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April 29, 2011

New guidelines for mortgage servicers could be good news for struggling borrowers

Mortgage servicers have been roundly criticized for their efforts -- or lack thereof -- to help delinquent homeowners avoid foreclosure. More than 2 million of the delinquent mortgages they're servicing are owned or guaranteed by Fannie Mae and Freddie Mac.

You can see how they could make a difference.

Their regulator, the Federal Housing Finance Agency, said yesterday that the mortgage giants will issue new rules for servicing troubled mortgages in hopes of doing just that. Servicers will get incentives for working with borrowers more quickly -- "earlier contact, more frequent communication, and prompt decisions" is how the agency's director puts it -- and will be hit with penalties if they don't perform well.

For instance: no more starting foreclosure proceedings while a borrower is working with the servicer on an alternative.

"The updated guidelines ... address the so-called 'dual track' by requiring servicers to contact borrowers as soon as they become delinquent and focus solely on remediating that delinquency," the agency said. "The foreclosure process may not commence if the borrower and servicer are engaged in a good-faith effort to resolve the delinquency. The servicer must conduct a formal review of each case to ensure a borrower has been considered for foreclosure alternatives before the loan is referred for foreclosure. Even after foreclosure processing begins, financial incentives are provided to encourage servicers to continue to help borrowers pursue a foreclosure alternative."

Full guidelines are expected later this spring or over the summer, but there's a link to Fannie and Freddie's own announcements from the FHFA release.

Anne Balcer Norton, the state's deputy commissioner of financial regulation, said by email that it looks like a good start to fixing "misaligned compensation incentives" that make servicers treat foreclosure as the best option.

"There is a great deal of blame by the foreclosure bar and the servicers on Fannie and Freddie requiring that they move ahead with foreclosure proceedings within a given window," said Norton, who headed foreclosure-prevention efforts at a housing counseling group before coming to the state Department of Labor, Licensing and Regulation. "Ideally, through these guidelines, some of that blame is less credible."

She added, "It also sounds like these changes are in-line with the Enforcement Orders of the federal regulators in response to robo-signing. We're still far from national standards and fixing the problem but after 4 years, it looks like the industry is starting to head in the right direction."

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (10)
Categories: Foreclosure help, The foreclosure mess

April 28, 2011

1 in 3 say their financial situation is getting worse, not better

A third of Americans say their finances are in worse shape now than they were 12 months ago, and few are comfortable with their level of debt, according to a new survey.

I figured you all would be interested, since you need savings -- absent lots of downpayment assistance from other sources -- to buy a home.

Quick poll: Is your financial situation better than it was a year ago?

This week's guest poster argues that the echo boom generation, which includes everyone in their 20s, is (as a group) in no financial shape to buy a house -- and might be uninterested even when/if savings improve.

That's sparked an interesting conversation. Pigtown girl, for instance, says she and her siblings are all echo boomers and have very different perspectives on homeownership: "My one sister & I see real estate as an investment if done properly & my other two sisters see it as a ball & chain to the area."

One of the interesting side points that guest poster Timothy Smith makes is that many echo boomers would rather spend their money on post-baccalaureate higher education than housing, seeing higher education as an investment in themselves that will pay off. It just so happens that PayPal co-founder Peter Thiel is making a controversial argument that higher education is the new bubble, now that housing has gone bust.

All of which makes me wonder: What do you see as the highest and best use of your money -- and where does habitation play into it? Is small and cheap (owned or rented) your idea of a good housing situation? Spacious and gracious? Somewhere in between?

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (14)
Categories: Savings/downpayment

April 27, 2011

Baltimore rents up, home prices down

Rents in Baltimore (and many other places) are climbing, while typical home prices -- thanks to foreclosure sales -- are way down.

Here are just two of the implications:

--Affordability problems for renters. Twenty-seven percent of renter householders in the Baltimore region were spending more than half their pre-tax income on housing and utilities in 2009, up from 19 percent in 2000, according to a new report by Harvard's Joint Center for Housing Studies. And rents have only increased since.

That's a "severe" cost burden, but plenty of others are feeling pinched. Nationwide, just half of renter households were spending less than 30 percent of their income on housing and utilities in 2009, the center said.

"In the last decade, rental housing affordability problems went through the roof," co-author Eric S. Belsky of the joint center said in a statement. "And these affordability problems are marching up the income scale. In real terms, it means more people have less money to spend on household necessities such as food, health care, and savings."

--New grist for the buy vs. rent debate., a real estate site that shows both rental and for-sale listings, says rents in Baltimore have jumped nearly 5 percent in the last year while asking prices for city homes on the market have slumped nearly 30 percent. That's lowered the "rent ratio" -- its buy vs. rent calculation -- to the point that buying is "more favorable" than renting, the company says. The median home price is 7.8 times higher than a year's worth of rent in Baltimore, down from 10.7 a year ago, HotPads says.

Statewide, the figure is 14.7. For comparison's sake, that's 13th lowest in the country.

Of course, foreclosures in need of fixing up -- substantially, in some cases -- are helping to drag down the median asking price. Another cost consideration for the mix if you're crunching the numbers.

Patrick Killelea, of the housing-bubble-and-bust site, has his own buying rule of thumb:

The only true sign of a bottom is a price low enough so that you could rent out the house and make a profit. Then you'll know it's pretty safe to buy for yourself because then rent could cover the mortgage and ownership expenses if necessary, eliminating most of your risk. The basic buying safety rule is to divide annual rent by the purchase price for the house:

annual rent / purchase price = 3% means do not buy, prices are too high

annual rent / purchase price = 6% means borderline

annual rent / purchase price = 9% means ok to buy, prices are reasonable

That would be an interesting exercise. Homeowners, how much could you rent your home for, and does the annual amount divided by your purchase price work out to 9 percent or more? Renters, would the purchase price on your home -- or a home comparable to your apartment -- meet Killelea's test?

If you're doing the math, remember that the result will be a decimal. Multiply by 100 (that is, move the decimal two places to the right) if you want to see it expressed as a percent.

Maryland, using HotPad's figures on median asking price ($239,990) and median rent ($1,358), works out to 6.8 percent. Borderline, by Killelea's reckoning. I'm sure that calculation varies a lot from community to community. 

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (14)
Categories: First-time home buyers, Housing stats, Renting

April 26, 2011

FICO: Short sale no better for your credit score than foreclosure

For borrowers going through the frustration of trying to market their home as a short sale, the big selling point generally is the thought that it's not as bad -- from a credit-score perspective -- as a foreclosure.

But that doesn't appear to be true, the folks at FICO say.

The credit-score company says on its analytics blog that it compared the effect of both types of distress sales on the scores of three different types of consumers. A foreclosure and a short sale represented an equal hit to the FICO score of all three, FICO said. (Thanks to HousingWire for noticing.)

One commenter on that blog takes issue with the suggestion that it's all the same, arguing that someone who needs a security clearance would be out of luck with a foreclosure in their past and thus has a reason to push for a short sale. But it's not clear that defense officials see a difference, either.

Sheldon I. Cohen, an attorney who focuses on security-clearance issues, writes that the Department of Defense's Office of Hearings and Appeals has granted clearances to some with a short sale in their background and some with a foreclosure in their past, and it's also denied clearances to people who had a foreclosure or a short sale. The key is "good faith and moral behavior," he writes:


The common thread in all of these cases is that: (1) applicants were victims of circumstances not of their own doing; (2) they had not been speculators in the housing market who were caught when the bubble burst; (3) they had not succumbed to fraudulent schemes "too good to be true" as a result of their own greed; and (4) they had made good faith efforts to meet their other debts after the loss of their homes by foreclosure or short sale.

What do you think, guys? Anyone see an upside to a short sale -- from the exiting homeowner's perspective -- compared with a foreclosure?

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

April 25, 2011

Timothy Smith: 'Echo Boomers' have a different outlook on homeownership


Today's guest-post writer is the keeper of his own blog, the Echo Boom Bomb, which focuses on Echo Boomers -- aka the Millennial generation -- from an economic and financial perspective.

Timothy Smith has worked in the financial-services industry for five years in Texas. He's spent the last two collecting data, anecdotes and details on the generation the Baby Boom produced. (At age 28, he's an Echo Boomer himself.)

He predicts that the Echo Boom won't buy houses in bulk for a while -- if at all. His guest post is aimed at people trying to sell homes in one way or another, but it will probably interest anyone trying to get a handle on what the future holds for the housing market.

Take it away, Timothy:



How would you like to have 80 million customers? If you sell real estate, I know that you would love it. The great news is that the Millennial generation is estimated at 80 million strong, but the bad news is that these Echo Boomers don't appear ready to buy homes and may not want homes.

Echo Boomers, born from 1980 to 1995, constitute the second-largest generation in U.S. history. While they perform well in school, they tend to lack the financial skills needed to make large purchases, such as buying a home. They also think in a different value system than former generations when it comes to financial investments. Those in the real estate profession will face three major challenges with Echo Boomers, but each of these can be addressed with the appropriate strategy.

The first major challenge for those in real estate is the lack of net worth among Echo Boomers.

U.S.-born Echo Boomers have a negative average net worth (with a negative $1,000 median net worth), and 90 percent hold less than $1,500 in net worth. To put that in perspective, that’s a 10 percent down payment on a $15,000 home. Add to those numbers the fact that only 10 percent of Echo Boomers own homes. While the numbers seem to spell disaster, building relationships with Echo Boomers can pay off. They may not be ready to buy a home when they speak with you, but an honest conversation with clear and concise goals will help encourage them to set aside money for a home.

As an example of this, two Echo Boomers I spoke with moved into a house with six roommates because they wanted to save money to buy a home within a year. What made them OK with such a large sacrifice? Their real estate agent suggested some sacrifice so that they could buy a home and the two Echo Boomers followed it. Don't underestimate your power to motivate Echo Boomers; they listen.

Echo Boomers' love of higher education will present another challenge for those selling real estate. Only a third of Echo Boomers express interest in ever buying a home. Another third of Echo Boomers desire a graduate or professional degree because it provides them more flexibility. As many Echo Boomers see it, owning a home can limit your options, whereas a graduate degree can increase your options.

One Echo Boomer stated it best: "If I were to lose my job, owning a home could become a major liability, whereas investing that money in a specialized degree would do the opposite – I could find jobs in other areas within that field." Show these Echo Boomers the small homes that keep their options open, and avoid showing them houses that will drain their time and energy. Most Echo Boomers who pursue higher education want freedom and flexibility.

The final challenge with Echo Boomers is the temptation to oversell. As mentioned, some Echo Boomers will never buy homes – avoid pushing them to buy a home. Echo Boomers are well connected through social networks, and can spread word faster with this new technology. Social networks can work for or against you. If you befriend Echo Boomers and avoid pushing them in directions they don't want, you may receive other clients from referrals. But if you push too hard, they may resent you and tell their friends. The internet offers you the opportunity to build clients while you sleep. Remember that real estate is not the best investment for everyone.

Of course this all assumes you sell real estate. If you consider renting your homes instead of selling them, Echo Boomers will offer you a ton of opportunities. And if you diversify your real estate, selling some and renting some, you may collect the best of both worlds.



Thanks, Timothy!

Thoughts, questions, arguments? Comment away. Especially interested in hearing from folks in their early 30s and below: What are your thoughts on the own vs. rent debate?

If you'd like to write a guest post -- either to share expertise or to share an interesting housing-related personal experience -- please drop me a line. Details here.

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (14)
Categories: Expert guest post, First-time home buyers, Guest post

April 22, 2011

Got an idea for that empty storefront? 'Localize' aims to give you a say

If you've ever walked by an empty storefront and wished the owners were taking tenant suggestions, Alexa Baggio has just the thing for you -- or soon will, she hopes.

She's leading a team that's working to launch a start-up called Localize, which will offer a platform to vacant-building owners to let neighbors vote -- via text message -- on what sort of businesses should move in. (A "propertunity," as the team calls it.) Last weekend the fledgling company took second place at the Baltimore Startup Weekend.

The New York resident did an email Q&A with me that explains what made her want to give it a go, how else she hopes the tool can be used and why Baltimore.

Q. How did you get the idea?

A. I kept visiting my hometown and watching storefronts turn over to different variations of the same thing – a failed nail salon replaced by another nail salon, etc. I am passionate about creative small businesses and I wanted to find a way to ensure more of their success. In addition, I was fascinated by the idea of a local investing network – where local investors provide funds for ideas in their backyards that they are interested in. So, I wanted to create a platform to get the community involved in what businesses are created and use that community support to encourage local investment.

Q. When do you expect to launch?

I can't give you an exact timeline as we just demoed a prototype this weekend but the platform still needs a lot of development to be fully functional. We plan to continue working towards completion and will hopefully have completed the platform for at least one city by year's end.

Q. How will it work?

A. As of right now we have worked with Tropo to create a text voting system. So, walk by a vacant storefront in your community with our campaign on it, text a code to the property's listed number and vote on the ideas posted on the storefront. We are working to allow passersby to create new ideas and post them, both via text and via the property's web site. In addition, we would like to add Twitter and Facebook as potential voting mechanisms.

Q. What will it take for people to be able to start texting their suggestions for empty buildings? Will property owners need to sign up with you first? (Do you have any expectations as to when people will be able to start texting, i.e. later this year?)

A. Later this year for sure. We have already created the ability to start texting and now it's up to the property owners to sign up for the campaign. They have the option to work with Localize on a per-property basis to collect this information. We are looking for our first customer and as we build out the platform to incorporate all the voting features, etc., we will be ready for every location in the U.S.!

Q. Is the business operating specifically in Baltimore to start?

A. We would like to. I think Baltimore is the perfect place for this to launch as there are a significant number of retail vacancies in the area and in addition I think it's a place with a lot of growth potential where the residents are passionate and loyal. The goal, however, is to reach every town across the country.

Q. Will there be an outlet for people to text suggestions for buildings and/or houses (lots of empty houses in Baltimore) even if their owners aren't participating?

A. Hopefully. We are still in the preliminary stages of our business model but we would like to position Localize so that it can be used for community development wherever necessary. We are starting with local storefronts, but ultimately we are crowdsourcing community development on the whole. Localize can be scaled to public works projects, community programs, etc.

Q. What's your background?

A. I'm a recent college graduate who moved to NYC right after college to take a job on Wall St. However, I have been working on this idea for some time now and came to Baltimore to find a passionate team to help me build it. My brother lives in Baltimore and I believed the people would be much more receptive to my idea vs. for instance NYC. I was worried the NYC event would be more tech focused and my idea would be lost amongst people looking for the next Facebook – retail vacancy in NYC is also a very different beast. I thought a social startup with community development at its core would resonate much more in a place like Baltimore. I could not be happier with the outcome of the weekend.

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

April 21, 2011

Selling Silo Point via the Seven Deadly Sins

Turner Development, which is selling the high-end Silo Point condos in Locust Point, is hoping to appeal to your greed. Also, your gluttony, pride and other baser urges.

The company's new marketing for the project -- once a grain elevator, now a residential tower with room service, a wine club and round-the-clock concierge coverage -- is based on the Seven Deadly Sins. The company launched the campaign about two weeks ago with a focus on avarice ("Silo Point Greed: It's OK to want more," say the Facebook ads).

A new sin will be rolled out every month or so, though you get a preview on the Silo Point site, where the sins switch up every time you reload the page ("PRIDE: Bragging Rights for Sale").

Eric Turner, who oversees Silo Point, said Turner Development wanted a new campaign that was "a little edgy, a little cocky, a little in your face" after two years centered around images of the tower and its units. Expect to see deadly-sin events as well as ads, he said.

"We wanted people talking about it," he said.

He thinks the early results are heartening, and not just because I heard of it through Facebook (via colleague Gus Sentementes) rather than from a press release. "The past two weekends, everybody that came to the door was like, 'I saw the ads, the ads were great,'" Turner said.

Here's the Facebook example:


Silo Point units have been for sale since fall 2008, right in time for the U.S. financial meltdown. Turner said just over half of the 228 units have sold so far -- meaning settled deals -- with another 25 units under contract.

"We're very, very proud of that, considering the market," he said.

Among the unsold condos, the least pricey are a couple of units under $300,000 while the most expensive is the $4.2 million penthouse. The project's early sales were generally at the lower price end, while more recent contracts have been closer to the million-dollar mark, Turner said.

He said the Silo Point team decided to start with greed for its new Seven Deadly Sins campaign because they figured that would play well during the spring buying season. "Gluttony" will focus on Silo Point restaurants, including a new one about to be announced. "Sloth" is about the concierge services -- "you can be a little lazy," Turner said.

I didn't think to ask about lust. Guess we'll just to have to wait and see.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (14)
Categories: For sale

April 20, 2011

Snapshot of Baltimore: housing, people and more

Data lovers, start salivating: The newest "Vital Signs" report on Baltimore -- out Tuesday -- has information (or, if you prefer, market intelligence) on neighborhoods across the city.

Here are some of the findings, put together by the Baltimore Neighborhood Indicators Alliance at the University of Baltimore's Jacob France Institute:

· Though citywide population dropped 2.4 percent from 2000 to 2009, results varied dramatically at a more local level. "A few neighborhoods, including Greenmount East, Sandtown-Winchester and Midway/Coldstream, lost residents by double-digit percentages, while others, including Downtown/Seton Hill (16.6 percent), Fells Point (8.1 percent) and South Baltimore (7 percent) experienced population growth," the University of Baltimore said in its announcement.

· During the same nine-year stretch, the violent crime rate in Baltimore fell. It was 15.3 violent offenses per 1,000 people in 2009, down from 26.2 violent offenses per 1,000 people in 2000. (Biggest improvements: "The greatest decreases in the violent crime rate occurred in the Perkins/Middle East, Downtown/Seton Hill, and Patterson Park North and East neighborhoods.")

· Abandonment rose citywide over most of the last decade, but not in all neighborhoods. Canton and environs, for example, are exactly where they were in 2001 (with just under 1.2 percent of residential properties vacant and abandoned). And in the area in and around Patterson Park, the vacant-and-abandoned rate actually dropped, to about 7 percent. (The Vital Signs report uses "community statistical areas" that don't match up exactly with official city neighborhood boundaries.)

· This will surprise no one, at least no regular reader of real estate news: The city had nearly twice the number of new foreclosure proceedings in 2009 than in 2005, when the housing market was hot to trot.

· And home sales? Down 28 percent in 2009, compared with the year before.

Some of the statistics show the effects of the severe recession. Others show improvement, noted Vital Signs author Matthew Kachura.

"Baltimore's population is not going to bounce back to its post-war highs, and the kind of industry boom we saw here in the 1940s and '50s is not going to return. Instead, we're showing resiliency by strengthening our neighborhoods in ways that improve the quality of life, whether it's a program to rehab vacant houses or an effort to encourage high school students to graduate on time," Kachura said in a statement. "In an era of limited resources, the city has managed to stay viable by these and dozens of other strategic investments."

City folks and suburbanites alike: How has your neighborhood changed in the last few years? What's better, what's worse, and what -- for better or for worse -- is the same?

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

April 19, 2011

Funding for housing counseling cut

One result of the new deficit-cutting federal budget: an almost $90 million cut in housing counseling efforts.

Congress agreed to continue funding a foreclosure-prevention program to the tune of $65 million but completely eliminated funding for the U.S. Department of Housing and Urban Development's $88 million Housing Counseling Program, which is used not only on foreclosure prevention but also for nonprofit counselors who work with people before they buy, refinance, get a reverse mortgage, start renting and the like. The idea of such counseling is objective advice -- free or low-cost -- in an industry where that's hard to come by.

HUD spokesman Lemar C. Wooley called the zeroing out of the agency program "painful cuts that would not have been made in better circumstances."

The result locally could be both a reduction in services and new charges for long-free counseling, said Carol Gilbert, assistant secretary of neighborhood revitalization at the state Department of Housing and Community Development.

"It means a curtailment of services for sure, and that's very troubling," she said Monday. "This is a time we need as much housing counseling as we can make available to consumers."

A variety of programs aimed at new homebuyers, including a variety of downpayment grants and the state-run Maryland Mortgage Program, require that participants get the pre-purchase counseling that had been funded by the federal government. 

Counseling groups will likely seek help from the state and local jurisdictions next fiscal year to try to close the gap left by the federal cut, Gilbert said. But everyone's budget is strapped.

There is one relatively new source of money already in place: The state foreclosure mediation law created a fund for counseling. Mortgage servicers must kick in $300 when they start foreclosure proceedings on a borrower, part of which goes to the office overseeing mediation and part of which can be used for housing counseling.

"But we still count on federal support to be part of the picture," Gilbert said -- now and later. "That fund will only be robust as long as there's a foreclosure crisis."

Why the cut? It's part of the overall effort to ratchet down spending. (Monday, Standard & Poor's said its outlook on the country's credit rating is now "negative," meaning the AAA rating could be downgraded if the fiscal situation doesn't improve -- upping interest costs on U.S. debt.)

Republicans thought two programs for housing counseling -- one just for and the other partly for foreclosure prevention -- was duplicative.

A group of HUD housing counseling intermediaries, such as HomeFree-USA, defended the efforts in March, saying demand for all sorts of counseling was high. "We note that, if more homebuyers had received housing counseling, they might not have obtained loans they did not understand, at rates which they could not afford, which triggered many defaults in the foreclosure crisis," they added.

Gilbert calls it "foolhardy to ignore the need for the pre-purchase counseling." Counselors help prospective buyers lay out a budget and determine an affordable payment that takes into account their other debts, she said.

"We certainly don't want to repeat the mistakes of the past by not having housing counseling available to that new wave of homeowners," she said.

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (6)
Categories: First-time home buyers, Foreclosure help

April 18, 2011

Rachel Rabinowitz: How to buy real estate at auction




This week's guest writer is Rachel Rabinowitz, a residential auction specialist with Tranzon Fox.

A local, she graduated from The Park School of Baltimore, The George Washington University and Sotheby's Institute of Art London. She's a member of the Greater Baltimore Board of Realtors and the National Auctioneers Association.

Take it away, Rachel:






For the uninitiated, the prospect of purchasing real estate at auction can be daunting. So you’ve seen an advertised auction property and you’d like to take a closer look? Here are some best practices for pursuing real estate at auction.

Engage the auction firm. The majority of our inquiries come from consumers and real estate professionals that have little or no experience with real estate auctions. We are glad that you are interested in the auction and want to provide you with as much information as possible.

Identify the auction terms, read them carefully, and note any and all questions you may have. There are many different types of auctions so do not make assumptions based on previous experiences. Note what is required to participate in the auction. In most cases you will need to bring certified funds to the auction to bid on the property.

Be aware of Agency. The auction firm represents the seller. You have the option of being represented by your own agent, typically at no additional cost to you. Your agent can help guide you through the process and will attend the auction with you.

Perform your due diligence. If inspection and appraisal reports are not already available, in most cases, and at your own expense, you can have the property inspected or appraised for informational purposes prior to the auction. This is not a requirement, but if you are seriously considering purchasing a property this is a good step to take to ensure you feel fully informed prior to the auction. Real estate is sold at auction "as is"; however, the auction firm is required to disclose pertinent information to prospective buyers.

Create your own strategy. What is your budget? You budget should include the high bid, the buyer’s premium, as well as your estimated closing costs. The "high bid" is a term used to describe the final bid at the auction. The buyer’s premium is a fee that added to the high bid to create the contract price. Have a financing plan; most auctions require a settlement period of 30-45 days. In the case of a foreclosure or a bankruptcy auction, your contract may require court approval prior to entering the settlement period.

Pre-auction offers: People who do not have a lot of experience with the auction format often conclude that they would prefer to make a pre-auction offer, usually under advisement from their own agent, who may be unfamiliar with the advantages of the auction process. From the auction seller's prospective, a pre-auction offer needs to be significant to warrant the cancellation of the auction. If you conclude that you like the property at the "right price," the best way to participate is by attending the auction.

After you've won the auction: During the settlement period you will have access to the property to finalize your purchase. Should you encounter a condition issue that you need to remedy prior to settlement (sometimes this may be a condition of your loan), it is not uncommon for auction buyers to do this at their own expense. It is important to be cognizant of the fact that your auction deposit is binding. Should you fail to proceed with the purchase, the deposit will not be refunded. Auction contracts do not have contingencies. The auction method of sale does not uniformly work for every buyer.

Have fun. Nobody can predict with certainty what's going to happen at the auction. This creates a sense of excitement for all of the participants, including the auction firm. Don’t be the person who hears about the result the next day and wishes they had been there to get a fantastic purchase price. Once the auctioneer drops the hammer and declares the winner, the bidding is closed. As they say at the Maryland Lottery, "you gotta be in it to win it."

Auctions are public sales. You are welcome to attend the auction to just watch. Registering as a potential buyer is not an obligation to bid. While many auctions are indeed court-ordered, more and more private sellers are electing to sell their real estate at auction as part of a calculated strategy. Additional information about real estate auctions can be found through the National Auctioneers Association, the National Association of Realtors Auction Program, or by consulting one of the many qualified auction professionals in our own community.

The next time you see an auction listing, consider taking a closer look. You just might mind find the deal you've been waiting for.

Not every real estate buyer is able to participate in the auction format -- so it is fair to say, auctions aren't for everyone. However, for those who can participate, it is a great way to get a fair price. In what other method can you openly see your competition?



Thanks, Rachel!

Thoughts, questions, arguments? Comment away.

If you'd like to write a guest post -- either to share expertise or to share an interesting housing-related personal experience -- please drop me a line. Details here.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (17)
Categories: Auctions, Guest post

April 15, 2011

Asking-price reductions on homes, by ZIP code

Market intel for home buyers and sellers alike: See how quickly homeowners in various ZIP codes reduce their asking prices and by how much.

The new data, from real estate search site Trulia, maps price reductions across the country -- as well as the likelihood of a second drop in asking prices.

Two examples:

In 21244, Windsor Mill in Baltimore County, the first reduction is 10 percent and comes in an average of 49 days. Probability of a second reduction: 44 percent. In the much pricier Monkton, 21111, the average reduction is 9 percent and takes a lot longer in coming -- 152 days. Sellers are also less likely to drop their list price again.

While we're on the subject of interesting links, here are two more -- both on property taxes: 

Anne Arundel County, which has the lowest property-tax rate in the Baltimore metro area, is considering the possibility of an increase to deal with budget constraints. The 3 cent increase -- to 91 cents per $100 in assessed value -- would amount to about $90 extra a year on a $300,000 house.

In Baltimore City, which has the highest property-tax rate in the state (nearly $2.27 per $100 in assessed value), at least one mayoral candidate is suggesting a big decrease. City Councilman Carl Stokes will be speaking about his tax-cut proposal to the Mid-Atlantic Real Estate Investors Association in Pikesville April 20. More details here about the meeting, which is free but requires registration. (The group is expecting a big crowd.)

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

April 14, 2011

FHA mortgage-insurance premium rises next week

Planning to get an FHA mortgage? Keep in mind that the annual mortgage-insurance premium for new loans is set to increase April 18 -- next Monday.

The extra charge comes to about $42 a month -- $500 a year -- for a $200,000 mortgage with a 30-year term.

This won't affect anyone who already has a loan, mind you, just folks taking out new ones. And if FHA assigns a case number to your loan application before April 18, you'll be under the current fee system. (Assuming I'm reading the FHA guidance to the mortgage industry correctly, you can get a case number early on in the loan application process.)

In other FHA news, U.S. Sen. Ben Cardin of Maryland says the agency is charging borrowers for a full month of interest when they pay off their mortgages by refinancing or selling even if they do so just a few days into the month, and he wants that stopped.

Syndicated real estate columnist Kenneth Harney says industry folks contend that borrowers get a small break on their initial interest rates in exchange for the back-end charge, while critics such as the National Association of Realtors argue that the back-end charge is a substantial one-time hit averaging more than $500 per borrower. People with conventional loans pay interest only up to the day that they're refinancing, selling or otherwise paying the mortgage off.

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (9)
Categories: Mortgages

April 13, 2011

3BR Victorian ISO new owners

You see homes for sale with their own websites all the time. But how about one in which the home speaks directly to potential buyers?

That's what Matt McDermott put together for his property in Baltimore's Lauraville neighborhood, a 1918 house with three bedrooms, tiered decks and a Koi pond that's on the market for $165,000. "I'm just an old Victorian looking for a new family to make me a home," the site declares, with page headers such as "pics of me" and "stuff around me." The house blogs and tweets.

It sets the scene in an autobiographical blog post:

I used to belong to an interior designer who was on HGTV. He put a lot of love into restoring me and making me beautiful.  That's why my current family fell in love with me.  I was the place where they cut their first lawn, where their boy took his first steps, where they had their first cookout.  But it's hard for them to keep up with a big place like me, especially when they have to travel so much for work.  They both work in and near DC.

So they're hoping we can find someone who can take care of me.  I'd like that very much, too.

McDermott gave more of the backstory in an email. It's a housing-bust tale that anyone who bought toward the end of the boom days will probably sympathize with.

He and his wife bought the home four years and several life changes ago. Now his wife works in Washington, a long commute, and the two are parents. "It's become too much house for us, and that breaks our hearts because we absolutely love it," he said.

Even without the emotions involved, selling is no easy matter.

"Since we bought our house in 2007 (for $270K), the value's dropped $110K. Couple that with the fact that there are more than 150 properties for sale in the 21214 zipcode alone, and our prospects of selling the home look pretty dim."

It's on the market as a short sale. The lender has pre-approved such a move, McDermott said.

He said his real estate agent has worked "extremely hard to make something happen," and he and his wife wanted to help. So McDermott, who works in advertising with an emphasis on social media, launched the website on Sunday.

"I tell stories to win over consumers," he said. "It made sense to put a little of that love into our house."

Thus the website/blog and Twitter account. He also set up "targeted Twitter searches to reach out to people when they mentioned stuff like buying a home in, living in, or moving to Baltimore."

To one Twitterer who declared that she needs to move into a city -- "Baltimore City, DC, NY" -- the "house" responded: "I hear ya. Personally, I recommend Baltimore. Somewhere in the neighborhood of me." (I heard about the campaign through a tweet -- not from McDermott or his house, but rather from another Twitter user who figured I'd be interested.)

McDermott also created a Facebook Marketplace listing and a "tiny paid ad campaign targeted to a specific buyer demo (based on geography, age, marital status)."

"It's still a work in progress, but it's had some modest results since I set it up on Sunday," he said. "A little over 600 visits to the blog and more than two-dozen comments/mentions on Twitter and Facebook. Plus, about 16,000 Facebook ad impressions and 30-some click throughs to the blog." (And most importantly, "a few people who've expressed an interest in checking the place out in person.")

The idea of a short sale wasn't easy to stomach, McDermott said. But "in a way, it's better for the house (yes, we tend to personify the place). If someone can purchase it at a better price than we did, they'll have more resources to maintain it and improve it."

What do you think of this marketing strategy? Does personification help sellers connect with buyers on an emotional level?

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (25)
Categories: For sale, Housing market experiences

April 12, 2011

March home sales, prices drop in Baltimore area



That roller coaster pictured above is the last year of the housing market in the Baltimore metro area, at a glance.

In blue -- the figure with the huge swoops and swoons -- is the year-over-year change in the number of homes sold, according to Metropolitan Regional Information Systems' stats arm. In red is the year-over-year change in the average home sale price.

The federal first-time homebuyer tax credit is what drove the number of home sales up, and then down, last year. Buyers rushed to beat the deadline (contract signed by April, closing by June -- later pushed back to September). And at least some of them were people who would otherwise have bought later in the year.

Sales began to rise again in December, but new numbers for March show we're back in declining territory year-over-year. Probably not a tremendous shock, since we're now (and for the next few months will be) comparing against the height of the 2010 tax-credit boost. The April 2010 bump was particularly large, nearly 40 percent.

Even when the tax credit was in effect, however, market activity wasn't back to normal for the region. About 1,960 homes changed hands in the metro area in March 2010. That's 100 more than this March and 330 more than March 2009, but it's less than all the previous Marches in the last decade.

In March 2000, when fewer people lived in the area, more than 2,370 homes changed hands.

Here's the news story about March home sales, complete with an anecdote about a Baltimore County home seller who found people were more interested in his house when he offered to throw in a '93 Taurus (with low mileage) as a freebie.

April 11, 2011

Marney Kirk: What to do to sell your home




You can find real estate agent Marney Kirk on Twitter, Facebook and her own blog (which won Zillow's best-blog-in-Baltimore contest), so she's one of the first people I thought of when you all suggested guest posts. She's with Keller Williams Excellence Realty in Timonium, has been an agent since 1998 and was recently named entrepreneur of the year by the Greater Baltimore chapter of the Women's Council of Realtors.

Take it away, Marney:



Timonium, or Lutherville-Timonium, as the Post Office calls it, is part of the 21093 zip code.

According to MRIS, our local multiple listing service, there are currently 43 townhouses listed for sale under $400,000 in 21093, with an average of 98 days on the market. There are nine under contract, and the average days on the market for those houses is 72 days.

What does this mean for sellers of townhouses in Timonium?

It means there is a LOT of competition out there and sellers need to put their best foot forward when listing their house for sale.

A seller's best foot involves a number of things:

First, clean out and clear out personal items. Buyers want to visualize their things in the house, and too many of yours can block that.

Make those minor repairs you had been thinking about, or that your agent recommends. They really do make a difference.

Paint colors DO matter. Neutral is the way to go.

Consider staging. It is an expense, but it has been shown to sell houses faster, because stagers are professionals who know how to make your house look more desirable to buyers.

Price it competitively. The only two things a seller can control are condition and price. Make yours the one that buyers do not want to miss out on. If it looks right, feels right, and is priced right, buyers will choose yours over the 37 others they may qualify for and view.

The unfortunate part, along with the rest of the Baltimore area real estate market, is that Timonium house values are lower than they were a few years ago. Sellers may be taking a loss, so thinking of putting more money into a house where you may already be losing is a hard pill to swallow. But if you need to sell or want to sell, this is what you need to do – so that your house actually sells instead of sitting on the market.



Thanks, Marney!

Thoughts, questions, arguments? Comment away.

If you've got expertise or an interesting experience to share, I hope you'll volunteer to write a guest post, too. (Chances are, if you're trying to buy, sell, rent, renovate, etc., you've got the makings of a guest post in you. Here's one from a colleague who was struck by the way one selling couple is using their smallest bedroom.)

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (5)
Categories: Expert guest post, Guest post

April 8, 2011

Housing market in balance in some counties, way off in others

If you're trying to sell a home, you might want to move it to Montgomery County.

Economists generally say supply and demand is in balance if it would take six months for all the homes currently for sale to find buyers at the current pace. More months and buyers have the edge. Less, advantage sellers.

Montgomery stood at about 5.5 months in February, lowest in the state. Do the months' supply calculation for pending deals -- this is normally a busy time of year for contract-signing -- and it drops to just over three.

Call it the Washington effect. Maryland counties with the lowest inventory compared with sales and contracts are all Washington suburbs, either officially (like Frederick and Prince George's) or unofficially (like Howard and Anne Arundel, which send as many commuters south as north).

Counties at the other end of the spectrum are largely on the Eastern Shore. Garrett, in far Western Maryland, had the highest months' supply no matter how you cut it -- sales (more than 70 months) or contracts (just over 40 months).

Here's a chart showing pending deals, inventory and how they compare for February: 

JurisdictionPending salesYoY chgInventoryYoY chgMonths' supply
Prince George's95055%4,98015%5.2
St. Mary's9136%593-5%6.5
Anne Arundel47533%3,1501%6.6
Baltimore County52617%4,05211%7.7
Baltimore City57637%4,7613%8.3
Queen Anne's3986%578-4%14.8

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

April 7, 2011

Seeing the housing market with 20-20 vision

Some predicted a housing bust before it happened. Some of those people even predicted a big one. But most Americans, including those who should have been minding the store, went blithely along under the assumption that prices would not take a sharp U-turn.

This makes me wonder what we're not paying attention to now that we ought to be zeroing in on -- good trend or bad.

There's so much noise, it's hard to focus. Foreclosures. Robo-signing. Mortgage terms potentially changing. Mortgage-interest deduction potentially shrinking. The economy trying to right itself. What's in store for mortgage rates. How prices compare with incomes. How prices compare with rents. Federal budget cuts on the one hand, BRAC on the other.

It's all so much easier when you can throw on the 20-20 hindsight glasses.

But hey, give it a shot anyway. Here's your question of the day: How do you think the housing market will change in the next few years -- assuming you foresee any change -- and why?

Will the results be better or worse for most of us?

The last question of the day asked accidental landlords -- people renting their former homes because they can't afford to sell -- how the rental business is treating them. Interesting discussion, including advice from chappy10, an on-purpose landlord:

"If you're only getting enough to pay mortgage, taxes, and insurance, you are LOSING your money renting. You need a COMFORTABLE margin--I'd say 20-25%, minimum, to make up for wear and tear. Even if it's not for 5-10 yrs in the future, you need to do roof repair, buy new water heaters, change the locks and deadbolts, have the HVAC serviced, etc."

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (8)
Categories: Housing forecasts, Housing history, Question of the day

April 6, 2011

Report: Expect 2% increase in 2011 Baltimore-area home prices

Real estate information firm Delta Associates thinks the Baltimore metro area's housing market has hit the "recovery phase" of this unprecedented cycle and will end the year with prices up about 2 percent.

"We expect that renewed demand, in part by migration to the area due to BRAC, will yield modest price gains by mid-2011," the firm says in a new report.

However, it notes, "The pace of the recovery may be uneven."

Very uneven so far for the condo part of the market:

Just under 380 new condos sold during the past 12 months in the Baltimore metro area, down 18 percent from the previous 12-month stretch, Delta said. And prices dropped nearly 11 percent, comparing sales within the same condo projects.

That varies quite a bit. The northern suburbs saw new condo prices rise 3.2 percent, Delta said, as the pipeline there has "drastically reduced." Prices in the southern suburbs, meanwhile, fell almost 16 percent while dropping just over 17 percent in Baltimore City.

Overall, "There are 4.1 years of inventory in the Baltimore metro area at current sales rates," Delta says -- less in Baltimore County and Harford County, more to the south.

So recovery could be a ways off still for that part of the market: "We look to 2012 when price traction could return to the Southern Suburbs and longer still for Baltimore City." (One of the firm's recommendations to condo builders: convert to apartments.)

One of the worrisome question marks for this region, and most of Maryland, is how federal budget cuts will play out here. Between direct federal work and contractors, Uncle Sam accounts for a sizable piece of the state's economy.

Delta thinks the region will come out all right, which is why it's not projecting price drops for the housing market overall. It notes that Standard & Poor's believes defense contractors as a whole will see "minimal" impact from Defense Secretary Robert M. Gates' plan to cut back on spending because they also work with other federal agencies. "In addition, any cuts will be offset by the influx of military and government contractors to the Baltimore area due to BRAC," Delta says.

"However, we expect the Baltimore metro area to experience further cuts in the government sector, as state and local governments throughout the nation face budget shortfalls," it adds.

We'll just have to wait and see. But don't let that stop you from making your own predictions about home prices. Do you think Delta will be proved right or wrong on its forecast of a 2 percent increase in the Baltimore metro area this year?

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (4)
Categories: Housing forecasts

April 5, 2011

For sale: House with fabulous closet

My awesome colleague Justine Maki, who lives in Hampden, had an amusing looky-loo experience recently. Once I heard it, I wanted you all to enjoy the fun, too.

Here's her tale:



Now that homes are regularly available for tours 24/7 — thanks, Internet! — open houses seem a little quaint. Sure, nobody's going to buy a house without going inside and seeing the space, but those "open" signs also attract a lot of nosy neighbors.

I'm not casting stones here — I'd love to buy a house in my neighborhood, but I'm not planning to sign anything for a year or more. So a few weekends ago, I checked out an open house across the street from my apartment and noticed something funny.

The helpful flier and online listing said the place had four bedrooms. But there were pictures of only three.

When I climbed the staircase, the case of the missing bedroom was solved: It was a closet!

Not closet in the "it's so tiny, only a bed fits" sense, but the literal sense — the room, across the hall from the master bedroom, was being used by the mister and missus as a walk-in closet.

The funny thing was the closet even had a closet. The husband's clothes were neatly hung in there, while the wife's stuff took up the rest of the space. There was also a nice vanity desk and an IKEA bookcase for purses and shoes.

I don't blame the Realtor for skipping the picture on that one — nothing says "tiny bedroom" like a closet.



Thanks for sharing your experience, Justine!

Got a housing experience of your own -- renting, looking, buying, selling, owning -- that you think would make an interesting guest post? I'm all ears. Funny, frustrating, enlightening: all good.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (3)
Categories: Guest post, Housing market experiences

April 4, 2011

Foreclosure aid for unemployed, underemployed now available

The Emergency Homeowner Loan Program was signed into law eight months ago, but the $1 billion in aid for unemployed and underemployed people facing foreclosure has just now reached the first few states.

Maryland's share is $40 million. The state announced Friday that it is taking applications.

Borrowers could receive as much as $50,000 in interest-free loans to pay off past-due amounts and to make up to two years of payments. They must have taken an income hit of at least 15 percent, be three to 12 months behind on their mortgage and have a "reasonable likelihood" of being able to get back on their feet.

The emergency help is like loan-to-grant money given to first-time homebuyers: No payments are due for five years, and every year the total is reduced by 20 percent until nothing is owed -- as long as the homeowner keeps the property and stays up-to-date on the mortgage during that time.

If you want to apply, you have to meet with a nonprofit housing counselor, the state says. Its approved list is here. You can also connect with a counselor by calling the state's foreclosure-prevention hot line, 877-462-7555. The state is calling its version of the program "Emergency Mortgage Assistance."

Elected officials and housing counselors talked to borrowers about the program at two events over the weekend, one in Baltimore and the other in Prince George's County. Organizers of the Baltimore event, Money Power Day, say a steady stream of homeowners met with foreclosure-prevention counselors to sort through their options.

Why the months-long delay in receiving the federal money, you might ask? (An August press release said the program would be launched "soon.")

Some have speculated that it's politics. Federal foreclosure-prevention programs have come under fire for helping too few people, and Republicans want to put the kibosh not only on the much-maligned HAMP but also on the Emergency Homeowner Loan Program.

Legislation to end the still-untested loan program would need to get through the Democrat-controlled Senate and avoid a presidential veto, however. So I don't know if the U.S. Department of Housing and Urban Development was purposefully dragging its feet to see if the program would survive before doling out the money, or if eight months between authorization and actual funding is just typical gestation for a new program. States had to apply, and HUD decided whether to let local officials administer the program (as is happening in Maryland) or to delegate that work to a third party.

I asked a HUD spokesman on Friday why the money took so long to get to the states. He said he would check, but I didn't get an answer that day.

Philadelphia has been anxiously anticipating the funds -- officials there temporarily stopped foreclosure auctions in January, anticipating the money any day, but recently ordered them restarted rather than head into a fourth straight month without sheriff's sales. But a judge ruled that the sales can't be finalized for 90 days, which gives borrowers a shot at getting the loan.

The Philadelphia Inquirer reports that the national program was modeled off a Pennsylvania effort that helped more than 45,000 homeowners avoid foreclosure since the early 1980s. Loan repayments there have exceeded state aid.

What do you think? Better or worse than loan modifications?

U.S. Rep. Spencer Bachus, a Republican from Alabama, is among those in the thumbs-down group.

"When the taxpayers pay a $50,000 check, who do you think it goes to?" Bachus said, according to a HousingWire story. "It goes to Bank of America. It goes to JPMorgan Chase. It goes to Citigroup. This billion dollars is not going to homeowners. It's going to the largest institutions."

Posted by Jamie Smith Hopkins at 4:00 AM | | Comments (1)
Categories: Foreclosure help, The foreclosure mess

April 1, 2011

For Hopkins employees, a way to find homes that come with $17k

The Johns Hopkins institutions offer a pretty big incentive to get full-time employees to buy homes near work: up to $17,000 towards the down payment and closing costs. (No fooling.)

But not just anywhere in the general vicinity. The university and hospital, which are collectively the state's largest private employer, have specific boundaries inside which you must stay if you want the maximum -- and other boundaries for lesser grants ranging from $10,000 to $2,500.

Now a new search tool put together by the Greater Baltimore Board of Realtors and Metropolitan Regional Information Systems lets employees see exactly what homes are for sale in each area. Scroll to the links for the "tiers" -- i.e. Tier A1 (Harwood, Barclay, and Greenmount West) -- for each interactive map.

You can have the system email you an alert when the sort of home you're looking for comes on the market. You can also find out how close certain homes are to restaurants, daycare options, police stations, places of worship and a number of other niceties. (Click on "points of interest" to choose which of those things you want to see. Then mouse over each icon for name, address and phone number.)

"I think it'll make it a lot easier for people," said Joseph T. "Jody" Landers III with the Greater Baltimore Board of Realtors -- even if they're just looking for a daycare center, not a house.

If you don't work for Hopkins, you might still qualify for other live-near-your-work incentives.  Maryland's Department of Housing and Community Development has Smart Keys 4 Employees, an add-on to its House Keys 4 Employees down payment and closing-cost help. Baltimore City has its own Live Near Your Work program.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (15)
Categories: Home buying grants
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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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