I went to the auction with my wife and we were conflicted about the homes. We live in a historic, brick, three story home that has 5BRs, 2BAs, LR, DR, and eat in kitchen. We also have the benefit of the homestead tax credit and a low mortgage.

The Pier homes offered quite a contrast to our old home and the whole "North Baltimore" scene, and we felt it might be exciting to be downtown near the waterfront. But what made us conflicted were the following: (1) that the waterfront views were exaggerated for the houses right on Key Highway, and those were the only homes we'd be able to bid upon; (2) the views of the community itself struck me as cookie cutter, inorganic town homes -- better than most -- but not nearly as inspiring as advertised; (3) no sense of what the neighborhood was going to be because more than half the homes are empty. Its a ghost town there, right now.

Anyway, when over 110 bidders showed up for 12 homes and a few more add ons, we understood that the auctioneer had turned buyer - seller ratio in his own favor -- erasing the jumbo mortgage line from the equation, and rallying folks with (a veritable posse in this market) $500K+ to the offering table. i was impressed, because all the expensive real estate in my own neighborhood is just sitting on the market without much buyer interest at all.

But back to the auction, our $450K limit was too low. We never raised out bidding paddle in the air one time.

There are a lot of interesting points to your article Jamie, however, the one that stood out the most to me was the father who purchased a half million dollar home for his 24 year old daughter. Wow.

Yesterday's successful auction put many of the existing owners in that community significantly underwater. Given the strong correlation between significant negative equity and increased defaults, future prices in that development are uncertain at best.

Looks like no-nonsense age of price-dropping:).

Jamie, I pulled this comment from the comments of the news article:

"FaxMam at 12:56 PM June 29, 2010

Not only will 24 year old Jenna Yalich NOT be able to afford the property taxes (even with the 5 year 50% off new construction tax credit) she won't be able to afford the flood insruance she will need to close on her "awesome" deal.

"The U.S. Senate voted down a proposal to renew the National Flood Insurance Program, meaning people seeking to close on properties in flood zones cannot move forward. "

http://ifawebnews.com/2010/06/17/senate-votes-down-extension-of-national-flood-insurance-program/

And even then it won't be the flood that destroys these places - the shoddy construction virtually assures that the big bad wolf will be able to huff and puff and blow these little piggies' houses right down!

This project is after all the handy work of developer Richard Swirnow who moved to Ft. Lauderdale leaving all of his buyers in the HarborView Tower with a faulty HVAC system and all sorts of unhealthy mold spores and mildew to make their lives miserable.

If a deal looks too good to be true..... It generally is a bad deal. "<<

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I also a had friend warning of the flood insurance issues for these homes. As the reporting covering this story, did you ever ask any questions about flood insurance from the Pier Homes owners / sellers?

When I asked the sales staff about flood insurance, I was told the Condo Association had a property wide policy, but I was not shown this policy.

smithbaltimore, Congress did renew the flood insurance program at least temporarily: http://www.realtor.org/press_room/news_releases/2010/07/tax_flood_credits

What the long-term horizon is for the program, I don't know.