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June 30, 2008

How-to Monday: Paying off your mortgage early


Image courtesy of Stock.XCHNG


Sure, you get a tax deduction for the interest you pay on your mortgage, but that doesn't mean you aren't heartsick about all that interest. That's why paying off a mortgage early -- and cutting out as much interest as possible -- will always appeal to some homeowners.

There are various options, some better than others, experts say.

Consider, for instance, biweekly payment plans through your lender. If you make half your mortgage payment every other week, that's 26 half-payments -- or 13 full payments rather than 12, eliminating mortgage debt more quickly. But don't sign on the dotted line if the lender charges you a fee to participate, says's Greg McBride.

"You can achieve the very same objective on your own," he says.

Here's how: either make an extra payment once a year or add 1/12th of that amount to each monthly payment. "Neither of those cost a dime, and you retain the flexibility to change course if money is tight," McBride says.

Ethan Ewing, president of, makes the same recommendation. "Check your monthly statement from the lender and make sure it's being applied to principal," he adds.

You can see your total interest and principal due, and how those would change if you made extra payments, at's mortgage calculator.

More complex pay-off-early plans suggest you replace your mortgage with a home equity line of credit and use that line as your savings and checking account, depositing your paychecks and withdrawing money for your bills. The idea is that your deposits lower your mortgage balance as long as the money sits there, unspent. You end up with a lower average monthly mortgage balance than you otherwise would, saving you on interest payments.

"It's good if you're cash-flow positive. If you're cash-flow negative, you're going to be in trouble," says Ewing. Spend more than you earn, and you're eating up your home equity. "We've got a negative savings rate in this country, so there are certainly a lot of people who would be cash-flow negative."

Also consider the cost to refinance and the possibility nowadays that your line of credit could get scaled back or frozen by your lender, McBride says. Remember too that lines of credit have variable rates. You can often fix the amount you borrow upfront -- the amount of your mortgage, in this case -- but any later borrowing could end up with a higher rate.

Following along? OK, here's a related concept that requires a home equity line of credit in addition to, rather than instead of, your mortgage: 

Again, you deposit your paychecks and pay your bills through the line of credit. The difference? Every few months, you put, say, several thousand dollars from the line of credit toward your mortgage. In other words, reduce principal by borrowing against your line of credit, paying interest on what you borrowed for the several months it takes for your discretionary income to catch up.

Rich Leffler, a Towson-based consultant for Money Merge Account, a $3,500 program that comes with software telling you when to make the extra payments and how much the payments should be, says you'll come out ahead because your deposits lower the balance on your line of credit as long as they sit there.

"Eight to 14 years is when you could expect a typical 30-year mortgage to be paid off with this program," says Leffler, who's also a mortgage consultant. Depending on the loan, "You could save $80,000 on the mortgage by paying it off sooner and end up spending maybe $5,000 in interest over the life of the line of credit."

A variety of financial commentators are skeptical. McBride doubts the net benefit for most homeowners would be nearly that dramatic, particularly if they're starting off with a $3,500 payment for the program. With isolated exceptions, he doesn't see how it would work to your advantage unless the interest rate on your line of credit is lower than the rate on your first mortgage -- and remains lower.

McBride and Leffler agree on one point: Find out the costs and savings for you, personally, before you take the plunge. 

Another thing to consider before paying down a mortgage more quickly: so-called "opportunity costs." If you're putting additional money into your mortgage, you're not doing something else with that cash. Paying down higher-interest credit card debt, for instance. Or saving for retirement. Or making investments that have nothing to do with the housing market.

"If you put $100 extra into your house, basically -- into your mortgage -- you have to consider that an additional investment into real estate," Ewing says. "My wife and I, .... we'd rather save that money and put it into other investments."

Tried any pay-off-early ideas? Have any recommendations? Chime in.

Posted by Jamie Smith Hopkins at 4:00 AM | | Comments (15)
Categories: How-to Mondays

June 29, 2008

Eminent domain -- useful or counterproductive?

Baltimore's practice of hands-on revitalization efforts -- including eminent domain -- has hurt rather than helped the city, a new report argues.

"Baltimore’s Flawed Renaissance: The Failure of Plan-Control-Subsidize Redevelopment" makes a case that "the city’s lack of progress on so many fronts is a direct by-product of its failure to understand and treat the real source of its problems: hostility to private property rights and a resulting flight of capital that largely drained the city of its economic lifeblood."

The report, written by Loyola College economics professor Stephen J.K. Walters and Loyola graduate Louis Miserendino, was produced as part of the Institute for Justice’s series on eminent domain abuse. (The institute is a libertarian public interest law firm.) The authors write:

Often, areas that were well-functioning (if unappealing to planners’ eyes) became emptied-out slums only after they were designated as part of a renewal area or were unlucky enough to sit in the path of a planner transit artery thought necessary to revitalize downtown.

Eminent domain has always been controversial, though it has seemed to have more supporters in the city than, say, a suburban community where a state or local agency was eying privately owned land. What do you think its effect has been on Baltimore?

Posted by Jamie Smith Hopkins at 11:58 AM | | Comments (1)

June 28, 2008

Retirement wealth hurt by housing market

What happens when your home is your biggest investment: Homeowners near retirement age are suffering markedly from dropping prices, says the Center for Economic and Policy Research.

In a new study, the Washington think tank projected wealth -- or, rather, lack of wealth -- among people who will be ages 45 to 54 next year:

The first scenario assumes that real house prices fall no further than their level as of March 2008. The second scenario assumes that real house prices fall an additional 10 percent as a 2009 average. The third scenario assumes that real house prices fall an additional 20 percent for a 2009 average. The projections show that the vast majority of families in these age cohorts will have little or no wealth by 2009 in any of these scenarios and that the cohorts just approaching retirement will have very little to support themselves in retirement other than their Social Security. The projections also show that a large number of families in these age cohorts will have little or no equity in their homes in 2009.
The picture is brighter for renters, as the press release notes:
In fact, the renters within each wealth quintile in 2004 will have more wealth in 2009 under all three scenarios, than will the homeowners from the same quintile. These projections underscore the dramatic impact of policies that promoted homeownership during the housing bubble.

Well -- you know what comes next. Poll time:

Posted by Jamie Smith Hopkins at 8:10 AM | | Comments (1)
Categories: Polls

Unusual homes

Some lookie loos like to see huge mansions. But if tiny properties appeal to your curiosity, check out this Yahoo slideshow of photos from America at Home, which range from a shack (a very nice shack) to a houseboat.
Posted by Jamie Smith Hopkins at 6:53 AM | | Comments (0)

June 27, 2008

As rates rise, your buying power falls

Zillow says that homebuyers getting a mortgage now will pay significantly more than buyers two months ago, even as home prices have dropped. That's because interest rates are up.

People getting a median-priced home in the Baltimore area and making a 20 percent down payment on a 30-year fixed-rate loan will pay $1,188 extra a year than if they'd borrowed in April, Zillow says. (It based its calculations off rates offered through its Mortgage Marketplace to borrowers who had "good or better" credit scores.) The change in the annual percentage rate? From 5.75 percent in April to 6.44 percent in June, Zillow says.

It's a useful reminder that dropping prices won't always mean a better bottom line.

Posted by Jamie Smith Hopkins at 3:51 PM | | Comments (4)

A moving experience

Looking for a mover? makes 10 suggestions "to avoid being taken for a ride":

1. Ask your Realtor

2. Investigate the companies

3. Make the moving company look at your home

4. Get three estimates

5. Demand a contract that covers everything

6. Ask about the claims process

7. Do the movers conduct drug tests and background checks?

8. Be cautious of Internet movers

9. Look at the actual trucks used

10. Pay little up front

More details can be found HERE.

Would you add anything to that list? What about suggestions for moving yourself successfully?

Posted by Jamie Smith Hopkins at 9:14 AM | | Comments (0)

June 26, 2008

A home-sales snapshot

The National Association of Realtors says U.S. home sales rose 2 percent in May, the first month-over-month increase since February. (These numbers are, of course, preliminary and adjusted for seasonal variations.)

The February increase was greeted with cautious hope from some economists, who say declining home prices will attract bargain-hunters, increasing sales. The May numbers, released today, brought this comment from Wachovia: "It is still too early to call a bottom in the home sales market, but clearly the vast majority of the declines in sales are behind us." (The continuing problem, Wachovia says, is "excess inventory" -- too many would-be sellers competing for too few buyers.)

Compared with May 2007, sales are down about 16 percent, the NAR says. Both the average and median price of a U.S. home dropped more than 6 percent in May compared with a year earlier.

May numbers for the Baltimore metro area, released earlier by Metropolitan Regional Information Systems, show fairly flat prices -- up a bit on average, down a bit on median -- but a larger, 30 percent drop in year-over-year sales.

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

June 25, 2008

Not a jumbo number of jumbos

Catching up on housing-related news now that I'm back in the land of computers and Internet access, and I thought this Bloomberg story would be of interest to anyone wondering why Fannie Mae and Freddie Mac's new ability to get into part of the jumbo-loan market isn't having much effect on home sales:
Instead of using powers granted by Congress to buy jumbo loans for the first time, Freddie Mac and Fannie Mae are purchasing their own mortgage-backed securities, helping reduce losses, company filings show. ...

The National Association of Realtors estimated last year that Fannie Mae and Freddie Mac would buy $150 billion of jumbo loans in 2008. UBS AG analysts now say the amount may be $74 billion; the companies' own projections indicate that they may not even reach that figure.

So-called jumbo mortgages are above the $417,000 limit previously set for Fannie and Freddie. The feds temporarily raised the limit for a number of markets. It's $560,000 in the Baltimore metro area.

Posted by Jamie Smith Hopkins at 9:20 PM | | Comments (0)

June 23, 2008

Radio silence

I'll be away from a computer for a few days, so please forgive a bit of radio silence. (Feel free to leave comments -- just remember that I have to approve everything before it appears, so be patient.)
Posted by Jamie Smith Hopkins at 12:51 PM | | Comments (0)

How-to Monday: Finding foreclosures


Associated Press photo


The more you hear about foreclosures piling up, the more you may be tempted to buy one. There's a lot to consider if you do -- but first things first: how to find them.

A foreclosure becomes a foreclosure when the home goes to auction. Frequently, the buyer is the lender -- that's what happens when there's no one else willing to bid at least as much as the lender wants. If you think there's a deal to be had, you can be that bidder.

You'll find ads for impending auctions in the newspapers. Or you can see listings online. Alex Cooper Auctioneers, for instance, keeps a tally of scheduled foreclosure auctions -- typically on courthouse steps. Express Real Estate Auction Services has foreclosure auctions listed as well, as does Tidewater Auctions. Harvey West Auctioneers doesn't separate its foreclosure listings from its regular auctions, but you can see the full list HERE.

Then there are companies you can pay for pre-foreclosure and foreclosure information, such as and RealtyTrac. (Paul R. Cooper, a vice president with Alex Cooper, pooh-poohs the idea of paying. If you're willing to do your own homework, "all the information's free," he said.)

Remember: You have to come prepared to make an immediate deposit if you're going to bid at an auction. Alex Cooper expects cash, a cashier's check or a certified check.

If auctions worry you, there's another option: Buy from the bank afterward.

Some lenders keep a list of their post-auction properties -- known as "Real Estate Owned," or REO -- on their websites. Those with lists include Bank of America, Chase MortgageFannie Mae, Freddie Mac and the U.S. Department of Housing and Urban Development (which oversees FHA-insured loans).

Or ask a real estate agent. Realtors often market foreclosed properties for lenders, so they'll be listed for sale. (Agents can, if they choose, note on Metropolitan Regional Information Systems' multiple listing service whether a property is a foreclosure.) You can look for agents who take a lot of foreclosure listings or those who work with a lot of buyers interested in foreclosures.

A note of caution before you rush off to buy: While a foreclosed home could be a great value, seasoned real estate investors say there's no guarantee. The asking price or starting bid could be more than the house is really worth, particularly if the previous owner started with a small down payment. Or the house might need more repair work than you can afford.

That's where research and due diligence come in. You might, for instance, start by looking up the property's assessment record -- click on "property sales" to see recent sales prices elsewhere on the same street -- and by checking out the loan history.

Posted by Jamie Smith Hopkins at 4:00 AM | | Comments (5)
Categories: How-to Mondays

June 22, 2008

Government loans for everyone?

Martin Feldstein has a proposal: Let the federal government take on a piece of people's mortgages to stop a self-reinforcing downward spiral on home values.

In an opinion article published in The Washington Post (and picked up elsewhere), the Harvard professor and president of the National Bureau of Economic Research writes:

Such a program might be structured this way: The federal government would offer all homeowners with mortgages the opportunity to replace one-fifth of their existing mortgage (up to some dollar limit) with a government loan. This loan would carry a substantially lower interest rate than the individual's mortgage (reflecting the government's cost of funds). It would be a full-recourse loan that would have to be repaid regardless of what happens to the borrower's mortgage or home. By law, it would take priority over all non-mortgage debt.

... Because this program would, in effect, swap government bonds for individual IOUs, it would not involve any increase in government spending or in the deficit. Because the loans would appeal primarily to those who now have positive equity in their homes, it would not reward people who made high-risk purchases and now have high negative equity.

Most plans to help homeowners -- those facing foreclosure or hurt by the slump in other ways -- have proved controversial. So -- weigh in:


Posted by Jamie Smith Hopkins at 4:57 PM | | Comments (1)
Categories: Polls

Need to improve your credit?

If your credit score isn't up to par, you might look at this story about getting your finances into shape. Good credit is useful whether you're a renter, a hopeful homebuyer or a homeowner:
To try to fend off higher rates and other consequences, analysts say, consumers cannot afford to continue lax financial practices. Looking like a bad risk can keep people from obtaining affordable loans on homes or cars and end up with painfully high credit card interest rates.
On a different finance-related note, Ken Harney's column today follows the continuing -- yes, it's still continuing -- fight over seller-funded down payment assistance for FHA loans. This is the concept that has allowed buyers to essentially turn a 3 percent down payment loan into a no-money-down mortgage, which is either a great way for first-timers to get their foot in the door (that's what proponents say) or a recipe for price inflation and foreclosure (so saith the U.S. Department of Housing and Urban Development).

As Harney notes:

Where is this all headed? Quite possibly to court again.
Posted by Jamie Smith Hopkins at 8:24 AM | | Comments (0)

June 21, 2008

'I would like to say that a turnaround is imminent ...'

Andy Bauer, regional economist at the Federal Reserve Bank of Richmond's Baltimore office, answers questions at about the economy. A recent one -- when do you think the housing market will start turning around for sellers?

Here's his answer:

I would like to say that a turnaround is imminent but there is nothing in the data or in conversations with industry contacts that would suggest a turnaround. I have heard that in the most sought-after zip codes there have been signs of price stabilization and sales have improved. In addition, there has been some activity this spring. However, it is still too early to say if that activity will be sustained -- we experienced a similar pickup in activity in 2007.

There is still a significant imbalance in terms of supply and demand in the market, and it will take some time to work through these imbalances. Inventory levels of homes for sale remain very high, delinquencies and foreclosures continue to rise, and prices are declining in many areas. To underscore the inventory situation, in the Baltimore-Towson metropolitan area it would take 13 months at the current sales pace to sell a single family home. This figure is up dramatically from 2 months during the years before the housing boom. The question for 2008 is how much further will prices need to adjust in order to clear the excess inventory on the market.

Read more economic questions-and-answers HERE.
Posted by Jamie Smith Hopkins at 6:05 AM | | Comments (0)

June 20, 2008

The cost of mortgage fraud: $1 billion and counting

The FBI says the 406 people it has charged since March in mortgage fraud cases have cost victims about $1 billion. Some of those losses -- and some of the arrests the federal government has announced in recent days -- are in Maryland.

People charged in "Operation Malicious Mortgage" include lawyers, real estate agents, developers, mortgage professionals and appraisers, the Associated Press reports. It's a depressing reminder to everyone, especially those looking for help to avoid foreclosure, that someone's years of real estate experience are no guarantee that he or she isn't trying to take advantage of you.

A dozen have been charged in two Maryland cases, which the FBI describes as only loosely related to the Operation Malicious Mortgage sting. They're based in the Washington suburbs. But victims include Baltimore-area residents. Read more about the Metropolitan Money Store case HERE and the more recent arrests HERE.

The FBI describes its cases across the country as lending fraud, foreclosure rescue scams and mortgage-related bankruptcy schemes:

Lending fraud frequently involves multiple loan transactions in which industry professionals construct mortgage transactions based on gross fraudulent misrepresentations about the borrower’s financial status, such as overstating the borrower’s income or assets, using false or fictitious employment records or inflating property values. Foreclosure rescue scams involve criminals who target legitimate homeowners in dire financial circumstances and fraudulently collect fees for foreclosure prevention services or obtain ownership interests in residential properties. Both of these fraudulent mortgage schemes may be furthered by filing bankruptcy petitions that automatically stay foreclosure.
Posted by Jamie Smith Hopkins at 9:31 AM | | Comments (0)

June 19, 2008

Cutting back to afford the house

A U.K. charity said today that nearly one in four households is stressed or depressed thanks to housing costs, while one in nine has sold possessions to make their mortgage or rent. See Shelter's press release about the survey HERE.

How are things in your neck of the woods? Weigh in on our own poll:

Have you taken any creative -- or desperate -- measures to better afford housing? Are you finding better deals now on rent or mortgages? Comment away.

EDIT at 8:30 p.m.: And the winner at the moment is ... very affordable, with 35 percent of the (admittedly limited) vote. Always nice to hear good news! Still, "somewhat high" and "very difficult to cover" together add up to 41 percent. Here's hoping you voters find something that works with your budget.

EDIT on Friday at 8:30 p.m.: There's a number of extra votes now, 24 hours later, which changes things. Top category: "Somewhat high for my budget," with 39 percent of the vote. Together, the "too high" categories add up to 55 percent. "Very affordable" has about a quarter of the vote. Feel free to keep voting -- the polls never close here.

Posted by Jamie Smith Hopkins at 9:40 AM | | Comments (0)
Categories: Polls

June 18, 2008

Shaq to the rescue?

One part housing story, one part believe-it-or-not: Several thousand homeowners have swamped basketball star Shaquille O'Neal with pleas for help a week after he mentioned that he'd like to assist people in Central Florida facing foreclosure, the Orlando Sentinel reports:
Last week, an attorney working with O'Neal said the Phoenix Suns center wants to buy the mortgages of people whose homes are in foreclosure, then give the homeowner a new mortgage with better terms. Homeowners would stay in their homes with more affordable payments, and O'Neal would turn a small profit.

The problem is, O'Neal does not yet have a concrete plan. He wasn't planning an announcement, and word leaked out when he made an impromptu visit to Orlando City Hall last week.

On a less star-studded note, The Wall Street Journal reports that some employers are helping workers with no-interest loans and the like:

Productivity tends to wane when workers are suffering from financial or other pressures, says Laura Wallace, manager of work/life programs at SAS Institute Inc., a business-intelligence software company. Providing help "just makes really good business sense," she says. "If you're worried about losing your home, your creativity is going to go out the window."
Posted by Jamie Smith Hopkins at 9:51 AM | | Comments (0)

June 17, 2008

Did we say increase? We meant decrease

In the "dangers of number-crunching" category: The National Association of Realtors is now saying that New Jersey home sales didn't increase 4 percent in the first quarter of the year. Instead, they dropped 30 percent. Hey, what's a few percentage points between friends?

Walter Molony, a spokesman for the trade group, told me today that a typo in the seasonal adjustment factor -- what statisticians use to try to account for variations in behavior from season to season -- caused the error.

"It's really unprecedented, but nevertheless, pretty embarrassing," he said. (He said both the NAR and New Jersey agents noticed the problem independently. You can find the corrected numbers on NAR's site, though I saw no press release about it.)

There's increasing skepticism about housing numbers -- and concern about tampering -- as the market continues to slump. I mentioned this to Molony, who said the NAR barely touched on state sales in its first-quarter press release and didn't point to New Jersey at all. Instead, it focused on metro-area prices.

"The state sales number we thought was kind of a yawn because everybody knows they're down; they're down almost everywhere," he said. "It was just a data table that we made available."

Maryland's sales figure wasn't affected, he added. The NAR reported the drop here was nearly 40 percent.

Thanks to a keen-eyed Wonk reader for noticing the New Jersey brouhaha.

Posted by Jamie Smith Hopkins at 10:17 AM | | Comments (1)

June 16, 2008

How-to Monday: Price ranges


Photo by the Associated Press

If you're thinking of buying, it's useful to know what's in your price range. Once you have a clear idea which neighborhoods have homes you can afford -- or which homes you can afford in the neighborhoods you like -- then you can start seriously looking.

Have no idea what areas are in your price range? Here, let me help.

Below you'll see the average sales price in ZIP codes in our metro area during the last half of 2007, as measured by Metropolitan Regional Information Systems. This is just a starting point, of course -- averages hide a ton of variation in some ZIP codes, and you may find that neighborhoods that were too expensive for you last year are now right on the money.

I've included all ZIP codes that had at least 10 sales in those six months and 10 sales in the last six months of 2006. That's my usual attempt to toss out apples-to-oranges comparisons. Even so, be wary of reading too much into big price swings -- a few mansions selling in just one of the years can really skew things.

Read this document on Scribd: SecondHalfScribd

Remember, you can click on the magnifying glass to make the information larger.

A few factoids:

Number of ZIP codes with average prices ...

... under $100,000: 4

... in the $100,000s: 9

... in the $200,000s: 27

... in the $300,000s: 31

... in the $400,000: 15

... in the $500,000s: 14

... in the $600,000s: 4

... at $700,000 and above: 5

Number of ZIP codes that saw ...

... a gain in price: 42

... a loss in price: 58

... no change: 9

Number of ZIP codes that saw ...

... a gain in sales: 8

... a loss in sales: 97

... no change: 4

You can get more information about homes for sale in your price range by researching online listings or talking to an agent. Or, once you know what areas you're interested in, you can look at Metropolitan Regional Information Systems' statistics by ZIP code. There you can see the number of homes sold -- and listed -- in various price ranges.

Posted by Jamie Smith Hopkins at 4:00 AM | | Comments (3)
Categories: How-to Mondays

June 15, 2008

Home values: Separate and unequal pain

U.S. homeowners lost a lot of equity in recent months, but Kenneth Harney notes in his column today that this doesn't necessarily mean a big value drop in your neighborhood. Especially if your neighborhood isn't in California, Florida, Nevada or Arizona:
"I don't think numbers like an $880 billion equity loss are all that meaningful for most individual homeowners," said Jay Brinkmann, vice president for research and economics at the Mortgage Bankers Association and an expert on real estate cycles. "When you look at home price data over the last five years, you find that large parts of the country never got caught up" in the boom and bust cycle.

The losses are highly concentrated. "The Fed's [equity decline] numbers for the country as a whole are really being dragged down disproportionately by the big drops in prices in California, Florida and a handful of other states," said Brinkmann. "Most markets haven't been hit anywhere near as hard."

That doesn't mean you can pop the champagne corks if you live in Maryland, one of the states that did get caught up in the boom. Prices are falling here by most measures now, including this one. But it's good to remember that the harder-hit states are large, which means they will have an outsized effect on national figures. That's particularly true on foreclosures.

As you can see from yesterday's poll, some Wonk readers haven't been affected at all by the housing market -- or they're seeing upsides. (Of course, I don't know whether they're homeowners or renters.) 

Posted by Jamie Smith Hopkins at 7:01 AM | | Comments (1)

June 14, 2008

Metropolitan Money Store victims speak out

If you've been following the Metropolitan Money Store scam, you know that seven people were arrested this week on charges that (as Nick Madigan reports today) "they bilked more than 100 homeowners in a mortgage fraud scheme that netted more than $35 million and that cost many of its victims their homes."

Read his story for what some of the victims have to say, including Nadine Bostic of Elkridge:

"They hurt a lot of people," said Bostic, who is a plaintiff in a class-action civil suit against some of the federal defendants. "I never thought I'd ever say I wanted someone to be in jail, but I do. They need to be put underneath the jail. Not on top, not inside - underneath."
Posted by Jamie Smith Hopkins at 10:12 AM | | Comments (1)

Poll: How has the housing market affected you?

Doesn't matter what the market change is: Some will benefit and some won't. With that in mind, weigh in -- has the housing slowdown (or its ripples) affected you at all? If so, how?

Posted by Jamie Smith Hopkins at 8:12 AM | | Comments (0)
Categories: Polls

Company says: Prices down, risk up

A California real estate information company that tracks values across the country thinks Maryland is one of the harder-hit states:



First American CoreLogic has also released its latest mortgage risk map:



Posted by Jamie Smith Hopkins at 7:01 AM | | Comments (1)

June 13, 2008

Homebuilding in the region

Q. How many homes are companies getting permits to build in the Baltimore region?

A. A lot less than they did in 2005 and 2006, but only down a bit from 2007.

Here, have a chart:


Source: Maryland Department of Planning, U.S. Census Bureau.


Worthy of note: Seventy-five percent of the units approved from January through April 2005 were single-family homes. This year, it's 56 percent.

Also: Building permits were up in Baltimore County this year vs. 2005 -- unlike the rest of the region. Builders pulled permits for 594 homes, an increase of 15 percent from January-April 2005. The majority were not single-family.

Posted by Jamie Smith Hopkins at 9:06 AM | | Comments (0)
Categories: Number-crunching

June 12, 2008

A housing (TV show) boom

Think television programs about homes and the housing market are suffering along with sellers? Think again. As The New York Times reports today, the two channels best known for housing-related shows -- HGTV and TLC -- are drawing more viewers now than during the boom times:
HGTV’s prime-time schedule — built around the shows “Designed to Sell,” “House Hunters” and “My House Is Worth What?” — now average more than a million viewers every evening.

Shows that were hallmarks of the bubble — like “Flip That House” (on TLC) and “Flip This House” (on A&E) — are still around, but have been retooled with less-than-happy endings. The TLC episodes are repeated several times each week and still draw an average of 700,000 viewers a showing.

Posted by Jamie Smith Hopkins at 11:50 AM | | Comments (2)

June 11, 2008

Looking for a cheaper home? Good news

Number of homes on the market in the Baltimore metro area for under $250,000 in May 2006: 3,600.

In May 2007: 5,400.

In May 2008: almost 7,400.

Yup, that's double the choices in two years.


Posted by Jamie Smith Hopkins at 1:36 PM | | Comments (0)

May home sales -- I feel like I've heard this before

Baltimore metro area home sales fell 30 percent in May compared with a year ago, continuing the trend. Average prices were up modestly -- 1 percent, to about $316,000 -- but median prices were down about the same amount. (The median is the midpoint, which means half the homes are more expensive and half are less.)

Seems like the housing market has been playing the same song since last September.

Interested in seeing the figures or checking out county-by-county performance? Go to Metropolitan Regional Information Systems' stats page.

Posted by Jamie Smith Hopkins at 7:41 AM | | Comments (8)

June 10, 2008

Housing fair this Saturday

Maryland ACORN is holding a housing fair this Saturday for renters, first-time homebuyers and homeowners in need of foreclosure-prevention help.

The free event, scheduled from 10 a.m. to 3 p.m. at Baltimore City College, 3220 The Alameda, will also include tax preparation for people who are behind or need help with the paperwork for the stimulus checks. And you can find out if you qualify for weatherization, energy assistance and the like.

ACORN suggests pre-registering so you can find out what information you'll need to bring if you're interested in a specific service. Call 410-735-3360.

Organizing a housing-related event? Let me know.

Posted by Jamie Smith Hopkins at 9:13 AM | | Comments (0)

June 9, 2008

How-to Monday: "Trigger leads"


Photo courtesy of Stock.XCHNG


Applying for a mortgage? Don't be surprised if you get calls, emails or letters from competitors hoping to steal you away from the company you picked.

When your loan officer requests a copy of your credit report, the credit bureau can -- and often does -- sell that information to firms looking for would-be borrowers. People in the biz call it a "trigger lead."

Don't think that's died down as lenders have tightened their guidelines. A few months ago, Hunter Bloch was bombarded by calls after applying for a home equity line of credit with his bank. "It was at least 10 a day," said Bloch, who happens to be a mortgage broker. (He's vice president of Annapolis First Mortgage LLC in Hanover.)

Good or bad?

Proponents argue that consumers win because they could find a better deal. (The Federal Trade Commission, in this consumer alert, says the upside is that "prescreened offers can highlight other available products and make it easier to compare costs.")

Others -- including local mortgage brokers, who stand to lose business as a result -- say the offers can be disingenuous and are sometimes outright bait-and-switch.

Eric Gates, president of Apex Home Loans Inc., a brokerage in Bethesda, says to be aware that the callers might misrepresent themselves. "Like, 'I was asked to call you; we're going to handle your application from here,'" he said. "I know of a couple clients that were offered terms that were never delivered," Gates added.

If you like the idea of competing mortgage companies coming to you -- and can separate the shady offers from the real deals -- then you don't need to worry about trigger-lead calls. If you'd rather be left the heck alone, the FTC suggests these options:

1. Get on the National Do Not Call Registry, if you haven't already done so. You can put your number on the list at or by calling 888-382-1222. Bloch, president of the Maryland Association of Mortgage Brokers, wasn't on the list when the calls came surging in -- but he is now. Still, it won't shield you from companies you already have a "business relationship" with -- or from law-breakers. Gates knows of people who got "inundated" despite being on the list.

2. Opt out of receiving prescreened offers by calling 888-5-OPTOUT (888-567-8688) or going to You'll have to provide your Social Security number, so make sure the site security is working, the FTC says -- check for the lock icon on your browser or the "https" at the start of the web address.

Part of what bugs Gates about trigger leads is that angry customers invariably think the original mortgage provider is to blame. "They think we're the ones who sold their information," he says.

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

June 8, 2008

Bad credit, good advice

Kenneth Harney reports today on a credit-fix company that recently settled with the federal government after allegedly promising fixes it couldn't deliver on. He offers this advice to anyone pondering what to do about a low credit score:
If the problems in your credit files reflect actual late payments, nonpayments, tax liens or foreclosures, don't look for magic or miracles. No legitimate "repair" service can make them disappear permanently.

Most serious credit issues are likely to remain in your files for three years to seven years, and bankruptcies and foreclosures for as much as a decade.

On the other hand, if your credit files contain erroneous information, it's a different dynamic. Either you or an organization that specializes in credit assistance can contact the sources of the bad information and get it corrected on your national bureau files.

But under no circumstances should you pay money upfront for credit-repair services.

Remember, you can always go to a HUD-approved nonprofit housing counseling agency for free (or in some cases, low-cost) advice about credit issues.

Posted by Jamie Smith Hopkins at 11:12 AM | | Comments (2)

June 7, 2008

Homeowner equity and other signs of tight times

Economist Charles W. McMillion made this graph putting into context the country's record-low homeowner equity in the first three months of the year:




That's one of the issues I mentioned in today's story about the variety of new economic measures confirming that you're not alone if you're feeling budgetary pain. Here's a taste:

The unemployment rate rose 0.5 percent in May, to 5.5 percent, the biggest one-month jump since early 1986, the federal government said yesterday. Continued job cuts are putting adults out of work and leaving in the lurch many teenagers looking for summer income.

Meanwhile, net worth is falling as people's homes lose value. Americans were worth $1.7 trillion less in the first quarter than they were at the end of last year, the Federal Reserve said this week. Household debt compared with net worth? At record highs.

If you hold stocks in a retirement account or outright, yesterday brought more bad news: The Dow Jones industrial average fell nearly 400 points, while the Standard & Poor's 500 and Nasdaq composite indexes both shed about 3 percent.

Posted by Jamie Smith Hopkins at 6:56 AM | | Comments (3)

June 6, 2008

Foreclosures and (lack of) equity

Maryland homeowners are continuing to fall behind on their mortgages at a rapid pace. From our delinquency story today:
More than 70,000 loans were at least 30 days past-due in the first three months of the year, including those in imminent danger of foreclosure, the Mortgage Bankers Association estimated yesterday. That's an increase of 70 percent from the first quarter of last year, the largest jump since figures were first kept in 1979.

Are you in that group? Get more information about foreclosure prevention from an earlier How-to Monday.

The good news: Maryland's share of loans with late payments remains lower than the all-time highs at the end of the 1990s and in the early part of this decade, when fraudulent property-flipping schemes in Baltimore raged.

On a related, bad-news note: The Associated Press reports that homeowner equity "has dropped to its lowest level since the end of World War II":

Homeowners' portion of equity slipped to 46.2 percent in the first quarter from a revised 47.5 percent in the previous quarter. That was the fifth consecutive quarter below the 50 percent mark, the Federal Reserve said yesterday. ...

At the end of March, nearly 8.5 million homeowners had negative or no equity in their homes, representing more than 16 percent of all homeowners with a mortgage, according to Moody's chief economist Mark Zandi. By June 2009, he estimates, that will increase to 12.2 million, or almost one out of every four homeowners with a mortgage.

Posted by Jamie Smith Hopkins at 10:00 AM | | Comments (0)

June 5, 2008

Housing and economic growth

The ripple effect of housing -- for good and for bad -- has been impossible to miss this decade. If you needed any more reminders, the federal government this morning released new numbers showing that the economic slowdown in states last year "was most pronounced" in Arizona, California, Florida and Nevada. Yes, the hard-hit housing-slump states -- the ones that during the boom saw both prices and their economies grow faster than average.

Economic growth also decelerated in Maryland, but not as dramatically. The increase in gross domestic product here was 2 percent in 2007, compared with 2.3 percent in 2006. (Nevada, by contrast, went from 5.4 percent growth in '06 to 0.6 percent last year. Florida registered zero growth last year.)

Last year's growth puts Maryland squarely in the middle of the pack nationwide.

Posted by Jamie Smith Hopkins at 9:21 AM | | Comments (0)

Foreclosures of the rich and famous

In the "it could happen to anyone" category: Ed McMahon, best known for his years as a sidekick on "The Tonight Show" and pitchman for the American Family Publisher's sweepstakes, is in danger of losing his home to foreclosure.

Reuters reports that McMahon is in talks with his lenders, who in February filed a notice of default that said he was $644,000 behind on the Beverly Hills mansion:

The house has been on the market for about two years  ...

According to the National Association of Realtors, 14.5 percent or one in seven homes for sale across the nation in April were the result of foreclosure.

Posted by Jamie Smith Hopkins at 8:59 AM | | Comments (0)

June 4, 2008

A tax-sale admission

If you've been following the federal investigation into alleged collusion involving local tax-sale auctions -- and what housing-obsessed person wouldn't be? -- then you'll be interested to know that an investor has admitted to conspiring to rig bids.

Fred Schulte and June Arney report today:

Steven L. Berman, 50, of New Freedom, Pa., will pay a $750,000 fine and face a possible prison term, federal prosecutors said yesterday. In pleading guilty to the single felony count, Berman agreed to cooperate with the investigation. ...

Prosecutors allege that Berman conspired with other investors to rig the sales from at least 2004 through last year in Baltimore City and in Anne Arundel, Baltimore, Howard, Montgomery and Prince George's counties. In an affidavit filed last year to obtain a search warrant, FBI agents contended that bid rigging has corrupted the auctions for years, allowing a few bidders to win a large percentage of the properties.

One of the online elements with this story lets you search for properties sold at tax auctions in Baltimore this year.

On another note, a long-delayed twin-tower development on the city's waterfront is moving forward again, John Fritze reports:

If the City Council approves the zoning change, HarborView developer Richard A. Swirnow would be permitted to build a 26-story tower and could also proceed on an adjacent 17-story building west of the high-rise already on the site.

City officials say the proposed design is the best they have seen because it maintains better views of the water for surrounding residents and includes first-floor shopping to enliven Key Highway. Others argue City Hall is moving too fast to develop the site.

Posted by Jamie Smith Hopkins at 9:13 AM | | Comments (0)

June 3, 2008

A prediction on home prices

Irwin Kellner, chief economist for MarketWatch, in an opinion piece on the housing market today, predicts that the buyer's market could turn in favor of sellers "before you know it":

I would agree with those who say that it will take many months before balance is restored between supply and demand. There are simply too many homes for sale at asking prices that are still too high for housing to do a 180.

Nor am I expecting another housing bubble to form, not in this decade anyway.

All I would like to point out is that, in broad macro terms, the average house is no longer as overpriced as it once was. That being the case, it is no longer prudent to assume that home prices have to fall a lot more before they stabilize.

All right -- your turn to opine:

UPDATE: Of the 47 who voted as of 7 p.m. today, 26 percent of you think 2010, 23 percent of you say 2009 and an equal percentage say 2011. Nineteen percent chose the "years from now" option, and 9 percent picked this year.

Posted by Jamie Smith Hopkins at 9:13 AM | | Comments (3)
Categories: Polls

June 2, 2008

How-to Monday: Rental costs


Photo by Lloyd Fox, Sun photographer

How much does it cost to rent a place around here? That depends entirely on what you mean by "here."

M/PF YieldStar, which tracks apartment buildings, says the average rent for a two-bedroom in downtown Baltimore is about $2,020 a month. Elsewhere in the city, it's just over $930. Big difference.

Costs range in the rest of the region, too:

In the Towson area, expect to pay in the neighborhood of $1,140 for a two-bedroom apartment, according to M/PF YieldStar's research.

Eastern Baltimore County: $880.

Western Baltimore County: $980.

Northern Anne Arundel County: $1,220.

Annapolis/Davidsonville: $1,290.

Ellicott City/Columbia: $1,220.

M/PF YieldStar says its surveys include buildings with at least five units, but in general the figures are drawn from sizable complexes. The area also has a lot of condos, rowhomes and houses for rent, so the full spectrum of opportunities include properties that are cheaper and more expensive than typical apartments.

Kevin, frequent Wonk commenter and co-keeper of the Baltimore Housing Bubble blog, suggested a comparison between rental costs and for-sale costs. (When it's a lot more expensive to buy than to rent, economists have said, sale prices will inevitably drop.) It's a good idea, but alas -- there's no simple way to contrast M/PF YieldStar's averages against sales prices because the areas the company tracks don't have neat boundaries like counties or ZIP codes.

The U.S. Department of Housing and Urban Development calculates "fair market rent" figures for each county. But because the numbers are basically the same across the metro area -- $1,013, with one exception -- I hesitate to use them.

So, in lieu of a county-by-county comparison, here's a look at the Baltimore region overall:

Monthly rent across the metro area, according to M/PF YieldStar, was about $1,080 in March for a two-bedroom.

If you bought the average home in March ($298,000) and put 10 percent down, you'd be paying about $1,780 in principal and interest each month. That doesn't include property taxes, insurance and the like. (E-Loan calculates the principal-and-interest cost as more like $1,390 a month once you figure in the income tax savings.) 

Fair comparison? Hard to say, without knowing the size, condition and neighborhood situation of the average apartments for rent and average homes for sale. Tenants: How do local buying opportunities compare vs. your rental costs?

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

June 1, 2008

The raccoon ripple effect

Remember in the boom days when they said anyone could qualify for a loan if they had a pulse?


more cat pictures


No one ever considers the raccoon-related housing market fallout.

Posted by Jamie Smith Hopkins at 9:38 PM | | Comments (0)
Categories: Housing humor

The tax-credit effect

Thinking of buying or renovating an old house? Don't forget about tax credits.

Andrea Siegel reports today on historic property tax credits, which can save participating homeowners a lot of money and encourage rehabbers and redevelopers to do revitalization work. The city's credit lasts for 10 years and can be transferred during that time if the property is sold.

She notes properties that UrbanEx Development revamped in Mount Vernon and Charles Village:

For example, a one-bedroom condo with a den lists for $249,900. The annual property taxes on it would be about $6,000. But the estimated tax credit is about $5,300 a year, knocking the tax bill down to about $700.

That becomes the equivalent of more than $75,000 in additional buying power, or like buying that condo for about $175,000.

For information about Baltimore's credit, click HERE. For Maryland's, click HERE.

Do you have any thoughts about -- or experiences with -- historic property tax credits?

Posted by Jamie Smith Hopkins at 11:58 AM | | Comments (4)
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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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