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March 31, 2011

Pat Hiban: Surge in part of Md. housing market as buyers, investors leap



When I did a Q&A with real estate agent Pat Hiban at the beginning of 2009, he said foreclosure resales were about to hit in a big way, prices would continue to head downward and the higher end of the market had been "severely beaten up."

Now he returns as a guest blogger -- the first of what I hope will be many -- to talk about a new market shift he's seeing.

Hiban (pictured above) has been in the business for more than 20 years and runs the Pat Hiban Real Estate Group with Keller Williams Crossroads Realty. He's a billion-dollar agent who focuses primarily on Central Maryland and as far south as Washington, and he has a book coming out later in the year.

Take it away, Pat:



Very recently, the market has taken a major turn upward with regards to activity. I have one property on Nursery Lane in Gaithersburg with 23 offers on it -- multiple offers escalating the list price significantly. This is a single-family home listed at $630,000.

I currently have 51 properties pending whereas I am used to about 30. As I write this, we are negotiating 12 offers on 12 different properties and on an average day we may only be negotiating two or three.

The housing statistics for the state of Maryland show pending units are up 34 percent compared with February 2010. Because the number of active listings has only decreased by a mere 7 percent, this tells me that it's not an inventory shortage that has created a frisky market but a large increase in buyers.

Why have so many buyers come out of the woodwork?

Four very technical factors exist today that didn't even a year ago:

1. All the fence-sitters who previously believed the prices would continue to fall have finally become convinced the values are at or close to rock bottom and are confident buying now.

2. Interest rates remain incredibly low but the consumer hears daily threats that they will rise soon.

3. The delta between what an investor can buy a mold-infested, rundown house for and what he can sell a mold-free, crystal-clean, fully improved home for has increased to allow for a more significant profit margin. This delta between these two values didn't exist a year ago. In simple terms, flipping has become an attractive play for investors.

4. Rents have gone up and values have gone down. That creates a different but nonetheless more profitable delta between the home value or mortgage payment and the rental income. This has gotten "buy and hold" investors back out into the market place.

It appears that activity in the southern end of the state is driving the surge in market volume. While all pending sales shot up 34 percent statewide, Howard County actually saw a 9.9 percent decrease in its sales of single-family homes. In February 2010 we saw 192 houses go under contract while last month only 173 went under contract.

In my opinion, this an issue of better deals for investors elsewhere. I myself bought two homes in Prince George's County last month with the intent of fixing them up and flipping them for a profit.

It certainly appears that this rush of activity will continue on into the late spring and early summer. But if we have learned anything from the rise and fall of the Maryland market, it is that nothing stays the same forever.



Thanks for writing a guest post, Pat! Thoughts, questions, arguments? Let the commenting begin.

If you'd like to suggest a guest poster or volunteer yourself, check out these details.

March 30, 2011

Home prices up 317 percent!! (Or, why you should take stats with a grain of salt)

Here's a housing market that had a seemingly rip-roaring February: Kent County's average sale price soared 317 percent.

If I thought sellers in that Eastern Shore county were actually getting more than four times the amount that comparable homes sold for a year ago at a time when prices overall are falling, I'd be rushing out there to write a story. But here's a clue that it's apples-to-pizza -- well, besides the ginormous $96,000-to-$400,000 jump: Nine homes changed hands in the 20,000-person county last month. (A year ago? Eight.)

It's not just about the skewing that can come with averages. The median price jumped 158 percent. The thing is, people have the unhelpful habit of buying the homes they want rather than exactly the sorts of homes that sold a year ago, so price comparisons can get hairy.

Take Kent County in November, for instance: prices dropped 60 percent.

While we're having fun with statistics, there's always Somerset County, another small jurisdiction on the Eastern Shore. The number of home sales there rose 125 percent in February vs. a year earlier -- from four to nine.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (0)
Categories: Housing humor, Housing stats

March 29, 2011

'Enormous backlog of foreclosures'

Alarming number of the day, courtesy of Lender Processing Services

"As of the end of February, foreclosure inventory levels stand at more than 30 times monthly foreclosure sales volume."

So even though U.S. mortgage delinquencies are declining, "an enormous backlog of foreclosures still exists with overhang at every level," the company said.

Other notable numbers from LPS:

Foreclosures on option ARMs -- also known as "neg am" because the minimum payment option causes negative amortization, increasing the amount borrowers owe -- have risen 23 percent over the last six months, "far more than any other product type."

Just over one-fifth of mortgages that were at least three months behind a year ago are now current.

Average delinquency for a loan in foreclosure: 537 days, a record.

LPS, which provides services to the mortgage industry that include default management, handles more than half the country's foreclosures. Like its mortgage-servicer clients, it has been hit with allegations of robo-signing and the like. The Florida Attorney General's Office launched an investigation last year.

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

March 28, 2011

Renting vs. owning in a battle royale

If anyone is delighted by the paradigm shift that came with the housing crash, it's apartment owners. They'd been arguing for years that renting isn't a waste of money, but few people seemed to agree until a lot of folks who bought during the market's height ended up way underwater on their mortgages.

Five years after the housing bubble started deflating, many more people are renting -- some by choice, some not. The homeownership rate in the Baltimore metro area, for instance, peaked at 75 percent at the beginning of 2006 and is now down to 66 percent, according to Census Bureau estimates. Homebuying activity is on the rise again, but from a pretty low bottom.

Loyalists on both sides of the own vs. rent debate are continuing to fight it out for hearts and minds.

The National Multi Housing Council, a trade group for the apartment industry, titled its newest annual report "Renter Nation" and argues that demographics are on its side: a shrinking share of the population in nuclear families, more baby boomers looking to downsize and many of their "echo" boom kids at an age that's prime for renting.

"University of Utah Professor Arthur C. Nelson estimates that between 2008 and 2015, nearly two-thirds of new households formed will be renters," the group says in a March press release about the report.

Lender Wells Fargo offers up its own demographic reason for people in the homebuilding and -selling industries to take heart: Those echo boomers -- also known as "Millennials" -- are getting older every day, and some are already in their mid-20s and early 30s. They're potential homebuyers, and there are millions of them, the lender says.

"We're going to have to figure out how to reach them," a Wells Fargo executive told 26,000 real estate agents in a presentation shown on movie theaters across the country last week, according to a HousingWire report.

What all this means for the homeownership rate here and nationwide will be interesting to watch play out. There's so much to consider: What about the possibility that required downpayment amounts balloon or that the mortgage-interest tax deduction withers? Or that Americans -- Millennial or otherwise -- will be leery of putting down roots in case a job transfer or loss makes moving necessary?

But presumably some attractions of homeownership won't go away. You have a lot more freedom to change the place to suit you. As long as you keep up with your bills, it's very unlikely that your right to live there would ever be taken away. And once the mortgage is paid off, your monthly housing costs are maintenance, insurance and taxes.

Where do you come out on the rent-vs.-own continuum? Do you expect to do both at various points in the future or only one?

And which do you think has the edge in the future?

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (6)
Categories: Polls, Renting

March 25, 2011

Upcoming housing, neighborhood events

Spring is when some people's fancy turns to homebuying, so it's not surprising that a pair of buyer 101 events are coming up soon.

Live Baltimore has a Smart Homebuying Night scheduled for April 6 at the Jewish Community Center of Greater Baltimore, 5700 Park Heights Ave. (That's not the same as the twice-yearly Buying Into Baltimore, next scheduled for May 14.) An exhibitor fair with real estate agents, lenders and others will run from 5 to 6:30 p.m., with a pre-purchase counseling class from 6 to 9 p.m. for the first 100 registrants. The class is part of what you need to get a counseling certificate, which makes you eligible for some homebuyer incentives.

April 9 -- the following Saturday -- is the Howard County Housing Fair from 10 a.m. to 2 p.m., which will have industry folks (including homebuilders and remodelers), a bus tour of new developments and a lottery to buy a renovated townhome at what organizers describe as a "substantially reduced" price. (Deadline to register for the lottery is April 6.) The event will be held at Long Reach High School, 6101 Old Dobbin Lane in Columbia.

Residents looking for ways to improve their neighborhood have an event to check out, too: The Greater Homewood Community Corp.'s Fourth Annual Neighborhood Institute, which this year is focusing on "Building Blocks for Better Neighborhoods." That's scheduled for April 2 from 10 a.m. to 4:30 p.m. at Govans Presbyterian Church, 5852 York Road in Baltimore. Workshop topics will include marketing your neighborhood, training "block captains," starting a community garden and dealing with problem properties.

Know of other upcoming housing or neighborhood events? Please leave a comment with a link.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (2)
Categories: First-time home buyers, Neighborhood improvement

March 24, 2011

Housing counselor: Mortgage servicers 'routinely and blatantly ignore HAMP guidelines'

Baltimore resident Michael F. Molloy's letter about a relative's struggles to get a loan modification prompted a lot of comments from readers and full-fledged commentary from a foreclosure-prevention counselor at St. Ambrose Housing Aid Center in Baltimore.

Counselor Bryan Sheldon argues: "It's not that there aren't programs available to assist most homeowners. The problem is that servicers and investors have no real need to follow program guidelines or assist borrowers in default."

The Obama administration's HAMP loan-modification program has been roundly criticized for the low number of homeowners assisted, but Sheldon contends that "many more may have been helped if mortgage servicers did not routinely and blatantly ignore HAMP guidelines."

Other links that might catch your interest:

The Center for Responsible Lending says it ran simulations of the foreclose-or-modify test used by servicers and determined that investors really do make out better with modifications, even though servicers -- who are supposed to be acting in investors' interests -- overwhelmingly opt to foreclose.

A Georgia jury awarded $21 million in damages to an Army staff sergeant who contended that a servicer hurt his credit by reporting him late on payments that it hadn't properly credited him for. The servicer, calling the award "grossly disproportionate to any damages ... sustained," promised to appeal. (Hat tip to the Consumerist for noticing this.)

And on a (slightly) more lighthearted note: Foreclosure buyers hire witches to cleanse properties of "bad vibes" (The Wall Street Journal)

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

March 23, 2011

New apartment complex to offer electric-car charging stations

Need a place to charge your electric car? There's an apartment complex for that.

The Arbors at Baltimore Crossroads, a 365-unit development under construction near White Marsh, will have charging stations along with a variety of other high-end and unusual amenities: a pet spa, a dog run, a multi-tiered swimming pool, a Zen garden and a "Texas doughnut" layout of units and parking garage that will let residents park on the level their apartment is on.

This made me wonder what else you can find in the pricier complexes in town.

The Zenith touts its "cultured-marble vanities" and floor-to-ceiling windows. Several Baltimore complexes, including Symphony Center, have a gourmet kitchen in their community areas. Assembly Apartments has its own fire pit. Crescent at Fells Point has boat slips. 39 West Lexington offers free limousine rides around downtown. And the Palisades of Towson, in addition to its organic dry cleaning service and complementary yoga classes, parks your car for you with its automated garage.

Somerset Construction Co., which is developing the Arbors, says 100 units should be complete in October with the full complex finishing construction in April of next year.

The monthly rental costs for the one- to three-bedroom units will range from about $1,100 to $2,000, the company said.

Because Somerset is trying to win LEED silver-level certification, the apartments will include green elements -- such as energy-efficient heating and low-flow toilets -- that lower utility bills.

Why electric-car charging stations? Somerset says it hopes to encourage the use of such vehicles. (It expects that an overnight charge will cost about $1.50.)

The site is part of Baltimore Crossroads @95, the 1,000-acre mixed-use development off Route 43 and close to Interstate 95. It's in Baltimore County but isn't far from Aberdeen Proving Ground, so the developer is hoping for BRAC spillover.

Apartment-watchers: What's the most interesting amenity (or disamenity) you've come across?

What amenities do you actually want?

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (6)
Categories: New developments, Renting

March 22, 2011

Calling all real estate experts (and buyers, sellers, etc.)

A bit fewer blog posts overall, plus some written by guest bloggers, seems to be the community consensus for how I should manage my work/life balance problem. I'm hoping that will work well for all concerned, and I really appreciate the time you took to make suggestions (and to reassure me that it's OK if I dial it back a bit in the interest of being less frazzled -- thanks for being so understanding).

My tentative plan is three posts a week rather than five, though that could mean three substantive posts plus two quick hits. Several readers noted that they would enjoy being pointed to interesting stories and blog posts elsewhere, so I'll keep an eye out for things off the beaten path.

Also, I'm going to start contacting local folks with housing expertise to see if they'd like to write a guest post about something you'd like to read. Open invitation: If you can recommend someone or fit the bill yourself, please let me know by emailing jhopkins (at) baltsun (dot) com. A good guest post might be a look at what's selling (and what isn't) in a certain slice of the Baltimore region, an analysis of what works (and what doesn't) if you're renting out your home, a walk-through of possible changes to the ever-mutating mortgage market -- you get the idea.

Besides that, though, I'm interested in guest posts from people who are living this crazy housing market in some way. Buyers slogging through lots of open houses. Sellers trying to figure out what constitutes a sweet-spot asking price. Renters jumping to homeownership, homeowners jumping ship back to renting. Chances are, you've got an interesting tale to tell, be it ever so short. So please feel free to volunteer yourself.

Check out this post for a recent example of someone sharing a personal experience, one that sparked a conversation about what renters and landlords can and should expect from each other.

Here's to many more interesting conversations.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (7)
Categories: Your name in lights (well, newsprint)

March 21, 2011

Staving off the bank by 'renting'

The Protecting Tenants at Foreclosure Act keeps banks from tossing renters out of newly repossessed homes for at least 90 days -- longer, in many cases. But frequent commenter Josh Dowlut thinks homeowners who are about to be foreclosed on could use this law to their advantage, and he wants to spread the word.

Dowlut, who has worked in the mortgage business, ran for Congress last year as a Republican and is critical of the financial industry, called the law "a real weapon to fight the banks with" and laid out what he meant in an email interview:

"While you cannot stop the bank from taking legal ownership of your house, you can seriously delay their ability to take physical control of your house if you can get a signed lease with someone who is not your immediate family, for rent that is at least 70% of fair market value, and for a term not to exceed 2 years," he wrote. "Physical control and possession would remain with whoever is on the lease for the entire term of the lease, even after legal ownership transfers."

As long as the lease is "bona fide," the renter of record cannot legally be tossed out of the home until the term ends -- unless the property is sold to someone who intends to move in themselves, in which case the renter has 90 days to vacate. But it's usually the lender who buys back the property at foreclosure auction, and it sometimes takes a long while before the home is resold.

"My thought is homeowners could find a friend, or anyone who is sympathetic to their situation, perhaps even another homeowner facing foreclosure, to become the tenant of record," Dowlut said. Whether that tenant of record actually moves in or not doesn't seem to matter under the law, he added.

That would leave the homeowner paying the agreed-upon rent to the bank, which would likely be much less than the mortgage payment they couldn't afford, he said. A sort of do-it-yourself loan modification, except that the borrower would no longer own the home and would have to exit at the end of the lease.

I ran the idea past several attorneys. Matt Hill, a lawyer with the Public Justice Center in Baltimore who helps renters in foreclosure situations, said he has very occasionally run into people who seem to be trying something along these lines -- and he's not keen on it.

Of about 400 renters-facing-foreclosure cases Public Justice has handled, "I think the count is now at three as the number of situations where it seemed to us that there may have been some intent to sign a lease purely because the property is going into foreclosure. And we don't assist those people," Hill said. "If the sole purpose of the lease is to avoid the consequences of foreclosure, our opinion is it is not an arms-length transaction and thus not a bona fide lease."

Hill said he worries that if homeowners become last-minute landlords in large numbers, lawmakers would get rid of the protection for tenants. "And we don't want that to happen," he said. A sizable share of foreclosures proceedings in Baltimore affect honest-to-goodness renters because the properties are investor-owned.

When renters know their rights, the resolution is usually not a months-long wait for the lease to end but rather a cash-for-keys deal where they receive $2,000 to $4,000 to move out early, Hill added.

Here's the definition of "bona fide lease" from the federal law:

For purposes of this section, a lease or tenancy shall be considered bona fide only if—
(1) the mortgagor or the child, spouse, or parent of the mortgagor under the contract is not the tenant;
(2) the lease or tenancy was the result of an arms-length transaction; and
(3) the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property or the unit's rent is reduced or subsidized due to a Federal, State, or local subsidy.

So an arms-length transaction is key. But Dowlut wasn't deflated by Hill's argument.

"Even if the bank does convince a court that it is not a bona fide lease, something that would be difficult barring an admission of guilt by either the home owner or the tenant, the home owner has still kept physical control of the house away from the bank for the time of the legal proceedings and has thus gained something," Dowlut wrote me.

Homeowners could easily put a for-rent ad on craigslist to show that the property was in fact marketed, he said, and it wouldn't be surprising that a homeowner in financial trouble would want to bring in rental income. 

He wonders how far this could be taken. "If you have a lease for the use of 1 bedroom at $400/mo, can that prevent the bank from taking physical possession of the house?"

There's a definite divide in public opinion these days when it comes to foreclosure, with some in favor of helping homeowners stay in their homes -- whether through loan modifications or other aid -- and others taking the stance that anyone who doesn't uphold their end of a contract (fair or otherwise) should get no assistance.

So I asked Dowlut why he felt so strongly about this possible leverage for borrowers.

"I understand the broader, big picture consequences of throwing a monkey wrench in the banks' quest to retake physical control of property," he answered. "It degrades the free market function of the housing market. But these are not normal times, and today's housing market is anything but free. Most public policy being enacted these days is for the purpose of redistributing wealth upwards, namely from the working class to the banker class. There is an extraordinary asymmetry of power and information when foreclosures happen. This idea ever so slightly helps to level a battle field that is very tilted in the banks' favor. The days of the Bailey Savings and Loan are gone. This is fighting Goliath National Bank by all available means." 

When Wall Street "is raking in record bonuses while people get thrown out on the street, such action is morally justifiable and should be used to the fullest extent possible," he added.

What do you think, folks?

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

March 18, 2011

'Nothing has changed' in foreclosure world

As congressmen convened in Baltimore last week to talk about the "economic nightmare" that is the foreclosure crisis, city resident Michael F. Molloy said he tried -- without success -- to hand-deliver a letter about a relative's personal experience.

Instead, he shared it with me. His point: All the apparent effort "to protect consumers from predatory lending and mortgage companies" doesn't seem to have come to much. That was his impression after sitting through a mediation session, held earlier in the month, in which the lender was required to send a representative who could discuss foreclosure alternatives.

Here's most of his letter:


The attorney [for the mortgage servicer and investor] announced that she was unable to offer any reduction in fees, or other loan modification opportunities that would enable my relative to stay in her home. In other words the attorney came to the mediation meeting unwilling to mediate anything. They were just going through the motions.

My relative was ably represented by two attorneys from Maryland Legal Aid. I can just imagine how horrific this experience would have been had she had to do this on her own. Despite that, efforts to assist the struggling home owner are apparently not working when confronted with merciless mortgage companies and their investors. No amount of public shame has encouraged them to be the least bit flexible despite the damage to our communities.

Despite all that has been written about efforts to help consumers, this mortgage company and the investment bank owner of the mortgage are saying "pay all of our ridiculous fees and charges, our exorbitant interest rate, or we are going to kick you out of your home and we don't care one wit about your struggles." The interest rate on this interest only mortgage is almost 7.25% or almost 3% more than a market rate currently for a standard amortizing loan. That is the lowest that the interest rate can go.

My relative was in my opinion the victim of a predatory real estate agent, a predatory lender and at least two predatory mortgage servicing companies. She was encouraged to offer an above list price contract, qualified for a loan that she could never afford, and harassed with fees and charges that she could not understand when she couldn't keep up with the payments. Nothing has changed to make anyone of these institutions change or do things differently despite all that has happened to home owners in this country.

The most strange thing is that if my relative walks away from this house, the owners of this mortgage stand to get back much less on this mortgage by trying to sell a vacant house in a seriously down market. My relative with my help has the ability to stay in this house provided certain loan modifications are made and the fees and charges are adjusted. These institutions are acting as if they own a Credit Default Swap on this mortgage and if it fails, they will get all their investor's money back. Mortgage companies and investors win and our communities and vulnerable citizens lose. Nothing has changed.



Thank you for sharing your letter, Michael.

Have you been to foreclosure mediation in Maryland? What happened?

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (23)
Categories: The foreclosure mess

March 17, 2011

Suggestion box is now open

Three-and-a-half years and 1,600 posts after I came out of the closet as a wonk, I'm still enjoying the conversation with you all. And goodness knows there's no shortage of housing-related topics to chat about. But I've got a blogging dilemma that I hope you can help resolve.

As housing and economic coverage possibilities have ballooned, I've gone from doing some blogging at home to handling nearly all of it there. Most nights, I rush home, scarf down dinner, get my toddler to bed and have just enough time to write a blog post for the next day before falling into bed myself. (This week, I'm blogging on vacation.) So I'm well into burnout. But I'm loath to just get rid of the blog and call it a day.

So, readers, what would you propose? I've put some of the more obvious possibilities on the poll below and would like your input. Also, any less-obvious but awesome ideas that come to mind.

You can choose as many of the options below as you like. Thanks, all.

There's no guarantee that some of these would work -- I'm not the one who gets to decide if I write fewer stories, for instance -- but I'd like to know what you'd prefer before I try to make any major adjustments.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (18)

March 16, 2011

Landlord to tenants: Let's break the vicious cycle

Renters complain about landlords. Landlords complain about renters. If you're been on one side of the fence for a while, chances are you've dealt with someone on the other who burns your biscuits.

So I was interested in the response that one landlord wrote to a question of the day aimed at people renting their home out. Steve, who's from Baltimore and works at a university in town, owns a few rentals on the side and wanted to share an off-topic point by email. I figured it might interest you all, too.

Here it is:


I am a landlord. I believe I am a good landlord. My initial cause was to improve the reputation of landlords in Baltimore City while still making investment incentives for myself. After almost six years of property management, I'm gradually understanding how landlords and tenants in Baltimore get jaded, get sloppy, and ultimately, make their rental counterparts pay for their ignorance.

My current cause has evolved. I still want to improve the reputation of landlords. More importantly, I want to help landlords and tenants understand how things can get ugly and that, by one step in the wrong direction, a snowball of negativity can start rolling down a long hill -- an effect that can gradually grow and influence many landlords and tenants, though undeserving. As far as my investment is concerned, it's a losing one, but one I'm not willing to let go as a complete failure.

I bought three properties in 2005 and 2006. In hindsight, those were terrible years to buy property anywhere, but that is now water under the bridge. I try to make the best out of that fact daily and look to the distant future for a small chance of return. Although I put twenty percent down on each property, I would have to pay to sell them today. Many investors and homeowners in this position have gone the foreclosure route, but I guess I'm too proud, stupid, or stubborn to compound the national problem.

My properties are located in East Baltimore, specifically Eastwood, Dundalk, and Medford. I've put time and money into each property to make them nice homes for my tenants. I priced them fairly and always kept a higher level of quality in the homes from others in the neighborhood. I want people to know that I care and will go out of my way to make sure my tenants are happy. When I go on vacation or out of state, I make sure the tenants have someone to call that has keys to, and knowledge of, the property. Someone that will help them just like I do. I respond quickly and efficiently to service calls. Although I used to do some of the work myself, I rarely do anymore since I don't have the time. My tenants and I both have my list of preferred contractors to handle any situation or disaster. I am fair with my tenant selection, and believe everyone deserves a second chance.

My point is hard to say without seeming insensitive. As much care, thought, time, and money that I have poured into managing a property, I've come to realize that I cannot expect the same kindness to be reciprocated on my property by my tenants. Although I get emotionally involved in making each property a great place to live, I have to seal off those emotions when the tenants return the property half destroyed or pay late every month. I have even received apologies from previous tenants that did not have their security deposit returned. They knew the deposit money would not cover the damage they caused. They are almost embarrassed to talk to me. Is this a negative string of events leading back to a bad landlord? Did the bad landlord get that way by having their property trashed?

I do get positive feedback from my tenants. Two of them have told me that I was the best landlord they ever had. None of my current or previous tenants are angry with me or feel cheated. I have never evicted a soul. Something can always be worked out, and eviction is the hard way for everyone involved. It's not magic, it's common sense. Realizing that tenants may have misused your property because of a fellow landlord is an indirect, but perhaps more honest approach.

I'm not saying that good landlords should get a prize, but when I think about it, it's a losing battle, and not just for the landlords. I believe these actions cause many landlords that start out on the right foot to take each slight personally, and ultimately begin taking it out on the tenants in turn. That behavior, in turn, causes the tenants to treat rental properties with as little respect as they are shown by the bad landlords. It's a vicious cycle, and one that turns many good people into bad landlords and tenants.

Which came first, the chicken or the egg? How do we move forward instead of backward?

Personally, I feel I have managed to come out on top. I tell tenants up front that although they may have had bad landlords in the past, that I am not one of them and that I am not alone. I tell them that I will respect them and make living at my property comfortable and stress-less. I tell them I expect them to keep my property in good shape, regardless of how they've rented before. I want them to be happy. I will forgive late fees if the tenant calls me with a valid excuse as long as the behavior is not repetitive. I do expect to be paid each month so I can pay the mortgage and repair expenses. When tenants leave, I ask them to give their next landlord a chance. I ask them to have the new landlord call me for a reference so that I can give them my spiel.

I want things to be better for both groups and will continue to work toward that on a daily basis.



Thanks for sharing your experience, Steve.

Renters and landlords: What has your experience been? Is there a vicious cycle at work?

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (19)
Categories: Landlording, Real estate investing, Renting

March 15, 2011

What renters need to know about foreclosure

If you're renting a home, don't assume foreclosure won't affect you.

As tenants across the country have discovered the last few years, you can end up with a bank wanting to throw you out if your landlord doesn't keep up with the mortgage payments. Some residents who never missed a rent payment have been caught completely by surprise.

The Baltimore Homeownership Preservation Coalition and the Public Justice Center are launching a new education campaign to put renters on guard and remind them of their rights if a foreclosing bank starts talking about eviction.

About 40 percent of Baltimore homes in the foreclosure process are investor-owned, so that does happen all the time. Some landlords get behind because their renters aren't paying, but others simply overextended themselves.

"Tenants are often the forgotten and unintended victims of foreclosure," Maryland Attorney General Douglas F. Gansler said in a statement about the campaign.

The key things to remember:

Renters generally have the right to remain in the home for the remainder of their lease, or at least 90 days after receiving a valid notice to vacate if the lease term is shorter. Campaign organizers recommend that renters get legal help -- Public Justice offers it for free -- before accepting any deals to move out early in exchange for cash.

How can you know if your landlord is in trouble? Open all mail, even if it's just addressed to "occupant," so you don't miss official notices. You can also find out if a foreclosure case is pending in a Maryland court by putting the landlord's name into the court system's look-up site. (In Baltimore, you can also search by the property address.)

The public awareness campaign, funded with $30,000 from the Open Society Institute, will include television and radio spots as well as MTA bus ads.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (3)
Categories: Renting, The foreclosure mess

March 14, 2011

Councilman: Cut Baltimore's property-tax rate in half

Baltimore City Councilman Carl Stokes submitted a charter amendment last week that would do what most readers here seem to want: cut the city's property-tax rate in half.

In an interview, he said everyone is telling him such a reduction is important -- "except the mayor and City Council."

One colleague on the council calls his proposal a "tooth fairy plan." A spokesman for Mayor Stephanie Rawlings-Blake said the idea would result in "irresponsible cuts" to an already strapped budget.

Here's what Stokes, a mayoral candidate, is suggesting:

Voters would get to approve or quash a city charter amendment that would decrease the property-tax rate from nearly 2.27 percent to 1.1 percent -- same as Baltimore County's rate -- over a three-year period. The drops would begin July 1, 2013.

Right now, the city's rate is at least twice that of any other jurisdiction in the state.

Stokes' amendment specifies that the rate "may not exceed $1.10 for every $100 of assessed or assessable value" (otherwise known as 1.1 percent) from July 1, 2016 onward.

It could come with a catch for taxpayers, at least initially. Because Stokes anticipates an initial drop in revenue, he also submitted a companion bill that would temporarily increase the ceiling on the Homestead tax credit and put the extra money collected from residents into a fund to help the city pay its bills once the tax rate takes a nose dive.

The Homestead cap currently protects owner-occupiers from seeing more than a 4 percent increase in their taxable assessment in any given year. Stokes' amendment would increase the ceiling to 6 percent in July 2013, to 8 percent the following year and to 10 percent in 2015 -- the state maximum. It would stay there until July 2020, when it would drop back down to 4 percent.

The bill specifies that any money generated from the higher Homestead cap must be used "exclusively to reduce the City property tax."

Newcomers, landlords and most homeowners who haven't owned their properties for more than a few years would see no change from a higher Homestead ceiling because they're getting zero benefit from it now.

Longer-term owners would feel the impact. If my back-of-the-envelope calculation is correct, someone who has amassed a particularly large Homestead credit amount would pay just 7 percent less in taxes in 2020 under Stokes' plan than she's paying now. But if nothing changed, she'd pay 37 percent more in 2020 than her current bill. (I did the math for a hypothetical homeowner whose place is assessed at $200,000 but who is paying on just $100,000 of that amount right now.)

Stokes says he's offering a variety of suggestions to get the city over the hump of the initial revenue hit and isn't married to the idea of a Homestead increase. But he said he does feel strongly that the city needs to make its property-tax rate competitive with other jurisdictions in the state. He believes it would help Baltimore increase its population, jobs and development activity -- thus increasing its tax base.

"It is based on sound economic principals that have been proven to work over and over again in other towns and other cities," said Stokes, chairman of the council's taxation, finance and economic development committee.

He added, "The city recognizes that the tax rate is an impediment -- it recognizes it, because when someone comes to town and says, 'I want to build a big development in your town,' we say, 'Here's a tax incentive, here's a tax break, please come in and do it.'"

Meanwhile, homeowners complain that they're not getting twice the services of the suburbs for twice the tax, he said, and some leave as a result. 

"In the short term, we're going to have to make some adjustments" to the budget if the rate plummets, Stokes said. But he believes "at some point, the fact that the property tax is going down will cause such an expansion in the tax base that we won't have to cut."

Stokes' plan is similar in some ways to a proposal by a Loyola University Maryland professor and one of his former students, which would drop the rate to 1 percent even.

But the academics' proposal calls for a charter amendment specifying that the rate will fall all at once in three or four years. They believe growth would start immediately -- leading to an increase in revenue that officials could bank and use when the rate plummets. They don't suggest a Homestead hike.

Steve Walters, the Loyola economics professor, said in an email interview that Stokes' plan is "a good first step down the path of a genuine, organic renaissance for Baltimore." That it's proposed as a charter amendment means people shouldn't fear it's an empty promise, he said.

He doesn't think the Homestead increase is necessary. And he'd rather see a rate that's a bit lower than Baltimore County's to give the city an edge.

"But the Councilman deserves considerable credit for his insight and courage on this issue," Walters wrote in his email. "The status quo well serves many entrenched, special interests -- especially our redevelopment bureaucracy and an in-crowd of developers who have 'paid to play' and now receive the kinds of subsidies that offset the City's brutal tax rate; they'll fight this change tooth and nail. The problem is that the status quo just isn't working very well, as the latest census numbers showed -- as did the census before that, and before that. How long will we keep doing things the same way and expecting different results?"

The Baltimore Sun has not yet taken an editorial position on either plan, saying the population growth needed to cover a tax-slash budget gap would be "massive."

"But the knee-jerk dismissal the ideas are getting at City Hall is wrong," the Sun says in an editorial. "Of all the things holding Baltimore back, there is only one that the City Council and mayor could change with a stroke of the pen, and that is the property tax rate."

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (16)
Categories: Homestead Property Tax Credit, Property taxes

March 11, 2011

February home sales up, prices down

The housing market continued two trends in February: the number of home sales rose while prices dropped.

Sales increased 7 percent compared with a year earlier, less strongly than in January but still heading in the right direction (if we're ever going to see inventory get back to a normal level, anyway).

Average prices fell 5 percent to just under $250,000 -- about $12,000 below the average price six years earlier.

Here's the county-by-county breakdown, which ranges quite a bit.

The other economic report out Thursday was Maryland job numbers, and that was a doozy. The U.S. Department of Labor, which benchmarks state figures every March, revised 2010 numbers so sharply that the 25,000-job gain the state appeared to have in the 12 months ending in December turned -- poof! -- into about 4,500 jobs. Quite a depressing magic trick.

Here's the story about both that report and home sales, the latter of which gets second billing.

You can find the housing-market figures from Metropolitan Regional Information Systems on the website of its stats arm, RealEstate Business Intelligence.

A few more stats:

New pending deals, contracts that were signed in February and will later turn into sales if all goes smoothly, rose 25 percent from a year earlier. That's the same increase reported in January.

New listings rose, too -- 8 percent. There were nearly 16,000 homes on the market in total in February.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (1)
Categories: Housing stats

March 10, 2011

Making it official: 2010 in Baltimore's housing market

While we wait for February home sale statistics, here's something to whet your appetite: the official 2010 tally for the Baltimore metro area from the keeper of the multiple-listing service. (Earlier figures were preliminary.)

Overall, the number of home sales dropped about 3 percent in the region -- the city and surrounding suburbs -- last year vs. 2009, according to Metropolitan Regional Information Systems' stats arm, RealEstate Business Intelligence.

Prices dropped not quite 1 percent on average, to $274,000. (The decline in median price, for those who prefer that measure, was 2 percent -- with half the homes selling for less than $235,000 and half selling for more.)

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (2)
Categories: Housing stats

March 9, 2011

Foreclosure irregularities -- and testimony

Didn't mean to leave you all to your own devices yesterday, but I was swamped with foreclosure coverage.

A congressional field hearing about the foreclosure crisis was held in Baltimore while I was deep into the reporting on an insider complaint about a foreclosure law firm, and I optimistically decided to do both at once.

Here's that story, in which a paralegal filed a complaint alleging that his former employer recorded more than 1,000 deeds for Maryland foreclosures with false signatures.

The congressional hearing gets short shrift, so you might be interested in seeing the written testimony -- especially from Baltimore homeowner Kevin Jerron Matthews, an Iraq war veteran who told the House Committee on Oversight and Government Reform that he took an oath to defend the Constitution and he's simply asking that he and other borrowers be assured their constitutional right to due process. (Matthews is represented by Baltimore-based Civil Justice and the University of Maryland School of Law's Consumer Protection Clinic.)

Congressmen and testifying elected officials also got into a debate about whether to improve or eliminate HAMP and other government programs aimed at preventing foreclosure (including the Emergency Homeowners' Loan Program, which isn't actually underway yet). What do you think?

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

March 7, 2011

New Live Baltimore ad campaign offers twist on "just say no"


The nonprofit marketing group that encourages people to live in Baltimore has launched a new ad campaign with a bit of (tongue-in-cheek) anti-marketing. The big letters proclaim, "When people ask if you love Baltimore, say 'no.'"

The small print adds, "The less other people know about the City, the cooler it stays for the rest of us."

For a larger pop-up with readable text, click on the ad.

This is Live Baltimore's first new image campaign, not counting event promotion, since one that launched in 2007 and ended two years later.

The group is advertising in the Baltimore and Washington regions, including D.C.-area Metro stations -- repeating the strategy that drew a lot of attention in the bubble years, when Live Baltimore made hay out of the price and personality differences between the two areas. (A 2007 ad showed a black-and-white photo of suburban tract housing under the headline "Generica," contrasted with colorful "painted ladies" in Charles Village, headlined "America.")

Anna Custer, Live Baltimore's executive director, says the group is spending $40,000 on the first three months of advertising in hopes of pushing people off the fence. The tagline is "So if you've ever told yourself, 'Someday I'll own my own place,' get in touch. Because someday is now." ( redirects to the Live Baltimore site.)

"We’ve talked with our real estate partners who’ve lamented that some of their customers who seem to know it’s prudent to buy aren’t talking any active steps to do so," Custer said in an email interview. "With the start of the spring buying season, we thought it’s a good time to focus people on buying a home – and specifically buying in the City."

Besides the reverse-psychology ad, the others "highlight ironic things about Baltimore, like the farmer’s market under I-83, with the goal of showing to a broader audience just how cool the Baltimore of today is," she said. "We can always aspire to be more, but Baltimore has a lot of great things going for it and this campaign celebrates those aspects."

I asked about property taxes, since that's a perennial thorn in the "buy here" effort. Is Live Baltimore taking a position on the slash-the-rate-in-half proposal making the rounds?

"We are a marketing organization and don’t take official positions on ideas or proposals," Custer said. "When people start diving into the homebuying process, we do get questions on the property tax rate. While it's higher than the regional average, we also have lower overall housing costs. Additionally, we make sure people know about the tax abatement opportunities here in the City that other jurisdictions don’t offer – new construction, renovation, and historic tax credits – along with the state's homestead and homeowner's credit programs."

Read on for the rest of the ads, and remember that you'll get a larger (and easier-to-read) pop-up if you click on them. What do you think? And city residents: When people ask you if you love Baltimore, what do you say?

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (24)
Categories: First-time home buyers

March 4, 2011

Question of the day: Are you renting your home out?

The housing bust created a new breed of landlords -- homeowners renting their places out because they can't sell them, at least not for an amount they're willing to take. ("Accidental landlord" returns 100,000 hits on Google.)

Is this you?

I'm curious to hear the ups and downs, whether you take care of "the toilet's leaking" calls yourself and if it's all been worth it. (Some real estate pros are doing a brisk business helping connect owners and tenants, so please weigh in too, you guys.)

Others, of course, are renting a home or homes out by choice. How is that going? Do you think you've got an advantage over the accidental landlords?

And renters: How do you like (or not) having a landlord with just the one property?

OK, fine, so these are the questions of the day. Hard to stop at just one.

The last Q of the day asked (via a poll) whether you were rooting for home prices to rise, fall or stay flat. In a testament to how divisive the subject is, 46 percent said "up," 40 percent said "down" and all the rest -- minus a few write-in votes -- said "no change."

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (13)
Categories: Question of the day

March 3, 2011

Who's reaping the most benefit from the Homestead tax break?

Anne Arundel County residents are getting good use out of the Homestead break: They won't be billed for property taxes on about $12 billion in assessed value in the fiscal year that starts in July, according to the state Department of Assessments and Taxation.

That's by far the top amount in the state, helped along by the county's fairly low Homestead cap. The tax break puts a ceiling on how much of an owner-occupant's assessed value can be taxed in a given year, and in Anne Arundel, the increase can't top 2 percent annually. (Statewide, the cap ranges from a high of 10 percent to a low of zero. Yes, zero.)

No. 2 for Homestead use: Baltimore County, at $6.7 billion in untaxed assessed value.

The effect of the Homestead tax break isn't spread evenly around the state, thanks at least in part to the range in caps. Six jurisdictions have Homestead-shielded assessable amounts that come to nearly 10 percent or more of their total assessable bases. (Talbot's comes to a whopping 30 percent.) But it's 1 percent or less in 10 other jurisdictions.

Here's the breakdown:

JurisdictionHomestead-shielded assessable valueNet assessable base% of totalHomestead cap
Anne Arundel$12,246,575,955$62,458,477,04520%2%
Baltimore Co.$6,733,456,431$72,393,490,5699%4%
Prince George's$6,196,806,426$69,286,396,5749%1%
Baltimore City$4,699,359,146$32,129,661,85415%4%
Queen Anne's$774,807,516$7,303,692,48411%0%
St. Mary's$694,506,403$11,936,993,5976%5%


Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (3)
Categories: Homestead Property Tax Credit, Property taxes

March 2, 2011

Your take on Baltimore property taxes

Probably not surprising, given the frequent griping about Baltimore property taxes, but the vast majority of readers who took a poll about a proposal to slash the rate in half -- with a several-year lead-in period to build up a cash cushion -- say the city should go for it.

Eighty-five percent of poll-takers chose that option. Another 10 percent say they're intrigued but not sure.

Three percent say no thanks. And the remaining few wrote in answers, from "I wouldn't trust the city to deliver the rate cut" to "It makes logical sense and is the way to go for future residents" to "Tax rate could be zero and I still wouldn't live in the city."

It would be interesting to see a scientific poll on the subject with, you know, margins of error and such.

Here's the original Q&A on the proposal, offered by an economist and one of his former students, and the companion blog post.

And here's a new video, in case you just can't get enough on the topic:

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (8)
Categories: Property taxes

March 1, 2011

"Starter home" neighborhoods

Where can you afford to purchase a home if your limit is $250,000 or less? Many more places than a few years ago.

The average sale price was between $50,000 and $250,000 in 40 ZIP codes in the Baltimore metro area last year, spread around every jurisdiction in the region except pricey Howard County. (A few more were under $50,000, but that seems like the point below which sales are much more likely to be homes in bad repair picked up by real estate investors, rather than by first-time buyers.)

They account for almost one-third of ZIP codes in the metro area that had at least a handful of home sales last year. Many more had some sales in that price range -- just not enough to put the average there.

Neighborhoods are a more useful categorization in the city than ZIPs, and just over 120 in Baltimore had average prices between $50,000 and $250,000 last year. That's close to two-thirds of the neighborhoods with at least a handful of sales.

Here's the list of ZIPs and city neighborhoods:

ZIP codes:

CommunityZIP code'10 sales'10 avg sale priceSales changePrice change
SPARROWS POINT2121955$223,271-5%-17%
UNION BRIDGE2179115$220,3650%17%
GLEN BURNIE21060264$219,584-3%-6%
GLEN BURNIE21061312$215,627-14%-8%
WINDSOR MILL21244197$197,867-1%-3%
MIDDLE RIVER21220269$194,496-8%1%
CURTIS BAY2122663$191,006-5%-13%
GWYNN OAK21207271$148,839-2%-9%

Baltimore City neighborhoods:

Neighborhood'10 sales'10 avg sale priceSales changePrice change
WYMAN PARK13$227,154-19%5%
BREWERS HILL35$219,362-5%5%
CROSS KEYS24$214,03841%2%
CHARLES VILLAGE21$210,329-13%-14%
HUNTING RIDGE13$202,869-19%-14%
ORIGINAL NORTHWOOD9$201,986-31%-4%
RIDGELY'S DELIGHT10$200,1500%-8%
UPPER FELLS POINT101$192,37415%-4%
LAKE WALKER26$191,48863%-15%
MOUNT VERNON12$188,300-37%-22%
MID-TOWN BELVEDERE25$177,47632%-18%
WASHINGTON HILL8$175,788-27%-29%
BEVERLY HILLS11$169,99122%0%
CROSS COUNTRY27$166,511-4%0%
HOES HEIGHTS10$166,00025%-22%
NORTH HARFORD ROAD33$162,1733%-1%
BARRE CIRCLE9$155,65980%-22%
MADISON PARK7$142,357-13%45%
ROSEMONT EAST9$140,450-55%1%
PATTERSON PLACE35$137,8963%-6%
GROVE PARK6$130,0330%47%
PERRING LOCH20$128,62318%-5%
WEST HILLS11$121,766-15%5%
GLEN OAKS13$118,5548%-6%
WINDSOR HILLS18$116,42820%0%
NEW NORTHWOOD20$116,15854%-5%
HOWARD PARK45$116,04750%0%
GARWYN OAKS13$112,60963%29%
LOCH RAVEN23$112,174-15%-18%
FOREST PARK7$106,41440%76%
WEST ARLINGTON20$104,068122%-6%
YALE HEIGHTS9$102,778-40%-6%
RESERVOIR HILL62$99,82241%9%
CENTRAL FOREST PARK7$98,711-22%-20%
BROENING MANOR5$97,200-17%-7%
GRACELAND PARK17$96,34142%-30%
GREENMOUNT WEST8$96,244-33%-50%
JOSEPH LEE22$95,564-15%-17%
UNION SQUARE27$94,35069%-37%
WEST FOREST PARK7$93,847-30%-23%
KENILWORTH PARK7$91,386-22%-18%
ROGNEL HEIGHTS13$87,927-7%-20%
EAST ARLINGTON14$86,77040%-18%
WASHINGTON VILLAGE100$84,3984%-30%
MORRELL PARK35$82,922-24%-25%
MIDDLE EAST21$71,14691%73%
HOLLINS MARKET20$70,473-13%-39%
PARK CIRCLE24$63,721-8%0%
EDMONDSON VILLAGE44$61,956-4%-7%
WILSON HEIGHTS10$61,95143%-55%
CURTIS BAY19$61,172-24%-18%
MCELDERRY PARK49$59,21129%-14%
PEN LUCY20$51,5375%-39%
BETTER WAVERLY17$51,056-11%-17%

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (12)
Categories: First-time home buyers, Housing stats
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About Jamie Smith Hopkins
Jamie Smith Hopkins, a Baltimore Sun reporter since 1999, writes about the regional economy. Her reporting on the housing market has won national and local awards. Hopkins is a Columbia native and has lived in Maryland all her life, save for 10 months spent covering schools in Ames, Iowa.
She trained to become a wonk by spending large chunks of time as a geek and an insufferable know-it-all.
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