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June 30, 2010

Home buyer tax credit closing deadline: Sept. 30

The Senate has passed a measure to extend the closing deadline for the home buyer tax credit to Sept. 30, which means it's now headed for a presidential signature.

Dow Jones Newswires reports that senators decided to separate the tax credit extension -- popular with elected officials -- from the more contentious proposed extension of unemployment benefits. The Senate approved the tax-credit grace period unanimously.

That bill is a twin of the one passed by the House on Tuesday.

I haven't heard any rumblings that President Obama is inclined to veto a tax-credit extension, so it looks like all you buyers tied up with long-running short sales, paperwork problems and the like have another three months to close your deals.

A reminder: This does not give more time to folks still looking. The deadline to get under contract for a home was April 30.

UPDATE: The National Association of Realtors says, "There will be no gap between June 30 and the date the president signs the bill into law." Just in case you were wondering.

Posted by Jamie Smith Hopkins at 11:34 PM | | Comments (15)
Categories: First-time buyer tax credit
        

Update on home buyer tax credit extension

Here's how the Senate is planning on extending the home buyer tax credit -- by combining it with a bill to extend unemployment insurance. As the Associated Press notes, "The homebuyer tax credit is a much easier sell."

More here and here.

Posted by Jamie Smith Hopkins at 10:45 AM | | Comments (23)
Categories: First-time buyer tax credit
        

June 29, 2010

House takes up home buyer tax credit extension

The deadline extension for the home buyer tax credit might not be dead after all.

Several members of Congress -- including U.S. Rep. Frank Kratovil of Maryland -- introduced a bill in the House today to give buyers three more months to close on deals struck by April 30. The current deadline is tomorrow night.

Lucien Salvant, a spokesman for the National Association of Realtors, said the proposed Homebuyers Assistance and Improvement Act seems to have "a good chance of passing" in the House and he's hopeful it will happen today. The Senate could take it up tomorrow, he said.

The Senate, if you'll recall, supported an amendment to extend the closing deadline to Sept. 30 but attached it to a bill with a lot of other measures that did not have broad support. That bill died last week. This House version only extends the tax credit closing deadline and does nothing else, Salvant said.

This week the Realtors group estimated the number of deals that aren't going to close in time for the June 30 deadline. It's still going with up to 180,000 nationally but also broke it down by state. Buyers in Maryland, it said, would miss the deadline on about 2,630 sales. 

UPDATE at 5 p.m.: The House voted in favor of the bill this afternoon. The National Association of Realtors says it's on the way to the Senate now.

Posted by Jamie Smith Hopkins at 3:33 PM | | Comments (8)
Categories: First-time buyer tax credit
        

Limited computer access for a few days

I'm off this week to get my home renovation project finished, or as much finished as possible in a week. So my access to working computers will be limited. I'll be checking here for your comments whenever I can -- keep on conversing.
Posted by Jamie Smith Hopkins at 2:37 PM | | Comments (0)
        

June 28, 2010

Up to $1 million off at Pier Homes auction

The much-anticipated Pier Homes at HarborView auction produced 18 sales, all for hundreds of thousands of dollars off the last asking prices. The biggest drop from ask to auction: about $1 million.

Read more here.

I'd say more, but I'm exhausted. Good night, all.

Posted by Jamie Smith Hopkins at 10:28 PM | | Comments (6)
Categories: Auctions
        

Update on the sprinklers-for-rehabs proposal

The Baltimore City Council bill requiring fire sprinkler systems was approved and signed into law last week -- but for new homes only, not rehabs.

The original proposal brought a chorus of rehabber protests because it would have mandated sprinklers on any project covering at least 30 percent of the home's gross floor area, a threshold that would include do-it-yourself replacement of carpet as well as major rehabilitation efforts.

City Councilwoman Mary Pat Clarke, who sponsored the bill with Councilman Warren Branch, said after the early June hearing that she would amend the bill so only gut rehabs -- major projects -- would require sprinklers. But real estate investors were still opposed. Baltimore's housing agency estimated the expense of installing a system in an existing home at $13,000 to $15,000, much more than in a home being built from scratch. 

"What passed finally was new-construction only," Clarke said. "There's no rehabs in the bill anymore."

She said she's disappointed and hopes to try again.

"I’m going to take some time this summer with the fire marshal and the contractors and the water department and make sure we get the price that we all agree it costs, and we've got all systems supporting what needs to happen for the cost to be minimal," Clarke said.  

Some of you commented on the earlier posts to say you supported the idea and thought it would save lives. Many of you said "thumbs down," noting the cost and the likelihood of fewer rehabs as a result.

Pete from Highlandtown wrote, "This is not going to be a matter of a few rich guys making $15,000 less on each house. This is going to be about guys with low profit margins going out of business because they cant afford to fix up houses.

"I never have made more than $17,000 in my life. And i was never sad about that. I was content with my life and my income. But now even $ 15-$17 thousand dollars a year is something that i cannot achieve working construction in Baltimore. I am a hard worker who has never been on unemployment or any kind of welfare. But its obvious to me that the City doesnt care about people like me."

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (4)
Categories: Real estate investing, Renovation/rehab
        

June 27, 2010

Poll: Home buyer tax credit extension -- yes or no?

Most of your chatter here in the last few days has been about the as-of-yet failed attempt by the Senate to extend the closing deadline for the home buyer tax credit. Those caught up in loan, title, short-sale or other tangles really want more time. Those upset about the money doled out already want the credit to end June 30, a date that was itself an extension.

Sounds like a poll, don't you think?

Here's a sample of the pro- and anti-extension commentary:

Wonk reader Debbie writes, "I have been approved for 2 months now. I've had the lender call me 3 times to say everything is in order and that we are set to close. It's been 25 days since I was suppose to close and the regional manager calls me today profusely apologizing that we probably can't close until Tuesday! This is the 5th postponement. I don't believe a word he says and will never ever bank with a large bank again."

Metzger, responding to the many people still waiting to close on short sales, wrote: "I am sorry that it has taken so long, but you can't expect to have an extension just because you choose to purchase a potential short sale. If you wanted a guarantee of receiving the credit, you should have gone after an REO or a regular resale (non-distress). The tax credit has been in place for over a year. You can't make everyone happy. If they were to extend the credit, there would probably be people who still would not have closed on time."

Last week's poll asked renters to share how the state of the housing market has affected their efforts to buy. The most popular answer -- with just over a third of the vote -- was, "I haven't bought yet because prices are still too high for me."

"I haven't bought yet because I'm worried about where the market is headed" and "Market conditions have mostly been on my side -- not a bad time to be looking" were tied for second.

One of the write-in answers encapsulates the boom-and-bust's consequences: "I lost so much money on my last house that I need to recuperate."

June 26, 2010

Postcard from Day 1 of the home-renovation project

Office.jpg

 

The first day of the renovation project is behind me -- laminate floors, check -- which meant another round of household-item musical chairs. For today's recarpeting effort, Mr. Wonk and I needed to get the office cleared out (other than furniture and cats).

But we don't have any spare space at this point. Our washer and dryer is doubling as a bookcase, for Pete's sake. So for the time being, our living room looks like this:

LivingRoom.jpg

 

Wonk reader Kim, who's about to do a renovation project of her own, has a good idea: "I am renting one of those pod things. ... I was going to do the furniture shuffle but decided against it. Too much stuff."

Mary, meanwhile, feels my pain: "We've been working on house projects since we moved in and since we're changing EVERYTHING there's no safe place to stash our stuff--we just keep shuffling it from room to room. I don't recommend this approach!"

And Paul remembers his renovation days with thank-God-that's-over enthusiasm: "When my wife and I put a new floor in our kitchen all the furniture as well as refrigerator and stove ended up in our dining room for 3 days."

I appreciate your stories of woe, in a misery-loves-company sort of way. And I'm eager to hear ideas -- like Kim's -- for cutting down on that misery.

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

June 25, 2010

Home buyer tax credit extension bill fails

The grab-bag bill many home buyers have been on tenterhooks about -- because it had an amendment extending the closing deadline for the $8,000 federal tax credit -- is officially dead.

Supporters in the Senate have given up trying to pass the American Jobs and Closing Tax Loopholes Act, so the deadline to settle on a tax-credit deals remains June 30. The Senate had approved an amendment to the bill that would had tacked on an extra three months for the estimated 100,000-plus buyers who are still waiting for paperwork to go through.

Lucien Salvant, a spokesman for the National Association of Realtors, said the measure might still come to be through another bill. But with just a few days left, "it's coming right down to the wire."

"The anxiety level among home buyers who have to wait to close ... is very high," he said.

If Congress decides to pass an extension in, say, July and make it retroactive, some of these deals might have already fallen apart in the meantime, Salvant noted. 

 

The "fun" of preparing for a home renovation

books.jpg

 

You might wonder why my washer and dryer is doubling as a bookcase. Well, unless you've ever renovated your home, in which case you're probably thinking, "Boy, am I glad my books aren't on my washer and dryer anymore."

I'm trying to get the carpet replaced -- partly with laminate, partly with new carpet. Today, the laminate goes in, so everything but the furniture had to come out of the living room (hello laundry room, bathroom, office). Tonight, Mr. Wonk and I will be moving everything sans furniture out of the office and bedroom. It's like an exhausting game of musical chairs.

Here's the bathroom about halfway through last night's routine:

Boxes.jpg

 

(I didn't drink the previous contents of those boxes. No, really!)

Next week: painting and a bit of wallpapering. And new appliances to replace the 18-year-old examples in the kitchen, if all goes well.

I will be so happy when this is all done.

There was a time when I thought about moving my family of three out of the condo -- including all our stuff -- in order to renovate the place empty. But oh, moving. Twice in less than a month. So instead we're just moving all our stuff around, and it's even more obvious what a small space this is.

Tell me, folks: How have you handled the prep work for a renovation? Any great secrets for cutting down on the hassle? It's too late for me, but perhaps you can help someone else.

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (5)
Categories: Renovation/rehab
        

June 24, 2010

Home buyer tax credits for prisoners

Did you hear the one about the 1,300 people behind bars who claimed the first-time home buyer tax credit?

Or the single home claimed for credit purposes by 67 people?

They sound like setups for a joke, but they're sadly real.

Both are among the scams the Treasury Department's inspector general for tax administration turned up. His report noted more than 14,000 wrongly claimed home buyer tax credits, for a grand total topping $26 million.

On the upside, the Internal Revenue Service tells the Associated Press, that's pocket change compared with the total claimed through April -- $18.7 billion. The IRS says it's going after the tax cheats to get the money back.

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (0)
Categories: First-time buyer tax credit
        

Paying for the home with cash

People paying entirely in cash accounted for 25 percent of U.S. home sales in May, as the National Association of Realtors noted this week. That's more than the Baltimore region, as it happens -- but less than Baltimore alone, where investors congregate.

Investors aren't the only ones paying in cash, of course, nor are they always cash buyers. But local agents say cash deals are often struck by people who don't intend to live in the homes they're acquiring.

Thirty percent of the sales in the city were all-cash in May, according to Metropolitan Regional Information Systems. That's actually down considerably from the dead of winter, when most folks aren't spending time at the settlement table: In January, 42 percent of sales were all-cash.

I've got to figure that buyers rushing to beat the June 30 closing deadline for the home buyer tax credit -- which can't be used for investment purchases -- helped push up the number of mortgaged purchases in May.

For curiosity's sake, I checked out the city's stats in January 2000, before all the boom-and-bust craziness set in. Twenty percent of deals were all-cash that month. In May 2000, it was 23 percent.

So: Just how much cash are we talking about? I can't say, since the stats don't offer average prices by financing type, but I'm sure it ranges quite a bit. Fun fact: 55 city homes sold for less than $30,000 last month.  (By contrast, 12 sold for more than $500,000.)

Most of the "good time to buy or not" debate has focused on purchases for primary residences. Do you see this as a good time to buy a home -- or homes -- for an investment? Or do you think any time is good, depending on the individual deal?

Posted by Jamie Smith Hopkins at 12:01 AM | | Comments (2)
Categories: Real estate investing
        

June 23, 2010

BRAC jobs and the housing market

We've been hearing about BRAC -- and all its splendiferous jobs -- for five years now. But the big growth related to the base realignment and closure effort is finally on the way.

More details here, including the nearly 1,500 jobs moving to Aberdeen Proving Ground in August and September.

So what does this mean for the housing market?

Officials at the Residences at Bulle Rock in Havre de Grace say at least a third of their home sales this year have been to BRAC buyers. There was a lot of looking last year, but now people are signing on the dotted line.

"We anticipate the benefits to be for four, five, six years," said Brenda Desjardins, a spokeswoman for the golf-course community. "The trend we're seeing from people moving from Fort Monmouth is they do want to stay in that 95 corridor. They're tending to buy in Aberdeen and points north because they do want to keep that ... affiliation with New Jersey."

Deborah T. Devlin, director of human resources for the Army's Communications-Electronics Command, part of the C4ISR team that's moving from Fort Monmouth to Aberdeen, is seeing a split in BRAC staffers' location preferences. 

"Obviously, a lot of people will not want a long commute, so they'll go into the Harford County, Cecil County areas," she said. "But we do have pockets of our work force, particularly the young professional crowd, that sees the city of Baltimore as a good place to be."

The number of government workers relocating with their BRAC jobs has been a moving target. Right now the Army is estimating that half of the Aberdeen-bound positions will come with bodies, with the other half to be filled (or already being filled) with new hires.

Fort Meade, which is also due for thousands of BRAC jobs, is likely to get a much higher percentage of relocating workers. The Defense Information Systems Agency, the largest organization moving to the Anne Arundel County base, estimates that about 70 percent of its staff will come along. (Commuting from Northern Virginia, where they're now based, is possible in a way that New Jersey to Aberdeen is not.)

Because most workers being BRAC'ed to Fort Meade are coming from a (theoretically) commutable distance, officials expect less homebuying ripple effects around that base. The question mark is how long folks will put up with the drive before moving, quitting or retiring.

What's your BRAC story? 

Posted by Jamie Smith Hopkins at 12:12 AM | | Comments (14)
Categories: BRAC
        

June 22, 2010

In danger of missing the June 30 homebuyer tax credit deadline?

The National Association of Realtors says as many as 180,000 people nationwide could miss out on the homebuyer tax credit if the June 30 deadline to close isn't extended. Naturally, I'm curious to know how many Baltimore-area folks are in that position.

Is this you? What's your situation? How much does it matter if you get the money?

Divorce and the home buyer tax credit

A Consuming Interests reader wanted to know if he'll have to pay back half the first-time home buyer tax credit money now that his wife has filed for divorce. Intrepid reporter Liz Kay asked the Internal Revenue Service for an answer. You'll find it here.

Columnist Eileen Ambrose, meanwhile, writes about buyers getting denied the credit because their situations are so complex. 

Home buyer tax credit extension up in the air

Some of you are waiting on tenterhooks to hear if Congress will allow homebuyers more time to close on deals signed by April 30 with the expectation of a $6,500 or $8,000 tax credit, so I checked in with the National Association of Realtors for an update.

Trouble is, the amendment the Senate approved last week -- which would push the June 30 closing deadline to Sept. 30 -- is attached to a bill that is far from a sure thing.

The American Jobs and Closing Tax Loopholes Act "is a Christmas tree, it’s got everything in it, all kinds of stuff, and it looks like that bill is going to have a really tough time to be moved in the Senate," said Lucien Salvant, a spokesman for the Realtors group.

"The Senate has failed twice now to end debate on the major jobs creation bill, so I’m not sure what’s going to happen," he said.

The trade group believes that as many as 180,000 buyers are in danger of missing the June 30 closing deadline, many of whom are trying to settle on short sales -- notoriously not short when it comes to the time involved.

Even if the Senate does approve the overall bill, it will have to go back to the House for a vote, Salvant said.

The Realtors are hearing no objection for the extension from House leadership, he said. So he thinks it will happen. "But I don't know when," he said.

June 21, 2010

The homebuyer pullback in May

Only time will tell whether the drop-off in buyers signing contracts for home purchases in May -- the month after the contract-signing deadline expired for the home buyer tax credit -- is merely temporary. But here's a currently available fact: That pullback is pretty widespread hereabouts.

All but four counties in Maryland saw the number of newly pending contracts decline in May, compared with a year earlier. Year-over-year contract figures were significantly up for much of the tax-credit period.

Biggest drop: 54 percent in Caroline County on the Eastern Shore. That's according to data collected by the Maryland Association of Realtors from Metropolitan Regional Information Systems and the Coastal Association of Realtors.

Baltimore County had the largest decrease in the Baltimore area -- 39 percent. Next were Anne Arundel and Howard, both down 30 percent; Baltimore City, down 29 percent; and Carroll County, down 28 percent. Harford County, down 23 percent, had the smallest drop.

So which parts of Maryland actually saw more contract-signing activity in May than a year earlier? See if you can guess, then read on for the answer.

Calvert, up 1 percent

Worcester, up 11 percent

Talbot, up 14 percent

Dorchester, up 20 percent

Calvert is in Southern Maryland on the Chesapeake Bay. The rest are on the Eastern Shore; Worcester is home to Ocean City. Are second-home buyers driving that increasing-activity trend? Do speak up if you're following any of those markets.

As buying ebbed in much of the state last month, attempted selling increased. For-sale inventory rose in 15 out of Maryland's 24 jurisdictions, including all of the Baltimore area except Anne Arundel, which was down 2 percent.

The number of homes for sale increased 1 percent in Howard, 3 percent in Harford and Carroll, 5 percent in Baltimore City and 6 percent in Baltimore County. That means more for buyers to choose from -- good for buyers, not so hot for sellers.

Prince George's County, meanwhile, saw a big drop in homes for sale -- down 13 percent. That's bigger even than the county's 6 percent decrease in contract-signing.

What are you seeing in your neck of the woods?

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (1)
Categories: Housing stats
        

June 20, 2010

The housing market's impact on (would-be) sellers

There's a lot of pent-up supply out there -- homeowners who would sell, if only they thought the market would cooperate. That's what Zillow concluded after surveying Americans recently, and many of you said as much in the newest Wonk poll.

Just over a third of homeowners who took the poll in the last week -- about whether market conditions have interfered with plans to sell -- said they're delaying putting their home on the market as a result. That was the most popular answer by far.

Tied for second were "Yes, I tried to sell and couldn't" and "No, I had no plans to sell," each with about 21 percent of the vote.

Eight percent of homeowners who took the poll said they decided to stay put long-term because of market conditions. Seven percent said they sold with minimal issues. And the rest said they either had a headache of a time selling or ended up in a short-sale situation (of course, the latter is usually also the former).

Difficulty selling has real consequences for people. Duane commented, "I had 2 homes on the market in 2008 when this thing first started. They were on the market for over a year, not one buyer, and the banks wouldn't even work with me to do a short sale or deed in lieu...One went into foreclosure, and I have no idea what Chase is doing with the other. Chase has agreed to do a deed in lieu on my primary home in Baltimore city though, I am moving back to D.C."

I sympathize with everyone feeling jerked around by market conditions -- would-be sellers and buyers both. 

Renters didn't get to participate in last week's poll, so this one is just for you folks:

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

June 19, 2010

Eviction-prevention workshop

Many, many workshops have been organized for homeowners facing foreclosure. Now there's an event for renters interested in avoiding eviction.

The University of Maryland Extension is holding its Eviction Prevention Seminar this Wednesday -- June 23 -- from 8:30 a.m. to 1 p.m. at New Shiloh Baptist Church, 2100 N. Monroe St. in Baltimore.

The extension will talk about budgeting to allow for savings and avoid eviction. The Public Justice Center will offer information about legal service rights and foreclosure issues for tenants (because tenants can feel the ripple effects of foreclosure). And Baltimore Gas & Electric Co. will hold a workshop on saving money by conserving energy.

To register, call the extension at 410-856-1850 or email MElonge@umd.edu.

Know of other housing-related events? Please share.

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

June 18, 2010

Multitudinous mortgage fraud

The FBI, which Thursday announced hundreds of arrests for mortgage fraud nationwide, notes that the scammers are choosing from a long menu of possibilities in this uncertain market. For instance:

Bankruptcy as a scammer tool. "Mortgage fraud perpetrators are exploiting the U.S. bankruptcy system by filing fraudulent bankruptcy petitions to delay the foreclosure process and extract the maximum profit from victims during the commission of advance fee, fractional transfer, and sale-leaseback-repurchase foreclosure rescue schemes," the FBI says in its newest mortgage fraud report.

Flopping distressed property. "The perpetrators collude with appraisers or real estate agents to undervalue the property using an appraisal or a broker price opinion to further manipulate the price down (the flop) to increase their profit margin when they later flip the property," the FBI notes. "They negotiate a short sale with the bank or lender, purchase the property at the reduced price and flip it to a pre-selected buyer at a much higher price." (Here's an example of two Connecticut real estate agents -- make that former real estate agents -- who did just that.)

Stealing bank-owned property. Some enterprising crooks are recording fake deeds on empty bank-owned property, changing the locks and renting them out. "Recorders do not conduct due diligence to verify or otherwise determine the validity of property or other legal documents," the FBI says. "With access to the appropriate software and knowledge of required real estate documents, a perpetrator can create fictitious documents such as a deed of trust, have the deed notarized, pay a nominal fee, and present or mail the deed to the recorder."

Commercial real estate. Yup, it's not just houses anymore: "Perpetrators, including loan officers, real estate developers, appraisers, and apartment management companies, are increasingly submitting fraudulent documents that misrepresent their assets and property values to qualify for loans to buy or retain property," the FBI says. "When the loans are funded, the perpetrators often cease payment of their mortgages, resulting in foreclosure."

Where is this criminal commercial real estate behavior happening, you ask? Right here.

"Preliminary analysis indicates that the commercial markets exhibiting the most significant signs of distress are in areas where there is also a significant mortgage fraud problem," the FBI says. "These areas include the New York metropolitan area, Miami, Los Angeles and Orange County, Chicago, Boston, Dallas, Fort Worth, Houston, the District of Columbia, Atlanta, and Baltimore."

Maryland as a whole frequently appears on mortgage fraud top-ten lists. HUD's Office of Inspector General, which had 591 single-family loan investigations last fiscal year, said the states that showed up the most on its caseload were Illinois, California, Florida, Texas, New York, Maryland, Georgia, Colorado, Ohio and Pennsylvania.

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (7)
Categories: Mortgage fraud/scams
        

June 17, 2010

Mortgage applications tick up

Interest in mortgages to purchase a home, which plummeted after the April 30 deadline for the home buyer tax credit, is on the rise again -- at least a bit.

The Mortgage Bankers Association's newest survey shows mortgage applications for home purchases increasing 7.3 percent last week, compared with the week before. That's the first upward movement in six weeks.

But the level is still more than 30 percent below where it was a year ago, when the tax credit was in effect and enticing buyers. The May downturn sent applications tumbling to 13-year lows.

"While it is clear that purchase applications in May dropped sharply as a result of the tax credit induced increase in applications in April, it is unclear whether we are seeing the beginnings of a rebound now," said Michael Fratantoni, the trade group's vice president of research and economics.

We'll just have to wait and see. It's that sort of year.

May was a bad month for another housing indicator: new home starts, which fell 10 percent compared with April, according to the Commerce Department's latest estimates. But starts were still up vs. a year earlier.

By the way, you all have been having a lively discussion this week about the state of the housing market.

For instance, Wonk reader westside writes, "The fact that the Baltimore area market didn’t fall off a cliff like others now seems a mixed blessing. It was great we didn’t see the disaster scenarios that played out in Vegas, Orlando and other boom towns, but I almost wonder if falling off a cliff wouldn’t have spared some of those now barely treading water the uncertainty of being stuck in the current limbo. When your house drops 50% in value almost overnight you have no choice but to make peace with the fact that you’ll never find a conventional buyer and you either have to stay put or let it go into foreclosure. When you lose a few percent here and a few percent there every few months over the course of a couple years, as we have around here, the options aren’t as clear."

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (2)
Categories: Mortgages
        

Possible home buyer tax credit extension

Congress is thinking about extending the home buyer tax credit -- not the deadline to sign a contract, but the June 30 deadline to close on the deal.

If you're worried you're not going to get to the settlement table in time, the thought of three extra months will probably come as a joyous relief. (If you're a non-buyer irked at all the taxpayer money Uncle Sam is handing out, on the other hand, you were probably hoping many deals wouldn't close. I do recall a few reader comments to that effect.)

The Senate voted Wednesday to move the closing deadline for the $8,000 and $6,500 credits to Sept. 30, so the proposal is already moving through the system.

Walter Molony, a spokesman for the National Association of Realtors, said his trade group estimates that about 180,000 buyers are likely to miss the June 30 deadline "because of delays in the process." That's particularly true of short sales, he noted.

Are you still trying to close on a tax credit deal? Do you think you'll manage it by the current June 30 deadline?

June 16, 2010

Harvard's housing snapshot

Harvard's Joint Center for Housing Studies paints a less-than-rosy picture of the market in its newest State of the Nation's Housing report, out this week.

For instance:

One of the biggest drags on the housing market is the high joblessness rate. ... Unfortunately, most economists predict that the unemployment rate will remain elevated as discouraged workers reenter the labor force amid slow gains in jobs.
The overhang of vacant units for rent, for sale, or held off the market (including foreclosed homes) is another serious concern. Despite production cuts of more than 70 percent since 2005, the overall vacancy rate hit a record in 2009. In addition, many current owners are effectively trapped in homes that are worth less than the amount owed on their mortgages. If these distressed owners want or need to sell, their only choices are to walk away from their homes or write a check at the closing table. This will inhibit a recovery in repeat home sales.

Oh, is that all?

No, actually.

The Harvard folks note that even the Treasury Department expects 40 percent of people getting loan modifications through the federal Home Affordable Modification Program will re-default. And once number-crunching is complete, typical U.S. household incomes will "almost certainly" prove to be lower at the end of 2009 than they were at the beginning of the decade, accounting for inflation. And mortgage debt "has never been higher relative to home equity."

The report also notes a problematic trend in the rental market:

Nearly one in four tenants was spending more than half their income on housing costs in 2008. Many more were devoting at least 30 percent of income to rent. (Below that point is usually considered affordable.)

"The erosion of affordability over the last 50 years is striking," the report notes. "In 1960, only 12 percent of renter households spent half or more of their incomes on housing. By 2008, that share had doubled. ... In plain terms, the cost of supplying modest units even in less desirable neighborhoods exceeds the rents that large fractions of renter households are able to pay."

Joblessness and competition from homeowners-turned-landlords since 2008 has sent rents downward in many places. But renters earning less than they did two years ago don't see a net benefit from that change.

Tenants, are you able to find affordable places to live?

Landlords, what are the key factors keeping you from lowering your rents? Your mortgage payment? Property taxes? Maintenance needs?

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (2)
Categories: Housing stats, Renting
        

June 15, 2010

As home prices begin to rise elsewhere, Balt. area still declining

Home prices were up in 40 percent of the nation's metro areas at the end of last year, compared with a year earlier, but Baltimore was not among them.

That's according to Fiserv, the company whose data is the basis of the popular Case-Shiller index. It shows prices in the Baltimore metro area declining 3 percent from the fourth quarter of 2008 to the fourth quarter of 2009.

But because Fiserv is forecasting a temporary return to falling prices in some of the rising markets, and big drops in regions already hard-hit by the bust, it thinks the nation as a whole will take a bigger cut on price than the Baltimore area in the near term. The company is predicting a 1.8 percent drop in prices over the 12 months ending in the fourth quarter of this year in the Baltimore metro area, compared with a 3.1 percent drop nationwide.

On the one hand, says Fiserv Chief Economist David Stiff, more consumers "have confidence that buying a home doesn't mean catching a falling knife." On the other: "The first-time homebuyer tax credit has expired, the Federal Reserve has stopped buying residential mortgage backed securities (MBS) and the projected number of foreclosures remains extremely high."

Homeowners in our metro area haven't felt the housing crash as keenly as wide swaths of Florida, California and other big-population states in the eye of the storm. You probably knew this already -- it's been the story since the slump was a mild little infant rather than a rampaging toddler -- but here's a comparison to put that in perspective:

Fiserv calculates the drop in prices from the end of 2006 through the end of 2009 at about 15 percent in the Baltimore metro area. Nationwide? Twenty-seven percent.

Orlando is at one extreme, with prices down so much they're about half of what they were at the end of '06. But in Austin, Texas, prices are 10 percent above their 2006 mark.

Closer to home, there's Washington, D.C., where home prices took a "rapid decline" after the bubble but are on the rise again, Fiserv says.

"Since the market bottom in early 2009, prices in this metro area have risen more than 9 percent," the company says in a press release, crediting "a relatively strong local economy" and "substantially improved affordability" after the earlier price drop. 

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (17)
Categories: Housing forecasts, Housing stats
        

June 14, 2010

The housing market above and below the jumbo line

The cheaper something is, the wider the potential buying pool -- there's a blindingly obvious statement to start off your Monday. This is by way of introducing a statistical glimpse of the Baltimore-area housing market above and below the jumbo-loan mark of $560,000.

So yeah, of course it's easier to sell below that line than above it, not even getting into issues of financing. Of course it would take more months to find buyers for the pricier range, at the current pace of sales, than the less-pricey one.

But here's how much easier, according to an analysis of Metropolitan Regional Information Systems data by the Greater Baltimore Board of Realtors:

Below that line, nine months.

Above? Twenty-three months.

Six months of supply, in case you're wondering, is usually considered the magical "balanced market" figure where neither buyers nor sellers have the upper hand.

Joseph T. "Jody" Landers III, executive vice president of the Realtors board, looked at all listings as of June 2. He calculated the months of supply by dividing homes for sale by the average pace of sales in the first five months of the year.

Which Baltimore-area jurisdiction do you think is the toughest sell above $560,000? Below?

See if your guess is right:

Howard County:

Below -- 5 months

Above -- 15 months

--

Baltimore County:

Below -- 8 months

Above -- 24 months

--

Anne Arundel County:

Below -- 8 months

Above -- 26 months

--

Harford County:

Below -- 9 months

Above -- 36 months

--

Carroll County:

Below -- 10 months

Above -- 37 months

--

Baltimore City:

Below -- 12 months

Above -- 24 months

--

Howard County has the smallest months of supply for both categories, though it's still a lot lower for the below-$560 homes than the ones above. (With five months of supply, the county probably doesn't feel like a buyer's market in the below-$560,000 range.)

Baltimore City has the largest months-supply figure for the lower-price category, but its above-$560 situation is a heck of a lot better than Carroll or Harford's. In those two counties, the queue of homes in the pricier category would last three years -- years -- at the current pace of sales.

"Other than Howard County, all of the Baltimore metro subdivisions appear to have a severe glut of houses priced over $560K," Landers noted.

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

June 13, 2010

Real estate poll: Trying to sell and can't?

To sum up the month of May: The number of newly listed homes for sale in the Baltimore metro area was more than double the number of new pending deals.

It hasn't been easy being a seller for, oh, several years now. Many people have felt the sting of the market reversal -- especially those who purchased in the crazy days when it wasn't easy being a buyer.

What about you? Share your tale of woe, or at least take this week's poll:

Don't worry, renters. You'll get your turn next week.

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (2)
Categories: Housing market experiences, Polls
        

June 12, 2010

Affordable-housing awards -- and a debate point

Two local nonprofit developers won awards this week for their work on affordable housing in challenging times.

Homes for America, based in Annapolis, was named developer of the year by the Housing Association of Nonprofit Developers, which focuses on work from Baltimore to Richmond. Homes for America was honored for building three apartment communities for seniors on top of purchasing and fixing up two affordable-housing properties -- despite the deep freeze on financing.

Greater Baltimore AHC won an honorable mention in the "Affordable Housing Development" category for pulling off the rehabbing of a deteriorating Section 8 complex in Baltimore even as the financial crisis unraveled their original financing plans. (Read more about the MonteVerde Apartments project here.)

FDIC Chair Sheila C. Bair, speaking at the awards ceremony, suggested that the government has too long focused on homeownership at the expense of affordable rentals. Add up mortgage interest deductions, local property tax deductions and exclusions on capital gains from home sales, and "the taxpayer subsidies for homeowners are about three times the size of all rental subsidies and tax incentives combined," she said.

"In fact, you can argue that this huge subsidy for homeowners has helped push up housing prices over time, making affordability that much more of a problem for the very groups you're trying to serve," she added, according to the prepared text of her remarks. "I think we need a better balance. Sustainable homeownership is a worthy national goal. But it should not be pursued to excess when there are other, equally worthy solutions that help meet the needs of people for whom homeownership may NOT be the right answer."

Most homeowners taking the mortgage deduction would probably deny in angry terms that they're getting government subsidies, but of course a tax break is money in the bank.

As the country tries to figure out how to reshape mortgage markets, financial controls and the like, here's a discussion point for you: Should the federal government be incentivizing homeownership at all? If so, how?

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (6)
Categories: Affordable housing
        

June 11, 2010

A $3.5 million home sale in Deep Creek Lake

ExteriorDeepCreek.jpg

Photo courtesy of Betsy Spiker

 

In this difficult market for high-end homes, at least one seller found a buyer without looking.

A Deep Creek Lake house that changed hands last Friday for $3.5 million -- a record in the Western Maryland vacation spot, according to the buyers' agent -- wasn't actually on the market. The buyers looked at homes people wanted to sell but didn't fall in love with any of them, so agent Betsy Spiker with Long & Foster Real Estate thought she'd call the builder whose family lived in the stucco home pictured above to see if he'd be willing to part with it.

"I said, 'I do know the family in that house -- let me take a shot in the dark here,'" she said.

It worked.

What, you might ask, are the buyers getting for their $3.5 million? The house as it stands now is four bedrooms with three full bathrooms and two half bathrooms on the main and upper levels. But the contract includes a deal for the builder to finish the huge, 3,100-square-foot basement, adding a bedroom and a variety of elements from a sauna to an elevator.

All told, the house, its porches and garages add up to about 14,000 square feet of covered space, Spiker said. The sellers built it in 2007.

Here's a glimpse of the interior:

InteriorDeepCreek.jpg

 

The buyers, who paid in cash, are from the Pittsburgh area and want the home as a vacation spot. (It had been the sellers' primary residence.)

Spiker said the previous record price for a Deep Creek Lake home -- about $2.8 million in May 2007 -- was set in the same neighborhood, the Reserve at Holy Cross.

Deep Creek Lake's luxury market is clearly not back to its housing-boom heyday. The area saw 14 sales for $1 million or more in the last 12 months, compared with about 25 in 12-month stretches before the slump, Spiker said. But she says she is seeing improvement over the recent past.

"It's been better, I would say, since March," she said. "Our traffic is mostly weekend traffic, because it's a second home market. But so far it seems to be a significant increase from ’09, in just general activity and contracts as well."

So that's a postcard from the high end. If you've got a tale of a local home purchase under $250,000 that you think is a screaming good deal, I'd be happy to share that story, too.

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (10)
Categories: Unusual homes
        

53% drop in new contracts from April to May

If you're a housing-market watcher, you were bound to be curious how the end of the first-time home buyer tax credit would play out. We'll have to wait longer for the bottom-line result, but the immediate effect is a wallop.

Buyers signed 53 percent fewer contracts for Baltimore-area home purchases in May than they did in April, according to Metropolitan Regional Information Systems. The year-over-year decline -- the way we normally compare -- was more than 30 percent.

Read more about it in today's story. (And see what Richard J. DeKaser, a housing-market researcher who once put the Baltimore metro area on an overpriced-markets list, thinks of values now.)

Posted by Jamie Smith Hopkins at 12:01 AM | | Comments (1)
Categories: Housing stats
        

June 10, 2010

Sprinklers for 'gut rehabs'?

The legislation that would require fire sprinklers in new and renovated homes in Baltimore is undergoing some renovation of its own.

City Councilwoman Mary Pat Clarke said after a Tuesday committee hearing that she's looking to change the threshold so sprinklers aren't required unless the rehab in question is a "gut" project. "Really a major rehab -- removal of interior walls, etc.," she said.

Under the original proposal, the sprinkler mandate kicked in for any renovation affecting at least 30 percent of the gross floor area or adding 30 percent more space. But there was a hue and cry against adding thousands of dollars to the cost of fairly minor projects such as -- say -- reflooring.

Baltimore's housing agency, which opposed the bill as originally written, estimates the expense of installing a system in an existing home at $13,000 to $15,000. 

Clarke, who introduced the bill, said the Judiciary and Legislative Investigations committee is scheduled to vote on an altered version on Monday at 1:30 p.m.

"What we're doing now is trying to find a definition we can adapt as an amendment," she said. "A 30 percent threshold, even a 50 percent threshold, did not meet with approval and developers were very much opposed. We would like to go to the gut rehab standard … so that we can begin to assess how that goes and what the costs really are, so sometime down the line, we could expand. But we need to have some working experience first."

Clarke says she's hoping the sprinkler requirement will prevent fire deaths, an idea the Fire Department supports.

But Alan Chantker, president of the Mid-Atlantic Real Estate Investors Association, said even a higher threshold for sprinklers would mean fewer rehabs in a city with a lot of deteriorating homes in need of help.

"It's going to add a substantial cost," he said. "When you're talking about houses that might only sell for $60 to $120 [thousand], that cost might be enough to tip you from profit to no profit."

You had a lot to say about the original proposal. What do you think of this idea?
Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (13)
Categories: Real estate investing, Renovation/rehab
        

June 9, 2010

The housing market by the numbers

Sometimes a number is worth a thousand words. Here are a few that have caught my eye recently:

4.2 percent: The decline in home values in the Baltimore metro area in April, compared with a year earlier, according to Zillow's newest estimates

18 percent: Zillow's estimate for the decline in Baltimore-area values since the market peak, compared with 24 percent nationwide

23 percent: The share of Americans polled on behalf of the National Foundation for Credit Counseling who say it's justifiable to default on a mortgage if the balance due is higher than the home's value

15 percent: The share of Americans who said in the same poll that it's never justifiable to default on a mortgage, no matter what the reason

5.3 million: The number of U.S. homes owned by "sidelined sellers" who would be very likely to put their properties on the market in the next 12 months if they see signs of improvement, according to Zillow

27 percent: Share of homes for sale in Baltimore that are foreclosures, according to CoreLogic via Yahoo Real Estate

Sixth: The Baltimore metro area's ranking on the "lowest performing major markets" list compiled by data provider Clear Capital, based on recent home price drops 

What numbers have caught your attention?

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

June 8, 2010

Bill would require sprinklers for new homes, rehabs

A Baltimore City Council committee will hear a proposal this morning to require fire sprinkler systems in new homes and -- more significantly for a city chock-full of aging rowhomes -- in most renovations.

City Councilwoman Mary Pat Clarke, who sponsored the bill with Councilman Warren Branch, said she wants to prevent fire deaths. Rehabs of one- or two-unit homes would require sprinklers if the work covers at least 30 percent of the building's gross floor area or adds 30 percent more space.

Clarke said she began working on the legislation after hearing from Baltimore Fire Chief Jim Clack "about the need for sprinklers in residential homes, because they save lives." (The Fire Department said in a memo that it "strongly supports" the legislation.)

With rotating fire-company closures in the budget-strapped city, "we need other ways for citizens to protect themselves," she said. "And sprinklers are it."

The debate over the value of sprinklers vs. the cost -- with fire marshals on one side and home builders on the other -- has raged for years. But it's usually focused over new construction, not renovation.

In Baltimore, real estate investors were organizing Monday to turn out in opposition to the 10 a.m. hearing today.

Jack BeVier, a partner with Dominion Properties in Baltimore, which renovated about 90 homes in the area last year, said the cost of installing a sprinkler system in an existing property is substantially higher than adding it to a new home under construction. You're pulling apart walls and ceilings, then building them back up, he said.

He estimated the system and installation costs at $7,000 to $15,000 in an existing home, depending on the building size and condition. (Baltimore's housing agency, which is also opposed to the idea, estimates the cost at $13,000 to $15,000.)

"There's large portions of the city that aren't worth anything because of the condition of the property and the block that they're on -- they're not worth the construction cost required to put them back into use," BeVier said. "Adding another line item to the budget just increases the number of houses that fall into that category."

Baltimore Housing's memo of opposition, written by Commissioner Paul T. Graziano, suggests that setting the renovation threshold at 30 percent of the home could trigger the sprinkler requirement for more than investors. He argues that even homeowners doing fairly minor work in a small rowhouse, such as replacing cabinets or improving the basement, could end up having to put in sprinklers.

He suggested an 80 percent threshold.

Clarke said Baltimore would not be the first to mandate sprinkler systems as part of renovations. In Upper Dublin Township, Penn., sprinklers are required in projects where at least half of the interior walls and/or partitions have been removed during remodeling. Napa, Calif., requires them if more than half the floor area is affected by "demolition or rehabilitation."

Clarke said she's open to other ideas about the threshold for requiring sprinklers in renovation projects, but she thinks significant projects should include the devices.

"Because we have more rehab than new construction here, I think it’s very important to add that component at some level," Clarke said. "We need to do something."

The floor is now open for your debate.

Posted by Jamie Smith Hopkins at 12:01 AM | | Comments (18)
Categories: Real estate investing, Renovation/rehab
        

June 7, 2010

Foreclosure as free rent

As some homeowners desperately try to stave off foreclosure, others are happy to take advantage of the possibilities. It's a numbers game: With lenders waiting longer and longer to repossess homes and kick out the former owners, months -- even years -- can go by with defaulted borrowers living in the properties mortgage- and rent-free.

The New York Times had an enlightening story on the subject last week, noting that one attorney in Florida has made a business of helping owners drag the process out as long as possible for just that purpose. He has 350 clients, and every week brings about 10 more.

Even for homeowners who aren't trying to prolong foreclosure, the time line has lengthened:

"The average borrower in foreclosure has been delinquent for 438 days before actually being evicted, up from 251 days in January 2008, according to LPS Applied Analytics," the Times reports.

A crisis as large as this one will bring out all sorts of responses from people. Besides the foreclosure free-renters, you have homeowners who can't really afford their mortgages but are cutting corners everywhere else just to stay current. And homeowners who can afford their loans, but -- for various reasons, including plummeting home values -- have chosen to mail their keys back to their lender and walk, betting that the credit damage is worth it.

Not to mention homeowners who can afford their mortgages, are continuing to pay them and are steamed at the banks, the foreclosure free-renters and the strategic defaulters alike.

Talk about a mess.

Much has been said about whether homeowners should default on their mortgages from a financial standpoint. I'm curious what you think is the most ethical move for borrowers in these situations, and whether ethics and financial sense are in concert or at odds:

Person 1: Cannot possibly afford the mortgage payment. Might qualify for a loan modification.

Person 2: Can barely manage to pay the mortgage. Might qualify for a loan modification.

Person 3: Can afford the mortgage and doesn't qualify for a loan modification, but home's value has fallen 20 percent or more.

Thoughts?

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (6)
Categories: The foreclosure mess
        

June 6, 2010

Are you reading this from a homeless shelter?

High unemployment -- ever-longer stretches of it -- has thrust more Americans to the brink of homelessness. If this describes you, here's something you'll want to know:

Maryland's Department of Housing and Community Development said Friday that it has a new rental assistance program for people "who have become homeless or are at 'imminent risk' of becoming homeless as a result of the severe downturn in the economy over the past two years."

It received $22.4 million in federal stimulus funding for the effort.

A few details:

Eligible individuals and families may receive assistance in the form of rental payments, utility payments, rental and utility deposits, arrearages, moving costs and other allowable expenses. In addition to financial assistance, the program also provides for case management and other services to help clients in achieving stable, long term housing.

To access the help, call 1-877-428-8844 and mention the Homelessness Prevention and Rapid Re-Housing Program.

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (1)
Categories: Homelessness
        

June 5, 2010

A thumbs-up (sort of) to buying

Three-quarters of Americans polled for the National Apartment Association said renting is preferable to owning in the current market. But another large group of Americans -- close to two-thirds polled by Fannie Mae -- of are the opinion that now is a good time to buy.

So I asked you to break the deadlock.

Is now a better time to buy or rent? Or does neither have a clear advantage these days?

Forty-six percent of you say it's a better time to buy, the most popular answer -- though a plurality rather than an absolute majority.

Thirty-nine percent say it's a better time to rent.

And the rest -- about 15 percent -- say "six of one, half dozen of another."

There's been a lot of discussion about prices, rents, property taxes, tax deductions and the like, but I'd be interested to hear about how the process of finding a place to buy or rent has gone for you in recent months. Difficult? Easy-peasy?

Did you intend to buy, get frustrated midway through and switch to renting -- or vice versa?

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (4)
Categories: Housing forecasts, Housing market experiences, Renting
        

June 4, 2010

HGTV looking for first-time home sellers

HGTV, the channel that brought you shows such as "My First Place," is looking for homeowners trying to sell that first place.

It's casting for the second season of "My First Sale" and wants people in the Baltimore-Washington area. Specifically, "fun and dynamic" first-time sellers.

HGTV describes the show this way: "Selling your first place means the stakes are even higher than when you purchased. More pressure, more jeopardy, more to gain — and potentially thousands to lose."

If you're interested, email Andrew Olthuis, a casting associate producer, at aolthuis@highnoontv.com.

Posted by Jamie Smith Hopkins at 7:30 AM | | Comments (1)
        

New-home sales after the home buyer tax credit

Another postcard from May, the first month sans the first-time home buyer tax credit:

Metrostudy, which does market research for the home building industry, says early figures show a big falloff in new-home contracts signed in May in once-bubbly markets such as Las Vegas.

But not here.

Kenneth Wenhold, director of the Mid-Atlantic region for Metrostudy, said numbers for the Baltimore-Washington area suggest "traffic and contracts per project has changed very little from April to May, implying that we should not have a significant 'hangover' from the tax credit expiration."

"On average, traffic and contracts are trending similarly to what we saw during this time of year in 2009, resulting in a conversion ratio which is also on par with 2009," he wrote in an email.

About a week into May, Crofton-based homebuilder Caruso Homes told me it was seeing a pop in sales after the tax credit. People who'd just sold their homes were looking to close on a new place quickly.

May contract numbers for resales (and any new homes on the multiple-listing service) will be released next Thursday, so we'll see how the wider market fared.

Some of you shared what you've noticed in your community:

"Since the credit has expired a couple homes for sale in my neighborhood have been taken off the market, and the others have seen pretty substantial price reductions," Wonk reader Mary wrote, adding in a parenthetical: "Not that the sellers still aren't trying to make a beyond-decent profit..."

Jelena, who has long been trying to find a home, reports back with her experience: "In our modest price range the market has been completely stagnant for the last 2 months. No houses are coming up for sale and nothing is being sold. The listing updates are mostly finalized sales from the credit times and price drops on the properties already on the market. I've also seen some properties just taken off the market after the credit expiration."

June 3, 2010

Home-tour event in Columbia

Columbia's villages are putting on a home tour this Sunday -- their first -- that will crisscross through the earliest parts of the planned community.

The places to see: a waterfront townhouse in Wilde Lake, a "green" home in Oakland Mills, a contemporary-style house in Harper's Choice and two homes in Long Reach. The event, a fundraiser for the One Month's Rent Initiative, costs $20 a person and is co-sponsored by the Columbia Archives.

It's slated to run from 11 a.m. to 5 p.m. (The tours are self-guided and the homes are not for sale, in case you're wondering.)

Besides the tour, there will be refreshments and a display at the Other Barn, 5851 Robert Oliver Place in Columbia. Tickets are for sale at all Columbia's village centers through Saturday and at Oakland Mills and Long Reach village centers on Sunday.

Posted by Jamie Smith Hopkins at 7:30 AM | | Comments (0)
Categories: Housing events
        

Early signals about the effect of the now-ended home buyer credit

Mortgage applications are continuing to show the impact of life A.T.C. -- After the Tax Credit, specifically the $8,000 incentive for first-time home buyers and the $6,500 incentive for repeat buyers.

"Purchase applications are now almost 40 percent below their level four weeks ago," Michael Fratantoni, vice president of research and economics at the Mortgage Bankers Association, said in a statement Wednesday.

People wanting to refinance accounted for nearly three-quarters of the mortgage applications in the last full week of May.

Mark Vitner, a senior economist with Wells Fargo, wrote in a report last week that the numbers -- which had already fallen significantly at that point -- seemed to be sending a message:

"The slide in purchase applications has been sharper and more immediate than it was last fall, suggesting the pullback in sales and new construction could be greater than many currently expect," he wrote. "Purchase applications have tumbled a cumulative 36.3 percent over the past three weeks, falling to their lowest level since 1997. By contrast, purchase applications fell around 34 percent last fall."

Vitner's forecast: a "modest recovery gradually taking hold during the latter part of this year" in terms of housing starts, but home prices falling "a little further over the course of 2010, with a bottom being reached in either late 2010 or early 2011."

The mortgage stats and Vitner's thoughts are both national, not local. What's your local perspective? What strikes you as good measures of the expired-tax-credit effect?

Next week, we'll see one useful stat -- how many buyers signed contracts on homes in the Baltimore metro area in May. That will be part of Metropolitan Regional Information Systems' report on multiple-listing service activity.

June 2, 2010

A big price cut -- potentially -- on 11 HarborView homes

HarborView's developer is hitting the reset button on the Pier Homes.

Eleven of the luxury waterfront townhouses in Baltimore will be auctioned off June 28 with minimum bids 55 percent to 75 percent below the most recent asking prices. Accelerated Marketing Partners, which is handling the auction, says the minimum bids are the reserve prices -- meaning the developer will accept them if no one bids any higher.

The unit with the highest recent asking price -- nearly $2 million -- is tagged with a minimum bid of $665,000. The lowest minimum bid is $329,000 for a unit with an asking price of $1.2 million.

Of the 88 townhomes, 44 have sold and two are under contract. That leaves a lot still to sell. The goal of the auction is to drum up interest and get buyers to break up the logjam -- one that exists across the high-end market.

"In declining markets or markets that are reasonably uncertain, there tends to be a disconnect," said Jon Gollinger, co-founder of the Boston-based Accelerated Marketing Partners. "The only one who can cause traction on prices is the consumer." 

Read more in today's story, including the impact this has on other sellers and homeowners.

In Gollinger's mind, the decision to slash prices and let buyers bid them up from there (if the builder is lucky) is no more complicated than Economics 101. "Let the market determine value," he says. "These 11 units are going to set a value."

There's no buyer's premium added on to the price, for the auction-savvy among you who were wondering. Gollinger says some of the units are fully completed inside, and the rest are close to complete with some finishes for buyers to choose, included in the purchase price.

The units themselves range from about 3,000 to 3,700 square feet, most with water views.

At an auction Gollinger's firm handled in Boston, buyers picked up 14 units during the event "and the market responded by knocking off a quick 20 more after the auction," he says.

Kenneth Wenhold, director of the Mid-Atlantic region for Metrostudy, a real estate market-research firm, says the Baltimore price cut sounds big enough to get buyers' attention. "It'll make it very difficult to sell against them," he added, a problem for other builders.

The rough state the high-end housing market is in nationwide can't only be attributed to the lousy luck of projects conceived when everything was zooming and delivered when sales dried up, he says. Developers started luxury projects during the housing boom with little thought "to where these buyers were going to come from."

What he's saying is that asking prices were too high even for the bubble. "These things really were doomed from the get-go," Wenhold says. As prices come down significantly, though, the potential buyer pool widens.

Gollinger says the new minimum prices for the Pier Homes are below the cost of replacement. The developer and investment team decided against hanging on in hopes of getting more at some later date.

"With the kind of ... disconnect between the buyers and sellers that's occurring in Baltimore right now, to wait it out doesn't make sense," he says. "These guys are making a decision to capitulate now. In general, I think it's always the better way to go."

Posted by Jamie Smith Hopkins at 12:01 AM | | Comments (12)
Categories: For sale
        

June 1, 2010

FHA loan limits leave borrower out in the cold

Wonk reader Josh, an attorney who lives in Howard County, was hoping to refinance his first and second mortgages into one FHA "conforming jumbo" loan and enjoy lower monthly payments. But he can't -- and it has nothing to do with his home value or his credit score.

The trouble is that he needs a $590,000 loan. The limit in Howard County, like all of the Baltimore metro area, is $560,000.

But Josh is within walking distance of Montgomery County, where the limit is just under $730,000. That's true everywhere in the D.C. metro area, including Prince George's County, where typical homes go for a lot less than in Howard.

This makes no sense to him.

"Metropolitan Maryland is arbitrarily divided," he said in an email to me. "I live in Howard County, about one mile from the MoCo line and 14 miles from the DC border. I am about 25 miles from Baltimore, but my home is lumped into the Baltimore market."

The difference a mile makes: $400 a month. That's how much he could lower his payments if he could go from a first mortgage with a 6.25 percent interest rate and a second mortgage at 7.5 percent into a single loan with a 5 percent rate.

"I assume a lot of homeowners in Howard and Anne Arundel are in the same predicament. Can anything be done?" he asks. "Why not just combine Baltimore-DC into one FHA district?"

The U.S. Department of Housing and Urban Development, which oversees FHA, says it sets limits by metropolitan statistical area. Baltimore and Washington are separate regions by that measure.

The two cities and their satellite suburbs are in the same "combined statistical area," a federal nod to the significant economic ties between the two. But HUD goes with the smaller metropolitan statistical areas where ones exist.

"The program staff tells me the MSA decision came from Congress," says HUD spokesman Lemar Wooley.

HUD seems to go smaller where it can, rather than larger. Montgomery has the same limit as the Washington metro area, but it's actually grouped in the smaller Bethesda-Gaithersburg-Frederick metropolitan division, a subsection of the D.C. MSA.

And some parts of Maryland are simply MSA-less. Talbot County is part of a micropolitan statistical area. Several counties, such as Caroline, are on their own.

However you combine areas for the purposes of FHA loan limits, you're going to end up with some pretty big ranges. Baltimore City's median home sale price in April was $135,000, and yet its limit is the same as Howard, with a $340,000 median price. 

Thoughts?

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (10)
Categories: Mortgages
        
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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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