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April 30, 2009

The Struever saga continues

As Struever Bros. Eccles & Rouse grapples with millions in debt and related woes, the state is worried the Baltimore developer won't be able to handle its lead role in the long-discussed State Center redevelopment, Annie Linskey reports today.

From the story:

Maryland officials still hope to ask the Board of Public Works to approve in June a master development agreement that would allow the project to break ground by late 2010, said Michael A. Gaines Sr., assistant secretary for real estate in the Department of General Services. But Howard Freedlander, an aide to State Treasurer Nancy Kopp, said "we've been told that the state is examining the structure of the development team in light of what everybody knows" about Struever Bros.

Meanwhile, the city is letting the developer "walk away from $700,000 in loans" on another project. From the same story:

On Wednesday, the city's Board of Estimates renegotiated a loan it granted Struever 25 years ago to redevelop Church Square Shopping Center in East Baltimore.

The travails of the housing market and economy at large make this a difficult time for most developers. There's been a lot of crystal-ball pronouncements from economists lately about when we can expect things to improve.

Mark Zandi, chief economist of Moody's, offered a forecast at a recent National Association of Home Builders conference. He said sales have probably bottomed and prices will likely stop falling at the end of the year, with foreclosures peaking at the beginning of next year, according to the NAHB Nation's Building News. (This is nationally speaking, of course. Experiences can vary at a local level.)


From peak to trough, there will be a 36% decline in prices, and it will be more than a decade before home prices return to the highs recorded during the recent housing boom, he added.
Posted by Jamie Smith Hopkins at 10:40 AM | | Comments (0)
Categories: Housing forecasts, New developments

April 29, 2009

Using the power of the Internet

Both Q&As this week came to pass because I happened upon (or was pointed toward) a website trumpeting an idea. It's now cheap and easy -- beyond an investment of time -- to present your point of view to the world, and some local folks are taking advantage of the opportunity.

Here are other ones I've noticed on the subject of housing, development and/or neighborhoods, in alphabetical order:

Baltimore City's Past Present and Future. A blog with photos of past and present community conditions and suggestions for improvement. For instance, on the subject of whether Westport redevelopment will do anything for the wider neighborhood, blogger Spence writes that "we'll have to knock down some barriers in order to make it an all around success." The blogger also keeps a blog about the future of Columbia.

Baltimore Grows. "Real estate, development, and life in Baltimore," as the site notes. Bloggers point readers toward Baltimore-centric news, chat about new restaurants and opine on development proposals. A ongoing poll asks, "Who's Baltimore's Best Mayor?" (Schaefer is winning by a wide margin.)

Baltimore Housing Bubble. Started in 2007, this blog was among a number nationwide that predicted big declines in home values because prices rose much faster than incomes during the earlier buying frenzy. Bloggers Kevin and Adam officially retired the site last October, but they've posted a few times since then.

baltimore john watch. Residents of Washington Village/Pigtown blog about the problem of out-of-town men who troll the neighborhood for prostitutes and sometimes bother women who are not practicing the so-called oldest profession. The bloggers want to turn things around, whether by shaming the men or getting outraged residents to lobby for more city government help. One recent post describes a john, notes his license plate number and says "it is hazardous to one's health to try to pick up respectable women as they're trying to cross the light."

Baltimore Slumlord Watch. This blog -- which says it was started "by a resident who was tired of watching out of town 'investors' and others destroy neighborhoods as a result of their negligence" -- names names, lists addresses, posts photos and tells people which council district each derelict property is in, for ease of complaining to the appropriate council member. About a boarded-up North Fulton Avenue property, the blogger writes: "The owner has seen his fair share of foreclosure hearings and housing court violations — not surprising.  We have to wonder is anyone in the city paying attention to this revolving list of names?"

What other local sites or blogs have you seen in this vein? Point me toward a bunch of other ones, and I'll make up a new list.

Posted by Jamie Smith Hopkins at 9:57 AM | | Comments (10)
Categories: Real estate online

April 28, 2009

Q&A: Dollar Homes

Two Q&As for the price of one this week!

Wonk reader Matt Gonter noticed a new blog called Baltimore Housing Overstock that's trying to revive the idea of "dollar homes." (The city raffled off 104 homes for $1 in 1975, as this Live Baltimore bio of Otterbein notes. You can read about the larger, longer-running homesteading project here.)

I thought you all might be interested, so I chatted by email with Steve Goodman, the blog owner and a Better Waverly resident. He kicked off the site last week with this description of his proposal and a request that people go to Mayor Sheila Dixon's May 6 "neighborhood conversation" about vacant and abandoned properties.

Q. Why did you start the site? Do you plan to keep it up as a blog, or do you see it as more of a way to get your proposal out there?

I started the site as a way to spread the word that the mayor is interested in addressing the blight issue, and to rally public support for action. I think we're at a unique moment in time when there is a lot of flux in our country, and a coherent vision of the future can be quite powerful. I want to publicize that there are many people in Baltimore who love the city, but know that it needs to change and are hopeful for what lies ahead. I don't have any long term plans for it; I'm taking it day by day at this point.

Q. Why are you concerned about the city's abandoned homes?

Funny question! It's like asking "why are you concerned about the tumor?" I'm concerned about the city's abandoned homes because of the lead and asbestos that seep into the water supply from a house with no roof, the psychological effect of living in a city that looks like no one cares, the police blue lights that I see in Greenmount West but not Roland Park, the young girls who get raped in vacant houses in broad daylight, etc.

Blighted neighborhoods correlate highly with high crime rates, poor public education, poor transit solutions and poor public health. There has been a lot of ink used to cover crime, education, the Red Line and JHU studies. We need to address blight the same way we address the other issues. There are an estimated 17,000 abandoned rowhouses in Baltimore.

Q. Why do you think a "dollar home" plan -- or, rather, auctions of city-owned properties starting at $1 -- is a solution?

It's a great first step towards giving individuals the tools to make a difference in their neighborhood. The majority of city-owned properties are currently valueless on the open market; in fact they are worth less than $0 because they lower the value of the surrounding properties. If we can get these properties into the hands of individuals who want to invest in the neighborhood, we do a lot more good letting an individual put $10,000 into renovating the property rather than putting $10,000 into buying a valueless property. The city needs to think about the long-term tax consequences of entire blocks going up in value, and get these properties into the hands of residents.

Secondly, it's a program that has had success before here in Baltimore. ... Why not try again? The important thing to realize is that if this plan is a complete failure, and every single dollar house ends up in the hands of a slumlord who doesn't maintain it, we're in exactly the same place we are now. There is no way to lose with this plan: either we improve the city a lot, or nothing changes.

Q. Do you have a background in real estate? (I noticed the SquareFeet site -- is that yours?)

I do not have a background in real estate, other than being a homeowner. SquareFeet is my day job; it's a venture based on helping renters find neighborhoods that they would like to live in, and helping them compare apartments more easily. We're based in Baltimore, and will be launching our service this summer.

Posted by Jamie Smith Hopkins at 11:46 AM | | Comments (11)
Categories: Q&A

April 27, 2009

Q&A: Outer Harbor Initiative

By most measures, the neighborhoods around Baltimore's Inner Harbor are doing well. So I was interested to hear of the Outer Harbor Initiative, which calls for attention to be focused on neighborhoods just outside that ring of affluence and activity.

Chesapeake Habitat for Humanity in Baltimore, a nonprofit that builds affordable housing, developed the concept and approached Councilman William Cole for help. I asked Mike Mitchell, chief executive of Chesapeake Habitat, to explain the idea.

Q. What is the Outer Harbor Initiative?

Thirty years ago, the city redeveloped the Inner Harbor, and in the time since that redevelopment, neighborhoods around the Inner Harbor have succeeded in redeveloping. They've attracted homeowners, renters, and those neighborhoods have increased their tax base for the city, and they also have contributed to stability throughout the city.

In Habitat's work, we have seen that the neighborhoods just outside these Inner Harbor neighborhoods have faced blight and a lack of new investment. Part of the reason for this is that investors and speculators have not been willing to turn around their properties for rental or homeownership. And the great irony is these in quotes "investors" have prevented development from happening.

This has caused two negative impacts for Baltimore. First, it's meant the continuation of blight and vacancy, which has meant lost tax base for the city, increased crime and fewer resources for city services and schools, but it has also meant that thousands of Baltimore City residents who could be homeowners in these properties have not had the opportunity to be homeowners and live in these homes.

The Outer Harbor Initiative seeks to resolve this by continuing development beyond the Inner Harbor neighborhoods to this outer ring, these Outer Harbor neighborhoods. The idea is to present a strategy that entails four tools.

[Number one], code enforcement. Number two, … investment and development, finding investors who are willing to invest once the code enforcement department has done a good job of getting speculators to leave or invest in their houses. …

The third is then, after you get the developers and investors willing to invest in the neighborhood, you need a neighborhood association that has the resources and the know-how to market itself. And finally, you need a partnership with the police to ensure that public safety continues to get better and better.

Q. What neighborhoods are we talking about?

I can name some, but I want to emphasize that they are "such as neighborhoods" … And those would be Pigtown--or Washington Village/Pigtown--McElderry Park, Brooklyn-Curtis Bay, and the South Baltimore neighborhoods of Mount Winans/Lakeland and Westport.

Q. Why are you interested in this?

The main reason is to stabilize and revitalize communities--to make sure that Habitat homeowners and other residents have a safe and decent place to live. The second is that the city could benefit from the strategy of neighborhood redevelopment that moves beyond only doing large projects like EBDI or Uplands.

Q. Why focus on the "Outer Harbor" neighborhoods?

These are neighborhoods--not all of them, but for the most part--that Habitat is working in. And because Habitat is working as a market agent to turn around markets that don't exist. … In many of these neighborhoods, there is effectively no housing market. So we are acting as a catalyst to ensure development in the neighborhood.

Q. No market? No one's buying?

Well, there isn't reinvestment occurring in many of these neighborhoods at a level that would ensure growing stability.

Q. What do you want the city to do?

We want the city to do each of the four things as a neighborhood redevelopment strategy. So we want to see enhanced code enforcement in neighborhoods where reinvestment and development are present or can be present. We want to see banks come alongside the city and say, "If the code enforcement department works on this area, we banks and lenders will put up money to lend to developers."

We want to see mechanisms for neighborhood associations to be able to market their neighborhoods. And we want to see a strategy that entails working with police … Push the drug trade out until the neighborhood has stabilized. …

Another thing we hope comes out of the discussion is new financing mechanisms that the city can draw from to support transformation. For instance, the city uses TIFs [tax increment financing] right now for big developments, like the project in Westport. Is there some version of a TIF that can be used in a neighborhood to help finance [smaller-scale] redevelopment?

Q. How much of this do you see as public money vs. private?

I think the public money can only do part of it. It's going to take private money. But public money can help leverage private money. And the perfect example of that is the Inner Harbor. Thirty years ago, there was enormous public money that went into redeveloping the Inner Harbor, and I don't think anyone can argue that that investment didn't lead to a lot of private investment. You just have to look around the harbor and the neighborhoods around the harbor to see the impact that that had.

Q. Can you paint a picture of what this work might look like in a neighborhood?

I'll give you a specific example. In Pigtown, an outcome might be [that] the city says, this 10-block area has 60 vacants, and we're going to assign one code enforcement attorney and one nuisance attorney to prosecute; … we will seek from a private lender a commitment to loan within this 10-block geographic area. … And we will offer to support marketing of the neighborhood to the community association.

We have seen and been thrilled at the code enforcement department's work. They have done a very great job. But we believe in a code enforcement strategy paired with an investment strategy.

Q. How do you see Habitat's involvement in this?

We envision ourselves being part of the conversation and … one of the investing entities that helps to transform neighborhoods. So in the example I cited of a 10-square-block area, if there are, say, 60 vacant houses, maybe Habitat can do 25 percent or 20 percent of those homes, making sure that affordability is a part of all this.

Q. What should people do if they want to find out more or offer feedback?

The main thing they can do is get on the website.

We hope that folks think about affordable housing as part of this discussion--that there is a paradox in Baltimore City, with 30,000 vacant houses and at least 30,000 families that could own and live in these homes and be paying taxes to the city. … We as a community must respond to this paradox.

Q. On a related note, what has the housing slump meant for Habitat's affordable housing efforts?

It's certainly bad for neighborhoods to have more and more foreclosed houses, and … it's going to make it more challenging in the future respective to donations. Those are the main things.

Q. No silver lining? No influx of cheaper homes for Habitat to rehab?

Not at all. Because at the price points of what we buy, it really doesn't make that big of a difference. … We haven't seen huge drops in property values: $35, $40,000--it hasn't changed.

Posted by Jamie Smith Hopkins at 8:00 AM | | Comments (0)
Categories: Q&A

April 26, 2009

Where home prices are dropping fastest

First American CoreLogic said last week that its calculation of single-family home prices in February shows double-digit decreases in 11 states from a year earlier.

These are the states:

Nevada: -26.65 percent

California: -26.53 percent

Arizona: -21.11 percent

Florida: -19.68 percent

Rhode Island: -19.46 percent

Washington state: -12.66 percent

Illinois: -11.90 percent

Maryland: -11.62 percent

Oregon: -11.15 percent

Massachusetts: -10.26 percent

Virginia: -10.24 percent

The company said in a press release: "Although prices declines are beginning to stabilize for the very high depreciation markets, the price trends among a next tier of states that are experiencing double digit declines is worsening." It includes Maryland in that "next tier."

You can find the price changes mapped here.

In the Baltimore metro area, meanwhile, the company says prices have dropped about 9.7 percent.

"Over one-fifth of U.S. housing wealth has vanished and home prices continue to decline. Decreases are now being driven by rising unemployment and a high volume of distressed home sales. Given that home prices are generally a lagging indicator of market health, we believe the largest declines have already taken place, but we expect home prices to continue to decline into 2010 as economic conditions and excess housing inventories dampen prices," said Mark Fleming, chief economist for First American CoreLogic.
Posted by Jamie Smith Hopkins at 9:20 AM | | Comments (2)
Categories: Housing stats

April 25, 2009

A week's roundup of interesting real estate numbers

First interesting number: 11.9 percent. That was the "national mover rate" in the United States last year, a record low. The Census Bureau has tracked the rate since 1948. (The actual number of people moving was 35.2 million, down 3.5 million from the year before "and the smallest number of residents to move since 1962.")

Second interesting number: 34.1 percent. That's the share of people defaulting on Fannie Mae or Freddie Mac loans in January who gave "curtailment of income" as the reason, according to the Federal Housing Finance Agency. "Excessive obligations" came in next at 19.8 percent, followed by unemployment (8.1 percent), illness (6.5 percent) and marital problems (3.5 percent). (Those were the most common reasons, but there were others.)

Third interesting number: $16.3 million. That's how much K Bank, an Owings Mills company that a number of rehabbers turned to for loans, lost during the fourth quarter. The Federal Deposit Insurance Corp. said Friday that it has required the bank to "stop issuing construction and development loans and raise more capital," Andrea K. Walker reports today.

Fourth interesting number -- OK, numbers: $360,000, $360,000 and $420,000. That's how much Scots Glen condos sold for at auction yesterday after a lender foreclosed on builder Dale Thompson, according to Realtor Pat Hiban. Hiban says on his blog:

The 420k was the former model with 4 finished levels and an elevator. The model was last listed at 740k and the other two were in the mid 600's. ...

The lots in Highland drew even more bidders. Out of the 7 lots for sale, 4 sold at prices acceptable to the bank. The sale prices on the lots were 250k,255k,290k and 295k. The other 3 got bids of 150-180k and Columbia Bank chose not to accept those. It was quite an experience and it was good to see so many serious buyers there in earnest.

At one point the auctioneer yelled out "These are going for way less than the market!!!" and the guy next to me yelled back "Your looking at the market buddy!!! This is your market, right here right now!!!"

Thanks to David Hobby for pointing out Hiban's post -- I would have missed it otherwise.

Have other interesting housing-related numbers to share? Comment away.

Posted by Jamie Smith Hopkins at 10:33 AM | | Comments (4)
Categories: Housing stats, New developments, The foreclosure mess

April 24, 2009

Foreclosed: newly built homes

It's not just homeowners who have to worry about foreclosure -- builders do, too.

As Lorraine Mirabella reports today, "Two separate lenders have foreclosed on 35 of Dale Thompson Builders' unsold homes, building lots and unfinished houses in Columbia's Scot's Glen townhouse development. One lender also foreclosed on seven lots in a neighborhood of $1 million homes in western Howard County, according to public records detailing property auctions."

As the price tag suggests, these are upscale homes. You can see a photo of Scot's Glen -- and a map showing the numerous unsold properties -- on Dale Thompson Builders' website. The company is local, based in Howard County.

It's a tough time to sell, but that's not the only issue facing homebuilders. It's also not an easy time to keep the financing flowing for a homebuilding project.

Posted by Jamie Smith Hopkins at 8:07 AM | | Comments (2)
Categories: New developments, The foreclosure mess

April 23, 2009

EBDI open house

Anyone interested in the redevelopment efforts near Johns Hopkins Hospital in East Baltimore -- or just interested in buying or renting in that area -- can get a peek at the new homes and apartments at an open house this Saturday.

East Baltimore Development Inc., which manages the redevelopment, is holding the event from 9 a.m. to 11 a.m., kicking off with a ribbon-cutting at 1714 East Chase Street.

There's a model home to see that's a "greenhab," part of a rehab project that's taking approximately 120-year-old rowhomes and greening them up with elements like reflective roofs and tankless hot water heaters. Also part of the open house: The Townes at Eager (two- and three-bedroom townhomes with garages, priced in the "mid to high twos"), Chapel Green Apartments & Townhomes and two residential complexes that opened in 2007.

EBDI expects that Johns Hopkins employees will be interested. People who lived in the area before the redevelopment -- which scattered residents to other neighborhoods via eminent domain, some very unhappily -- might be too. Time will tell.

Posted by Jamie Smith Hopkins at 11:32 AM | | Comments (0)

"For Sale" 2.0

David Hobby, photographer extraordinaire and former colleague, is the guy who put the idea of blogging into my head. Because his blog is about photography lighting, though, it seemed extremely unlikely that I'd ever link to him with my Wonk hat on. But today, photography and real estate intersect.

He's just posted a how-to that shows home sellers a way to use a blog as a "buy my home" brochure. Launch, tweak, upload photos (lots and lots of photos), link to neighborhood restaurants and other attractions, embed map. Cost: zero dollars. (Why is he doing a how-to? Because he just put one together for his own home.)

Sellers have been turning to the Internet in greater numbers -- the tough market is the stick and cheap-or-free Web 2.0 options are the carrot. I've seen sites with snazzy video walk-throughs. But for sellers or agents looking for a no-cost alternative, there's always (or whatever blog system you like best).

Hobby knows some people will do this as part of a "For Sale By Owner" strategy, but his house is on the multiple list -- he launched his blog-brochure as an additional resource.

Sellers: Do you have a dedicated site or blog for your home? If so, share in the comments. Buyers: Do you find these sorts of sites helpful?

Posted by Jamie Smith Hopkins at 7:39 AM | | Comments (3)
Categories: Real estate online

April 22, 2009

Another opinion on Baltimore-area housing values

One more volley in the debate about home prices: IHS Global Insight suggests in a new report that housing in the Baltimore metro area is pretty close to fairly valued.

The economic forecasting firm says its number-crunching, which takes historical values into account, puts prices in the Baltimore metro area at 2.9 percent overvalued at the end of last year. That's within IHS Global Insight's margin of "historically normal."

By contrast, the metro area was 11 percent overvalued last summer and 26 percent overvalued at the peak of the housing frenzy in 2005, the company says.

According to the report, out this week:

Extreme overvaluation is now essentially nonexistent. Only Atlantic City, New Jersey met our definition for extreme overvaluation during the fourth quarter, a sharp contrast to 2005 when 52 metro areas were judged to be extremely overvalued. For the country as a whole, the housing market is slightly undervalued. When the 330 metro areas are weighted by market value, the nation is 8.4% undervalued. When weighted by housing units, the nation is 10.2% undervalued.

What numbers did the company crunch to come up with this evaluation, you ask? OK, fine, maybe you're not asking, but here's the answer anyway:

Our approach to determining statistically normal house values considers not only house prices and interest rates, but household incomes, population densities, and any historical premiums or discounts metropolitan areas have exhibited over time.

Looks like you have to sign up on the company's site to get the report, but you can see the press release here.

I'm getting the sense from agents and house-hunters that price range matters when it comes to sorting out whether values (or at least asking prices) are fair. One reader commented on yesterday's post about home prices vs. incomes: "We still feel priced out of the market and have been looking to buy a home in the $320K range."

Are there price ranges where the homes seem undervalued? Or where many of the properties on the market seem overpriced? And what -- as Goldilocks would say -- seems just right?

Posted by Jamie Smith Hopkins at 9:31 AM | | Comments (2)
Categories: Housing forecasts

April 21, 2009

Baltimore income vs. housing costs

In the ongoing debate about housing affordability, people argue about whether prices are out of whack and what normal would look like. It's important to buyers, who want a good deal, and sellers, who would like to sell before the first of never rolls around -- not to mention all the people whose livelihoods depend on real estate, the banks with problem mortgages, the taxpayers bailing out those banks, the folks living next to foreclosed homes ...

Pretty much everyone in the country at this point, eh?

So I figured you'd all be interested in some newly updated measures from John Burns Real Estate Consulting, a real estate consulting firm whose "housing cycle barometer" I wrote about a while back.

The barometer tracks home prices, median household income and mortgage rates in metro areas. If a metro gets a zero on the barometer, it's the least expensive time to buy in that area since 1981. A 10 on the barometer says it's the most expensive time. This is measuring a community against its own history rather than comparing it to other parts of the country.

The Baltimore metro area, which hit 10 in the aftermath of the bubble, is now a 5.9. (It was zero at the end of the '90s, right before the run-up in prices. And, as you can imagine, it was awfully high in the early '80s thanks to double-digit mortgage rates.)

John Burns Real Estate Consulting considers anything between 5 and 7.5 on the barometer to be an area of "affordability concern," and Baltimore is one of nine metros that fall in that range.

But here's something that puts Baltimore's barometer figure into context: Buyers who get a median-priced home and earn the median household income would spend 29.5 percent of their paychecks on mortgage costs. That's only a bit higher than the 28.1 percent historical average for the Baltimore metro area, and a lot lower than the nearly 43 percent required at the beginning of 2006, according to the firm.

(Wonkish aside: The firm assumes a 20 percent down payment but includes one-seventh of that payment as part of the annual housing cost for each of the first seven years. Why? Because the company wants to account for the outlay, and people often remain in a house for seven years.)

I asked the company why the barometer is a 5.9 if housing cost vs. income is very close to average for the Baltimore area. The answer: Because the area's housing-to-income ratio was pretty stable for a long stretch, so small swings make a difference.

What would bring the Baltimore area's barometer down to zero, making it the most affordable time to buy since '81? If that median-income, median-home buyer could spend less than 20 percent of his or her paycheck on the mortgage.

A lot of metro areas are at zero now, including Minneapolis, Reno and Atlanta. The Washington area comes in near zero -- 0.6 -- with median-income, median-home buyers putting 25 percent of their paychecks toward housing.

Here's what the company says in its April newsletter about the national picture:

The monthly cost of homeownership has fallen 43% from the peak in this cycle, with more than half of that due to the decline in price, and the remainder due to the decline in mortgage rates and increase in incomes. The median-income household, which earns $52,800 per year, only needs 25% of their income to buy the median-priced single-family home of $164,600. In July 2006, that ratio was 44%.
So: Our area's housing cost vs. income has dropped, but not to the extent that it has elsewhere in the country -- which of course many of you already knew. As Steve Dutra of John Burns Real Estate Consulting notes, "Home prices have not dropped on a percentage basis in this MSA as much as they have in other MSAs." (MSA: metropolitan statistical area.)

Thoughts? Buyers, what percentage of your income do you want to spend on mortgage costs -- or mortgage costs plus property taxes and anything else you think ought to be calculated upfront?

Posted by Jamie Smith Hopkins at 6:48 AM | | Comments (7)
Categories: Housing stats

April 20, 2009

Poll: The recession and your spending habits

People's ideas about saving and spending deeply affect the way they live, including if and when to buy a home and what sort of home it should be. With that in mind, I'm wondering how -- if at all -- the recession is changing the way you save and spend. Do you think this moment in history, like the Great Depression, will permanently alter the way today's teens and adults think about money? Or is it a speed bump?

That's part of the debate in Andrea Walker's story today about consumers cutting back.

Join the debate! Weigh in on this poll:

The order of answers is randomized, in case you were wondering.

Posted by Jamie Smith Hopkins at 10:10 AM | | Comments (3)
Categories: Polls

April 18, 2009

The spring home-buying season: a pick up?

Here's a bit of good news for folks with a home on the market: Pending sales in Maryland last month were up more than 7 percent from a year earlier, to about 5,600, according to the Maryland Association of Realtors. (The number of homes on the market decreased by about the same percentage, taking the inventory of unsold properties below 45,000.)

Contracts and contingent deals rose most in the Washington suburbs -- up a whopping 56 percent in Prince George's County, 53 percent in Frederick and 32 percent in Montgomery. No idea how much the buyers are intending to pay for those homes, but average prices for deals that closed last month fell nearly 20 percent in all three counties.

In the Baltimore area, pending sales rose in Carroll (13 percent) and Howard (3.5 percent). Pending deals were essentially flat in Anne Arundel. They fell 4.7 percent in Harford, 6.7 percent in Baltimore County and almost 11 percent in Baltimore City.

Do the differences come down to price? Hard to say, without knowing what those pending deals are going for.

In the Baltimore metro area as a whole, at least, asking prices do seem to be down significantly. According to HousingTracker, they've decreased 10 percent from a year ago and 18 percent from two years ago for the median house. That two-year difference is a $60,000 cut.

Posted by Jamie Smith Hopkins at 10:38 AM | | Comments (2)
Categories: Housing stats

April 17, 2009

A recessionary tale

Picture this: It's 2004 and you have the chance to buy some nice real estate. It would mean a lot of debt, but why not, you think? Interest rates are low. Economy's good. Property values are rising. Then fast-forward to 2009. Recession. Values falling. Your short-term loans have come due and banks don't want to refinance you.

What do you do?

If you're General Growth Properties, you file for bankruptcy. Which is just what the company did Thursday.

Chicago-based General Growth bought the Rouse Co. in 2004, getting Columbia, Harborplace & The Gallery, local malls and office space into the bargain. I was covering Rouse at the time, and the executives talked about it as an inevitable sort of thing: Big companies keep acquiring until there's nothing else they can acquire, and then they themselves get bought out. But I wonder if -- had General Growth and Rouse stayed independent -- both companies would have been better off today.

Jay Hancock opines in his column that founder Jim Rouse wouldn't have gotten into this trouble:

He never borrowed too much or risked the franchise to get a couple percentage points less on the mortgage. ... James Rouse took risks with malls and marketplaces, not finances. General Growth Properties did the opposite.
Posted by Jamie Smith Hopkins at 10:39 AM | | Comments (2)

April 16, 2009

Appraising the appraisers' role in the housing bust

Lenders, mortgage brokers, Wall Street wizards, buyers, sellers, real estate agents and the federal government have all come in for a share of the finger-pointing after home values began rapidly falling. The Center for Public Integrity, an investigative journalism group, suggests adding the appraisal process to that list.

Dozens of appraisers tell the center "that for years lenders across the United States have pushed them into inflating the value of homes to justify higher mortgages. ... In addition, the Center has obtained copies of lenders’ 'blacklists' containing the names of thousands of appraisers; some appraisers say lenders used those lists to exclude those who refused to inflate home values."

The Center also found many appraisers who say they bowed to lender pressure to “hit the numbers” in order to remain in business. These appraisers, along with the lenders who pressured them, helped pump air into the housing bubble that led to widespread economic devastation, according to dozens of appraisers, lenders, and others with intimate knowledge of home loan practices.

The Home Valuation Code of Conduct, which takes effect next month, is supposed to deal with such problems by, for instance, banning "loan origination staff from ordering appraisals directly" for mortgages Fannie Mae and Freddie Mac can purchase. But appraisers tell the center that this will do nothing but direct business to them through middlemen who can pressure them just as effectively as the lenders did.

So what's the solution? Weigh in.

Posted by Jamie Smith Hopkins at 11:31 AM | | Comments (3)
Categories: Appraisals

April 14, 2009

Bill aimed at renters fails to pass

You may recall if you read this fair housing Q&A that the General Assembly was considering a bill to help tenants whose landlords get foreclosed on. HB 733 proposed that any lease would continue in force for three months after the foreclosure, unless it expired earlier. But that bill is dead, as The Daily Record reports.

The foreclosure bill that did pass was HB 640, which "allows local governments to pass ordinances requiring lenders to report foreclosure filings to local governments within five days of filing them, instead of two weeks before evicting tenants," the Daily Record says.

There's a delicate balance between protecting the rights of tenants in a foreclosure situation -- if they were paying their rent, they're innocent victims -- and the rights of lenders, who have repeatedly said they don't want to be landlords.

What do you think is the right balance?

Posted by Jamie Smith Hopkins at 11:05 AM | | Comments (4)
Categories: Renting, The foreclosure mess

April 13, 2009

Q&A: Tim Higgins, home loan consultant

It's not surprising that a lot of people are thinking of refinancing with mortgage rates as low as they are. That got me wondering, though--in this world of tightened standards, how many of them can? For the answers, I turned to Tim Higgins, a home loan consultant with Patuxent Funding, a correspondent lender in Ellicott City.

Here's what he had to say last week about refinancing, buyer options and the housing market.

Q: Are standards continuing to toughen?

Underwriting guidelines have tightened. And then the extreme layer of bad news is property values. ... I have had probably 200 conversations in the last 60 days [about refinancing] and I have locked in one person at 4 ½ percent. One person. Now, I've locked in other people at higher rates, but I've locked in one person at 4 ½ percent. That's because that guy, he was borrowing $300,000, his home appraised at a million, he had an 800 credit score, his debt ratio is a 12, and he is what the banks consider a perfect risk. And therefore there's no additional overlays on his rate lock.

Q: Do you have to be perfect to avoid add-on fees?

Yeah, you do. ... Fannie Mae will severely penalize you if your credit score is less than a 720. ... We're in the middle of a refi boom, ... but unfortunately I spend 90 percent of my time telling people what I can't do. I get a lot of people who have an 800 credit score, who have a 12 percent debt ratio, who owe $300 [thousand], but when I call my appraiser, they tell me their home is only worth $330 whereas it was once worth $430. So they're not eligible. ... They don't have the 20 percent equity.

Q: What about the Obama administration's refinance plan for people with little or no equity?

I haven't done one of those yet. I'm told if it's a Freddie Mac loan, I can't--only the current servicer can do it. And I haven't even been given the rules yet for if it's a Fannie Mae loan. So the speculation is that there's going to be additional provisions that apply. …

All this is very confusing to the consumer. All the consumer hears is, interest rates are at 4 ½, and the government has just spent billions buying mortgage-backed securities and Treasury bonds to lower interest rates, so in their minds, they're thinking, "Great, interest rates are going to go to 4 percent." They're waiting. But interest rates aren't going to go to 4 percent. This is the bottom. ... It seems the government's plan wasn't so much to bring rates down to 4 percent as it was to cap rates at 5 percent. And to complicate things a little bit more, there's weird thresholds and loan limits. So you have Fannie Mae's old loan limit of $417,000: That's still the magic number. That's still the amount that's going to get you the 4 ½ to 5 percent interest rates. …

The biggest challenge is the low value. When I talk to some of my clients and I say, "What's your house worth," and they say $900 and the appraisal comes back $550, that's a pretty big disconnect. It's just one low appraisal after another.

I'm [also] getting purchase transaction appraisals that are coming in low. And that's strange, because we're in a declining market and the buyer is walking away saying, "I just got the greatest deal of a lifetime, I bought this house for $400 when the guy before me bought it for $700 two years ago," and the bank is saying, "That's great, but it's really worth $380."

So it's a mess. I'm still doing 10 to 20 deals a month, but I should be able to do 50 deals a month with these low rates. So it's very frustrating.

There's nobody that would not enjoy 4 ½ percent. There's nobody in America that would say no to that. But I can't help most of those people because they don't qualify, for whatever reason. Appraisal, credit score, loan size, debt ratio.

Q: Where are your clients based?

Mostly in Howard County. But I do a lot of Baltimore, Anne Arundel, Carroll. I had a couple transactions in Carroll County where the appraisals came in super low. That tells me Carroll is probably getting hit super hard.

I tried to refinance a guy who paid $900 a couple years ago and the appraisal came in $650.

Q: What about would-be buyers? Do they need a big down payment, or is FHA a viable alternative?

They can go FHA. ... You can put 3 ½ percent down. …

FHA went from two years ago representing 3 percent of the new loans in the country to now 30 percent of the new loans in the country. That's still a big avenue. … It doesn't make sense to do a conventional loan with less than 10 percent down, because then it starts to be pretty expensive and you might as well do an FHA loan.

Purchasers, ... they have the complete upper hand in the market right now. ... It's just that there's so much inventory for them to choose from. In the past, we would close purchasers in a weekend. And now these transactions, just to get them under contract, are taking six months. Because their decision-making process has been stretched out. Rates are stable, and they're low. There's a glut of homes to choose from and values continue to decline. There's no urgency for them to make a decision in a weekend. They have all the time in the world, and they take it.

But refinances, that's where it becomes frustrating. Because there's so many people out there that would like to take advantage of today's low rates and reposition their money on a 30-year fixed at 5 percent or better, and I just have to tell them they can't.

Q: What can they get? Five-and-a-half or 6 percent?

That does happen a lot. If they're already at 6 percent or 6 ½, it doesn't make as much sense to them. But the main reason people can't refinance, the number one reason, is because they don't have the 20 percent equity position.

Q: Twenty percent is absolutely required?

You could have a 10 percent equity position to refinance, ... but then as a lender I'm required to attach mortgage insurance to your loan. That's $300 on your mortgage payment. Just to take you from 6.5 to 5 [percent], ... the savings you're going to see is probably close to $300, so it's not going to benefit you in any way. People want two things, two things and two things only: They want a 30-year fixed ... and they want payment relief.

Q: Do would-be refinancers already have a 30-year fixed-rate mortgage, or are they trying to get out of a more exotic loan product?

It's a combination of both.

It's the millions and millions of people who bought in the last five years that are desperately trying to reposition their money, and it's impossible. It's just impossible. ... I was praying that Obama's plan would somehow say, "Anybody who wants to reposition their existing mortgage debt on their house, as long as they qualify with a pay stub, a credit score and whatever asset requirements are needed for normal value approval, we'll forgive home value for a minute." Let's just let people reposition their current mortgage debt at a fair rate, whatever it may be. … I know the banks would balk at the under-equity position, but it just seems like a simple solution to me.

The government's throwing trillions and trillions of dollars into all these different avenues of bailout, and the Fannie Mae refi thing is a good idea, but it doesn't help as many people as it seemed it would.

Q: If you're not going with an FHA loan, what credit score do you need?

You can do a loan with 620, but you're going to get trampled with add-ons.

Q: What interest rate would you qualify for in that situation?

You are looking at 5.75 and you're still going to have to pay 2 points. Basically, you're not going to be able to avoid paying points with a 620 credit score. So you're three-quarters of a percent above the market and you're still paying points as well. … [One point] is 1 percent of the loan amount.

Q: What's the going rate today for an 800 credit score?

You're really at 5 percent today.

Q: How many points should people expect to pay with a credit score below 720?

It's three-quarters of a point if you're below 720. But then it starts to incrementally increase. 700's the next level, and then 680 and then 660 and then 640.

Q: Do you see a light at the end of the tunnel?

I think that when we get to the point where you can put down a 20 percent down payment on a house and your payment would be the same payment if you rented that property, then housing will have to turn. Because if I can rent for $1,500 or my parents can give me $60,000 and I can buy and have a $1,500 mortgage payment, I think my parents are going to be much more inclined to lend me the $60,000 to buy a house. .. But we're not there yet. I think we're still heavily overvalued.

Q: The whole area or Howard County specifically?

I think it's more true in Howard County. Baltimore City's still pretty fair. You can buy a ... little condo or rowhome in Baltimore City and have a payment that's $1,700.

Prices are coming down, don't get me wrong, but I just don't think they're where they should be. The townhouse I bought in 2001 for $196,000, there's homes on the market on the same street for $375,000. Which is crazy. As a country I think we've come down to 2003 levels, but I really think we need to be down to 2001. They say all bubbles bottom where they started, right? ... So until we get back there, I think we're going to keep on going.

Posted by Jamie Smith Hopkins at 1:13 PM | | Comments (11)
Categories: Mortgages

April 12, 2009

The market for new condos in the Baltimore area

Asking prices for new condos in the Baltimore metro area were down 10 percent in the first three months of the year vs. the same period a year earlier, according to real estate information provider Delta Associates. The company's new report on the new-condo market says asking prices dropped most in Baltimore's northern suburbs (more than 16 percent) and least in the city (4.8 percent).

Some of the more eye-popping factoids:

--At the pace things are moving right now, the northern suburbs have enough new condos for sale to last buyers through 2022, according to Delta.

--In Baltimore City, contract cancellations in the first three months of the year outnumbered sales. (The same thing happened in Washington's Fairfax/Falls Church area.)

Delta addresses these supply vs. demand issues in the report:

The inventory of condos in the Baltimore metro area is still too high compared to sales velocity, and as a result, more projects have been removed from the pipeline, and this trend will likely continue over the period ahead.
Posted by Jamie Smith Hopkins at 1:09 PM | | Comments (1)
Categories: Housing stats, New developments

April 10, 2009

March home sales in the Baltimore metro area

By the numbers, according to Metropolitan Regional Information Systems:

The average home sale price in the Baltimore metro area last month was $278,511, a drop of 6.4 percent from a year earlier. (It's also more than the average two years ago -- about $306,600 -- but remains above the $258,900 average of March 2005.)

The number of home sales dropped 18 percent to 1,545.

What sellers got was just under 88 percent of what they'd asked for.

Unsold homes on the market: 18,321.

Lorraine Mirabella sums up the stats by jurisdiction in her web-only housing story:

Home sales fell as much as 27.7 percent in Harford County, where the average sales price was down 7.6 percent, and stayed relatively flat in Howard, where the average price dipped nearly 11 percent.

Sales were down 16.3 percent in Baltimore, where the average price fell 15.4 percent. In Baltimore County, sales fell 24.2 percent, with an average sales price decline of 5 percent. Sales declined 15.8 percent in Anne Arundel, and prices dipped 3 percent, while in Carroll, sales dropped 22.5 percent, and prices fell 9.5 percent.

See anything in the numbers you found particularly interesting? Got any buying or selling stories to tell? Comment away.

Posted by Jamie Smith Hopkins at 1:17 PM | | Comments (4)
Categories: Housing stats

April 9, 2009

Fighting foreclosure blight

Nearly $4 billion is supposed to flow to neighborhoods across the country to deal with the effects of vacant foreclosures, part of the package Congress passed last year to try to stabilize the housing market. Columbia-based Enterprise Community Partners, one of the organizations that pressed to have that money included in the bill, released a report today about how cities, counties and states say they'll put it to use.

Analyzing "action plans" for more than half the money, Enterprise says 56 percent of the dollars are earmarked for foreclosure purchase and rehab, 21 percent for financing homebuying, 13 percent for redevelopment, 6 percent for demolition and 4 percent for land banking. (That's of the money not going to administrative costs.)

Most of the jurisdictions intend to stretch those dollars by adding other sources of taxpayer money or getting funds from private sources -- foundations, businesses and the like.

A sizable chunk of the money going to Maryland as well as directly to local jurisdictions -- including Baltimore City and Prince George's County -- is intended for purchase and rehab. The applications from the state and jurisdictions suggest the money will touch 1,500 homes in one way or another, Enterprise says.

Enterprise is a nonprofit builder and financier of affordable housing. So why does it care about foreclosures? This is its answer:

Foreclosures can cause a downward spiral of disinvestment, leading to yet more foreclosures. Thus, as foreclosures rise nationwide, communities decline. Enterprise and many other community development organizations have been working for decades to build high-quality, safe and stable neighborhoods. Therefore, our role in solving the national foreclosure crisis is to stabilize communities and design innovative solutions to ensure that this never happens again.
Posted by Jamie Smith Hopkins at 2:16 PM | | Comments (1)
Categories: The foreclosure mess

Slots to lower Baltimore property tax rate?

The group that wants to run a slots parlor in Baltimore has agreed to a deal that -- city officials say -- could mean an eight-cent reduction in the property tax rate, as Annie Linskey and Gadi Dechter report today.

The city's rate of $2.268 per $100 in assessed value is the highest in the state -- more than twice as high as other jurisdictions' rates. (It's also a continued source of complaint for residents and angst among folks who want more people to move into Baltimore.)

The Dixon administration points out that the cut won't be immediate -- and it relies on slots performance. From today's story:

Under the agreement, the casino would provide ground rent to the city via a profit sharing agreement on gross gambling revenues, and those funds won't begin to flow until the casino is operating, which city officials hope will be in 2011. The money from slots must be used for either property tax reduction or school construction, so those funds cannot be used to eliminate expected budget shortfalls in those years. ...

According to the deal, the bidders will pay the city $20.8 million when the casino opens, which includes ground rent, property taxes and other revenues, said First Deputy Mayor Andrew Frank. That would provide a minimum five-cent reduction in property taxes. Since the revenue is based on the casino's performance, Frank said, the city's share could grow.

To allow an eight-cent reduction, the parlor would need to produce about $25.4 million a year in revenue. That's what the city is forecasting within five years.

If all those if's come to pass, a city resident paying taxes on a $200,000 assessment would see his or her property tax bill drop from $4,536 to $4,376, a $160 savings.


Posted by Jamie Smith Hopkins at 9:56 AM | | Comments (9)
Categories: Property taxes

April 8, 2009

A request for home buying books

Read Street blogger Nancy Johnston has put out a call for book recommendations -- books about home buying, otherwise you wouldn't be reading about it here, naturally.

What home buying books would you suggest? What home selling ones, for that matter?

She's looking for nonfiction, but I'll happily take recommendations about favorite housing-related novels, too.

Posted by Jamie Smith Hopkins at 1:56 PM | | Comments (2)

Baltimore on list of 'Most Livable Cities'

Forbes put together a list of "America's Most Livable Cities," and guess which one comes in No. 8? Yes indeed -- Baltimore.

Forbes says it considered quality of life measures such as income growth, cost of living, crime, unemployment and a "culture index." (Baltimore's culture index ranked it seventh, but other measures, such as crime, pulled it down.)

Though the list says "cities," Forbes is actually looking at metro areas -- and only those with at least 500,000 people. Metro area No. 2 on the list: Bethesda.

Here's the full top ten:

1. Portland, Maine

2. Bethesda, Md.

3. Des Moines, Iowa

4. Stamford, Conn.

5. Tulsa, Okla.

6. Oklahoma City

7. Cambridge, Mass.

8. Baltimore

9. Worcester, Mass.

10. Pittsburgh

Tip of the hat to Robert Strupp of the Community Law Center in Baltimore for noticing this list.


Posted by Jamie Smith Hopkins at 9:17 AM | | Comments (2)
Categories: We're No. 1! (Or thereabouts)

April 7, 2009

Cardin: 'Now is the time to buy'

There's a lot of debate about whether to buy a home now or wait to see if prices fall farther. U.S. Sen. Benjamin L. Cardin has come out on the side of now, reminding renters Monday of the $8,000 tax credit for purchases made through November and "to advocate for buyers' counseling and to boost the slumping housing market," Mary Gail Hare reports in a story today:
"Now is the time to buy," Cardin said, while standing in the garage of the home whose buyers took advantage of the credit.

I'm interested in hearing from people who are planning to buy soon, and those who want a house but intend to wait. If you're about to buy, what made you decide to take the plunge? If you're not, what market signal (or life change) are you waiting for before you make your move?

Posted by Jamie Smith Hopkins at 9:41 AM | | Comments (3)
Categories: First-time buyer tax credit

April 6, 2009

Q&A: Jonathan Benya, real estate agent

Foreclosures are about 40 percent of Jonathan Benya's business -- either representing the banks or working with buyers. Benya, a Realtor with Century 21 New Millennium in La Plata, chatted with me recently about why he got into real estate after the boom and some of the wildest things he's seen inside bank-owned homes.

He usually works from Annapolis southward, though he's represented foreclosures farther north in the Baltimore area as well.

Q: How long have you been a real estate agent?

Licensed, I've been in the business for two years. (My mother has been in the business for 12 -- I worked with her as her assistant for a time.) …

It was a simple twist of fate, really. I used to do audio engineering work for a band, and I had an accident on the job where I broke my fingers in 23 places. I decided it was time to get out.

Q: Holy cow -- how did that happen?

Backstage, after a show. … I got in [real estate] right as the market was tanking, which might be less than opportune, but when you get lemons, you make lemonade.

Q: What's the lemonade?

Foreclosures. … Everybody wants a foreclosure right now. Even when they don't want a foreclosure, they think they want a foreclosure. If I had a dollar for everybody who said, 'I want a foreclosure for half-price that needs no work,' I'd be a rich man.

The problem with foreclosures is, it's always a double-edged sword. They always need some work.

Q: What sort of condition are the foreclosed homes usually in?

Generally, you see situations where they may need appliances -- when the owners move out, they may take the appliances with them. [The house] may need to be repainted. I've seen extreme cases where the houses have been completely flooded out. …

Banks, of course, don't want to spend that kind of money to repair the properties. They want to sell them as-is. But I've seen them as bad as entire exterior walls missing due to fire. … I've seen severe vandalism, where people have cut the carpets short three inches along the wall on every carpet in the house. People get vindictive. Understandably so. In a lot of cases, these people got put into loans they never should have been given. The loan officer fudged information.

Q: Are problems usually caused by the previous owner or more often the result of a house sitting empty?

It's a combination of both. Typically, there's almost always some concern related to the previous homeowner. Whether that be that the carpets have been stained to the point that they need to be replaced, or the walls have been damaged or marred when they were moving out -- because there's no incentive to keep these properties in habitable condition. So typically I almost always see something that is likely related to the previous owner, but those may not be major concerns. They may be so minor that they might not even affect FHA or VA loan approval. But this time of year, with the cold weather, when you have pipes burst, that becomes a major problem.

Q: So that was the cause of the flooding you've seen? Or previous owners turning on the taps?

I've seen both. I've seen situations where people have intentionally stuffed sinks and left foreclosures to flood. Amazingly enough, there are investors willing to purchase those properties. If the bank prices it right, they'll still move. It all comes down to price. You can sell almost any piece of real estate, provided it's priced to sell.

Q: What sorts of homes are they, these foreclosures?

We've got one in Columbia for $1.6 million. It's really hitting everywhere. When it first started exploding on the foreclosure market, it was traditionally your newer homes that were purchased with these exorbitant ARMs. As it got deeper, you saw older homes coming up. Now you're seeing luxury higher-end homes come up. It's not just junk loans. It's job loss ... [and] a lot of people treated these homes like their piggy bank. When it all came crashing down, they were left holding the bag.

Q: What's the most surprising thing you've ever seen when you walked into a foreclosed home?

The most surprising thing? Well, that's kind of a tossup.

I went with a Realtor friend of mine to one property to find squatters and a possible meth lab.

We found one house that had been sitting vacant for two or three weeks with a pit bull in the basement. Pit bull was still alive, just not very happy. They'd left a five-gallon bucket of water and a bag of dog food. The dog had enough to survive but the house didn't smell very good.

We had one situation where [a foreclosure] … had been condemned because the fire department had to pump it out. The water was seeping out the windows in the first floor, so you can imagine how high the water was in the house. Pretty much ruined everything. The water had started from a stopped-up sink in the master bath on the top level. And we'd managed to sell it rather quickly. We priced it competitively and had multiple competing offers from investors on it.

The walls had turned completely black from mold. There were mushrooms growing on the carpet in the basement. It was absolutely incredible.

Q: What do buyers need to know if they're thinking of getting a foreclosure from a lender?

You have to understand that a property is being sold strictly as-is. Even if the property's in good shape, if it's missing, for example, a washing machine or a stove or something like that, that may be enough to prevent FHA or VA financing. VA's a little stricter than the FHA, but even so, if you're missing major appliances, it will not be funded.

Q: Even if the buyers purchase the appliances themselves?

I've seen situations where that has happened -- where potential buyers have purchased items in advance and had them in the property for when the FHA appraiser comes in.

Q: Are most lenders working well with buyers to move foreclosures off their books, or not so much?

It really depends on the lender and how good their legal department is. I still see situations where the deeds are not properly transferred or recorded and you're stuck as the buyer waiting for that to happen. ... With some lenders, they don't seem to be able to get on the ball. Particularly if there was a bankruptcy. If the previous owner files bankruptcy, depending on when they file it, it can really snare up a foreclosure. You can find yourself waiting for a lender to get their act together. And there's some lenders, you can purchase a foreclosure and within two weeks be moving in.

Q: But overall, is it simpler for people who want to buy foreclosures than it was when you started two years ago?

I feel like it's getting simpler, because the banks by and large are moving their properties more efficiently. They are generally paying more attention to time on market and list price, and some of the lenders have become very aggressive about dropping the price on properties quickly to get them sold.

The one thing people should bear in mind is, if they see a property they like that's grossly overpriced, it's no skin off their Realtors' nose to write an offer. ... If the house is listed for $300, you write an offer for $150, the worst they can do is say no. If you're lucky, they'll write a counteroffer.

I don't want to say it's the norm that they would accept something like that -- quite often they're not going to consider a counter on something like that. But if the situation is right -- hopefully your agent would be able to identify those situations -- you may be able to get away with it.

These are toxic assets on their books, and they need to move them. The banks aren't willing to give away the properties, but they don't want them to sit for a year or two years.

Q: How many foreclosures are you working with?

Typically with the banks, I'm seeing requests for price analysis come in about four or five times a week. I may list 20 percent of those properties, so I may pick up one listing a week for a foreclosure. With sales, generally averaging about two to three new buyers each week, one of which may be able to qualify. So we probably do about two to three buyers each month.

Q: Many buyers are having qualification problems, then?

Absolutely. The high credit requirements have really pinched a lot of people. I've seen people who have sat on the fence too long and have watched the credit score requirements pass them by. People who could have purchased six months ago can't purchase now. ... Until the credit requirements lax up, which I don't see happening, that's just the way it is.

I have several clients who are actively working on credit repair. If you're sitting within 20 or 30 points, you can easily get moved up within six months if you pay down your debts and don't make any big purchases.

Posted by Jamie Smith Hopkins at 10:05 AM | | Comments (5)
Categories: Q&A, The foreclosure mess

April 4, 2009

Mortgage defaults

Two pieces of recent mortgage-default news I thought you might want to know about:

First, the travails of FHA, the go-to place for borrowers with small down payments. The Federal Housing Administration insures FHA mortgages, which means it's on the hook if those loans go bad. Now its market share has shot up to about 30 percent -- thanks in large part to the death of subprime and no-money-down options -- and it's being swamped with problem loans. Some borrowers are missing payments immediately.

As The Wall Street Journal reports, this has raised the specter of another taxpayer bailout -- or changes for future borrowers:

If defaults drain the FHA's insurance fund, the Obama administration will have to decide whether to ask Congress for taxpayer money or raise the premiums it charges to borrowers. That decision will be spelled out in President Barack Obama's 2010 budget, Housing and Urban Development Secretary Shaun Donovan told lawmakers.

The other news: a glimpse into what works when lenders modify mortgages to try to keep borrowers from ending up in foreclosure.

The Office of the Comptroller of the Currency and the Office of Thrift Supervision, which track two-thirds of U.S. mortgages in quarterly reports, said "re-default rates" on modified loans last year "were consistently lower for modifications that resulted in lower monthly payments."

When modifications decreased monthly payments by more than 10 percent, only about 23 percent of the loans became seriously delinquent six months later. By contrast, some 51 percent of the loans in which payments remained unchanged were seriously delinquent after six months. The comparable number for loan modifications in which payments increased was 46 percent.
In more than half of loan modifications last year, lenders kept payments the same or increased them, the agencies said. But more loan mods came with decreased payments by the end of 2008.
Posted by Jamie Smith Hopkins at 9:06 AM | | Comments (5)
Categories: Mortgages, The foreclosure mess

April 3, 2009

Mortgage rates: There's low, and then there's low

If you're thinking about refinancing, you're not alone. Lenders are seeing more applications for loans, and 80 percent of applicants want a refi, according to the Mortgage Bankers Association.

That's because mortgage rates are below 5 percent for 30-year fixed products. Freddie Mac, releasing its weekly survey Thursday, said it was 4.78 percent -- the lowest since it started tracking the figure in the spring of 1971.

You know, this is exactly the sort of situation that cries out for a graph.

Here you go:




The higher line is the annual average; the lower one is points. There's no 1971 (only a partial year of data from Freddie Mac) and no annual average to be had for '09 yet, obviously. But you can imagine the line dropping from '08.

I included points because they've ranged a lot over the years -- from more than 2 percent to less than half a percent.

I updated the graph above on 4/6 to show the rate and points separately -- which I should have done from the beginning. Desk, meet head.

Posted by Jamie Smith Hopkins at 8:11 AM | | Comments (4)
Categories: Mortgage rates

April 2, 2009

Guess that number, Part II

Continuing the "Guess That Number" game: Comment below with your prediction of the average home sale price in the Baltimore metro area in March. (It was $282,034 in February and $297,681 in March 2008.)
Posted by Jamie Smith Hopkins at 8:18 AM | | Comments (1)

Baltimore real estate: Guess that number

Baltimore-area home sale figures for March are expected out next week. A Wonk reader suggested a game to while away the time: Guess what some of the important numbers will be.

It's a good time for it, since spring begins in March -- many buyers get serious in spring.

So in the comments below, make a prediction: How many new (pending) contracts were signed last month in the Baltimore metro area? In February, it was 1,800. In March 2008, about 2,300. (Want more data? Go to Metropolitan Regional Information Systems.)

Posted by Jamie Smith Hopkins at 8:16 AM | | Comments (1)

April 1, 2009

Real estate by the numbers

A few of the notable housing-related numbers I've seen in the past few days:

4.61 percent: the average interest rate (not including points) for 30-year fixed mortgages, the Mortgage Bankers Association said today. That's the lowest since the trade group started its survey in 1990. 

31 percent: the decrease in vacation homes sold last year, according to the National Association of Realtors. Sales of investment homes dropped 17 percent and primary-home sales fell 13 percent. The survey includes new as well as previously occupied properties.

40 percent: the portion of all home sales that were for vacation or investment purposes in 2005, the "peak year for home speculation," as the NAR puts it.

30 percent: the portion of all home sales that were for vacation or investment purposes in 2008

$808,500: the winning bid (including buyer's premium) for a 4,400-square-foot Federal Hill home, auctioned off Tuesday to benefit an animal charity.

Seen other interesting numbers?

Posted by Jamie Smith Hopkins at 8:44 AM | | Comments (3)
Categories: Housing stats
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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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