It doesn't look like many underwater homeowners will be surfacing anytime soon.

About one in five borrowers in the Baltimore region owe more on their mortgages than their homes are worth, a figure virtually unchanged all year, according to new estimates from real estate data firm CoreLogic. The company's negative-equity estimate has hovered around 19 percent from the first through third quarters, affecting about 120,000 homes.

It's hard to expect anything different for the time being. Home prices continue to drop, eating away at the progress borrowers make via monthly payments. About 33,000 more homeowners in the region are just barely keeping their heads above water, with their values no more than 5 percent above the amount they owe, CoreLogic said.

But Baltimore and its surrounding counties are collectively doing better than the state as a whole, according to CoreLogic. About 23 percent of borrowers in Maryland are underwater, seventh highest among the states.

Maryland's figure is a lot higher than New York and North Dakota -- both under 7 percent -- but still far outpaced by the worst-off states, including Nevada (58 percent) and Arizona (47 percent).

The Baltimore region is middle-of-the-pack for negative equity among the 50 largest metro areas, CoreLogic says. Las Vegas is over 60 percent -- ouch. At the other extreme is Nassau-Suffolk, N.Y. (Long Island), with about 5 percent.

Home equity loans are contributing to a substantial chunk of negative equity, though they're not the only reason people are underwater. Here's the breakdown nationwide, according to CoreLogic:

• About 60 percent of the negative-equity borrowers don't have home equity loans. Their average mortgage balance is $222,000, $52,000 more than their average home value.

• The remaining 40 percent of the negative-equity crowd does have a home equity loan. Their average mortgage balance, including that add-on loan: $309,000, $84,000 more than their home's value.

• Homeowners who don't have home-equity loans are much less likely to be underwater than those who do. Eighteen percent of borrowers who haven't tapped their home equity owe more on their mortgages than their homes are worth, compared with 38 percent who did pull cash out.

"Although slightly down, negative equity remains very high and renders many borrowers vulnerable when negative economic shocks occur, such as job loss or illness," Mark Fleming, CoreLogic's chief economist, said in a statement. "The nearly $700 billion mortgage debt overhang has touched many corners of the market, and this overhang is holding back the recovery of the housing market and broader economy."

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (15)
Categories: Underwater
        

Add new homes to the list of gifts you can register for as you're planning a wedding.

Greenbelt-based Bozzuto Homes announced yesterday that it has launched a bridal registry to allow friends and relatives of engaged couples to contribute to their down payment. The company says it will match up to $15,000, with its contribution going to closing costs.

The first couple that signed up is buying a home in Ellicott City.

Homebuilders appear to be moving in this direction across the country. 1-800-Registry says it is partnering with more than 500 builders on its new "home registry" program. And Bozzuto said it decided to pursue its own registry after seeing a demonstration at a builders' show.

"We thought this would be a good idea," said Bruce Rosenblatt, Bozzuto's director of sales.

I'm curious whether guests will see down-payment registries as a request for cash rather than a purchased gift, since appeals for money are typically frowned upon. Cathy Leaning, Bozzuto's senior director of marketing, thinks people will categorize it as a true gift that "demonstrates that the giver has given it some thought and really wants to give the bride and groom something meaningful to them."

"This is almost like a double gift ... because Bozzuto will match it," Rosenblatt added.

Here's how Bozutto's registry works: 

Couples have to ask to sign up at the very start of the homebuying process, so it's important to disclose your intentions immediately. You must be engaged before signing a contract to buy and either married at the time of settlement or able to provide proof that you've applied for a marriage certificate.

What about civil unions between same-sex couples? "We would honor that, absolutely," Rosenblatt said.

Bozzuto, which builds in Maryland, D.C. and Northern Virginia, has four developments underway in the Baltimore region -- Ellicott City, Fulton, Towson and Baltimore (the Uplands on Edmondson Avenue). The company will be starting a project in Annapolis early next year.

What do you think of a registry aimed at the home rather than items to put in it? This piece about the 1-800-Registry service suggests that couples with relatives willing to pay for a pricey reception would be better off foregoing and putting that money toward the down payment.

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

Louis Wilen, a Montgomery County resident who is a part-owner of a few ground rents, emailed me the other day to share his observations about when (and how) it's worth it for homeowners to buy out the ground rent on their property. I thought you'd be interested, so I'm turning today's blog post over to him in just a moment.

First, Ground Rent 101:

It's a longstanding quirk in our system, one that seems to separate the ownership of homes from the ground underneath them. If your home has a ground rent, you must pay a fee -- usually a relatively small one, twice a year -- to the owner of that investment. Or you can buy it outright, known as "redeeming" it.

Homeowners dealing with ground rent do actually own their land as long as they continue to pay. They officially have a "leasehold" interest in their home and ground, while the ground rent investor has a "reversionary interest." The ground rent works as a never-ending lien.

A Baltimore Sun series about abuses by big ground-rent owners prompted state legislators to pass a series of laws intended to reform the system. One of those changes was recently overturned by Maryland's highest court as unconstitutional because it zapped any ground rent that wasn't registered by owners before the end of September 2010. (A variety of mom-and-pop ground rent owners, the types who weren't seizing houses left and right over small unpaid bills, had complained that they had no idea until it was too late that the state had required registration.)

OK -- that should do. Take it away, Louis:

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With most ground rents yielding 6 percent (and some yielding 12 percent) based on the rent rate divided by their redemption value, most homeowners would save money by redeeming their ground rents, assuming that they have the cash to do so. Paying off a ground rent is essentially equivalent to putting money into a risk-free investment yielding 6 percent. Since there are no risk-free investments yielding 6 percent at this time, the financial benefit of redeeming a ground rent is clear.

Redemption of a ground rent requires payment of recording fees and transfer tax. The amount of the fees and taxes vary depending on the jurisdiction in which the property is located, but as an example, the government fees and taxes to redeem a $100 per year ground rent would be about $100. Also, if the parties need legal assistance to perform a title search, draw up the deed and perform settlement services, there could be additional costs of about $200 to $500.

For homeowners who are refinancing, the benefits are certain and immediate. Ground rent is not tax-deductible, whereas mortgage interest is tax-deductible. Therefore, an astute homeowner who is refinancing would pay off his or her ground rent using the proceeds of their mortgage, effectively converting an interest-only, non-tax-deductible liability into an amortized, tax-deductible loan.

Furthermore, the interest rate on most mortgages nowadays is less than 6 percent, so the interest that they would pay on their mortgage would be less than the effective interest they are paying on the ground that they are renting.

As part of a refinance settlement, the title company sells very profitable title insurance and other settlement services to the homeowner -- so they would likely perform ground rent settlement services at minimal additional cost. I called several title companies and they all said that the additional fee to draw up the ground rent redemption deed and perform the ground rent title search would be little or nothing.

For homeowners who wish to redeem a ground rent outside of a refinance settlement, the transaction costs may make redemption financially unappealing. Any party to the transaction can draw up the deed and avoid the cost of using a title company or lawyer, although that's probably not a wise idea unless they know what it takes to do a title search and write a deed. (If a homeowner knows how to do a title search and write a deed, they've probably already redeemed their ground rent.)

Therefore, as a practical matter, many homeowners will need to hire a real estate lawyer or a title company to handle redemption of their ground rent.

If the State of Maryland would like to see ground rents disappear, perhaps they could put a program in place that would lower the recording fees and transfer taxes for ground rents, and provide some sort of inducement to title companies to provide a uniform ground rent settlement service at a discounted rate.

There's also the ground rent redemption program that was created by the Maryland legislature in 2007. This program provides a 30-year, 0 percent loan -- for those who qualify -- to pay off the ground rent. However, the transaction costs are very high, since they are based on the homeowner paying full charges for a title company to handle the settlement. Therefore, this program is probably not a good deal for most homeowners. It's much less expensive to redeem a ground rent when refinancing.

----------------------------------------------------------------- 

Thanks, Louis!

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 6:12 AM | Permalink | Comments (14)
Categories: Ground rent
        

Think Black Friday and its spinoffs ("Small Business Saturday," "Cyber Monday") are about retailing and not homebuying? Here's a builder that's applying the doorbuster concept to a product with actual doors.

Dominion Homes is running a Cyber Monday promotion that promises "drastic discounts" of up to $80,000 on a dozen homes. The properties aren't local -- they're in Ohio and Kentucky -- so the odds are slim that you'd be interested in joining the buying pool. But I wonder what you think of the idea.

Does a holiday-deal approach aimed at homebuyers appeal to you or turn you off?

The Thanksgiving through New Year's stretch is typically a doldrums period for the housing market, the exact opposite of what happens to retailers.

On that note: If you end up out in the Black Friday scrum, you can make me a happy camper by shooting me an email about what you're seeing. Busy or not? Worth it or meh? I'm writing our story about the annual post-Thanksgiving (and this year, during-Thanksgiving) shopping craziness, and I can't be everywhere. Email: jhopkins(at)baltsun.com.

Thanks, all. And happy Thanksgiving!

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (4)
Categories: For sale
        

Curious where the 1 percent live? Turns out the Baltimore area has a fair amount -- or, at least, a fair amount of the top 3 percent of income earners, which is as close as a Brookings Institution fellow was able to get with available IRS data.

Howard Wial, director of Brookings' Metropolitan Economy Initiative, wrote in an Atlantic Cities piece that Baltimore is one of just 20 metro areas that have at least 1 percent of the country's households with $200,000-plus incomes. Top of the list, to no one's shock: New York.

Meanwhile, a report from Brown University's US2010 Project finds that the poor and well-to-do are increasingly isolated in their own neighborhoods, and those islands of poverty and wealth are growing as the number of middle-class neighborhoods is shrinking.

Just over 30 percent of families in large and medium-sized metro areas lived in neighborhoods at either income extreme in 2007, up from 15 percent in 1970, according to the report. (The Baltimore region was at nearly 30 percent in 2007, but the report doesn't give its '70 statistic.)

"These trends are consequential because people are affected by the character of the local areas in which they live," write the report's authors, from Stanford University. "The increasing concentration of income and wealth (and therefore of resources such as schools, parks, and public services) in a small number of neighborhoods results in greater disadvantages for the remaining neighborhoods where low- and middle-income families live."

Thoughts?

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

Many Baltimore communities have lots of homes jostling for would-be buyers' attention, but only one has more than 500.

The 21224 ZIP code had 513, to be exact, on the market in October, according to Realtor.com. The real estate search site's October housing summary shows nearly six dozen ZIPs with at least 100 homes for sale in the Baltimore region, just over two dozen with at least 200 and almost a dozen with at least 300.

The 21224 ZIP is pretty expansive, stretching from the Canton waterfront to several blocks north of Patterson Park, and -- west to east -- from the park to the city line. Many rowhomes are tucked within, so it's always going to be a candidate for Most Homes for Sale.

What's changing nowadays: The number of listings is plummeting. 21224's offerings are down more than 30 percent from a year earlier, when about 750 homes were for sale. Most of the Baltimore region's ZIPs are down too -- for a nearly 20 percent drop on average, same as the national trend.

Why? Robo-signing might be part of the answer. There's probably also some amount of "thanks but no thanks" among homeowners who don't like today's sale prices.

What are you seeing out there, and what do you think is driving these inventory drops?

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (5)
Categories: For sale, Housing stats
        

At the rate homes are going on the foreclosure block in Maryland these days, it would take 21 years -- yes, years -- before the current "pipeline" of homes in danger of foreclosure are all sold.

That's according to industry consultant LPS Applied Analytics, which shows a dramatic drop in the number of Maryland foreclosure sales (repossessions or other involuntary transfers) after the robo-signing revelations last fall. That's pushed the state's time-to-sell figure skyward to the fourth-highest nationwide.

This seems poised to change, with warnings of impending Maryland foreclosure cases spiking in November. But here's how things stood as of September:

LPS Applied Analytics says the owners of about 105,000 Maryland homes were at least 90 days behind on their payments, including those with foreclosure cases filed against them. That number hadn't grown much over the year. But foreclosure sales dropped 80 percent -- from an average of about 2,000 a month statewide to about 400.

Why? Foreclosures went from flood to trickle after news that mortgage-servicer employees were signing foreclosure documents for courts assembly-line-style, without having any idea if the information was accurate -- and that some foreclosure attorneys were outsourcing the signing of their names to other people, among other alleged problems. States where foreclosure is a court case, not a non-judicial affair, have seen their collective time-to-sell pipeline double since then.

But Maryland's rose fivefold, from about four years in 2010. Perhaps some state-specific reactions to robo-signing made mortgage servicers more cautious about filing cases:

Maryland's highest court, appalled that local attorneys were counted among the "sign all this for me" group, passed emergency rules last fall designed to allow for large-scale document checks and to send the message that judges should feel free to haul offenders in to explain themselves.

Baltimore-based Civil Justice, meanwhile, filed motions to get foreclosure suits thrown out, arguing that the only way to keep title from being fatally flawed and hurting buyers downstream was to start the cases again and do it right this time. GMAC Mortgage decided to drop 250 cases in Maryland and said it was not taking similar actions elsewhere.

But several other states have a higher pipeline of potential future bank-owned homes. No. 1: New York, where judges have put the mortgage industry and their lawyers in the hot seat and the state attorney general is investigating mortgage securitization.

Here are the states with the 10 largest pipelines measured in years needed to sell, according to LPS Applied Analytics:

The firm's parent, Lender Processing Services, has been accused of robo-signing too as its employees handled documentation for mortgage servicers. A Nevada grand jury just indicted two people who worked for Lender Processing Services during the housing bubble in connection with an allegedly "massive" robo-signing scheme. 

Nevada, by the way, is non-judicial, and its time-to-sell has actually been lower this year than it was in 2010 -- just under two years rather than just over two. That's one of the lowest figures in the country, behind only Arizona and Wyoming (both under a year and a half).

Ronald Deutsch of Cohn, Goldberg and Deutsch, a Towson law firm that handles foreclosure cases for the mortgage industry, said servicers have ratcheted back dramatically for the past year to year and a half in Maryland and a variety of other East Coast states as they work to retool their systems. 

"There is a tremendous backlog now of files that need to move through the system, unfortunately," he said. "There are a lot of people who have not made payments on houses in this state for two years, three years. It's reached the point of, I don’t know if criticalness is overblown, but it's reached a crescendo at this point for sure. At least one and maybe more servicers are starting now to get it flowing again."

That means the effect of foreclosures on the housing market in 2012 could be far different than what we had in 2011.

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (8)
Categories: The foreclosure mess
        

More than 18,000 Maryland homeowners have received formal warnings from their mortgage servicers so far this month that a foreclosure case could be filed against them in as little as 45 days.

That sounds like a big number, and it sure is after about a year of mostly suppressed activity as a result of the robo-signing scandal. Fewer than 11,000 notices of intent to file for foreclosure were sent to Marylanders in all of November 2010, according to the state.

Maryland regulators believe the big increase is a sign that some of the backlog created when revelations of robo-signing ground the foreclosure apparatus to a crawl could be starting to hit now. (They also say that October changes to the state's foreclosure-mediation rulebook seem to have prompted more filing from attorneys who were waiting for certainty about how it would look.)

More in today's story.

While I was at it, I asked for data on the state's opt-in foreclosure-mediation program, which has drawn relatively few applications from homeowners.

Sometimes the borrowers don't show up or don't bring paperwork. Frequently the mortgage servicers won't agree to a foreclosure alternative. But state records suggest that 40 percent of cases end with a positive or positive-ish result for the homeowner, from a loan modification to a better-than-eviction exit strategy such as a short sale or cash for keys.

The state's housing officials say homeowners have the best results if they've sought counseling from a nonprofit foreclosure-prevention group and/or arrive with an attorney. Housing counselors are helping link homeowners with free or low-cost legal assistance for that purpose.

Have you been to mediation? How did it go?

Final food for thought: The Center for Responsible Lending says the foreclosure crisis has cut a swath through the poor, middle class and affluent alike, and it isn't even half over.

Posted by Jamie Smith Hopkins at 7:15 AM | Permalink | Comments (0)
Categories: The foreclosure mess
        

A new report conducted for a mortgage-industry trade group likens "strategic default" -- walking away from a mortgage you can afford to pay because you owe more than your house is worth -- to a contagious disease.

It's not just the idea that strategic defaulters spawn more strategic defaulters. The report's authors focus much of their attention on real estate experts -- "mavens" -- who advocate such a move and sway underwater homeowners to their way of thinking. 

"Much the same way as a disease spreads throughout a population, so too do decisions to 'strategically' default," the report concludes, adding: "Mavens are more contagious than non-Mavens because people place greater trust in their opinions. ... In fragile markets, advice by influential Mavens can result in a flood of strategic defaults, causing a contagious downward spiral of home prices and potentially a market collapse."

The report was sponsored for the Mortgage Bankers Association's Research Institute for Housing America. Last year, the bankers association's then-CEO said would-be strategic defaulters should think about the damage they would do to their neighbors' property values and their own reputations. "What about the message they will send to their family and their kids and their friends?" John Courson told The Wall Street Journal at the end of 2009.

That just before the Mortgage Bankers Association sold its headquarters building for millions less than its 2007 purchase price -- and millions less than its financing, too. The WSJ reported at the time that the association would not disclose the terms it negotiated with its lenders, but sources thought the group would be paying back only part of the $30 million that the sale price hadn't covered. Irony lovers had a field day.

People have debated the ethics and bottom-line considerations of walking away for several years now. The ethics argument boils down to whether paying your debts is a moral obligation or a contractual one (i.e. "I pay the mortgage or I give you back the house, so here's the house, buddy"). On the financial side, there's the chance to get out from under a house that might never be worth what you paid for it vs. the effect on credit scores, the ability to get security clearances and the possibility of future dunning attempts.

Some states are non-recourse, meaning that mortgage holders can't come after you for the difference between what you owe and what they can sell the house for. Others -- including Maryland -- allow the debt collectors to come calling.

Last year I wrote about a strategic defaulter who was planning to file for bankruptcy protection after he walked away from his Baltimore home.

So, folks: What do you think of strategic default nowadays? Do you think the "disease" theory is apt?

Posted by Jamie Smith Hopkins at 7:09 AM | Permalink | Comments (2)
Categories: Walking away / strategic default
        

You hear all the time about homeowners waiting for home prices to rise before trying to sell. But what about waiting to sell until prices drop even more?

Some homeowners who don't intend to sell or buy next year say that's the basic plan. "I own a home and want to wait for prices to fall further before buying elsewhere" is actually the most popular answer so far in this week's poll for those who aren't in the market.

"That makes no sense," Wonk reader George wrote in a comment. "Waiting for prices to fall further just hurts you more on the selling side. Logic would dictate you sell now, rent then buy later if you feel prices will fall further."

I offered that as a poll option because Wonk reader elweedz has mentioned that he would have gone the sell, rent, buy route but he couldn't get his wife on board with the plan to not be homeowners for a while. So he's simply waiting to sell.

"Equity is not found money. I have 100k in 'equity' in my home but, I cant spend it without selling my home," he wrote in a comment. "If I sell my home and want to stay in the same community then I will need it to buy the next home. Now, if both my current home and my next home were worth 100k less then it wouldnt make a difference to me."

Are you also waiting to sell until prices drop further? What are your reasons?

Posted by Jamie Smith Hopkins at 7:18 AM | Permalink | Comments (3)
Categories: Housing market experiences, Polls
        

Quick poll to satisfy my curiosity: Do you see yourself buying or selling anytime soon?

If you're not in the market, why?

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (5)
Categories: Polls
        

Got a mortgage held by mortgage-financing giant Fannie Mae? If you're trying to get help with it and you're not having any luck by phone, you now have a face-to-face option.

Fannie Mae last week opened a "Mortgage Help Center" in Greenbelt that's targeted at the Baltimore-Washington area. It's the 12th such center in the country, the company says.

Spokesman Andrew Wilson said Fannie Mae has worked with about 9,000 homeowners in the 11 that have already been operating, and 60 percent "have been able to stay in their home."

"Many of the others can achieve what we call a graceful exit, where they avoid foreclosure through a short sale or deed-in-lieu of foreclosure," he wrote in an email.

To make an appointment at the Greenbelt center, call 866-442-9376, Wilson said. (You can check here to see if Fannie Mae owns your loan. But the company says anyone can call, and staffers will send homeowners without Fannie Mae mortgages to HUD-approved counseling agencies.)

Some mortgage servicers have been opening centers or holding convention-center-type events. If you've been to anything like this, weigh in -- did it work for you?

In other mortgage financing news, Fannie Mae just asked for $7.8 billion more from taxpayers to cover losses, the head of the agency that oversees Fannie and Freddie Mac (both in government conservatorship) is defending the bonuses paid to execs last year and Ginnie Mae -- the lesser-known mortgage-bond issuer -- is now bigger than Freddie.

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (0)
Categories: Foreclosure help, Mortgages, The foreclosure mess
        

Today, guest blogger Ellen Berry shares information about a very specific sort of real estate investing -- buying rentals with an eye toward the college-student market.

As a member of the BrainTrack.com team, she writes about a wide variety of topics related to the college scene.

Take it away, Ellen:

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Good news for investors seeking profitable rental properties -- Baltimore ranked in the top 10 for college town real estate markets in the U.S. in a recent MarketWatch story. Key investor-friendly variables come together in cities like Baltimore, including:

● A high rate of housing demand that is consistent over time, primarily due to a continuous influx of students and professors seeking off-campus housing. Also, college towns are desirable retirement spots thanks to the nearby restaurants and steady stream of cultural and athletic events. Landlords can be more confident that they will be able to choose from a sizable pool of tenants and avoid long-term vacancies.

● Significant increases in tuition costs and campus living throughout the country are motivating students to choose affordable nearby housing over student housing. This allows landlords to charge more for rental properties -- often enough to cover the entire cost of the mortgages on their properties.

● To increase their employability and take advantage of educational incentives, many professionals are returning to school. Non-traditional-age students often prefer off-campus housing and rental homes over apartments, and they tend to be reliable, long-term tenants.

● Community growth is expected to continue in college towns at a faster rate than other towns. "The U.S. population is expected to grow about 1 percent a year between now and 2050, but towns and cities with large universities will grow at three times that rate," Rich Karlgaard wrote in his Forbes article "Live Rich in College Towns."

According to the MarketWatch report, in June 2011 the average rental price for a Baltimore two-bedroom was $1,443, while a three-bedroom or larger rented for around $1,663. The median home price had dropped 8 percent, to $242,700, within a year. For a home at that price, a typical mortgage payment in Baltimore is around $990 (if a 20 percent down payment is made on a 30-year fixed-rate loan). Note that these statistics are for the Baltimore metro area -- the median home sale price in the city itself was about $98,000 in June.

Other towns that made the list were Boston-Cambridge; Nashville; Chicago; Washington, D.C.; Houston; South Bend, Ind.; Atlanta; St. Louis; and Syracuse, N.Y.

Potential investors should keep the following in mind:

● Do some research into the rate of growth at different universities before investing in a specific college location. Check into recent tuition increases and plans for campus improvements.

● Before purchasing property near a campus, be sure you know to what degree you will be competing with the school regarding housing. Consider that some campuses do not offer on-campus housing, so students are required to live off-campus. Other universities may require full-time students to live on campus for their first year.

● Research universities often attract companies in medical and technological fields. Both of these employers tend to hire diverse, well-paid employees who are likely to seek quality housing.

● Residential investors may wish to consider building rentable storage space or purchasing storage facilities as an additional, complementary source of income.

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Thanks, Ellen!

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.

And if you've got questions you'd like to see a guest poster address on another subject, ask away right here.

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

FHA, Fannie Mae and Freddie Mac all dropped their loan limits in a variety of metro areas across the country as of Oct. 1. Result? Buyers (and would-be refinancers) in the Baltimore region can't borrow more than $494,500 from them. Everything above that amount is in "jumbo" territory with higher rates and -- in some cases -- much higher down payment requirements.

The Baltimore region had temporarily been bumped up to $560,000 in 2008 in reaction to the mortgage meltdown.

The downward push seems to have had an immediate effect on sales between $500,000 to $600,000, which dropped more than 20 percent vs. a year earlier. (Sales between $400,000 and $500,000, meanwhile, rose during the same period.)

Read more about it in today's story about October home sales.

And while you're at it, you might want to check out this piece about a mortgage fraud/Ponzi scheme conviction and this story about fallout from the ground rent ruling.

Posted by Jamie Smith Hopkins at 8:51 AM | Permalink | Comments (5)
Categories: Housing stats, Mortgages
        

Maryland's pickup in home sales compared with last year is among the smallest in the country.

That's according to new figures from the National Association of Realtors, which said the number of homes sold in Maryland over the summer was up 10 percent from a year earlier, lower than all but six other states.

No. 1 and No. 2 for smallest sales increases? Virginia and D.C., respectively. Gotta wonder if federal budget problems -- and the resulting pullbacks by government contractors -- have something to do with that.

The Realtors trade group looked at sales from July through September. Last year at that time, the federal homebuyer tax credit had basically expired -- the deadline to close deals was changed from June 30 to Sept. 30 to help people with short sales and other complex transactions, but everyone who could close before July did.

So you'd expect to see an increase in sales this summer, what with the dive that housing activity took after the credit was no more.

But to make this more complicated, because nothing housing-related is allowed to be simple nowadays: The National Association of Realtors data does not match up with sales figures from the state association, which shows an even more tepid increase in Maryland -- 2.6 percent. That would put the state at the bottom of the pack, assuming of course that all the other states' sales figures are accurate.

Why the difference? Possibly because the National Association of Realtors figures are calculated as a "seasonally adjusted annual rate" and the Maryland Association of Realtors figures are not. But you'd hope that seasonal adjustment doesn't affect the year-over-year comparison since it's -- you know -- all about making comparisons to different seasons possible.

Whatever the true increase, a slow pickup from depressed activity last summer isn't good news for home sellers. They need more demand from buyers for falling prices to finally hit bottom.

Median prices for single-family homes fell 7 percent in the Baltimore region compared with just under 5 percent nationwide, according to the National Association of Realtors. (The NAR tracks sales by state but prices by metro area, and the metro stats are not seasonally adjusted.)

Median prices for condos in the region fell 12 percent, much more than the nationwide drop of about 2 percent, the NAR said.

We're due to get local housing-market figures for October this morning. Metropolitan Regional Information Systems' stats arm, RealEstate Business Intelligence, will release them on its website.

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

How much do you think home prices rise in a typical year? Four out of every 10 prospective home buyers surveyed by real estate search site Zillow say "seven percent," which -- Zillow says -- is way out of sync with reality despite all the dour news about housing the last several years.

Housing bubbles and busts aside, home prices usually increase two to five percent a year, Zillow says. The company points to Yale economist Robert J. Shiller's index of housing prices from 1890 onward, which adjusts for inflation and shows a lot of up-and-down movement.

"It's troubling that we're still in the midst of one of the worst housing recessions in history, and yet prospective buyers continue to have such high expectations for home value appreciation," Stan Humphries, chief economist at Zillow, said in a statement. He added: "Over-estimation of the appreciation potential will lead many to buy real estate when the time in which they plan to live in the house may make renting a better strategy."

I wish we had more robust historical data on local home values. I came across this Census Bureau chart the other day that suggests median home values in Maryland actually did rise nearly 7 percent a year on average from 1940 through 2000 -- unless you account for the effect of inflation, in which case the story is markedly different.

The average annual increase was 4 percent in Maryland during that period, inflation-adjusted. From 1960 through 2000, it was just a bit over 2 percent. And 1990 through 2000? Negative appreciation -- down two-tenths of a percent in an average year.

I suspect most homeowners don't figure out their appreciation (or lack thereof) in "real" terms, knocking out the upward effect of inflation. It's a useful exercise. Here's one inflation calculator, in case you'd like to try it with your own home.

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (6)
Categories: Housing stats, Survey says ...
        

You might think a simple question like "how much have home values dropped" would get you a simple answer. Sorry, no.

Reports out within the last few days have very different figures for the loss in home-sale prices in the Baltimore region -- the city and nearby suburban counties.

Real estate data firm CoreLogic puts the drop at 1.7 percent in September, compared with a year earlier. Clear Capital, another data firm, calculates a loss of 6.4 percent for a slightly longer period that includes that month -- July through October, compared with a year earlier.

Both firms track repeat sales of homes over time to try to capture the real change in value, but CoreLogic is looking at single-family homes while Clear Capital says it also includes condos.

Zillow, meanwhile, says its "Zestimates" of homes' value -- not just recently sold homes -- suggests a 4.1 percent price drop in the Baltimore area in September compared with a year earlier.

And Metropolitan Regional Information Systems, which runs the local multiple-listing service, says the average price of all homes sold in the Baltimore area in September fell less than 1 percent from a year earlier. (October numbers are due out on Thursday.)

Confused yet?

Some of it is about different ways of measuring, especially when you're comparing repeat-sale methods with the oft-criticized Zestimate and the average of everything that sold. (The sort of homes that sold this month aren't necessarily much like the homes that sold a year ago, for instance.) But it's interesting that CoreLogic and Clear Capital are fairly far apart.

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (5)
Categories: Housing stats
        

Today, guest poster John Evan Miller -- who writes for the ForeclosureDeals blog -- brings good news and bad news about foreclosures in our area. He's been writing about real estate for years and has a graduate certificate in international real estate.

Take it away, John:

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Those of us who have been in the real estate industry for any significant amount of time know one thing about today’s market: It’s a mess.

Across the country, from Maine to California (and even Alaska and Hawaii), the real estate market has been besieged by successive waves of foreclosures that have decimated neighborhoods, depressed home values and sent millions of Americans searching for new living arrangements.

How does the state of Maryland – and the city of Baltimore – stack up when compared to foreclosures in the rest of the country?

First, the good news.  A review of available data reveals that the situation is not as dire as it is elsewhere in the country. Nevada, for example, has by far the highest foreclosure rate, with one out of every 118 housing units receiving a foreclosure notice in September. In contrast, according to the state Department of Housing and Community Development, Maryland’s foreclosure rate was a relatively-small one out of every 720 housing units – good for the 9th best rate in the country.

Overall foreclosure activity also declined by a remarkable 27.9 percent from June to September across the state.  In Baltimore, foreclosure filings have fallen three straight months, with 144 filings issued in the month of September.  Right now, the city has a foreclosure rate of one out of every 2,046 housing units, with 1,287 foreclosed homes for sale at the moment. That is good for approximately 15.6 percent of all foreclosures in the state.

That’s the good news. Now, we will take a look at the weaknesses in the Maryland and Baltimore housing markets that could persist throughout 2012.

While foreclosure activity fell in Baltimore and Maryland for the quarter, and remain lower than the national average, foreclosure filings increased dramatically from August to September, climbing by 31.1 percent. There were 3,251 foreclosure events from June to September, which counts notices of default filed, foreclosure sales and lender purchases. That number is lower than the second quarter’s figure, but is still the second-highest total this year.

One major reason – perhaps the reason – behind the quarterly decrease is simple: Lenders in Maryland, like elsewhere in the country, have refrained from filing for foreclosure as a result of the robo-signing and foreclosure processing controversies that rocked the industry last year. The state of Maryland also instituted a foreclosure mediation program last year, but participation has been so low that the decline is probably not related to the program.

Falling unemployment is another potential reason for a decrease in foreclosures, but in Maryland and Baltimore, that isn’t the case. Unemployment actually increased in Maryland in September from 7.3 percent to 7.4 percent. Baltimore continues to have a higher-than-average unemployment rate of 10.4 percent. In essence, the decrease in foreclosure filings reported is more than likely due to banks momentarily halting their processing.

What happens when banks start foreclosing on homes again? The short answer is this: You can expect to see more foreclosures for sale in the market – which means Maryland’s foreclosure rate will increase along with most states in 2012.

How soon that will happen – and the severity of the next foreclosure wave – is unsure at this moment. Unless something changes soon, though, Baltimore and Maryland will likely see their respectable national rankings in foreclosures increase for the foreseeable future.

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Thanks, John!

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.

And if you've got questions you'd like to see a guest poster address on another subject, ask away right here.

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

If you're curious how the median home sale price in the Baltimore region compares with the median household income these days (and how that compares with the past decade or so), have I got some charts for you. First, the one above, which really drives home how out-of-whack prices got as the housing bubble inflated.

First, a warning about a data limitation: I don't have household income stats past 2009 for the region, so I repeated the approximately $67,000 figure for 2010 and '11. (High unemployment tends to stifle income growth, so that's probably not far off. The estimates from the Maryland Department of Planning show median household income inching up by $400 in 2009.)

So: The median sale price more than doubled between 1999 and 2006, while the median household income rose 26 percent. It's not quite so far apart now -- prices are up 80 percent since 1999 and incomes are up 35 percent.

But what about the effect of today's low-low mortgage rates? How have monthly payments changed, and how does that compare with incomes?

Yeah, I've got those charts, too. Also one showing prices as a multiple of income.

The bottom line is that home prices appear a lot more affordable if you factor in mortgage rates, which were nearly 8 percent 12 years ago and last month were around 4 percent.

Check out these visuals:

Here's the change in monthly payments in the Baltimore region -- principal and interest only:

And those monthly payments as a percentage of before-tax monthly income in the region (again using the median household income figures):

This year's figure -- 19 percent -- is back to the level of 2001 and 2002, thanks to low interest rates rather than comparable prices.

The median home sale price is for September of each year (September's the most recent stat for 2011) from Metropolitan Regional Information Systems' stats arm, RealEstate Business Intelligence. The mortgage-rate information, also for September, comes from Freddie Mac's regular survey.

What strikes you as the best way to measure whether prices are low, medium or high compared with income?

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

In response to this post about a call to convert downtown Baltimore office buildings into apartments, a reader offered this plea:

"What the downtown area really needs isn't just more apartments. It needs more affordable apartments where young single people can live alone in a nice place without dropping $1700 a month for a 500 sq ft studio/1br plus parking. There's really no middle ground between the high end apartments that aren't as nice as the rents would suggest and the never-renovated dumps. But that middle ground is a huge market. I know so many people who would ditch their 2 and 3 roommate row houses if more reasonable apartments were available."

It reminds me of the frustration expressed by middle-income home buyers that they can't find anything suitable in their price range.

The question I have for builders is, can you build homes or apartments aimed at people in the middle? If not, what's standing in your way?

The median household income in the Baltimore region is about $67,000, according to the Maryland Department of Planning. In Baltimore proper, it's $40,000. If you agree with the notion that 30 percent of your pre-tax income is the maximum you should be spending on housing, that's $1,675 a month for the typical household in the region and $1,000 for the typical city household.

Are you typical? What do you think of your housing choices?

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (10)
Categories: Affordable housing, Renting
        

Mike Mitchell has led Habitat for Humanity of the Chesapeake through one name change, two mergers and lots and lots of affordable-housing construction projects since he took the helm almost nine years ago. Now the CEO is about to head out the door.

He said he thinks the organization is well-positioned, and he's ready to do something else.

"There's been a lot of change," Mitchell said Tuesday. "I think with all of that change, I am, I guess, tired in a lot of ways -- 'tired' isn't the right word, but I'm just ready for something new. I'm actually going to take some time, and I may even change careers completely. I don't know what I'm going to do, but I'm excited about doing something different."

He plans to step down in mid-November. The group expects to launch a search for his replacement shortly but has already been getting inquiries from potential candidates, which tells you how fast news travels in the nonprofit community here. (It was only Friday that Mitchell told the board he intended to leave.)

Mitchell, who joined the staff after a few months as a board member, didn't come from the housing industry. His background is nonprofits and workforce development. He's run for office before (he took a three-month leave of absence from Habitat in 2006 while contending for a seat in the House of Delegates) and currently sits on the Baltimore City Democratic Central Committee. So politics is a possibility for his next phase, but he says he's keeping his options open.

Habitat for Humanity of the Chesapeake -- like Habitat chapters worldwide -- relies on volunteer labor and donations to sell newly constructed or rehabbed homes to lower-income workers at prices they can afford. Habitat also offers no-interest mortgages, another way to keep the costs down.

"The organization is continuing to grow and thrive," said Sandra Erbe, Habitat for Humanity of the Chesapeake's marketing director. "We've just completed a big development on Clay Street in Annapolis. We're getting ready to dedicate another 11 homes in East Baltimore. While we consider [Mitchell's resignation] to be a great loss for the organization, we plan not to miss a beat."

Mitchell, reflecting on the group's work, noted an irony that some of you have talked about before: "Baltimore is a city that has thousands of vacant houses, and it has thousands of people in need of decent housing." Habitat, he says, tries to bridge that gap.

What else do you think could be done -- by nonprofits, businesses or city agencies -- to turn eyesore vacants into livable homes that don't cost an arm and a leg?

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (4)
Categories: Affordable housing
        

Photo courtesy of the Downtown Partnership of Baltimore

The downtown vacancy rate for offices is nearly 18 percent. For apartment complexes? A lot lower. (It's 10 percent if you count newer buildings that are still working to get leased up, according to real estate data firm Delta Associates, and just under 2 percent for the rest of the upscale complexes downtown.)

The Downtown Partnership of Baltimore is trying to convince owners of older office buildings to make the leap from Group A to Group B.

Kirby Fowler, president of the nonprofit group, which runs downtown-improvement programs and markets the area, said downtown has some "aged, obsolete buildings that need new plans." Partnership officials are making the rounds to office owners, lobbying them to think residential and connecting them with developers.

One of the skyscrapers he'd like to see convert to apartments is the "iconic" Bank of America building at 10 Light St., which law firm Miles & Stockbridge plans to exit in 2013 for Transamerica Tower down the street.

"The majority of owners are receptive," Fowler said. "Some are out-of-town owners of properties that don't seem to understand what's going on. ... We've given them the statistics."

Namely, that downtown and environs already have a lot of residents. More than 40,000 people live within a one-mile radius of Pratt and Light streets, the Downtown Partnership says.

The census tract that stretches from Pratt to Franklin streets (south to north) and from President to Paca streets (east to west) -- "the older skyscraper district," Fowler calls it -- was the fastest-growing in the city over the last decade. It jumped from 1,700 residents in 2000 to 4,000 last year, according to a Maryland Department of Planning analysis.

The census tract is number 401, and the Downtown Partnership liked the stat so much that it's trying to make "the 401" a thing. Staff launched a 401 website in an attempt at guerrilla marketing, with photos (like the one above) that aim to show downtown from unusual angles.   

"We want people to look at downtown in a different way," Fowler said. "We're in the process of ordering T-shirts and dog leashes and coasters and bumper stickers. We want to get the word out. We'd love for restaurants to buy into it. We've got to draw attention to this fact, because very, very few people know this district is the fastest-growing neighborhood."

Its residents are mostly renters. Considering the difficulties facing the for-sale market, the Downtown Partnership is trying to sell office-building owners on converting to apartments. Staffers aren't only targeting skyscrapers such as 10 Light, but also smaller buildings that could "squeeze in 30 apartments, even 10 apartments," Fowler said. 

"The rental market is the high point in the real estate market right now," he added. "I think developers recognize that's where money can be made. It's really hard right now to make money on the office/hotel side, but people should be taking advantage of the residential market."

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (3)
Categories: Renting