.1 percent or 5,500 jobs in the 12 months ending in February.) Home prices there are a lot lower than in the Baltimore-Washington region.

Click HERE to see a PDF of the top gainers and losers. Thanks to McMillion of MBG Information Services in Washington for sharing. (And as always, remember that the February numbers are preliminary and could be revised by the federal government later.)


Posted by Jamie Smith Hopkins at 12:44 PM | | Comments (0)

Subprime and exotic loans: A bird's eye view

The Federal Reserve Bank of New York has a new tool that lets you look at a map of the country -- or specific ZIP codes -- color-coded by the number of subprime or "Alt-A" loans made, the number in foreclosure and the like.

Click HERE to check it out.

McClatchy Newspapers, which wrote about the data, says the site will be updated monthly:

The Federal Reserve hopes that by providing online access to maps and data about non-prime mortgages down to levels as specific as ZIP codes, it’ll be easier to identify potential and current problem spots for foreclosures.
Posted by Jamie Smith Hopkins at 10:25 AM | | Comments (0)

April 1, 2008

Not all homes falling in value, says, best known for its "Zestimates" of individual property values, released an analysis yesterday that says the cheapest housing in the Baltimore metro area rose in value nearly 9 percent from the end of 2006 to the end of 2007 while all pricier categories declined.



Zillow broke housing into five groups based on value. In our metro area, the bottom was $137,999 or less; the lower middle was $138,000 to $232,999; the middle was $233,000 to $297,499; the upper middle was $298,000 to $388,999; and the top was $389,000 and up.

This was a new analysis of Zillow's Home Value Reports for the fourth quarter, which were released last month. 

The results don't suggest it's all good news for owners of less expensive homes and bad news for owners of pricier ones.

People in the lower-middle category who bought last year "had the least owner equity ... and nearly 40% actually have negative equity," Zillow says. The typical person who bought a home in the most expensive category last year has a 21 percent equity stake -- "fueled by the fact that those in the Top quintile had a median down payment of 20%, while those in the Lower Middle quintile put less than 1% down," Zillow says.



Click HERE for the data or HERE for the national press release. 

Zillow's Zestimates have drawn criticism for inaccuracy. Zillow's vice president for data and analytics, Stan Humphries, blogged about the data earlier in the month:

The Zillow Home Value Index takes a different approach to constructing its market index. We generate valuations several times a week on more than 67 million homes, or roughly three out of four homes in the U.S., and calculate historical values dating back to 1997 (thus creating over 13 billion Zestimates). This complicated process allows us to aggregate these house-level valuations into indexes (what we call the Zindex) at the neighborhood, ZIP code, city, county, metro area, and national levels. This Zindex eliminates the bias present in median sale prices by looking at the value of all homes in a region, not just those homes that sold. ...

An important property of the Zillow Zestimate that allows us to aggregate them into a very accurate and reliable Zindex is that they have relatively little systematic error meaning that, while each Zestimate has some margin of error, they are just as likely to be above the actual sale price of a home as below. This means that individual estimates, each with some error, can be aggregated to form a quite accurate measure of all homes.

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (7)
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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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