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June 30, 2009

Baltimore's new-construction tax credit

The clock starts today on that second chance for people who qualified for Baltimore's new-construction tax credit but didn't apply in time (it's a short window after buying). Here are the details on the amnesty approved by the City Council:

If you went to settlement on a new home after Oct. 1, 2004, you can apply for the city’s new-construction tax credit through Aug. 28, when the amnesty period ends. Homeowners in properties that were substantially rehabbed after being vacant may also be eligible.

You can find more details from the city Department of Finance, including the application form, in this PDF document. (You can also read my original post on the topic here.)

Why should you care, you ask? Because the credit reduces a homeowner’s property tax bill by half and then phases in the full amount over a five-year period. Yeah. That's why.

The City Council also changed the process going forward so new-home buyers have two windows to apply: within 90 days of settling and within 90 days of getting the first tax assessment notice.

Posted by Jamie Smith Hopkins at 1:13 PM | | Comments (0)
Categories: Property taxes

Deciding when to refinance

Let's say for argument's sake that you know you could refinance if you want to (no sure thing for a lot of homeowners today) but you're not certain if you should.

Enter "A Financial Analysis of Consumer Mortgage Decisions," a new report by the Research Institute for Housing America and the Mortgage Bankers Association. It discusses various mortgage choices and when it makes sense to get what, including a refinancing.

The authors' advice: Don't just consider interest rates. Look sharp at the closing costs.

Play around with this "Optimum Mortgage Refinancing Calculator," noted in the report, and you'll see how cosing costs can make a difference.

Say you've got a 6 percent interest rate on a mortgage with a balance of $250,000. You're contemplating a refi into a loan that has a 5.5 percent interest rate and 1 discount point.

If your closing costs add up to $2,200 and you roll that into your new mortgage along with the point, you'll save $137 a month over your old loan.

But what if you have $5,000 in closing costs, at the higher end of what LendingTree says the range can be?

Then your monthly savings are $121. That's $192 less a year than the savings with the cheaper closing costs.

Ah, you say, but a savings is a savings. Who cares about the closing costs if you can roll them into the mortgage amount and still pay $121 less a month?

Because, the authors say, you want to think about the "opportunity cost" of refinancing now only to see rates fall further. If you refinance now, it might not be in your best interest to refinance later as well.

"If closing costs are significant, say 3 percent of the remaining principal, and you refinance every time there is a 50 basis point drop in rates, you may never fully recover the cumulative closing expense incurred," they write. (And meanwhile your principal keeps growing. That's why the "serial refinancing" encouraged by some -- ah -- "helpful" folks in the mortgage industry isn't a good idea for a typical borrower.)

The mortgage calculator I linked to above attempts to take all this into account and tell you whether -- given your potential interest rate and costs -- it's a great, OK or bad idea to refinance. Its opinion on the refi opportunity with $5,000 in closing costs: Pass. It dubs the one with $2,200 in closing costs "OK, But Not Optimal." (What would be optimal in this case? Closing costs under $1,250. Or $2,200 in closing costs with a 5.4 percent interest rate rather than 5.5 percent.)

The authors dub this "refinancing efficiency."

What do you think of this way of looking at refinancing options?

And something to consider in today's environment: Does it make sense to hold off refinancing on the chance that rates could go lower when the prevailing expectation is for increases?

Posted by Jamie Smith Hopkins at 8:39 AM | | Comments (2)
Categories: Mortgage rates, Mortgages

June 29, 2009

Home appraisal "code of conduct" under fire

Inflated home appraisals were one ingredient in the toxic stew that overflowed onto our economic stove, if you'll permit me a Dave Barry-like analogy. Enter the Home Valuation Code of Conduct, New York Attorney General Andrew M. Cuomo's plan to change the process using the heft of Fannie Mae and Freddie Mac.

The code, which went into effect last month, prohibits "lenders and third parties from influencing or attempting to influence the development, result, or review of an appraisal report," at least if they want to sell to mortgage giants Fannie and Freddie. The idea is that appraisals will more likely reflect true value if lenders, brokers, agents, etc., aren't suggesting to Joe Appraiser that $504,999 is an excellent number for anyone who intends to do any business with them again.

But many industry folks -- including appraisers -- aren't happy about the rules. As The Wall Street Journal reports:

The code bars loan officers, mortgage brokers or real-estate agents from any role in selecting appraisers. This has encouraged lenders to outsource the selection to appraisal-management companies, or AMCs, which take a sizable cut of the appraisal fee. As a result, appraisers are under pressure to "do it faster, do it cheaper," said Bill Garber, a spokesman for the Appraisal Institute, a trade group.


The National Association of Realtors' Lawrence Yun says "stories of appraisal problems have been snowballing from across the country with many contracts falling through at the last moment." The National Association of Mortgage Brokers proclaims, "Tens of thousands of consumers have already been robbed of their opportunity to enjoy historically low rates by Attorney General Andrew Cuomo’s rule." The appraisal management companies, critics say, don't seem to care if the appraisers they pick know anything about the neighborhoods in question.

News that U.S. Reps. Travis Childers (D-Miss.) and Gary Miller (R-Calif.) are co-sponsoring a bill to put the Home Valuation Code of Conduct on an 18-month moratorium was met with some loud cheers Friday. (You can follow some of the chatter here, at Mortgage News Daily.)

But though it doesn't think the code is "ideal," the Appraisal Institute is not amused by all the talk of faulty appraisals. It issued a press release after the NAR blamed appraisers for lower-than-expected May sales numbers:

Bill Garber, Appraisal Institute Director of Government and External Relations, said: "We take offense with the notion that the appraisal is only good if it happens to come in at the sales price. That mentality helped cause the mortgage meltdown to begin with. The fact that the appraisal does not match the sales price is not the fault of the appraisal but a fault of the market today.”

Have you had personal experience with the appraisal process since May 1 as a buyer, homeowner or industry pro? Let me know what you think of it, and of the bill to put the code on ice.

Posted by Jamie Smith Hopkins at 6:55 AM | | Comments (28)
Categories: Appraisals

June 28, 2009

New real estate poll: Ask the experts

I'm thinking of lining up various experts willing to answer your housing-related questions. But it's only worth doing if there's enough interest from you, the potential question-askers.

So weigh in below. Which of the following Q&As would you want to participate in? (You can pick as many as you want.)

Have a particular expert you'd like to see answering the Q's? Comment below. (Thanks to Kevin R for offering the first suggestion.)

And now, because two Wonk commenters think weekly polls are a bit much: another poll! (Stay with me here.) I've been putting up a poll every weekend, but there's no reason to continue if it leaves most of you cold:

Posted by Jamie Smith Hopkins at 5:00 PM | | Comments (4)
Categories: Polls

Real estate poll results: Government intervention

I asked you a week ago what you all thought about federal government efforts to support the housing market via spending. Good idea? Bad? Good idea badly executed?

Seventy percent of the folks who took the poll say "bad idea." (One of you suggested Uncle Sam would be better off giving good borrowers low-cost refi's.)

Nineteen percent say "good idea badly executed," including the reader who wrote in "good idea in theory but bad in actuality," which seems like basically the same point to me.

That leaves 11 percent who say "good idea" without the "but."

I asked people to identify whether they're renters or homeowners. Would renters disagree with taxpayer spending on the housing market (most would-be buyers prefer lower prices) while homeowners, concerned about their property values, offer three cheers?

Nope: A majority of homeowners and renters who took the poll think it's a bad idea. But more homeowners than renters do think it's a good idea, or a good idea badly executed. Sixty-three percent of homeowners say "bad idea," compared with 80 percent of renters.

Does this match the thinking of Marylanders in general, let alone Americans? No idea. This poll might have been open to anyone, but I can't imagine the demographics of poll-takers magically worked out to be a random sample.

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (0)
Categories: Polls

June 27, 2009

Baltimore on Top 10 lists

And now for something completely different: top 10 lists that Baltimore graces.

As the Economic Alliance of Greater Baltimore points out, the city (or metro area) has appeared on at least three "best of" lists recently.

Next Generation Consulting names Baltimore seventh on its list of large cities it believes are "the best places to live and work for young professionals." The factors it looked at -- based, it said, on 11 years of studying "residential and relocation patterns" of 20- to 40-year-olds -- are "Earning, Learning, Vitality, Around Town, After Hours, Cost of Lifestyle, and Social Capital."

Forbes includes Baltimore on its list of "Best Cities to Get Ahead" -- though by dint of being part of Greater Washington. The mega metro area, it says, has "one of the lowest unemployment rates in the country and a high median household income."

And The Nielsen Co. thinks Baltimore is one of 10 cities with the "greenest automotive potential." It says Baltimore households are 22 percent more likely than average to buy a green car, based on its analysis of ownership rates of high-mileage vehicles. That ties Baltimore with Los Angeles for ninth on the list.

There are a lot of best-of lists out there. (Forbes seems to have a new one every day.) Do you think they can influence people's buying or moving patterns? Or do they at least reflect those patterns accurately?

Posted by Jamie Smith Hopkins at 8:38 AM | | Comments (0)
Categories: We're No. 1! (Or thereabouts)

June 26, 2009

Report: Expect significant drop in Baltimore home prices

Deutsche Bank economists think the country as a whole has already ridden out the majority of the home-price decline it's going to see. But most of Baltimore's price drop, they believe, is yet to come.

A June forecasting report by the company lists us as one of the metro areas with the "largest expected future depreciation." It projects that Baltimore prices will drop almost 29 percent from the beginning of this year to the "trough," whenever that might end up being. That puts us No. 6 on the biggest-expected-drop list, after New York, Fort Lauderdale, West Palm Beach, Salt Lake City and Miami.

Add in the drops the Baltimore area has already seen, and the economists expect a total price decline of about 37 percent.

Why? "Affordability is the main factor that puts Baltimore on this list," the economists write. They say Baltimore is one of the relatively few metro areas in which prices are still too high for typical family income.

By contrast, the economists project a 14 percent drop for the United States from the beginning of the year onward, for a grand total (peak to bottom) of about 42 percent.

The report considers affordability first and also looks at the amount of distressed property for sale, at unemployment, at the change in unemployment and at "home price momentum" -- that is, which direction (and how quickly) prices are moving. "Home price trends are highly self-perpetuating — downward movement begets more downward movement, and vice versa when prices are increasing," the economists write.

So, even though many metro areas are as affordable now as they ever have been (thanks in part to low interest rates), Deutsche Bank doesn't think the housing market has hit bottom yet:

Unfortunately, affordability is no longer the driving issue in the housing market, and we believe prices still have a ways to fall in many areas before home prices reach their trough. The bottom is getting closer, but we are not there yet. ... Foreclosures are still running at a very high pace. The U.S. unemployment rate is now 9.4%, and Deutsche Bank economists see that rate exceeding 10% by early 2010. While home sales activity has picked up in some regions, much of it reflects clearing of distressed inventory and is accompanied by falling prices.

Have you seen other recent home-price forecasts? Let me know so I can share them with everyone.

The Deutsche Bank economists also address an issue that several of you have been chatting about here in recent days: What impact do mortgage rates have on price?

Clearly, higher mortgage rates will reduce affordability; for markets that are only barely affordable now, the rate increase could put downward pressure on prices.
Posted by Jamie Smith Hopkins at 9:59 AM | | Comments (53)
Categories: Housing forecasts

June 25, 2009

Avoiding carbon monoxide poisoning

Liz Kay's story today about five Essex residents hospitalized with symptoms of carbon monoxide poisoning is a sober reminder to us all that it's not a bad idea to know the warning signals. The U.S. Consumer Product Safety Commission says an average of 170 people die in the United States each year from carbon monoxide produced by things other than cars and trucks -- furnaces, fireplaces, water heaters and the like.

Three residents of the Cove Village townhouse complex in Essex died in 2005. That's the same neighborhood where the recently hospitalized people live.

So what should you watch out for? Here's what the Environmental Protection Agency says:

At moderate levels, you or your family can get severe headaches, become dizzy, mentally confused, nauseated, or faint. You can even die if these levels persist for a long time. Low levels can cause shortness of breath, mild nausea, and mild headaches, and may have longer term effects on your health. Since many of these symptoms are similar to those of the flu, food poisoning, or other illnesses, you may not think that CO poisoning could be the cause.

Carbon monoxide is odorless, so don't wait around for a funny smell.

If you suspect carbon monoxide poisoning, go outside right away -- fresh air helps -- and get to an emergency room.

The EPA says the quality of carbon monoxide detectors varies quite a bit, so you'll want to do some research if you're planning to buy one. Even if you're satisfied with the one you get, the EPA says, "don’t let buying a CO detector lull you into a false sense of security."

The agency offers a checklist of ways to avoid problems in the first place, such as having your fuel-burning appliances checked at the start of each heating season and never idling your car in the garage.

Posted by Jamie Smith Hopkins at 9:43 AM | | Comments (4)
Categories: Health and housing

June 24, 2009

New chance to get Baltimore new-construction tax credit

Long before there was an $8,000 income tax credit for new buyers, there was Baltimore's property tax credit for newly constructed homes. It makes a real bottom-line difference for buyers, who get their property tax bills phased in. First year, half off. The amount due rises to 60 percent the second year, 70 percent the third, and so forth, which means it's not until year six that someone with the credit is paying the full amount.

Unless the new buyer didn't apply for the credit within 90 days of purchase.

You can imagine how some residents felt when they found out -- too late -- that they had been eligible for a substantial discount on property taxes in the jurisdiction with the state's highest rate.

Now you folks have a second chance.

The City Council has just passed a bill, signed into law Tuesday by Mayor Sheila Dixon, that offers a "one-time amnesty period." It's for people who would have been eligible in 2005 or later had they met the original application deadline. (There's a gray area there, thanks to the law's use of the word "eligible": Certainly you would have been eligible if you bought Jan. 1, 2005. But you also would have been eligible if you bought in the 90 days before that date.)

The amnesty lasts 60 days, and it's up to the city finance director to set the procedures. I called Baltimore's Department of Finance and was told that the clock starts June 30, and the staff there hopes to update this document about the program (with details, instructions and application form) by then. (You might also check the Finance Department's homepage in case the link ends up changing.)

If you apply, keep in mind that you'll get your normal tax bill in July. If you're approved for the credit, you'll get a new, revised notice in the mail.

Thanks to Wonk reader Matt Gonter for noticing this law change was in the works.

Other notable things about the revamp:

--It gives buyers two windows to apply, either within 90 days of settling on the home or within 90 days after receiving the first assessment notice. 

--It extends the life of the credit program. The program was set to expire at the end of the month, meaning no new applicants. City leaders pushed that back to June 30, 2014.

Like the homestead credit, this tax break is only for owner-occupants. Though the credit refers to "newly constructed dwellings," you might also be able to get the credit if you bought a "substantially rehabbed" home that was previously cited by the city as vacant and abandoned.
Posted by Jamie Smith Hopkins at 11:22 AM | | Comments (5)
Categories: Property taxes

June 23, 2009

Opinions about title insurance? Your time has come

The Maryland Insurance Administration is holding a hearing Thursday on title insurance -- part of the home buying process that you might barely notice unless something goes wrong. For instance, if your escrow money disappears.

A commission that intends to recommend changes to state law invites people to share "issues or concerns relating to title insurance, title agents, the manner in which real estate settlement practices are conducted, the handling of real estate escrow accounts, and any difficulties that a person may have experienced with the title insurance industry."

The hearing is scheduled for 5 p.m. at the Miller Senate Office Building, 11 Bladen St. in Annapolis -- look for it in the Senate Finance Committee Room, 3 East. The insurance administration says you can find free parking at the Calvert Street Garage, 19 Saint Johns St.

Posted by Jamie Smith Hopkins at 7:35 PM | | Comments (3)
Categories: Housing events

Tracking HUD stimulus dollars near you

Want to know where stimulus funds are going and for what? Of the various tracking tools out there, at least one is housing-related. The U.S. Department of Housing and Urban Development said today that it's added its information to a map tool created by the USDA.

You can mouse over states to see how much they're getting overall, or you can click on Maryland to look at the counties and Baltimore -- and then click again to see it down to a project level. In Baltimore, the total is $38.1 million spread between 16 projects or programs. (That's not tops in the state. Washington County in Western Maryland got almost $76 million, according to the site.)

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (0)

June 22, 2009

Mortgage bankers: Expect higher rates

The Mortgage Bankers Association is forecasting that interest rates borrowers pay for home loans will rise this year and next.

In a press release today, the trade group points to several factors, including the fast-growing federal debt and the expectation that the Federal Reserve will eventually have to "withdraw the substantial liquidity it has injected into the financial markets to keep a lid on expected inflation." That substantial liquidity has helped keep rates low-low-low, so when it's gone, rates will probably go up, the mortgage bankers say.

The group notes, though, that some believe "continued anemic growth and high unemployment will combine to hold down inflation and the demand for debt" -- keeping interest rates more or less where they are. So if you're trying to decide when to get a mortgage, you might want to invest in a crystal ball.

The mortgage bankers group also said it expects people will get fewer mortgages this year than it anticipated in the spring. Its new forecast is for $2.03 trillion in new home loans, down more than $700 billion from what it forecast in March. Why? Buyers getting smaller mortgages because homes are cheaper, investors snapping up properties with cash, fewer people refinancing and "very low volumes in the Fannie Mae and Freddie Mac Home Affordable Refinance Program."

Posted by Jamie Smith Hopkins at 10:39 PM | | Comments (11)
Categories: Mortgage rates

Looking for a rent-free home on a lot of land?

For rent: Historic home surrounded by acres of land. First month's rent free. Also all subsequent months.

That's the deal for people in "an unusual program run by the Maryland Department of Natural Resources in partnership with the Maryland Historical Trust," as Andrea Siegel reports today. But they do need to shell out money in order to live rent-free in the homes DNR got as it acquired parkland:

In exchange for restoring the houses to rigorous national historic standards at an out-of-pocket expense that almost always reaches well beyond $100,000, the curators receive lifetime tenancy. ...

Supporters say the program is a cost-effective way to preserve historic houses - three are on the National Register of Historic Places and the others are eligible for that consideration - without taxpayer dollars. The state would never have enough money, they say, to restore the neglected and dilapidated buildings.

So not exactly free -- and not for anyone who shudders at the thought of a fixer-upper.

Have you come across other "free rent in exchange for work" situations?

Posted by Jamie Smith Hopkins at 9:01 AM | | Comments (3)

June 21, 2009

Housing downturns of the past (ouch)

You can't always predict the future by studying the past, but it's not a bad idea to know what's come before. With that in mind, the Federal Housing Finance Agency has put together a report about previous boom-and-bust cycles in the states and metro areas that have been down this road.

The conclusion: It takes a while to get back to where prices were before they started falling, at least if you're accounting for inflation.

FHFA’s Metropolitan Statistical Area and Division (MSA) indexes suggest that the time from peak to trough tends to be about 3¾ years, whereas the median recovery period (from trough to prior peak) was 6⅔ years.

The agency offers words of caution about trying to apply this to the current situation, noting that differences between the price escalation this decade and previous ones could make for limited "applicability." Take a look at the warning, because it seems to me to imply that this downturn could well be worse:

The economic drivers of price increases during the boom period in the early 2000s differed from the drivers of prior market booms, and the magnitude of recent price increases has generally been larger. Also, ... most of the larger historical downturns were caused by sharp increases in unemployment rates and shocks to personal income.  Although the U.S. economy has experienced such conditions in the last year, those factors were not among the precipitants of the latest downturn, which began in 2006, well before the financial crisis erupted in the third quarter of 2007 and the recession began in the fourth quarter of 2007.

So what were some of the previous boom-busts? Texas offers one example. It benefited richly from the 1970s oil crises. But when oil prices fell, so did Texas employment -- and Texas home prices. And this was no 10-year recovery, either:

Prices peaked in the first quarter of 1982 and then declined steadily.  Prices bottomed out in the first quarter of 1997 after losing 33 percent of their value.  Texas’ real estate prices have yet to fully recover and now are roughly 15 percent below their prior peak.

You read that right: Twenty-seven years after its housing downturn started, Texas prices are lower -- in today's dollars -- than they were in 1982. I'm guessing that helps explain why the state isn't (as of yet) seeing a dramatic decrease in prices in this national downturn.


A postscript about inflation:

The report -- "A Brief Examination of Previous House Price Declines" -- tries to account for the rising cost of living by adjusting prices for inflation. This acknowledges that a house worth $300,000 today is less valuable than a house worth $300,000 five years ago, since you can't buy as much food, gas, etc. with the $300k nowadays if you convert it into cash. It's good to know how prices have changed in today's dollars if you want to compare housing to other types of investments.

On the other hand, plenty of homeowners just want to know if they can sell their home for at least as much as they bought it for. And if they do sell, they generally plan to convert any extra cash into a down payment for another home.

That's partly why I'm conflicted about adjusting historical home prices to reflect today's dollars. Two other reasons: The Consumer Price Index includes the cost of housing, and not all economists think the CPI accurately measures the rising cost of things.

But this new report uses the CPI-minus-shelter, so it's not (cue sigh of relief) adjusting home prices with a measure that includes home prices.

Posted by Jamie Smith Hopkins at 1:18 PM | | Comments (0)
Categories: Housing history, Housing stats

June 20, 2009

New real estate poll: Your tax dollars at work

The new-buyer tax credit. Higher-than-normal loan limits for FHA, Fannie Mae and Freddie Mac mortgages. Billions for foreclosure prevention and neighborhood stabilization.

The government's doing a lot to try to improve the housing market, both directly (by encouraging buying) and indirectly (by encouraging lenders to work with troubled borrowers rather than foreclose).

Good idea? Bad? Good idea badly executed?

Whether you're a homeowner or renter, you probably have an opinion. So have your say:

Answers appear in random order.

Got an opinion that requires more than a one-sentence answer? Comment away.

Posted by Jamie Smith Hopkins at 7:24 AM | | Comments (7)
Categories: Polls

Real estate poll results: Now hear this

I asked you last weekend what sorts of topics you like to read about here, because if I'm not blogging about things you all are interested in, what's the point, right?

The poll allowed multiple answers. Here's how you ranked the options:

1. Home sales, prices and similar stats -- 19 percent of the vote

2. Local housing news (besides sales and prices) -- 16 percent

3. Property taxes -- 11 percent

4. Mortgages, rates, credit -- 10 percent

5. Home improvement and maintenance -- 9 percent

6. National housing news with some impact on the area -- 8 percent

7. Finding a home/apartment -- 8 percent

8. Q&As -- 7 percent

9. Renting issues -- 6 percent

10. Foreclosure and/or foreclosure prevention -- 5 percent

And one reader wrote in an answer: "Stuff for first time buyers who are still waiting for bottom."

Thanks for the insight into your preferences, folks. I'll keep it all in mind.

Does this ranking match up with your interests?

Posted by Jamie Smith Hopkins at 7:06 AM | | Comments (3)
Categories: Polls

June 19, 2009

Inner Harbor Ritz condos: 21 sold, 171 to go

People frequently wonder how well (or poorly) a development near them is selling. Today Lorraine Mirabella has an update on the pricey Ritz-Carlton Residences at the Inner Harbor: 21 of the 192 condos have sold so far, according to tax records. A year ago, the developers said they had 113 contracts -- which suggests a lot of cancellations, a lot of delayed settlements or both.

Mirabella notes this in a story about lead contractor Bovis Lend Lease petitioning for a lien because it says the developer has missed $1.37 million in payments. Subcontractors aren't happy either, as you might imagine. (Developer Midtown Baltimore, in a statement about the Bovis petition, said it is "working closely with them to complete the close-out process and to amicably settle any outstanding matters in a timely manner.")

It's not an easy time to sell expensive homes, and these are definitely upscale for our area, complete with valet attendants and doormen. When the first residents moved into the Ritz condos last summer, the units were priced from the upper $800,000s to $5 million, Mirabella reports.

I took a look at homes in the Baltimore metro area listed for $800,000 or more through Metropolitan Regional Information Systems last month. There were 1,384. Home sales in that price range? Thirty-three. If that pace continues, it would take three-and-a-half years to move all currently for-sale $800,000-plus homes into buyers' hands.

Is this a reflection of difficulties in the jumbo mortgage industry? Of concerns about the economy (including stock portfolios)? Of too few people who can sell their not-quite-so-expensive homes and move up? Or is it just about too few people who have the money to buy upscale, period?

The answer is important for a development like the Ritz. Because the million -- or rather $1.37 million -- question for the developer is this: Will the condos do well when the economy improves, or are they ill-suited for the Baltimore market?

I'm not claiming to know. What do you think?

Posted by Jamie Smith Hopkins at 10:29 AM | | Comments (20)
Categories: Housing stats, New developments

June 18, 2009

Home sales by city neighborhood

Live Baltimore Home Center has updated its neighborhood home sales stats -- now you can see city neighborhood sale numbers and both average and median prices through 2008.

Because the stats go back to 1998, you can track pre- and post-bubble activity in the neighborhoods you're most interested in.

Live Baltimore is using property transfer data. That means these figures include sales that weren't on the multiple list and don't get picked up by Metropolitan Regional Information Systems.

See any notable trends? Do share.

Posted by Jamie Smith Hopkins at 3:05 PM | | Comments (2)
Categories: Housing stats

June 17, 2009

Supersized homes (and the impact on price)

American homes, you've probably heard, are a lot bigger than they used to be. But how much bigger? And how much does supersizing explain price increases?

Here's the changing size of the typical new home between 1978 and 2008, according to the Census Bureau:


That's a 41 percent increase. Significant change in 30 years.

But it can't explain away even most of the increase in price, because the average new U.S. home cost 368 percent more last year than it did in '78. Home size grew 7 percent during the speedy run-up in prices of 2000 to '05.

But wait, size isn't everything. Wonk reader jake recently asked for a more complex chart showing the change in home prices adjusted not only for square feet but also inflation and interest rates.

I number-crunched for a while, but I'm deeply conflicted about adjusting housing to account for the rising cost of living. That's because the Consumer Price Index, generally used as a stand-in for inflation, includes housing costs. (There's also debate about whether the CPI is an accurate measurement of living costs, but that's another story.)

I ended up setting aside inflation. Instead I produced a chart that shows the financing cost, per square foot, of an average new home in each of those years. In other words: What's the monthly tab for an average-priced, average-sized new home with a 30-year fixed mortgage at the going rate?


That's a 140 percent increase since 1978, from 30 cents a month per square foot to 72 cents. So, account for the growing size of homes and the falling cost of financing -- mortgage rates were 6 percent last year compared with 9.6 percent in '78 -- and the jump in price does look somewhat less dramatic.

If rates take an upward turn, though, that can change the story. What I found really interesting on this second chart was the steep increase in monthly cost from 1978 to 1981. The primary reason wasn't rising home prices. It was mortgage rates shooting up from 9.6 percent to 16.6 percent.

The increase earlier this decade is often blamed on mortgage rates, too -- but for the opposite reason. Rates, 8 percent in 2000, dropped below 6 percent on average in 2003, 2004 and 2005. That touched off the "our loan terms are INNNNNSANE" craze that got us where we are today, economically speaking.

What do you think of adjusting historical home prices to account for various economic factors? Are there other ways you like to look at the change over time?
Posted by Jamie Smith Hopkins at 11:00 AM | | Comments (4)
Categories: Number-crunching

June 16, 2009

Any other name would smell as sweet?

The Daily Show with Jon Stewart recently noted one of the odder twists of the financial bailout. Insurer AIG, bailed out to the tune of $180 billion, has ... Wait, I'll let Stewart tell it:
Stewart: "AIG is making some radical changes."

Clip of Edward Liddy, the company's CEO: "I think the AIG name is so thoroughly wounded, ... we've already begun the rebranding process to AIU."

Stewart: "$180 billion dollars and all you come up with is, 'Why don't we change a letter.' Talk about buying a vowel!"

After a bit of commentary that's too blue to quote here, Stewart said: "Also changing its name post-bailout: Citigroup, which will now become Citigrouu. While Fannie Mae and Freddie Mac become, respectively, Mindy Sue and Jeffrey Monk. Plus Bank of America will now be called the Good Time Teddy Bear Hugateria."

You've got to laugh or you'll cry, right?

For non-comedy reporting on AIG's rebranding, see this Reuters story about efforts "to distance the giant insurer's sprawling operations across 130 countries away from the AIG name" and this Bloomberg article about the company taking its logo off ID badges and company credit cards.

Posted by Jamie Smith Hopkins at 12:52 PM | | Comments (1)
Categories: Housing humor

June 15, 2009

Tips for dealing with a mostly abandoned home

It used to be a problem that plagued few neighborhoods outside older urban communities, but now abandoned and all-but-abandoned homes can be found everywhere. If you live near one, you know that an unmowed lawn can be the least of the troubles. So what do you do? suggests five rules: Research local laws to see what constitutes a violation. Call your local government if any violations exist. Contact the homeowner directly to see if he, she or it (if a bank) will take care of the problems or at least give neighbors permission to do so. Don't do anything to the property if you don't have permission (that's trespassing). And ask the real estate agent for help if the home is listed.

Rule No. 4 -- no trespassing -- might seem silly to a neighbor who can't see why anyone would mind if he cuts the lawn for free. And certainly people have been doing just that. But points out that "if you mow the lawn and mistakenly cut a cable, you could be liable." Something to think about, in any case.

Some folks are following the universal rule about squeaky wheels and grease.

At LenderOffender, neighbors post complaints and photos about bank-owned properties in the hopes of shaming lenders into doing something. (I could find only one from Maryland, involving a house in the Eastern Shore community of Greensboro. A neighbor, noting that the former owners keep coming back to dump garbage, says: "The worst thing about this is when I look out of any window in the back of my house all I see is this trashed house that was a very nice house at one point and I can't do anything about it.")

There's SeeClickFix, a forum for people to note neighborhoods problems of all sorts, from trash dumping (attention Greensboro resident) to potholes.

And, of course, there's Baltimore Slumlord Watch, a local blog about vacant properties and their owners. It names names and encourages calls to the City Council.

Do you have one or more problematic vacant homes near you? Have you found some solutions?

Posted by Jamie Smith Hopkins at 8:33 AM | | Comments (7)
Categories: Neighborhood improvement

June 13, 2009

Real estate poll: Your post here

I'm sure you have opinions about what constitutes an interesting and/or useful blog post about real estate. Perhaps you've been keeping those opinions to yourself. Hold back no longer -- now you can leave me some multiple-choice feedback, and you don't even need a No. 2 pencil.

Remember, it's multiple choice. Pick everything that interests you and feel free to write in answers.

Oh, and I'm always happy to get emails suggesting blog topics. Thank you to everyone who's contributed to the idea jar.

Posted by Jamie Smith Hopkins at 10:19 PM | | Comments (2)
Categories: Polls

Real estate poll results: Low offers

Homeowners might feel insulted by an offer that's a lot lower than their asking price, but many will come back with a counteroffer rather than a straight "no." Or at least that's what folks said in the latest Wonk poll.

About 40 percent of the (self-identified) homeowners say they'd make a counteroffer, most "a bit lower" than their asking price and some midway between offer and asking.

Nearly as many -- 36 percent -- say they'd counter-offer "unless it's really low, in which case 'no thanks.'"

And 8 percent say they'd just take the offer, thanks very much. Hey, a willing buyer is a willing buyer.

The remaining 15 percent are either confident that their asking price is reasonable or they're unable to go any lower, because their policy on low offers is to just say no.

If you'll recall, the previous poll asked buyers if they expect a reduction in asking price as part of the negotiation. As of right now, just over half say yes (and a quarter of the total expect a big reduction). Another quarter say it depends on what the asking price is.

Sounds like most buyers and sellers alike -- at least the ones taking wonky polls -- anticipate real negotiation will be going on. Do you find that to be true in practice, folks?

Posted by Jamie Smith Hopkins at 9:46 AM | | Comments (2)
Categories: Polls

June 11, 2009

May home sales in the Baltimore area

So the good news -- for those of you muttering "come on, market stabilization, come on already" -- is that home sales in the Baltimore metro area didn't fall nearly as much in May as the drops we've become accustomed to seeing.

Sales were down 8.5 percent from a year earlier, one of the smallest decreases since sales started slumping in the fall of 2005, according to real estate listing service Metropolitan Regional Information Systems.

A sign that a bottom in buying is near? Or just a temporary bump from government efforts to inject life into the housing market, including the $8,000 new-buyer tax credit? I'll let you good folks argue it out (though I probably won't be able to put up any of your comments until tonight).

In the meantime, here are some of the things that struck me about local home sales in May:

--The average sales price in the metro area, $280,000, has dropped to what the average buyer paid four years earlier. (For those of you saying, "Yeah, great, but what was it in May 2000": about $157,000.)

--The drop in average price from a year earlier -- 11.4 percent -- is the second-largest on record. The largest? April's 13.5 percent. (Keep in mind that the record, where MRIS figures are concerned, only goes back to the late 1990s.)

--Though the sales slump moderated, the number of deals that closed last month was still unusually low. Buyers picked up 1,930 homes, down from 2,100 and the smallest number on record. From 1999 to 2007, May was consistently a 3,000-plus month for sales.

--Home sales didn't drop everywhere. They rose a tiny bit (three extra homes!) in Anne Arundel County and stayed stable in Carroll County vs. a year earlier. But home sales fell about 4.5 percent in Baltimore County, about 14 percent in both Harford and Howard counties and more than 17 percent in Baltimore City.

Lorraine Mirabella has more in this housing-market story. (One economist calls a near-bottom to the sales slump but expects that prices will continue to slide into next year.)

Posted by Jamie Smith Hopkins at 6:52 AM | | Comments (13)
Categories: Housing stats

June 10, 2009

Home sellers reducing prices

Real estate search engine Trulia recently analyzed homes for sale to see how many are priced lower now than they were within the last year. Baltimore was one of a dozen cities with asking-price drops on at least 30 percent of listings. (Precisely 30 percent in Baltimore's case. The average reduction here? Ten percent, close to the national average.)

Trulia just sent me stats on the rest of the metro area. Here they are:

Sellers have dropped their asking prices on 34 percent of listings in Anne Arundel and Carroll counties, 32 percent of listings in Baltimore County, 31 percent of listings in Harford County and 30 percent of listings in Howard County.

The average price reduction was 8 percent in all the counties except Anne Arundel, which saw a 10 percent drop. That's not chump change for the sellers: The average decrease in Baltimore County was $33,000, and it was more than $40,000 in pricey Anne Arundel and Howard counties. (Time will tell whether it's enough to interest buyers.)

Some of the price drops are pretty darn large. Trulia offered as one example this home in Towson. The asking price was more than $1.6 million in the middle of April, according to the website, and several drops later is $998,500.

Trulia's analysis does not include foreclosure listings, but there's clearly an impact from those homes. In a press release, the company says:

The national average for price reductions on current home listings is 10.6 percent, but sellers in the areas hardest hit by foreclosures are slashing prices the most. Detroit home owners on average reduce their homes by 23 percent, while Las Vegas sellers reduce their homes by 16 percent and Miami sellers reduce their homes by 15 percent. Phoenix and Mesa are also experiencing deep price reductions with 13 percent slashed off the original listing price. 

Some of these reductions are a bit here, a bit there, a bit more again, etc. It's probably psychologically easier on the homeowners than one big decrease. But is it helpful?

Posted by Jamie Smith Hopkins at 8:15 AM | | Comments (19)
Categories: Housing stats

June 9, 2009

More on the $8,000 new-buyer tax credit

Eileen Ambrose, the Sun's personal finance columnist, offers some details about putting the $8,000 first-time homebuyer tax credit toward down-payment or closing costs. Who qualifies, how big the mortgage can be, where you can call for more information, etc. Her column is here.

And remember, this doesn't reduce the minimum down-payment requirement:

The advance can't be used for the 3.5 percent down payment required under FHA-insured loans. But it can be applied to other purchase costs or to make a bigger down payment, thereby reducing your monthly mortgage payments.

Anyone out there planning to use the credit this way?

Posted by Jamie Smith Hopkins at 10:27 AM | | Comments (6)
Categories: First-time buyer tax credit

June 8, 2009

How do you know when it's time to buy?

Two Wonk readers just posted questions about the same thing: Is it time to buy or wait?

Josh Alexander asks:

Should I buy real estate in a down market? Our area has seen a drop in home prices, so is now the time to buy?

Frequent commenter Kevin R, meanwhile, writes in response to the "asking price" poll:

I'm a renter looking to buy. I was convinced that home prices would continue to drop this year and in to next year and decided to hold off buying. Wouldn't you know it, a great home with a close to reasonable price came on the market. In spite of my previous decision to wait, I put in what I thought was a fair offer on the home only to be outbid by someone offering more than listing price.

While I said "yes" to answer this poll (as did half of voters), seeing the growing number of "Under Contracts" makes me wonder if asking prices are indeed too high. People are buying these homes right? Granted, I can't know what the contract price is until the home actually closes, but the point is that it looks like the market is moving. Am I missing the boat? I'd be interested to hear what other buyers on the sidelines are thinking and seeing out there.

Normally, the answer to "is it time to buy a home" is "it all depends on you" -- meaning, are you financially ready. Real estate professionals like to say you can't time the housing market. But it's not hard to see why some folks are worrying that prices will continue dropping if they do buy and start rising if they don't.

I've seen a lot of conflicting answers to Josh and Kevin's question. What do you all think?

Posted by Jamie Smith Hopkins at 11:57 AM | | Comments (6)
Categories: Housing market experiences

June 7, 2009

Real estate poll: Low-low offers

Homebuyers got a chance to weigh in on their price expectations via poll last week. Now it's your turn, sellers and future sellers.

Let us know: What's your policy about how to respond to significantly low offers? To "lowball," according to Merriam-Webster, is "to give a markedly or unfairly low offer." In this market, that seems to be in the eye of the beholder -- one person's "unfairly low" is another person's "just right."

So for purposes of this poll, let's say an offer that's at least 15 percent below your asking price. A $255,000 offer for a house on the market for $300,000, for instance.

Posted by Jamie Smith Hopkins at 1:40 PM | | Comments (8)
Categories: Polls

June 6, 2009

Real estate poll results: The price you'd offer

You homebuyers out there keep telling me that typical asking prices are too high. How, I wondered, does this affect your sense of the way contract negotiations ought to go?

Thus the most recent Wonk poll, which asked if you expect sellers to decrease the price when you're negotiating.

Here are your answers, as of right now:

Half of you said yes, you do expect it. (You're equally split between those expecting a big decrease and those expecting a modest decrease.)

Twenty-eight percent said it depends on the price of the house.

Seventeen percent said you look for homes you think are fairly priced to begin with.

Three percent of you don't expect a price drop but do want other concessions.

And one of you offered your own answer: "No, I don't think sellers have room to move down."

Thanks for playing, folks.

Stay tuned for the next poll, which will give sellers an opportunity to weigh in. And while you're waiting, why not comment below: Are sellers best off asking for a fair price to start with -- neither above nor below market value -- or is the lesson of today's poll that many buyers always expect a price drop no matter what?

Posted by Jamie Smith Hopkins at 9:27 AM | | Comments (4)
Categories: Polls

June 5, 2009

Harford County lowers property tax rate

Harford County homeowners rejoice: Your property tax rate is going down July 1.

Well, all right, it's going down less than 2 cents per $100 in assessed value -- from $1.082 to $1.064. On a $200,000 house, the new rate adds up to a bill of $2,128, or $36 less than the old rate. But I'm guessing you'd prefer that to a change the other direction.

On a related note: Harford's homestead cap, which limits how much an owner-occupant's tax bill can increase each year, dropped this year from 10 percent to 9 percent. That's still the highest in the Baltimore metro area. But County Executive David R. Craig says on his blog, "The next step is to reduce it from 9% to 5% by the FY11 budget (calendar year 2010)."

Values aren't going up 10 percent or 9 percent or even 5 percent right now. Still, homeowners whose housing-boom values haven't been fully phased in (even accounting for dropping home prices) could see an impact from this change.

I've heard a lot of grumbling about property tax rates over the years, particularly from Baltimore residents, but some Harford Countians went beyond grumbling and started protesting. Harford Property Tax Revolt organized rallies this spring, complete with signs like "Will Work for Lower Taxes." (This Dagger article about a May rally drew 45 comments.)

The old debate during a recession is (a) lower tax rates to help residents in their time of trouble, (b) leave tax rates alone to try to avoid big cuts in services that residents need in their time of trouble or (c) raise taxes to maintain or increase services that residents need in their time of trouble.

What argument do you prefer?

Posted by Jamie Smith Hopkins at 8:49 AM | | Comments (14)
Categories: Homestead Property Tax Credit, Property taxes

June 3, 2009

A development proposal, despite it all

Amidst the drumbeat of delayed and canceled residential projects comes a -- well, whatever the opposite of a drumbeat might be: A developer is proposing to build something. Yes! Really!

As Edward Gunts reports today, Baltimore-based A&R Development Corp. wants to turn several properties, including city-owned land, into "a $17 million apartment and retail complex" near Little Italy. The Baltimore Development Corp., the city's economic development arm, gave the company the right to exclusively negotiate for the property:

A&R proposed combining the city land with several privately owned parcels to create a five-story mixed-use project containing 107 rental apartments, 156 parking spaces and 18,000 square feet of street-level retail space at the intersection of Central Avenue and East Lombard Street.

A proposal isn't the same as starting construction, of course. But it does mean a developer sees light at the end of the tunnel -- no matter how far off.

What sorts of things do you want to see built in the region? Or are you of the opinion that less construction is good?

And help me out here: What is the opposite of a drumbeat?

Posted by Jamie Smith Hopkins at 9:24 AM | | Comments (3)
Categories: New developments

June 2, 2009

Maryland's economy in 2008

The U.S. economy officially peaked in December 2007, which means all of last year the country was in a recession. But what about Maryland?

It probably depends on your definition. The National Bureau of Economic Research, which "calls" recessions, makes its decisions mainly by looking at job numbers, income and economic growth (gross domestic product).

I mention this because today the federal government released GDP by state, which gives us a peek at local economic activity.

Maryland's GDP growth, which was 1.8 percent in 2007, slowed to 1.3 percent last year. The United States saw a much more precipitous drop -- from 2 percent to 0.7 percent. That's according to the Bureau of Economic Analysis.

(Wait, you wonks are saying, isn't a recession by definition a drop in GDP? Like, two consecutive quarters or somesuch? Nope, the NBER says. A recession frequently does show a two-quarter-or-more drop in GDP, but not always.)

So that's the story on GDP -- better in Maryland than in the U.S., but less growth than before. As for income: Maryland's per-capita personal income rose 3.5 percent last year. That's also a slowdown from 2007, when per-person income in the state jumped nearly 6 percent. (The country saw a similar-sized drop in per-capita income growth, but it was lower than Maryland's to begin with. So its 2008 increase of 2.9 percent is also lower than Maryland's.)

And what about employment? No growth there. Maryland shed almost 10,000 jobs last year, according to the Bureau of Labor Statistics. That's a drop of almost half a percent. Exactly the same decrease the nation as a whole saw last year, as it happens.

So: Local recession or not? It might be a semantics issue at this point. For the housing market, at least, a slowdown in economic growth and income growth paired with a loss of jobs isn't good news, whether you slap the "R" word on it or not.

Posted by Jamie Smith Hopkins at 10:42 AM | | Comments (0)
Categories: The economy

June 1, 2009

Price reductions -- and a new real estate poll

Anyone who likes a sale will appreciate Trulia's new "price reduced" feature, which lets you query the real estate search engine for homes in your area with lowered asking prices. I searched on homes reduced at least 20 percent in the last month and got 48 hits. Including one property in the Pen Lucy neighborhood that Trulia says was reduced by more than half last month.

Redfin also has a price-reduced option, but it shows you everything reduced in the time period you pick -- it doesn't let you specify, say, only the 20-percent-plus drops. (And there's a lot of homes with at least small reductions in the last month. Even searching only for reduced foreclosures got me 133 results on Redfin.) ZipRealty, meanwhile, will show you all price reductions, period -- no asking for just the ones reduced, say, last week.

Have you seen other sites with handy price-reduced features?

All this got me wondering: Does "JUST REDUCED!!" whet your interest as buyers? Does "20 percent off" have the same appeal when it's applied to houses that it does for shoppers looking for a deal on jeans?

And I'm sure homeowners would like to know this: Do you buyers out there expect sellers to drop their asking prices -- regardless of what the price is -- as part of contract negotiations? Or would you be happy to pay the asking price if you think it's fair? (I get the impression that some sellers price their homes with the expectation that they'll be asked to reduce it no matter what they're asking.)

Take a moment to answer by way of the new poll:

Posted by Jamie Smith Hopkins at 11:06 AM | | Comments (4)
Categories: Polls
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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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