« July home sales and Zillow's take on the local market | Main | Need foreclosure-prevention help? »

August 12, 2009

Financing that home purchase -- now vs. then

Near the peak of the housing frenzy four years ago, 75 percent of homes sold in the Baltimore metro area went to buyers with conventional mortgages -- loans not guaranteed or insured by a government agency.

Now? Thirty-five percent.

The share of buyers turning to FHA-insured mortgages has increased tremendously in these post-bubble, post-subprime times. Forty percent of Baltimore-area buyers went FHA in July, according to Metropolitan Regional Information Systems. (That's up from 2 percent in July 2005. Yeah -- 2 percent.) It's such a turnaround that FHA-financed purchases jumped ninefold from four years ago, even though total home sales fell by almost half.

Also up: VA loans, assumptions -- where the buyer takes over the loan held by the seller -- and owner financing. Of course, owner financing deals only rose from 1 to 4, so I wouldn't call that a trend. (Though it is a 300 percent increase ...)

And even in these recessionary times, some people (267 in July, to be exact) do have the means to buy a house with 100 percent down. Fewer people than four years ago, granted, but they represent a greater share of total sales: 12 percent, up from 7 percent in July '05.

One Wonk reader recently got a USDA-backed mortgage. Those loans are for purchases in rural areas that aren't necessarily as rural as you might think -- a fair swath of the Baltimore suburbs is eligible.

Have a financing story? Do share.

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (4)
Categories: Mortgages


Great write-up! Very interesting.

Could you comment more on conventional mortgages? Or did you mean non-conventional? Or conforming?

Do you have an idea of what happened to those mortgages 4 years later: How many foreclosures, deliquencies, refinances, owner vs. investor, etc...?

Great article in The Sun BTW!

These figures are purely about the ways buyers financed their purchases -- it's connected to the home sales data we see every month -- so there's no way to track what happened to those specific 2005 purchasers. But an unusually high share of loans made in '05 and '06 went bad pretty quickly.

"Conventional," in this case, is exactly as noted in the post -- everything that's not insured or guaranteed by Uncle Sam. That includes the conforming 30-year stuff as well as subprime, jumbo and all the variations of exotic loans that were once available.

But if conventional means FNM/FRE, which does have a govnmt guarantee of sorts.

Further, I think conventional financing occludes subprime, jumbos, and exotic.

I read the link and that's what I came away with.

Are you certain that conventional mortgages include exotic, et al loans? Or how exotic of a loan will FNM purchase? Neg am?

My assumption is that we have 35% conventional, 40% FHA, 4% owner, and 12% cash would leave the rest as jumbo, subprime, portfolio loan et al.

Actually, owner-financing is 4 as in four people, not 4 percent. A very small amount, in other words!

But back to the main point: conventional, from everything I've read, isn't the same as conforming. It means everything that isn't a government loan. I went searching for confirmation and found a number of places -- including -- which say that conventional loans may be conforming and non-conforming.

In any case, in July 2009, conventional plus FHA plus VA plus assumptions plus cash plus owner financing added up to 2,200 of the 2,240 home purchases. The rest? "Other."

Post a comment

All comments must be approved by the blog author. Name-calling aimed at other commenters is not welcome here. Please do not resubmit comments if they do not immediately appear. You are not required to use your full name when posting, but you should use a real e-mail address. Comments may be republished in print, but we will not publish your e-mail address. Our full Terms of Service are available here.

Verification (needed to reduce spam):

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.
Baltimore Sun articles by Jamie

Most Recent Comments
Baltimore Sun coverage
Baltimore Sun Real Estate section
Archive: Dream Home
Dream Home takes readers into the houses of area residents who have found their ideal home.
Sign up for FREE business alerts
Get free Sun alerts sent to your mobile phone.*
Get free Baltimore Sun mobile alerts
Sign up for Business text alerts

Returning user? Update preferences.
Sign up for more Sun text alerts
*Standard message and data rates apply. Click here for Frequently Asked Questions.
  • Sign up for the At Home newsletter
The home and garden newsletter includes design tips and trends, gardening coverage, ideas for DIY projects and more.
See a sample | Sign up

Charm City Current
Stay connected