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August 31, 2008

Population boom for Towson?

Towson will have 2,500 new residences in the next few years if building plans come to fruition -- and some are already underway. Condos across from the mall. An 18-story apartment building.

Kevin Rector reports today that the housing is "a key component in a billion-dollar development boom designed to transform the Baltimore County seat into a regional hub for entertainment, shopping, dining and night life." Ed Kilcullen, president of the Greater Towson Council of Community Associations, looks forward to it but does express an anxiety:

Kilcullen worries about the housing market, "which is a big concern because there's going to be a lot of residential projects and not a lot of people buying," he said. "We don't want to have a lot of projects that are not successful sitting empty or rented out to college students ... and not attracting the type of people who we want in Towson."
Posted by Jamie Smith Hopkins at 8:41 AM | | Comments (0)
        

August 30, 2008

A foreclosure snapshot -- Baltimore vs. Miami

Here's what the foreclosure picture looks like in the area, according to First American CoreLogic:

June08fcCoreLogicSmall.jpg

The company says foreclosures account for 0.7 percent of all mortgages in June, significantly better than the national rate of 1.6 percent but still more than double the share of foreclosures a year earlier.

It's a good reminder, though, that this is hardly -- say -- Miami:

June08fcMiamiCoreLogicSmall.jpg

Posted by Jamie Smith Hopkins at 9:30 AM | | Comments (4)
        

August 29, 2008

Tax collection dampened by sales slump

Homeowners who can't sell their properties aren't the only ones with heartburn. Fewer sales mean fewer opportunities for the government to collect taxes.

As Laura Smitherman reports today, the economic and housing-market slowdowns are both eating into tax revenue, "with collections falling $73.5 million short of expectations." Court revenue -- including recordation fees collected when homes change hands -- was $12 million (or 8.3 percent) below the forecasted amount for the last fiscal year, which ended in June.

Posted by Jamie Smith Hopkins at 9:30 AM | | Comments (2)
        

August 28, 2008

Mortgage fraud on the rise

Mortgage fraud, which helped contribute to the housing boom, is still going strong, according to a report out this week. The Mortgage Asset Research Institute says reported fraud in the first three months of the year increased more than 40 percent from a year earlier. (These are mortgages taken out in the first quarter that "have since been classified as fraudulent," the company says.)

Tied for third on the most-fraud list? Maryland.

Florida is first, California second and the other tied-for-third states are Illinois and Michigan.

MARI says that a quarter of the fraud reported in Maryland was in the Baltimore metro area. In Illinois, on the other hand, almost all the reported fraud originated in the Chicago area.

By "fraud," the company means anything from false income information to doctored closing documents -- whether submitted by the borrower or another party. Much of the Maryland fraud was related to tax documents and other financial information, MARI says.

Posted by Jamie Smith Hopkins at 12:27 PM | | Comments (2)
        

August 27, 2008

Maryland still the highest-income state

New Census numbers continue to rank Maryland No. 1 for median household income -- $68,080 from July 2006 to July 2007. Income rose 1.6 percent from the year before, accounting for inflation.

Sumathi Reddy's story today notes that Howard, Calvert and Montgomery counties are among the 10 richest in the nation, with Howard at No. 3 with $101,672.

Income rising, even slightly, should mean more people can afford to buy homes, particularly as home prices drop. But, as the story explains, inflation has since been eating into Marylanders' buying power:

Demographers and economists warned that the state and national picture that emerged in two separate surveys belies the circumstances to come. The data from 2007 do not take into account the current realities of soaring food and gas costs and a slowdown in the job market.
Posted by Jamie Smith Hopkins at 10:02 AM | | Comments (5)
        

August 26, 2008

OFHEO shows home values falling 4 percent

The value of Maryland homes sold or refinanced this spring fell 4 percent from a year earlier, the Office of Federal Housing Enterprise Oversight said today.

That's the seventh-largest drop in the country, though it's well behind the usual-suspect states of California (down almost 16 percent), Nevada (down 14 percent), Florida (down about 12.5 percent) and Arizona (down 9 percent).

OFHEO, as you may already know, tracks repeat transactions of the same single-family houses. That means it avoids apples-to-oranges comparisons, though its statistics don't include so-called "jumbo" loans.

One fact of note: Maryland home prices are up 66 percent vs. five years ago. Only D.C. (up 72 percent) and Hawaii (up 81 percent) can top that.

That's either good or bad, depending on your perspective.

Posted by Jamie Smith Hopkins at 10:42 AM | | Comments (6)
        

August 25, 2008

See what's happening in your area

Today's story about the housing market comes with a nifty searchable database of home sales and prices for all ZIP codes in the Baltimore metro area that had more than a handful of sales in the first half of 2007 and 2008. Wonk or not, you might like to try it out.

And here's a taste of the home-sales story, which looks how things stand vs. a year ago and also vs. the frenzied days back in '05:

The numbers show a sharp change since the peak of buying three years ago. Sales have dropped by at least half in one out of three communities in the metro area. Average sale prices are down in one out of five communities compared with 2005.

Another trend that might seem counterintuitive: Some buyers are getting outbid for the homes they want. That's not necessarily escalating values vs. a few years ago, but it's still startling people who expected a lack of competition:

"We wanted ... an area where the school districts were good based on state ratings," said Christine McDonough. "We found there were too many other people waiting for the same thing."
Posted by Jamie Smith Hopkins at 6:51 AM | | Comments (1)
Categories: Number-crunching
        

How-to Monday: International lookylooing

The Baltimore Sun's redesign, which launched yesterday, has had a last-minute ripple effect on How-to Mondays. Rather than appearing first here and then being reprinted (at least in part) in the paper, it will be print-first (Sundays in Real Estate) and blog-second.

That doesn't mean much for you folks who follow the blog -- I'll still try to include extras here, because I love you all so very much -- but there's one temporary blip: The How-to set to appear today ... well, it's now running next week.

But I refuse to let that mean a How-to-less Monday, not after all the How-to's through sickness, vacation and holidays. Today's post, though abbreviated, is a monument to wonkish stubbornness.

If you've ever sold, bought or thought about buying, you've probably heard the term "lookyloo." Typical definition: Curious person who checks out homes for sale and has no intention of buying. The internet has given lookyloos a lot more scope for the imagination, what with pages of loving details, photos, walk-through videos, etc. -- and now there are sites that allow you to take your inner lookyloo to the next level.

That's right -- international, baby. Why limit your looking to the house down the street?

Vivirama lists a smattering of the properties for rent and sale across the world, allowing you to browse through the details of a Bangkok vacation house (amenities include a kayak), a French home that "needs some decorative work, in some rooms more work than others" and a three-bedroom Roman flat listed for 977,000 euros. (For reasons that escape me, Movable Type will not let me link you to Vivirama, but add a .com to the name and you're there.)

Other lookyloo possibilities: 

Daft.ie, which bills itself as "Ireland's Biggest Property Site." See modest homes for not-so-modest-prices (converted to dollars, at least) and a waterfront home in Dublin that you could finance for just 8,466 euros per month.

If you prefer your lookylooing a bit farther afield, check out the New Zealand listings at Harcourts. "Enjoy uninterrupted river vistas & beautiful sunsets while entertaining in the secluded & stylish Italian-inspired courtyard," notes one listing for an Auckland home. 

Or try out PlanetPads.com, another compilation of listings across the world. If you have $3.5 million to spare, you could buy an entire apartment complex in Riga, Latvia. (Did you know Riga "is a booming real estate market at the moment"?)

Find anything especially interesting? Have other sites to recommend? Comment away. 

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

August 24, 2008

Rating the home-search sites

Odds are, you've searched for homes online at some point -- either to buy, to get intelligence so you could sell or to satisfy your curiosity. What sites did you find useful? Clever? Frustrating?

The Baltimore Sun's real estate section spent time checking out sites recently -- from Realtor.com to Homesdatabase.com -- and rates them in a story today. The criteria:

We evaluated the sites based on a variety of elements, including how easy it was to find homes within our search parameters and how accessible the listing was, how many clicks we had to endure, and if there was helpful and meaningful information about neighborhoods and schools. Although we included the number of homes that each site turned up, it did not figure heavily in our criteria.
Posted by Jamie Smith Hopkins at 7:05 AM | | Comments (4)
        

August 23, 2008

Don't forget about closing costs

Bankrate.com says in a report this month that typical closing costs in Maryland are $3,118 for a $200,000 loan, ranking the state 23rd in the country. That's a little better, relatively speaking, than last year, when the state was 19th. New York -- by which Bankrate.com actually means NYC -- topped the list this year at just over $4,000.

The cheapest was North Carolina, at less than $2,700.

These figures include fees levied for the mortgage, title work and settlement but do not include taxes, which aren't an insignificant expense.  

Bankrate.com says that despite falling home prices, U.S. closing costs are 14 percent higher this year than they were last year.

Posted by Jamie Smith Hopkins at 8:05 AM | | Comments (0)
        

August 22, 2008

More people searching for Baltimore real estate

Realtor.com says consumer searches for homes listed in the Baltimore metro area on its site last month increased 27 percent from the year before. That means more people are looking -- or at least researching -- even if that hasn't yet translated into sales. (Home sales in the Baltimore metro area dropped 30 percent in July, according to Metropolitan Regional Information Systems.)

The increase in searches ranks the Baltimore area 37th among the 135 largest markets, Realtor.com says. It would be higher than that if the site's definition of "market" didn't split the Washington metro area into three (Maryland side, DC section and Virginia side); increases in those Washington areas ranged from 31 percent to 49 percent.

The biggest jump in searches was a 141 percent increase for Stockton-Lodi, Calif. The smallest was a 1.1 percent increase for Wilmington, N.C.

Posted by Jamie Smith Hopkins at 6:50 AM | | Comments (3)
        

August 21, 2008

Poll: How-to Mondays -- useful or not?

If you're a regular Wonk reader (and thanks very much if you are), you know that the regular feature here is the How-to Monday post. It covers various aspects of living in the area -- how to find apartments, how to improve your credit so you'll pay less for a mortgage, how to handle problem neighbors.

The posts get a lot of hits, but just because you're clicking doesn't mean you find it worthwhile in the end. I'd like to know if you do because -- with fewer reporters on staff here now -- I can't afford to waste my time on not-so-worthwhile things.

So weigh in: Very useful, somewhat useful or not useful?

If you think it would be more useful if only I would cover [your topic here], suggest it -- either in the comments below or by email. Next Monday's How-to grew out of a Wonk reader's question.

UPDATE on 8/28: Ninety percent of you (well, the 20 of you who cared enough to vote) said to keep on reporting the How-to posts. So I will.

At least until I go on maternity leave. Then I do plan to take a break.

Posted by Jamie Smith Hopkins at 9:08 PM | | Comments (1)
Categories: Polls
        

It might be a housing slump ...

... but that's not stopping all developers from pushing ahead on projects. As Lorraine Mirabella reports today, Capital Development has in mind a spring start date for a $230 million mixed-use project near Johns Hopkins Hospital:
The team is scheduled to unveil its plans today before the city's Urban Design and Architecture Review Panel. Some 444 new apartments are proposed along with new shops that could include a bookstore, coffee shops or restaurants. The site is bounded by an area that includes Baltimore, Orleans, Wolfe and Washington streets.
Posted by Jamie Smith Hopkins at 9:35 AM | | Comments (3)
        

August 20, 2008

Driving the bubble bus

Further "blame game" fodder: Dean Baker, co-director of the Center for Economic and Policy Research in Washington, weighs in today in his Housing Market Monitor:
It was only due to extremely bad policy and regulatory decisions at all levels of government, first and foremost at the Fed, that the housing bubble was allowed to grow to the enormous proportions. However, it was the private sector that actually drove the bubble. The top executives in major financial institutions took extraordinary risks. These risks may have increased short-term profit, but they eventually led to enormous losses, which is endangering the survival of many of the country's largest financial institutions.

What prompts this? A new CreditSights.com report about Wachovia, which inherited option adjustable-rate mortgages when it acquired lender Golden West. New York Times financial correspondent Floyd Norris sums up the findings on his blog:

Wachovia has discovered that people who take out loans that let them make smaller initial monthly payments often do so because they cannot afford other loans. Given that option ARM loans cost more in the long run, that should not be a huge surprise. And homeowners who have no money invested in a home are more likely to walk away when it loses value. Who could have foreseen that?
Posted by Jamie Smith Hopkins at 10:54 AM | | Comments (4)
        

August 19, 2008

The un-bailed-out

Some of you Wonk readers have commented (bitterly or otherwise) that all the housing-related bailouts are handing a bill to taxpayers who played by the rules and are paying their mortgages or their rent. The Associated Press feels your pain in a story today:
If the government can toss a lifeline to troubled mortgage underwriters Fannie Mae and Freddie Mac, why won't it do something for Americans who save their money?

Why aren't the nation's savers storming the Federal Reserve or the Treasury Department or the halls of Congress demanding that something be done for them?

"Perhaps there is a mentality that you can't beat city hall," ponders financial adviser and author Ric Edelman.

The debate seems to be whether the ripple effects of the housing fallout would be worse or better for the average American than the tax money being spent to combat the fallout.

What do you think?

Posted by Jamie Smith Hopkins at 12:09 PM | | Comments (8)
        

August 18, 2008

How-to Monday: Foreclosure help ... and "help"

ForeclosureAuctionSignAP.jpg

Associated Press photo

You get what you pay for, right? Well ...

If you live by that rule of thumb and you're trying to avoid foreclosure, you'll seek out a for-profit foreclosure consultant who will charge you for any services provided. But consumer-protection advocates say you're much better off going to a nonprofit housing counseling agency that will work with you for free.

Here's why ...

First, the obvious reason: "They're charging a lot of money for something the homeowners don't need to be paying those kinds of sums for," Robert Strupp, director of research and policy with the Community Law Center, says of foreclosure consultants.

It's thousands of dollars in some cases, he says. Any money you don't shell out for foreclosure help is money you could use to pay down late fees and other penalties on your mortgage.

Ruth L. Griffin of the Maryland Housing Counselors Network says the only thing a nonprofit approved by the U.S. Department of Housing and Urban Development might ask a struggling borrower to pay is an incidental cost such as the expense of ordering a credit report.

Besides the difference in dollars, both Strupp and the Maryland Attorney General's Office say you're putting yourself at risk of being scammed if you go anywhere but a HUD-approved nonprofit.

"We have several suits currently pending against people who were purporting to offer foreclosure rescue and in fact took the houses," says Bill Gruhn, chief of the attorney general's consumer protection division. The state earlier sued a foreclosure consultant who "didn't provide meaningful assistance," he adds.

Strupp is also troubled by the consultants who work hand-in-hand with real estate investors looking to buy from homeowners at the brink of foreclosure. "That doesn't seem to put the foreclosure consultant in the right place as an impartial third-party buffer," he says.

In Gruhn's opinion, this is not a shop-around situation. When I asked if a borrower who does some due diligence first should sign on with a for-profit consultant, his answer was succinct: "No."

But what, you ask, about the "certified foreclosure consultants" out there? Surely that should be safe?

"There is no state regulatory certification process," Strupp says. "These people are self-titling."

As nonprofit counselors get overloaded with people seeking help, he worries that homeowners will turn to for-profit consultants by default. But attorneys are starting to volunteer their time, and more nonprofit counselors are on the job than before.

"We weren't really doing this last year ... but there was so much volume that we really felt like we needed to help," says Felix Torres Colon, executive director of Neighborhood Housing Services of Baltimore, a nonprofit lender that now does foreclosure-prevention counseling too.

The group sees about 240 people a month, he says.

"Helping people with foreclosure is very difficult; some people have really impossible situations," he says. "So if anyone tells you it's going to be really easy and quick and all you have to do is pay a few bucks, run away."

I know there are Wonk readers in the real estate investment community: Anyone want to defend foreclosure consultants or investors who buy pre-foreclosures? I've heard investors say they're helping people get out of a bad situation by allowing them to sell quickly, but Gruhn says homeowners are better off getting an agent and "selling the home through the market process."

Posted by Jamie Smith Hopkins at 4:00 AM | | Comments (6)
Categories: Foreclosure help, How-to Mondays
        

August 17, 2008

$100 house?

Consuming Interests columnist Dan Thanh Dang takes on a niche marketing idea: Sell that house via raffle. She notes that there are two in Maryland, both for $100 a ticket -- a $550,000 Dunkirk home and a $186,000 Owings Mills home:
It sounds like a win-win for all involved. Ticket buyers get a chance at a realty gold mine, homeowners unload property in a down market and a charity gets a slice of the pie. But be warned that this little adventure is not for the faint of heart or the ill-prepared.

Why? Because it's not simple or quick for the owner. And for the winner, well -- it's not precisely a $100 house. Closing costs, assessments, property taxes and income taxes: That's on you. And it's not chump change, particularly because the fair-market value of the house is what you'll have to report as taxable income to the feds:

That could bump you into a far higher tax bracket and cost you thousands of dollars come tax time.
Posted by Jamie Smith Hopkins at 8:38 AM | | Comments (2)
        

August 16, 2008

More on home prices

First American CoreLogic, which tracks U.S. home prices, says they were down 10.7 percent in June from a year ago. A map of the country shows Maryland in the "down 5 percent to 10 percent" range, the second-worst category but not as bad as the usual-suspect states of California, Florida, Arizona and Nevada.

Wonk reader Kevin R wondered recently about the drop in prices including inflation, known as the "real" change as opposed to the "nominal" change. So he (and maybe you too) will be interested to see this quote from Mark Fleming, the company's chief economist:

“Nominal home price declines have stabilized in the 10 to 11 percent range for several months. ... [H]owever, given the surge in inflation, real inflation-adjusted home prices are still declining at a faster rate. Between April and June home price declines were very flat, falling by an average of 10.8 percent, but real home price declines accelerated from April’s 15.3 percent to June’s 16.8 percent."
Posted by Jamie Smith Hopkins at 9:03 AM | | Comments (0)
        

August 15, 2008

Smoking or non-smoking ... apartments?

There are no-smoking restaurants, hotel rooms and workplaces. But apartment complexes?

Yes, that too. In some places.

The Dallas Morning News reports:

Welcome to the latest no-smoking frontier: private homes. Smoke-free housing could become as common as no-pet policies.

Nationwide, more landlords are barring tenants from lighting up to reduce neighbors' exposure to secondhand smoke, joining a long list of cities, companies and hotels that have done the same. The Smokefree Apartment House Registry features about 300 listings nationally, up from 11 when it began in 2001.

The Smokefree Apartment House Registry doesn't seem to have any listings in Maryland, though I see a few in Pennsylvania and Virginia.

Posted by Jamie Smith Hopkins at 6:44 AM | | Comments (6)
        

August 14, 2008

Where we stand, according to the NAR

The drop in home sales in Maryland during the important spring selling season was sixth-biggest in the nation, according to numbers released today by the National Association of Realtors. (That compares April-June of this year with the same months last year.)

The 30 percent decline was a lot more than the nation's as a whole -- 16 percent. But it's an improvement on the first three months of the year, when Maryland sales dropped 39 percent vs. a year earlier, worst in the nation.

The Realtors group also compared sales in April-June with January-March, adjusted for seasonal variations, and said that 13 states saw increases. Maryland was not one of them; its sales dropped about 5 percent, about middle of the pack.

Single-family home prices, meanwhile, dropped 4.5 percent in the Baltimore metro area in the spring, according to the NAR, which does not has price information by state. That's also roughly middle-of-the-pack performance, at least among the 150 metro areas the NAR tracks. (Prices in the Washington area are down 17 percent, according to its number-crunching. Sacramento, Calif. prices are down 36 percent.)

You Wonk commenters who have said sales will pick up when prices drop enough might be interested to see this part of the Realtors' press release:

Lawrence Yun, NAR chief economist, said a clear cause-and-effect response has developed in the housing market. “The biggest home-sales gains over the previous quarter have been in some of the markets with the steepest and fastest price drops,” Yun said.

The only states reporting year-over-year gains in sales? Nevada and California, which have been among the hardest-hit by the slump.

Posted by Jamie Smith Hopkins at 2:43 PM | | Comments (3)
Categories: Number-crunching
        

Greenspan's prediction: Prices bottoming next year

Former Fed Chairman Alan Greenspan has been criticized for keeping interest rates low amid the home-buying frenzy, but many people still want to hear what he thinks -- which is why The Wall Street Journal put his thoughts about the housing market on the front page today:
"Home prices in the U.S. are likely to start to stabilize or touch bottom sometime in the first half of 2009," he said in an interview. Tracing a jagged curve with his finger on a tabletop to underscore the difficulty in pinpointing the precise trough, he cautioned that even at a bottom, "prices could continue to drift lower through 2009 and beyond."

He's relying on several data sources:

One is the supply of vacant, single-family homes for sale, both newly completed homes and existing homes owned by investors and lenders. He sees that "excess supply" -- roughly 800,000 units above normal -- diminishing soon. The other is a comparison of the current price of houses -- he prefers the quarterly S&P Case Shiller National Home Price Index because it includes both urban and rural areas -- with the government's estimate of what it costs to rent a single-family house.
Posted by Jamie Smith Hopkins at 9:27 AM | | Comments (3)
        

August 13, 2008

Translating "for sale" jargon

Ever wondered what the buzzwords in listings mean? How much "loving care" does that "fixer-upper" need?

The National Association of Exclusive Buyer Agents, in a tongue-in-cheek publication, tries its hand at defining common seller phrases -- particularly the ones its members have seen used a bit too euphemistically. (Thanks to Jon Boyd, past president of the group, for the heads up.)

A few examples from the publication:

"'Cozy condo': Often means it is so small that it is difficult to turn around in."

"'Easy access to everywhere': Can mean backing up to an expressway."

"'Finishing touches needed': Often means you need to bring your own lighting, hardware, paint, wood trim, and carpet."

Buyers: Have any listing descriptions made an impression on you, good or bad?

Sellers: Have you found the perfect description that will get buyers to look but not make them feel misled when they do?

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

August 12, 2008

More homes selling at a loss, Zillow says

Zillow.com said today that about one in eight homes sold in the Baltimore metro area in the last 12 months went for less than the seller originally paid. Just under 5 percent of homes sold were in foreclosure, according to the company's newest real estate market report.

Zillow sees worse signs of distress elsewhere, reporting that nearly one in four U.S. homes sold in the past 12 months were a loss for the seller and nearly 15 percent of homes sold were foreclosures.

From its press release:

U.S. home values in the second quarter posted the largest year-over-year decline in the past 12 years, dropping 9.9 percent from the year-ago quarter and 1.7 percent from the first quarter to a U.S. Zillow Home Value Index (HVI) of $206,919. ... The median U.S. home value has not been this low since the fourth quarter of 2004, leaving nearly one-third (29.1%) of homeowners who purchased since 2003 with negative equity.
Posted by Jamie Smith Hopkins at 9:48 AM | | Comments (6)
        

August 11, 2008

How-to Monday: Improving your credit

CreditStockxcngLotusHead.jpg

Image courtesy of LotusHead via Stock.XCHNG

 

So you now know oodles about how credit scores work -- or you do if you read last week's How-to. On to the more practical Part II: Improving your score.

This matters a lot if you're in the market for a home loan and don't want to get stuck with a 10 percent interest rate. Lenders are much, much pickier than they were before being hit by rising foreclosures. 

Two years ago, a 620 FICO score was enough to get you the best rate for a 30-year fixed mortgage, says John Ulzheimer, president of consumer education for Credit.com, a financial services and consumer education firm. Nowadays? The 700s.

His top recommendation for a healthy score is this: "Never ever give a lender a reason to say anything bad about you to the credit bureaus."

In other words, pay on time. Really on time, and not a day afterward. A 30-day-late ding on your credit report means you were late by as much as 30 days or as little as one, he says. A lender might choose not to report you for day-late behavior, Ulzheimer says, but why take that chance?

Ulzheimer, who used to work for Fair Isaac Corp., developer of the FICO scoring formula, also offers this advice:

--Aim for balances of no more than 10 percent of your credit-card limits. Better yet, pay off your cards every month, he says. You look like a riskier proposition to lenders the closer you creep toward your credit limit.

--Don't apply for credit cards willy-nilly, particularly store cards, never mind the "10 percent off your first purchase" come-ons. Every time you apply, the company asks for your credit report, and those inquires count against you for the next 12 months, he says. "Don't ever use your credit report as a 10-percent-off coupon at the mall," he says.

--On the flip side, don't avoid credit entirely or you won't be building a credit history. He also suggests against shying away from holding several cards merely in the hopes of improving your score. "You should have as many cards as you need to operate efficiently," says Ulzheimer, who has six. The older your credit history, the less your score will be negatively affected by multiple credit cards, he says, and the more you're able to vary your usage based on what cards are offering the best terms at the time.

Yes, yes, you say, but what about people who already have black marks on their credit reports -- late payments, tax liens, repossessions, foreclosures, bankruptcies?

The more recent that black mark, the more it affects your score, says Barry Paperno, consumer operations manager with Fair Isaac. Eventually, it disappears altogether.

"Negative information, by law, for the most part cannot stay on your credit report for more than seven years," Paperno says.

Under federal law, you can get a free copy of your credit report once a year from each of the three national credit-reporting agencies. Go to AnnualCreditReport.com for more information. (The agencies are Equifax, Experian and TransUnion.)

Those reports won't tell you your credit score, but they will show you what information is influencing it. If you want the score, you'll have to buy it. Fair Isaac, for instance, charges $15.95 for a FICO score from one of the credit-reporting agencies (that's $47.85 for all three). The company's myFICO site has more details.

Buy one or all three? Up to you. Ulzheimer suggests you look at your free credit reports and, if they're very similar, buy just one score.

He recommends against using credit-repair companies to try to improve your standing. It's not worth the money, in his opinion. If there's inaccurate information on your credit report, you can dispute it for free to the credit-reporting agency in question, which must investigate promptly, usually within 30 days. The Federal Trade Commission has more details.

If the negative information's accurate? Time -- and better money-management strategies -- should heal your score.

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

August 10, 2008

Oops

Remember the law that state legislators passed to make homeowners certify that they qualify for the homestead property tax credit, which caps annual increases? (Many of you haven't had to fill out the paperwork yet, but you will, if you own a home.) Well -- Gadi Dechter reports today that some legislators are improperly getting that credit on homes that aren't their primary residence.

The legislators, Democrats and at least one Republican, are pleading ignorance: They said they didn't know they were getting the tax break.

Del. Don H. Dwyer Jr., an Anne Arundel Republican who received breaks on two homes he doesn't live in, told Dechter that people who don't qualify for the credit shouldn't be getting it, himself included:

"Clearly, it's very easy" to have subverted the tax credit before the law change, Dwyer said. "When you have members of the legislature that have been in the same boat and don't even realize it, how many other homeowners do you think are in the same situation?"
Posted by Jamie Smith Hopkins at 5:34 PM | | Comments (0)
        

MRIS' Mr. Is story, Episode 2

If you're following Metropolitan Regional Information Systems' comic-book-style "Mr. Is" storyline, you can see Episode 2 here.

In which a mild-mannered Realtor turns into a super agent, if this is the origin story I think it is.

Posted by Jamie Smith Hopkins at 4:13 PM | | Comments (0)
        

August 9, 2008

July home sales: Prices, sales down

Average prices in the Baltimore metro area, which includes the city's five suburban counties, fell 3 percent to just under $320,000 in July, according to Metropolitan Regional Information Systems. (The average price fell in every county but rose in the city.)

Sales fell 32 percent from a year earlier -- that's the 11th month of similar declines. See the full statistics HERE.

I'll be very interested to see what happens to sales in September: That's when we'll be a full year past the point at which the credit crunch started pummeling the numbers. Right now we're still comparing to (mostly) pre-crunch times.

Speaking of credit issues, I cover a new development in today's home sales story:

Further tightening is coming: Mortgage financing giant Fannie Mae, reporting a $2.3 billion loss from April through June, said yesterday that it would raise fees and get out of the so-called "Alt-A" loan business entirely.

Fannie Mae, which buys many of the loans borrowers get, said an outsized share of its losses are coming from Alt-A mortgages, supposedly less risky than the subprime loans that have driven foreclosures skyward.

"The housing market has returned to earth fast and hard," Daniel H. Mudd, president and chief executive of Fannie Mae, told analysts in a conference call yesterday.

Posted by Jamie Smith Hopkins at 9:15 AM | | Comments (3)
        

Is your Zestimate a good estimate?

There's been a lot of debate -- in news stories and more recently on this blog -- about the accuracy of Zillow.com's Zestimates of home values. I'd like to conduct an unscientific experiment, if you'll indulge me: Check out the Zestimate of your home (or a few homes in your neighborhood, if you're living in an apartment complex and would like to play along) and see whether it matches up with your sense of the value.

Yes, yes, I realize your sense of the value might not be entirely unbiased, but do your best. You'll get your Zestimate if you type your address into the "find homes" box on the Zillow front page.

So what do you think?

UPDATE at 8:30 p.m. on 8/10: So far, almost half of you think your Zestimate is about right. Twelve percent say it's way too high, 14 percent say it's a bit too high, 19 percent say it's a bit too low and 2 percent say way too low.

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (3)
Categories: Polls
        

August 8, 2008

A different sort of housing crunch

The housing market may be slumping, but Denver homeowners see a way to cash in -- temporarily, at least. With hotels booked, they're hoping to rent out their places to Democratic National Convention-goers, The Wall Street Journal reports:
Owners of one-bedroom apartments near the convention site are asking as much as $750 -- per night. Moderate-size houses are seeking $1,500 or more a night, and the owner of a mansion suitable to host big parties or fund-raisers is asking $100,000 for all of convention week.

Folks in the Minneapolis-St. Paul area have the same idea for the Republican National Convention:

Craigslist shows about 900 RNC-related housing posts.
Posted by Jamie Smith Hopkins at 10:21 AM | | Comments (0)
        

August 7, 2008

Your condo experience may vary

Pop quiz: Condo prices are ...

1) Up

2) Down

3) Flat

Answer: Yes.

CondoAuthority.com analyzed condo sales on Metropolitan Regional Information Systems' multiple-listing service and found prices moving every which way, depending on location and type of condo.

The site, looking at sales of all condo types through July of this year vs. sales in all of 2007, says prices were up in Harford County, essentially flat in Baltimore City and down in Anne Arundel, Baltimore and Howard counties. Anne Arundel's drop was the largest, at almost 7 percent, while Harford's sales price rose 4 percent. (Carroll was not included because its condo market is so tiny.)

CondoAuthority says its numbers account for the effect of seller concessions such as closing-cost help to buyers.

Smaller condos -- two bedrooms or fewer -- showed price drops across the region, as it happens. Sales prices rose for larger ones in Baltimore City, Baltimore County and Harford County. In its analysis, CondoAuthority says: "We expected lower priced units to hold up in price better than larger and more expensive units due to the general affordability factor, but this has not been the case. One explanation may be that buyers of larger condos/coops may be less affected by tightening lending standards than the buyers of smaller and less expensive units."

I chatted with Jamie Test, managing partner of CondoAuthority, who said he expected to see bigger price drops. "It just didn't seem like that much," he says. "If this is as bad as it's going to get -- prices are down a few percentage points after going up 100 percent -- that's not that bad."

The site compiles information for buyers about new condos in the Baltimore and Washington regions, though of course this analysis of MRIS numbers is predominantly catching resales.

Posted by Jamie Smith Hopkins at 10:55 AM | | Comments (1)
        

August 6, 2008

Zillow sees gap between housing perception, reality

Zillow.com, best known for its Zestimates of home values, says there's a tremendous difference between what homeowners think is happening to their property values and what's actually happening.

Sixty-two percent of homeowners it surveyed said they believe their values are the same as or more than they were a year ago. But Zillow says its newest real estate market report will show values dropping for 77 percent of U.S. homes. That's such a mirror-image result that the company now has a Home Value Misperception Index to track the gap over time.

"Whether it's apathy, confusion or just plain denial, homeowners seem to believe the housing crisis affects every other home but 'not my house,'" the company said in a press release today.

Most of those surveyed are not trying to sell, by the way.

Zillow says its poll was done online by Harris Interactive at the end of June and beginning of July. Just over 2,000 adults participated, 1,361 of whom are homeowners.

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

August 5, 2008

Pays to negotiate, Consumer Reports says

Ask your real estate agent to charge less, and chances are, he or she will, according to a new Consumer Reports survey:
Forty-six percent of sellers CR surveyed attempted to negotiate a lower commission rate. Roughly 71 percent succeeded. The survey also found that sellers who paid commission rates 3 percent or lower were just as satisfied with their brokers’ performance as those who paid 6 percent or more, suggesting that haggling can’t hurt.
The survey, the results of which are in the September issue of Consumer Reports, included more than 9,100 people who sold or tried to sell homes with real estate agents from 2004 to 2007 -- in other words, during both the boom and the slump.
Posted by Jamie Smith Hopkins at 9:55 AM | | Comments (4)
        

August 4, 2008

Your How-to topic here

As you can see below, I cover a different topic related to housing every Monday in this space -- how to track down property owners near you, how to childproof your home, how to compare property taxes from county to county, etc. I can try to dream up the topics myself, but I'd much rather pick ones that you're interested in reading about.

So, folks, be my editor for a moment and suggest How-to assignments. You can see past How-to Monday posts here, but don't feel obligated to look before making recommendations.

Posted by Jamie Smith Hopkins at 5:17 PM | | Comments (0)
        

How-to Monday: Credit scores

DollarSymbol2Stockxchng.jpg

Image courtesy of Stock.XCHNG

 

You probably know your SAT score, assuming you took the test in high school. But what about your credit score?

Once you're past the college-application stage of life, the second score is a lot more important. Or, rather, scores, since a variety of companies are watching and grading you. Mortgage lenders look at your scores to help determine how big a risk you are, and therefore what interest rate you should pay. Many others will take a peek, too, from credit card companies to insurers to apartment complexes.

Do they know more about you than you do?

"The U.S. consumer is grossly undereducated with respect to credit," says John Ulzheimer, president of consumer education for Credit.com, a financial services and consumer education firm.

Credit scores are such a big topic that I couldn't possibly cover everything in one How-to, so I won't. Next week: tips on improving your credit. Today: how credit scores work.

Many companies look at your FICO score if they're deciding whether to extend you credit. Fair Isaac Corp. developed the FICO formula, but the scores themselves are produced elsewhere -- by the three national credit-reporting agencies, Equifax, Experian and TransUnion. They use the FICO model and plug in information from lenders, public records, collections agencies and the like.

Your score can vary between the agencies in part because they might not all have the same details about your credit history, said Barry Paperno, consumer operations manager with Fair Isaac. But five overall factors influence your FICO score:

Payment history. Whether you pay on time accounts for 35 percent of your score -- the most important piece, but not as important as many assume.

Amounts owed. This is 30 percent of your score and primarily refers to credit cards. The lower your balance compared with your limit, the better.

Length of credit history. How old is your oldest account? How old are the rest? The longer, the better, and these answers add up to 15 percent of your score.

New credit. Ten percent of your score is based on this factor. Opening a lot of new accounts lately? That can ding your score, as can multiple applications to credit-card companies, which show up as inquiries on your credit report. (Multiple inquiries as part of the shopping-around process for auto loans, mortgages or apartments aren't supposed to count against you, Ulzheimer says.)

Types of credit used. This accounts for the final 10 percent of your score, and what the scorers are looking for is variety. You'll do better here if you have credit that's revolving (for instance, a credit card) and installment (i.e. an auto loan or a mortgage).

Got that?

In these days of rising mortgage defaults, you might be wondering what's worse from a credit-score perspective, a foreclosure or a bankruptcy. Answer: It depends. Filing for bankruptcy is a hit equal to foreclosure, Paperno says. If the result of that bankruptcy is multiple debts discharged, that hurts more, he says.

FICO scores range from 300 to 850. Like the SAT, higher is better. Fair Isaac's consumer site, myFICO, says a monthly payment on a 30-year fixed-rate mortgage can range from about $1,850 for someone with a credit score of 760-plus to $2,700 for someone in the low- to mid-500s. (That's for a $300,000 loan calculated with the going rates in late July.)

The newest information Fair Isaac has on the breakdown of FICO scores is from the 1990s -- yes, really -- but here's how it looked then: 

Of Americans with FICO scores, 13 percent were 800 and above. Forty-five percent were in the 700s. Twenty-seven percent were in the 600s. Thirteen percent were in the 500s. The rest -- 2 percent -- were below that.

(EDIT on 8/6: Fair Isaac says it was wrong, and these figures are actually much more recent, probably from late 2006. Glad to hear it.)

High income doesn't guarantee a great credit score, by the way, just as low income doesn't necessarily doom you to the bottom of the barrel. "Wealth is a measure of capacity, not creditworthiness," Ulzheimer says. A credit score "is the measurement of how you manage debt."

Next week: How to manage that score.

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

August 3, 2008

Selling a house?

Sellers are focusing more attention on home interiors to attract buyers, but David Sobel of Home Warranty of America warns against forgetting about the exterior. In a piece in RISMedia, he offers tips for improvement to keep buyers from driving up, grimacing and immediately driving off. For instance:
- Paint or stain the front and garage doors, especially if they show any weathering. ...

- Any old, basically abandoned sheds or small structures must be removed, the area graded and the grass replaced.

- Change any dated, outside light fixture(s).

- Fix that driveway.

Buyers, have you seen any exterior problems that really turned you off? Sellers, have you made any fixes (simple or involved) to give you more curb appeal?

Posted by Jamie Smith Hopkins at 6:47 AM | | Comments (2)
        

August 2, 2008

Poll: Trouble with your mortgage?

Commenter January 1954 suggests a poll to find out how many Wonk readers need a primer on foreclosure -- in other words, whether folks are having mortgage troubles. OK, Jan (can I call you Jan?), but only because you contributed the 800th comment to this blog.

I'm joking, of course. All suggestions for polls are gladly considered.

Without further ado, weigh in (and note that the first two categories are phrased to allow renters to participate, too):

UPDATE as of 9 a.m. on 8/9: The good news is that most of you say you're not having trouble AND don't know anyone who is: 58 percent of you have picked that option so far. Twenty-five percent say you're not having trouble but do know someone who is. Five percent are having trouble but aren't behind, and another 5 percent are behind.

If you're in the trouble category or know someone who is, check out this How-to on foreclosure-prevention resources.

Posted by Jamie Smith Hopkins at 10:50 AM | | Comments (2)
Categories: Polls
        

A legal primer on foreclosure

Confused by the ins and outs of foreclosure? Not sure how the state's new law changes things for lenders and homeowners?

The Maryland State Bar Association has a new brochure available online that covers foreclosure basics. For instance:

In Maryland, before the lender can file a foreclosure case against your property, the lender must:

* Wait 90 days from the date that your loan is in default; and

* Send you a Notice of Intent to Foreclose 45 days before the foreclosure case is filed.

o The Notice of Intent to Foreclose will provide you with important information about why your loan is in default, the amount you owe to bring your loan current, the last payment received, contact information for the lender or secured party, for the mortgage servicer that collects your mortgage payments and for the department that can help you work out your default (the loss mitigation department).

Posted by Jamie Smith Hopkins at 9:14 AM | | Comments (5)
Categories: Foreclosure help
        

August 1, 2008

Q&A: Economist Mark Zandi

Mark Zandi, chief economist of Moody’s Economy.com, is a frequent housing-market commentator. Now he has a new book out -- Financial Shock: A 360 Degree Look at the Subprime Mortgage Implosion, and How to Avoid the Next Financial Crisis.

Seems an opportune time for a Q&A -- not just about the book, but also about his views on local home prices, his advice for homeowners and his take on the ripple effects of BRAC.

Q. So -- what can we do to avoid the next financial crisis?

Zandi: “Well, we’re doing some of those things already. For example, the Federal Reserve has ... implemented new regulations guiding mortgage lenders with respect to what kind of mortgage loans they can make going forward. ... They have to make sure that the loan … they’re providing to the borrower is affordable to the borrower. Before, that wasn’t really a criteria for making the loan, and now it is. Another thing that’s happened is we’ve gotten a housing bill, which includes a number of things, one of which is a mortgage write-down plan, which should help a few hundred thousand homeowners who are struggling hold on to their homes.

“But what’s so novel about the plan is, it’s the first attempt to facilitate loan modifications that entail a reduction in the amount of mortgage debt owed by homeowners. Before this, there was really no effort to do this. And I think this is really vital. This kind of a write-down plan is very important because there are now close to 10 million homeowners that are underwater, meaning they owe more than the value of their home. To give you context, there are 51.5 million homeowners with first mortgages. So already, closing in on 20 percent of homeowners that are underwater. … That is a large pool of homeowners that are at significant risk of default.”

Q. What else do you recommend to avoid another crisis?

Zandi: “We’ve got to invest in financial literacy. I think a very substantive cause of our current problem is many homeowners don’t have a basic understanding of their finances. They got mortgages that they did not understand. And I think that goes to some significant limitations of our K through 12 educational system. I know when I went through high school, by the time I got out, I knew how to make an omelette … but I had no idea how to balance a checkbook or what a CD was or even what the stock market was all about. I had to learn that afterwards. That’s something we should really rethink.”

Q: What can the average person do about the housing-market travails?

Zandi: “If you don’t have a problem with your mortgage, if you’re still making your payments and you’re current on your mortgage, I think it’s just a matter of waiting -- to sit tight. The market will find a bottom and it will recover and prices will begin rising. … By the turn of the decade, the market will right itself. You need to look through all of this and not panic. If your horizon is more than a few years, you’ll be fine. For those folks that are having problems with their mortgage now, the worst thing to do is nothing. There are many options now, and you should avail yourself of all of them."

(An aside to Wonk readers -- here's a How-to post with foreclosure-help information.)

Q. What's your prediction for housing-market turnaround?

Zandi: “I think prices nationwide will continue to decline through next spring. They’ll be flat for a year after that, and by 2010, the spring 2010 selling season, I think prices will start to rise. By 2011 in most communities, this will just be a distant, bad memory.”

Q. You expect big price drops, though. When do you think home prices will return to their pre-slump peak?

Zandi: “It’s going to be somewhere near 2014, 2015 nationwide. Prices, when it’s all said and done, will fall about 25 percent from the peak. Say you get 4 or 5 percent per annum growth -- so it really won’t be until 2014 until many communities start seeing a return to the previous peak.”

Q. What about the Baltimore area?

Zandi: “Baltimore’s been a bit of an enigma. I keep thinking that it should be comparable to the national housing downturn, and I still think that will be the case when it’s all said and done. It just seems to have entered into the downturn more slowly and prices haven’t fallen as far as I anticipated. … The market is not good, but it’s not quite as bad as I expected at this point. But of course, the story’s still being written.”

Q. What do you think explains that difference?

Zandi: “I think the economy may be holding up a little bit better, meaning the job market. A lot of that may be related to health care, educational services; those are industries that are holding tough, still adding jobs, and I think that’s providing a floor to the job market and to housing demand. I just think some of the excesses that are plaguing California, Florida and even Northern Virginia are not quite as significant. There’s been subprime lending but not quite as much, there’s been overbuilding but not quite as much, there’s been speculation but just not quite as much.”

Q. What impact do you expect from the thousands of jobs that are slated to come here as part of the base realignment and closure process?

Zandi: “It’s helpful. But Baltimore is a big economy. Even something as big as this is relatively small in the context of the size of the economy and the housing market that we’re talking about. The most important thing for housing is affordability. So prices have to fall, ultimately, to be consistent with incomes and rents; otherwise, the market will never really find its grove. It may be the case that prices don’t fall as much as we’ve anticipated because of [BRAC], ... but fundamentally, prices have to be low enough that enough people can afford to buy the home. And so far, that affordability is still elusive.”

Q. Tell us about your book.

Zandi: “It’s a description of how we got into this financial predicament, the role that all the different parties involved in the crisis played and their contribution to the mess that we’re in, and also ... the link between what’s happened in the housing, mortgage markets and financial system and the broader economy, and the now recession-like conditions that we’re suffering. And then finally it talks about policy and policymakers, how they responded to all of this, what kind of role they played, and what we can do going forward to make sure we don’t suffer the same kinds of problems.”

Posted by Jamie Smith Hopkins at 6:37 AM | | Comments (1)
Categories: Q&A
        
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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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