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December 30, 2011

Get your property-assessment appeal in by Tuesday

If you think your property assessment is wrong (and you're not among the one-third of owners who were just reassessed), you'd better get a move on. The deadline to appeal is Jan. 3 -- Tuesday.

Some homeowners are inevitably surprised to hear they can appeal on off-years. But yes, you can appeal every year, not just the one-in-three when assessors revalue your home.

Notices just went out this week for those who have been reassessed this year, and those property owners have until Feb. 10 to decide whether to fight. For everyone else, the clock is rapidly ticking down.

This out-of-cycle appeal is called a "petition for review." Home sale prices haven't stopped their downward trend, so you probably can make a strong case that your value is lower now -- especially if you were last reassessed two years ago. Like any property appeal, you want to arm yourself with sales data showing what people have paid for comparable properties.

Beware of relying on short sales and foreclosures unless they're a substantial part of the market near you. The state Department of Assessments and Taxation says it wants to see "arm's length" transactions in which banks played no role beyond financier, so you'll have to make the case that distress sales are driving your local market if you want the agency to lower your assessment with foreclosures and short sales in mind.

Here's the application. You can hand-deliver it, postmark it or email it by Jan. 3, the state says.

If you're successful, your property assessment will change for the tax year beginning July 1. (Not necessarily by July 1, though.)

Owen C. Charles, deputy director of the state Department of Assessments and Taxation, said some homeowners get their property-tax bills in July and then appeal. But that means they won't have a chance for an assessment reduction until the next tax year starts the following July.

Remember that it's possible to get a lower property assessment via appeal and not affect your tax bill one iota. That's what happens if you have a sizable tax break from the Homestead Property Tax Credit, which puts a cap on big annual increases for owner-occupants.

The short explanation is that many owners are paying on well less than their full assessment, so you have to get your assessment lowered below the amount you're actually paying on to see a tax impact. Here's a longer explanation with an example, including details on how to figure out that amount you're really paying on.

Another appeal tip: If you purchase a home in the first six months of the year, you can get an appeal considered for that next tax year -- the one starting in July -- as long as you appeal within 60 days. That's called an "appeal upon purchase."

The state Department of Assessments and Taxation lays out the different sorts of appeals, including your options if your first appeal doesn't turn out the way you'd like, right here.

ValueAppeal, an online property-tax appeal service, said this week that it's getting a "strong" response from Marylanders interested in doing petitions for review. This is how many homes it believes are overassessed in the state's largest jurisdictions, considering only the two-thirds that weren't just reassessed:

MontgomeryBaltimore CityAnne ArundelBaltimore CountyPrince George's
Evaluated properties171,480135,007114,981148,893154,715
Number overassessed14,72331,1579,73221,74023,905
% Overassessed9%23%8%15%15%

Here's how the company says it comes to that conclusion:

We determine if a home is overassessed by comparing its current assessed value against the sale prices of comparable homes nearby. If we determine that there are enough strong comparable home sales to support an appeal, then we classify that home as overassessed. We also eliminate any foreclosures or short sales, as they can’t be used in an appeal.

We approach each property as its own entity, rather than casting a blanket over an entire area, and analyze each property based on a large range of factors, and use those same factors in comparing that property to others. We also check in with each county to try to determine how much weight is placed on any particular detail (bathrooms, neighborhood, age, etc.) in determining what is comparable.

The company hasn't yet clarified whether it takes the effect of the homestead credit into account -- that's critical if you're trying to determine whether an assessment drop would translate into lower taxes. (ValueAppeal's CEO said last year that the company wasn't baking in homestead information but planned to account for tax credits at a later date.)

UPDATE: Here's what Mike Allende of ValueAppeal says about the homestead credit:

We’re continuing to try to find the best way to account for the homestead credit. It’s obviously a very complicated issue and we only want to include it when we’re sure we have the best way to configure it pinned down. Right now we try to eliminate those property owners who have the highest homestead credits. If someone uses our service and doesn’t see savings, even if it was successful, we would provide a refund. So if someone purchased our service, successfully lowered the assessment but didn’t see any real savings due to the homestead credit, we would consider that a case for refund.

Our goal isn’t simply to reduce the property assessment, it’s to actually save people on their taxes. Most of the time the two go hand in hand but if not, then we would address that.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (0)
Categories: Homestead Property Tax Credit, Property taxes

December 29, 2011

Homebuying for the holidays

The stretch between Thanksgiving and New Year's is usually housing-market downtime. Most would-be buyers are busy purchasing other sorts of things at the malls. Would-be sellers sometimes pull their homes off the market entirely to wait for the much brisker spring market.

But this year, some real estate agents are reporting a spike in business.

"I've been really busy over the last month with clients, out either looking for houses or under contract and closing," said John Kantorski, a real estate agent with Cummings & Co. Realtors in Lutherville.

He even got a call about one of his listings that was pulled off for the winter. Buyers wanted to come see it. "That's unusual," he said.

When we chatted last week, Kantorski was about to show another client several homes -- three days before Christmas. "Usually this time of year, I have plenty of free time. Now, not too much," he said.

Tom Harner, broker of Century 21 Associates in Maryland, said his agents are seeing "a lot more activity" as well.

"We're going to see a favorable December -- not a runaway market, but a favorable December," said Harner, whose brokerage has offices in Columbia, Annapolis and Waldorf.

Noah Mumaw, a real estate agent with Yerman, Witman, Gaines & Conklin Realty in Baltimore, was in the middle of a settlement (a slow part) when he chatted with me on Dec. 21. Lack of snow helps, he said.

"I think it's the weather staying warmer just keeps people out and going," he said. "Usually it starts to settle down ... right around Thanksgiving. ... This year it really hasn't. People are out and looking."

Now he's counting on a January slowdown to give him a chance to prepare for the spring market.

As Kantorski noted, this is all anecdotal. We'll see when December figures come out next month whether the holidays were unusually busy for the housing market as a whole.

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

December 28, 2011

Property reassesments: 17% drop in Md. home values since '08

A third of property owners in the state are about to get notices outlining their new assessments. If you're among the 631,000 homeowners in that group, chances are good that your assessed value is down.

Assessments for residential properties dropped an average of 17 percent statewide compared with the last time they were revalued in late 2008, the state Department of Assessments and Taxation says. About 90 percent of homes saw a decline.

More details in today's story.

Not sure whether you were due for reassessment? Check out these maps

Thinking of appealing? Your deadline is Feb. 10 if you've just been reassessed; you'll get paperwork with your notice that you can mail back in.

If you're among the two-thirds of property owners who haven't just been reassessed, you can still appeal -- it's called a "petition for review" -- but your deadline is Jan. 3. (That's because it's the first business day after Jan. 1. Assessments chief Robert E. Young says the office will accept petitions delivered, emailed or postmarked that day.)

Here are more details on petitions, and here's a petition success story. Application? Here.

And here's a post about the appeals process. (It's from 2007. Enjoy the blast-from-the-past housing market chatter.) The state covers the basics of various forms of appeal here.

Oh, and if you happen to buy a home during the first six months of next year -- or any year -- you can have your appeal considered for the tax year beginning July 1 if you get it in within 60 days of transfer.

But as colleague Alison Knezevich notes, the local appeals boards have a backlog of thousands of cases. So the wait might be longer than you hoped. (Appeals boards hear "second-level" appeals, cases in which the property owner wasn't satisfied with the response to his or her appeal to the assessment agency.)

Not sure if you applied for the Homestead Property Tax Credit for owner-occupiers? If you haven't and you're being reassessed, you'll get an application with your notice. No application means you have applied.

Check the notice to make sure the property is on record as a principal residence, though -- if it's not, you'll want to get that fixed and make sure you really are all set application-wise.

Homeowners who bought before 2008 have until the end of 2012 to apply for the credit or they'll lose the break. Newer purchasers have had to apply soon after buying. The requirement is supposed to make it easier for the state to knock ineligible recipients off the rolls and keep people from collecting unwarranted credits in the future.

Here's the application.

Let's see, let's see -- oh, yes, here's why your property-tax bill might rise in July even if your assessed value drops.

And no, the assessment agency won't strip your homestead credit because you had the temerity to appeal (assuming you're eligible for the tax break, of course), but successful appeals can result in credits shrinking or disappearing. Here's why.

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

December 27, 2011

Homestead credit Q&A

So many questions came in during our live-chat Q&A about the homestead credit last week that we couldn't get to them all, but I didn't want to leave people hanging. Ditto with folks who emailed questions to Midday with Dan Rodricks at WYPR that didn't get asked on air.

So here they are, with my best effort at answers.

Two people touched on a similar theme. Margaret from Baltimore asks: "What would prevent thousands of families from fleeing the city to the counties which not only have lower tax rates but also will continue to offer the homestead cap that protects homeowners?"

And Amir from Baltimore says: "These stories are great. I'm a renter and want to find the right place to maybe buy in the city. If Baltimore residents are stripped of the Homestead credit – what incentive is there to move and live for many years?"

I don't think the homestead credit would disappear in the city and remain in the rest of the state. A successful court challenge, for instance, would undo the law statewide. I doubt the General Assembly would get rid of the program on its own -- alterations are more likely -- but there too the homestead credit would probably be dealt with on a statewide basis.

Quick reminder: The homestead program caps any increases in the amount of assessed value a homeowner is actually taxed on at 10 percent statewide, allowing jurisdictions to set their own caps lower. Baltimore's is 4 percent, like Baltimore County's. Carroll, Harford and Howard counties are at 5 percent. Anne Arundel is at 2 percent.

Some counties and cities are at 10 percent -- Annapolis, Sykesville and Montgomery County, to name a few -- but most are outside the Baltimore region. So while Baltimore could raise its cap to 10 percent, it has generally been proposed as part of a plan to decrease the city's overall property-tax rate in order to increase population. Here, for instance, is a 2007 proposal from a city blue-ribbon committee that recommends such a move.

That brings us to a question asked by Dave from Baltimore: "If the cap was set at 10% in the last decade, how many thousands more homeowners would have fled the City? What with the ballooning assessments from the real estate bubble."

If the cap had been set at 10 percent in the last decade, the city could have aggressively decreased its rate during that time, a broad-based form of tax relief.

The sticking point is this: Would a substantial decrease in the rate encourage more people and businesses to move to the city, as advocates have argued? If so, and if that benefit carried over into the housing bust, then hooray -- thorny problem solved! If not, the city would have seen a substantial drop in revenue as home sales slumped, something it can ill afford.

This is not easy stuff. It's one of those "if there were a simple and guaranteed fix, we would have done it already" situations.

But as more people press the city to find a way to drop the property-tax rate, it seems logical to examine the entire system to understand how it's working, if it's reasonably fair and whether any changes could help the city lower the rate.

If everyone likes the idea of keeping a lid on taxes but dislikes the side effects that have come with the homestead program (like neighbors paying dramatically different tax bills for very similar homes), then the solution might be to look at alternatives and judge whether they've worked better.

There's Massachusetts, for instance, which since a taxpayer revolt in 1980 has limited the increase in total revenue local governments can raise from the existing property-tax base to 2.5 percent a year. (Localities that want to push past that limit must get the OK from voters.) Closer to home, Washington, D.C. doesn't tax the first $67,500 of assessed value on principal residences, a policy that doesn't cap increases but does decrease the total amount of tax paid.

On a related note, Laura from Remington asks: "What do you think of Adam Meister's argument against raising taxes on current city residents? 'A change in the homestead property tax credit rate is not going to get new people to move to Baltimore, but it will drive current residents out of Baltimore.' I would call Meister the 'homestead muckraker.' With his experience as a homestead muckraker, the Sun should hire him to write reports on the homestead credit. One, he understands basic economics and tax policy; and two, he broke the story of Conaway abusing the credit."

I don't get to hire anybody, more's the pity, so all I can do is address your question: Wouldn't changing the homestead program just make people leave?

As noted above, I think it depends entirely on what the change might be and whether you drop the property-tax rate at the same time. What economists say the city could really use is tax policy that doesn't push people out and also doesn't discourage newcomers from moving in, something that's easy to talk about but obviously less simple to put into practice.

It's long and I'm sure some readers skimmed it, so I'd better point out that the story Scott Calvert and I wrote about the homestead program does not boil down to, "Scrap the credit, raise taxes on thousands!" We pointed out that the program is leading to far bigger disparities and costs than its creators in 1977 imagined. Maybe voters think that's still better than any possible alternative. But then it's an informed choice, which is definitely better than the alternative (an uninformed choice).

Next question! Ron Levine asks: "My mother in law is 84 years old and her income from various sources is approximately $8,000 per month. She lives in a condominium in Baltimore City and her current property tax is $3,500 per year. Is she eligible for a property tax reduction or a homestead property tax credit?" 

If her income is $96,000 a year ($8,000 per month), then I don't see that she's eligible for the low- to moderate-income tax reduction program known as the homeowners' credit. That caps tax bills for households with income of no more than $60,000 a year, with a net worth of less than $200,000 (not including the home and retirement accounts). But you can always call the state Department of Assessments and Taxation to find out.

But she is eligible for the homestead credit, since she lives in her condo. "Eligible for" isn't the same as "actually getting a tax credit from" because it all depends on whether she's seen assessment increases of more than 4 percent since she moved in -- or, more precisely, since her second July 1 in the condo.

Check her address here (the Sun's searchable database) or here (the city's online look-up site) to determine whether she's receiving a break from the homestead. If not, look to see if her home is listed as a principal residence. If it's not, you'll want to contact the state Department of Assessments and Taxation to get that fixed so she will be listed as eligible for the credit going forward.

Finally, make sure your mother-in-law has applied for the homestead credit. Everyone must, and the deadline for people who owned their home before 2008 is Dec. 31, 2012. (Newer buyers have had to apply right away.) Those who don't apply lose the credit.

Susan from Baltimore asks: "If the City raised the homestead tax credit to 10%, effectively raising taxes on thousands of homeowners, exactly how much new revenue would come in? Would that revenue continue indefinitely or would it eventually phase-out, prohibiting the possibility of a sustainable overall tax cut?"

That's a great question, Susan. The total amount of additional revenue -- and how long it would come in -- depends on what happens to home values. The city would rapidly burn through the amount shielded by the homestead cap if assessed values keep falling in a big way. If values stabilize, it would take longer. If values begin rising again, even longer. 

The idea that a tax-rate cut could be sustainable -- despite what happens to the wider housing market -- is based on the argument that a sufficiently lower rate would prompt population growth, more rehabbing and an increase in property values. Steve Walters, the Loyola University Maryland professor who has suggested the city drop its rate in half, points to cities in California and Massachusetts that were worse off than Baltimore before those state's tax revolts and since then have prospered.

There's debate about whether this is possible here, and in the here and now. Fabulous for the city if it can break through the Catch-22 of, "We don't have enough taxpaying residents so we have to have a high tax rate to cover costs, but the high tax rate is keeping us from getting more taxpayers." Horrible, though, if dropping the rate does nothing but pummel revenues and make even more people decide to leave.

The next pair of questions are related:

Pat from Baltimore asks, "I appreciate that you worked hard on the numbers for the city, but I don't know what you stopped there. Specifically - why is it unfair for long-term residents of Baltimore City to get the Homestead, but not for residents of the rest of the state?"

And a questioner from Aberdeen says, "This was great journalism that we need more of. Thanks. You write, 'Critics say it discourages newcomers from moving to Baltimore.' Isn’t that the case with homebuyers in any MD county? Any new buyer will have to pay taxes based on the new assessment."

Pat, if the homestead is unfair in the city, it's unfair everywhere. The story wasn't trying to suggest that the unfairness varies depending on where you live, but rather that the homestead program has had an outsized effect in the city because of its high tax rate. Anne Arundel, with its 2 percent cap, is the only jurisdiction in Maryland with more money shielded from taxation by the homestead program than Baltimore.

That's also the answer to the Aberdeen questioner's query -- the homestead disparities matter more in Baltimore than they do in places with lower tax rates. The dollar amounts are larger on an individual basis, i.e. the homeowner paying a third more than what his next-door neighbor does. They're also larger collectively, again with the exception of Anne Arundel, which has a substantially lower tax rate but also a lower homestead cap.

Matt G. asks, "Based on my dealings with SDAT and the city's Department of Finance, it seems that Finance has to wait to receive confirmation from SDAT that a house is not owner-occupied before they can reissue a bill with the revoked homestead credits -- which often delays the process by months. Has there been any talk among either SDAT or the city's Finance Department as to ways the process can be streamlined?"

None that I'm aware of, but we also didn't specifically ask that question. I'll put that on my list. Thanks for the suggestion, Matt.

Chappy10 asks, "Is there a reason the Sun did not release its list of 'double dippers'? I note that you did talk to some people who were wrongly receiving the tax break, and you mentioned them by name, but I'm surprised you didn't make the full list public. It seems like that is public information and should be made public. I am wondering if I am missing something?" In a later comment, chappy clarified:

I think it would be good for the Sun to release the list it submitted to the city/state for a few reasons: 1) Gives notice to some of these people so they can perhaps fix the problem themselves--the best solution to such problems, 2) Transparency to your readers by letting them know "the story behind the story" or at least how you're arriving at the number of "double dippers" you report in the story, 3) It's public information and it would be generally good if it were public, 4) It would show that you stand behind your reporting and the methodology you used to arrive at that number and, lastly, 5) it would comport with the Sun's stated motto of "Light for All" by shining a light on financial matters at a time when the city needs money to do things like keep rec centers open and keep firehouses fully staffed.

Far from shaming people, I think posting your "working list" would put people on notice. If your methodology was simply to cross-reference last names, I'd be willing to bet a lot of my family is on the list because virtually all of us live in Greektown and have similar names due to the common practice of naming children after grandparents.

The big issues for the city, it seems to me, are the fact that the Homestead Credit isn't capped or means-tested, producing regressive consequences. Plus the fact you lose your HC if you move, even if to another city house.

Thanks for clarifying, chappy -- that was helpful.

We didn't publish all the names (online or in print) for the same reason we didn't publish all the names of owners with vacant properties getting the homestead credit, something we wrote about in an earlier story. We think it's important to give people a chance to comment and explain before their name is associated with even the possibility that they're getting an undeserved tax break.

I get your point about fair notice. The state's process is to send a letter to a property owner it believes is getting an unwarranted homestead credit, giving the owner 30 days to explain why he or she is actually eligible. So owners should all get notice and a chance to say, "Hey, wait, that other John Q. Public is my grandfather."

Both the city and the state, by the way, say they did similar searches for double-dippers but hadn't yet taken the next step of contacting them at the point that we inquired.

Regarding your transparency point, here's more from colleague Scott Calvert, who did the heavy lifting on the double-dipper story, about how he tried to avoid casting too wide a net:

What I did first was look for repeat names. From there I excluded common names, unless the mailing address for both properties was the same. It's a judgment call, but the more common the name, the more likely I was to skip over it. That extended to names like Joseph T. Smith Jr. -- it might well have been the same person, but odds were decent enough that they were separate people that I deemed it not worth the time.

Once I had my list, I went deeper to cull "false positives." For each pair, unless there was an address match, I actually went into Nexis to see if it connected both addresses to a person with that name, age, etc. I'd also look, in the case of male names, to make sure Junior didn't own one home and simply have a connection to the address of Senior. I'd actually look for ownership of both homes by the same person if there was any potential for junior/senior confusion.

In many cases there was dual ownership of at least one house. I excluded all such cases where the names seemed to be of the same gender. That obviously didn't mean those credits were valid, but it was the best way to exclude non-spouse co-owners (though I realize in this era of same-sex marriages that doesn't always apply).

Where one or two of the houses had co-owners whose names indicated they were indeed of opposite gender, I didn't just assume they were married and therefore ineligible for more than one credit. I checked Nexis to see if their addresses matched and also to see if their ages were close or at least in the same generation -- reasoning that that raised the likelihood they were married. But I also frequently went to and looked up deeds because deeds often identify couples as husband and wife.

Hazel Laing asks, "More a rhetorical question I guess--but why were you able to gather, analyze, and suggest applications for the data but the folks we pay to do this seem unable to do so?"

Sometimes it's simply how you're looking at the data. If you have it in a form that's fairly easy to query, you're more likely to look at it from a variety of different angles. We're using Excel and Access, which are well suited for analysis.

The city's new billing integrity program is designed to take a closer look at all sorts of tax credits, so I suspect staffers will be doing analyses that the city has never or rarely done before.

An anonymous questioner asks, "Why doesn't the City do its due diligence (you two were able to find these double dippers) and research before extending tax credits to people already getting them? It's harder to back track. Is that possible?"

The homestead program is actually run by the state, not the city. So while the city could in theory check on every recipient, it wouldn't be able to start until after they're already in the system.

One thing that should help is a 2007 law requiring that homeowners apply for the credit. The application requires Social Security numbers so the state can verify that homeowners aren't receiving the break on any other property and check that they're using the same address for their tax returns and driver's licenses.

The deadline for longer-term owners isn't until the end of next year, though, so it won't be until the following tax year -- beginning July 2013 -- that credits will disappear for those who don't apply.

Mike says, "Hi Jamie. As you know I have been complaining about this for years but do not have the money to take it to a court fight. Do you know how many people rent in the city? These people get no relief at all. Is it fair that tenant should pay more taxes than home owners?"

The Census Bureau says Baltimore's homeownership rate is about 51 percent, so there are tens of thousands of renters. 

It's not uncommon for property-tax policies to give homeowners a break not extended to other types of residential property owners, including landlords. But it's true that higher taxes affect renters. Landlords will of course try to pass their costs on to their tenants, or else there's little point in renting out their properties. (Some people are renting out their former homes in hopes of waiting out the housing market, so they might be willingly doing so at a loss. But that's not a long-term business model.)

Lili says, "My property is a double lot, but my house has a specific number. I was denied the tax credit because my official address seems to appear as a second residence, when in fact, the 'first' residence is my side yard! I tried to appeal online, and never heard back."

Frustrating! I suggest you call the state Department of Assessments and Taxation and explain the situation by phone. Hopefully if you talk to someone, it can get cleared up. Good luck.

Michael asks, "If the idea is to free the homeowner from the tax burden while they're living there, shouldn't the city get something back from the sale when the house sells one day?"

The city does get transfer taxes when a home changes hands, but that's true whether the property had a homestead credit or not. One of the reader ideas in this blog post was to change the program so the city would take a cut at sale.

Rebecca from Baltimore says, "In the early nineties, I purchased a home in the neighborhood below Federal Hill, next to a hardware parts wholesaler called Leonard Jed Industrial Supplies. I could not have anticipated that years later, a developer would persuade Leonard Jed to move, get the city to change the zoning, and then build townhouses originally priced at a million dollars apiece! (They've since been dropped to between 600 and 700,000.) Speculators all over the city have been buying low priced houses and flipping them, jacking up the cost of living for many of the longtime and moderate income residents. Where's the fairness in that?"

Gentrification has always been a strong argument in favor of a program that prevents tax bills from skyrocketing.

If the housing market is rapidly lifting all values, a cap on overall revenue collection (a la Massachusetts) would protect homeowners. But if only certain pockets are seeing big spikes, or they're seeing far bigger increases than the broader market, those homeowners would get stuck with spiraling bills unless there is a program in place to address that.

So it's really a question of what people want to accomplish. You can have rules capping total revenue collection and a separate cap at the individual homeowner level. You can design tax limits based on income, as the homeowners' credit does. You can change the system entirely, as some readers have proposed, or do nips and tucks or do nothing at all.

Here's to more discussion!

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (0)
Categories: Homestead Property Tax Credit, Property taxes, Q&A

December 23, 2011

From different limits to 'land tax,' your fix for the homestead credit

Readers have been sending in ideas for how to change the Homestead Property Tax Credit, replace it or, alternatively, how to change the entire property-tax system. It's been interesting to see, and I didn't want to keep them all to myself.

Some have come in as questions.

"It looks like we have 2 tax credits for homeowners, both designed to protect them against financial shocks from tax spikes: the Homestead Tax Credit, which you've been covering so well, and the Homeowners' Property Tax Credit, which is incapable of being enjoyed by upper income homeowners because it has an income eligibility cut-off," Steve R. wrote during the homestead Q&A this week. "Couldn't we solve the inequities you found and still maintain protections for middle class homeowners (and incentives for them to stay in their city homes) by scrapping the Homestead Tax Credit and strengthening the Homeowners' Property Tax Credit?"

Del. Sandy Rosenberg's suggestion, which we covered earlier in the week, is to keep the homestead program but inject an income element into it so that the annual cap on taxes would vary based on how much a household makes. You could still end up with people in similar homes paying very different amounts of taxes under that model, but those differences would be based on income as well as when the homeowners bought rather than just the latter.

I'll circle back to that proposal -- and reaction to it -- in a bit. (Also: Allegations of class warfare!)

A quick primer on the homestead credit: It sets a limit on how fast the amount of assessed value you're actually taxed on can increase each year. The statewide maximum is 10 percent; many jurisdictions have set their caps lower. Baltimore's limit is 4 percent. Every homeowner is eligible -- it's a tax break for owner-occupiers.

While some reader proposals focus on the homestead program, by itself or as part of an effort to decrease the city's property-tax rate, others say all the attention should be focused on the rate. It's the highest by far in Maryland (though one reader says the difference isn't quite as bad as it appears -- some counties' effective rates are higher than advertised because they add on a lot of extra charges, he says). 

Reader David Meltzer writes, "The only message that an advocate of Baltimore should be sending is that Baltimore property taxes must be HALVED in order to cure its problems. Why foster infighting among us?"

Steve Walters, the Loyola University Maryland professor who wrote a paper recommending that the city cut its rate in half, has an idea for protecting certain homeowners from big increases if the homestead program disappears.

"The alternative would be a state- or city-run tax deferral program that would work like reverse mortgages do," Walters writes. "The poor or elderly could apply for a cap on their annual bill (once and for all, to address the administrative issues raised by Mr. Young), but then any unpaid balance would accrue and be collected once the home IS sold and the capital gains realized."

He adds, "This approach would eliminate an illegal and inequitable policy, could fund more broad-based city tax relief, seems administratively manageable (since the tax man already monitors closings to collect transfer and recordation taxes, etc.) and provides long-term residents needed protection against cash flow problems resulting from the city's high rate."

Rick Gilmour from Towson writes, "No longer a citizen of Baltimore City (I moved out to achieve lower county taxes), I nevertheless learned a great deal about homeowners' taxation while living in Baltimore for some 7 years." He offers four steps to get to a lower tax rate "by spreading the cost of city services to all who use them":

1) Convert basic city services, like public safety and trash collection, to fee-based services, just as water and sewer are now fee based.

2) Impose those fees on all property parcels in the city, governmental, not-for-profit, charitable, and religious property owners included. Where an entity (such as the federal government) cannot have those fees "imposed," then merely deny them the services unless they pay.

3) Do not cut any deals with any property owner as regards these fees. No reductions for anybody!

4) Vastly streamline the process by which the city can acquire title to, and then dispose of, real estate parcels that are in arrears on water & sewer charges and the basic service fees. Then use that streamlined process to get properties out of the hands of deadbeat owners.

Bill Marker, an activist from Pigtown, proposes a statewide overhaul of the property-tax system -- rather than the homestead program -- via one uniform rate. He calls it the "One State, One Rate" plan.

"Property taxes for the whole state would go into a single, state-wide fund, presumptively to be distributed to the counties (and Baltimore City) based on their percentage of Maryland’s population," he writes. "Setting the State-wide rate at .8686/$100 would raise the same total amount as currently raised, and reduce Baltimore City’s $2.268 rate by nearly 62%. Like eliminating the homestead tax credit, the city needs State action to establish the One-State, One Rate property tax; fortunately, it would benefit nearly 55% of Marylanders, including the citizens of Baltimore County."

Joshua Vincent, executive director of the Center for the Study of Economics in Philadelphia, suggests an entirely different system -- a "land value tax" rather than a property tax.

"The land tax would remove the penalty for reinvestment in construction by exempting buildings from tax,"writes Vincent, formerly of Locust Point. "It would also remove much of the need for the Homestead Tax Credit."

Tracy Gosson, the former Live Baltimore director who runs her own consulting firm, has a recommendation for how the city could solve the problem of people saying they had no idea they were getting homestead credits on homes that aren't their primary residences: "put a red insert in tax bill w rules & penalties" and "promote lawbreakers they go after 2 show there actually is accountability. lets starts w scofflaw politicians." (Suggestions via Twitter, thus the shorthand.)

Back to Rosenberg's cap-based-on-income proposal:

Reader Martin Kirchhausen thinks it's a "terrible" idea because the property tax is based on property values and "bears no relationship to income."

"I think a much better approach would be to limit any increase in the Homestead credit to a fixed amount or percentage while at the same time not allowing an increase in the credit for any homeowner whose current credit exceeds a set amount or percentage until such time as the amount reaches a predetermined acceptable level," he writes.

Shulamit Gartenhaus of Baltimore also wrote in but to cheer Rosenberg on. She fits the demographic that is generally thought of as prime homestead proponents -- nearing retirement -- but is no fan of how the credit's effects are playing out.

"I always thought I was paying much more taxes than my neighbors," she said in a letter to the editor. "I went online, and saw for myself. Some of my neighbors are getting a whopping 46 percent credit for a house assessed $20,000 more than mine, while I get a measly 24 percent credit. I can't figure it out because I bought my house long before they did. I feel even worse for those of my neighbors who are getting no credit, and I know they can't afford the high taxes. This is certainly not a fair system."

One final income-related thought: Tony Johns from Upperco wrote in to politely suggest that Scott Calvert and I are jumping onto the class-warfare bandwagon because we pointed out that the largest homestead credits are, well, very large and are going to well-do-to owners such as Constellation Energy's Mayo Shattuck.

"The current tax system has already chased the middle class away from the city," he writes. "Do we really want the rich people to leave too?"

Homestead credits for the wealthy wasn't the major thrust of the story so we didn't spend a lot of time on it, or else we might have thought to make clear that the next-door-neighbor disparities in tax bills that you find on rowhome streets are playing out among the mansion set, too.

The homeowner directly across from Shattuck's family, for instance, pays about $3,900 more than they do even though his home is assessed at $700,000 less. That's because his homestead credit shaves about $1,900 off his taxes this year while the Shattucks' credit knocks more than $22,000 off theirs.

Thanks for weighing in, folks! Apologies if you sent me an idea and I didn't include it here -- as you can see, there have been a goodly number and I might have missed one in the scrum. (That's also why there was no Thursday blog post. I've been working on this thing in what passes for my free time since Wednesday evening.)

Thoughts, arguments, other ideas?

Oh, and I will be getting to at least some of the questions that didn't get answered during the homestead Q&A and on Midday with Dan Rodricks, but it looks like that will have to be done next week. So much to do, so little time.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (14)
Categories: Homestead Property Tax Credit, Property taxes

December 21, 2011

Most say 'good time to buy,' few say 'good time to sell'

Most Americans surveyed by the group that provides the data for a widely tracked measure of consumer confidence say it's a good time to buy a home -- but not a good time to sell one.

This will probably not come as a shock.

Interestingly, though, renters are less bullish about buying than homeowners, who generally would have to sell in order to purchase.

That's according to a study for the Mortgage Bankers Association and its Research Institute for Housing America. The report looked at years of results from the University of Michigan's Survey of Consumer Attitudes.

Fewer than 65 percent of renters thought it was a good time to buy as of the beginning of this year, compared with about 80 percent of homeowners. 

"For homeowners, sentiment in 2011 is at a level similar to the average over the last twenty years," notes author Gary V. Engelhardt of Syracuse University. "For renters, sentiment is somewhat lower now than the past average."

Sentiment about selling is -- naturally -- far more negative than average.

Fewer than 10 percent of homeowners surveyed at the beginning of the year thought it was a good time to sell. That measure was rarely below 40 percent from 1993 through 2006, and surpassed 70 percent at the end of the housing bubble.

Some of those who do think it's a good time to sell seem to mean it in the relative sense: They think prices will continue to fall, so later would be worse.

On the flip side, most of those who say it's a good time to buy offered a variation on "prices are low" or "prices are going to rise." Fewer cited low mortgage rates as their main reason for holding that view.

Oh, and one more nugget: Americans (owners and renters) are almost always more likely to believe it's a good time to buy than for homeowners to think it's a good time to sell. Check out the graph on page 33 of the report (the one labeled Figure 14) to see the years-long trend. 

Do you agree it's a good time to buy and a bad time to sell? Some here have made the argument that it's a bad time to buy and a good time to sell (in the "sell now or lose even more value" sense). I've also heard readers opine that it's a bad time for both. I don't think I've heard anyone say it's been a good time to buy and sell in the last few years, except the occasional real estate agent.

But sometimes it's simply the time to move, whether good or bad. Though the level is low, homes still do sell every month.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (7)
Categories: Survey says ...

December 20, 2011

Join in on homestead credit Q&A

Got questions about the state's Homestead Property Tax Credit or the Sun's investigation into how it works and doesn't work?

Ask them here. We'll have a live Q&A at noon today, but you can type up your question (or questions) beforehand, too. 

On a related note: You've been commenting, tweeting and emailing various thoughts about how the homestead credit -- and the city's property-tax system overall -- could be fairer and/or better. I'm going to pull them together for a post this week (I'd hoped to do it in time for this morning but other stories interfered, including this one about a lawsuit against the Creig Northrop Team), so there's still an opportunity to pipe up.

Thanks for all the ideas! Interesting discussion.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (7)
Categories: Homestead Property Tax Credit, Property taxes, Q&A

December 19, 2011

Next door, vastly different property-tax bills

Homeowners on a stretch of Roundhouse Court in Pigtown are paying between $2,400 and $5,700 in property taxes this year.

The tax bill on one rowhome on Churchill Street in Federal Hill is $3,900, while directly across the street it's $6,500.

And on Bank Street in Upper Fells Point, you can find homeowners paying $2,900, $4,400 and $6,500, all within about a block of each other.

In each example, the neighbors' home values are basically the same. The reason their bills are not is that the Homestead Property Tax Credit caps homeowners' increases at 4 percent a year in Baltimore.

That limit has left many paying on far less than their full assessment, even with the housing bust that followed boom. Those who bought over the last several years, by contrast, have generally had no increases to cap, so they're paying full freight. You can find homestead-fueled tax-bill disparities across the state, but they're particularly notable in Baltimore thanks to its highest-in-Maryland property-tax rate.

The upside to such a cap is that it protects homeowners from skyrocketing bills. The downside is that it shifts more of the tax burden onto newer buyers and renters. (Landlords don't qualify for the break, and they pass their costs along via the rent.)

Scott Calvert and I spent several months delving into the homestead program and were amazed at what we found.

Did you know the value to recipients (and cost to the city) is $120 million this year alone? Or that the attorney general's office has for years opined that the program violates Maryland's constitution? And that hundreds of city property owners are getting credits that were inflated by mistakes or that they shouldn't be receiving at all?

You can read the full story here, and here's a follow-up that reports on a state delegate's call to revamp the homestead credit so the cap varies based on income

Here, you can read about the hundreds of "double dippers" -- plus 17 owners getting credits on three or four homes each -- that Scott found.

And check out how Councilman Carl Stokes amassed a homestead credit that covers most of his property-tax bill but is advocating a change he thinks will spread tax relief more broadly.

Oh, and don't forget this searchable database where you can see how your property-tax bill compares to your neighbors'. And this photo gallery of the 10 largest homestead recipients.

Three cheers to Patrick Maynard for turning the data searchable and to Liz Pillow for making a list into an interesting gallery.

This is the first in an occasional series about property taxes in Baltimore. Feel free to chime in with ideas.

Oh, and in case you're wondering: Scott receives no break from the homestead credit because he lived overseas for a stretch as the Sun's Africa correspondent. I've been in my condo more than 10 years now, and my homestead discount covers about a third of my bill in the 'burbs.

Our tax bills didn't get us interested in how the homestead program works and doesn't work -- it's by far the biggest property-tax credit in the city, so it seemed a natural place to start the series. (Also, this homeowner's complaint about the homestead credit -- "You're robbing Peter to pay Paul. I'm Peter" -- stuck with me.)

What do you think of the homestead credit? Do you get a tax discount from the program?

Would Del. Samuel I. "Sandy" Rosenberg's sliding-scale idea be an improvement, or is there another method you believe would be fairer/simpler/better?

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (14)
Categories: Homestead Property Tax Credit, Property taxes

December 16, 2011

House (or apartment) poor

Just because you're paying your rent or mortgage every month on the dot doesn't mean you can really afford it. That's the idea of "house poor," people spending so much on housing costs that they're not spending on much of anything else -- or saving, for that matter.

Is this you?

The National Housing Conference and Center for Housing Policy just updated their "Paycheck to Paycheck" data this week to show the income you need to avoid spending too much on the typical home or rental in metro areas across the country.

Their calculations suggest that plenty of workers -- from bank tellers to security guards to school bus drivers -- had better double up with another working stiff, or they'll have a hard time of it. That's all right for a variety of families, but it's less all right for single folks and any couples dealing with a job loss.

In the Baltimore region, the two housing groups say, you need to earn almost $70,000 a year to buy the median-priced home and not spend more than 28 percent of your income on the mortgage, taxes and insurance (a common measure of affordability). This assumes a 10 percent down payment, bigger than FHA's minimum requirements.

You don't need to earn as much if you're renting, but it's still a good chunk of change.

A Baltimore-area renter making $42,000 can just afford a one-bedroom rental at HUD's "fair market rent" of $1,052 a month, according to the Paycheck to Paycheck report. A $50,000 income is just enough for a two-bedroom with fair market rent of $1,263 a month.

That calculation considers rent affordable as long as it doesn't eat up more than 30 percent of monthly income, a bit higher than the homeownership figure because renters aren't responsible for broken toilets, leaky roofs and other maintenance costs.

The Baltimore metro area is the 29th most expensive housing market in the country, according to Paycheck to Paycheck. Its $242,000 median price is far behind No. 1 San Francisco ($585,000), but far above the typical price nationally ($176,000) let alone in the cheapest region, Youngstown in Ohio ($77,000).

Paycheck to Paycheck uses National Association of Home Builders data, which includes new-home sales as well as existing homes. That probably explains why its median price for the Baltimore area is a bit higher than what Metropolitan Regional Information Systems recorded for the same period, July through September.

As for rents, the Baltimore metro area is even higher up the list -- 22nd most expensive out of 210 regions.

The median household income in the Baltimore metro area in 2009, the most recent figures from state planners, was about $67,000. So about half the households in the region don't make enough to afford the median home, while half do (if only barely in some cases).

Here's hoping you make more than enough to comfortably pay your mortgage or rent.

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

December 15, 2011

Nonprofits trying to blunt impact of foreclosures on neighborhoods having trouble finding some to buy

Healthy Neighborhoods is trying to get several hundred foreclosed Baltimore homes rehabbed and back in the hands of homeowners. The hitch? Something few people anticipated when Congress authorized funds to cushion the foreclosure crisis's effect on neighborhoods.

"There's not a lot of foreclosures out there," says Lisa Evans, a senior program officer at the Baltimore nonprofit.

It's a not a problem-solved situation -- thousands and thousands of local homeowners are far behind on their mortgages. What happened is that the foreclosure apparatus all but shut down after the robo-signing scandal last year, and it's only recently showed signs of revving up again.

Healthy Neighborhoods won $26 million in federal Neighborhood Stabilization Program 2 funds to coordinate the effort to acquire and fix up city homes. Four development partners, mostly nonprofits, are doing the rehab work.

Half the money needs to be spent by next February, which Evans says shouldn't be a problem -- all but $200,000 already has been. The rest must be spent by February 2013, a tricky task if bank-owned properties remain scarce.

"We're optimistic -- we think we'll get there," Evans said. "But it will be a challenge."

Healthy Neighborhoods and its partners noticed the slowdown a few months ago, later than they might have if they hadn't hit pause on acquisition to concentrate on renovation.

Evans says they're happy with the results from the earlier purchases. Of the nearly 120 homes  acquired so far, 42 have been fixed up and sold to homeowners while another 40 or so are under construction. The rest -- nearly 40 -- are awaiting renovation.

Sales prices for the fixed-up homes have ranged from about $87,000 in Belair-Edison to almost $250,000 for 2,600-square-foot houses on Calvert Street in Barclay, near Charles Village.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (5)
Categories: The foreclosure mess

December 14, 2011

More student debt, fewer homeowners

FinAid's Student Loan Debt Clock is just as alarming, in its way, as those clocks that relentlessly tick up the national debt.

The FinAid clock is fast approaching $1 trillion, ratcheting up at the pace of nearly $3,000 per second. Americans owe more on student loans than they do on their credit cards, a switchover that happened last year.

Consider that the amount you can borrow to buy a home depends not only on how much you earn but also how much debt you already have, and you can see what the student-loan boom has to do with the housing market.

Rick Palacios Jr., senior research analyst at John Burns Real Estate Consulting, wrote recently that homebuilders should beware.

"Faced with mounting student loan debt, poor job prospects and stagnant wages, an increasing amount of 25 to 34 year olds (a prized demographic for the housing sector) have moved back in with their parents," he wrote.

According to Palacios, the number of adults in that age bracket living with parents is up 26 percent since the Great Recession started in late 2007. They're now nearly 6 million strong.

"Today's 36.8% homeownership rate for 25 to 29 year olds is at its lowest level since 1999, and homeownership for 30 to 34 year olds is at its lowest rate in 17 years," he wrote. "The good news is that this pent-up demand will ultimately provide a much needed boost to the housing sector. The bad news is that the boost will be heavily skewed to the rental market as it will take longer than ever for young people to qualify for a mortgage, especially if more and more graduates are hit with credit blemishes from unpaid student debt."

No wonder apartment owners and developers are feeling pretty good right now.

What's your student-loan situation? Do you have any? Are you making good progress paying them off?

Are they influencing where you live?

If so, do you care?

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (16)
Categories: Renting

December 13, 2011

Bozzuto breaks ground on Union Wharf apartments


Union Wharf rendering courtesy of the Bozzuto Group


The Bozzuto Group, long interested in building apartments on a parcel alongside the Fells Point waterfront, is officially breaking ground there today for a 281-unit upscale complex.

The project, part of the Union Wharf mixed-use development, will include nearly 5,000 square feet of commercial space that Bozzuto expects will be used by a restaurant.

The apartment market is yin to the housing-market yang, with rents rising and vacancies improving over the last few years while sale prices have fallen. Bozzuto builds for both markets, and CEO Tom Bozzuto explained in today's housing-market story why he thinks residents in their 20s will be heavily in the renter demographic.

More on Union Wharf:

The company expects construction will finish in November 2013, with some units ready for renting the previous summer. The complex will be one long, five-story building wrapped around a 500-unit parking garage, with several courtyards built along the promenade.

Bozzuto expects average rents will be comparable to its nearby Spinnaker Bay complex, somewhere in the neighborhood of $2,250 to $2,300 a month.

Not surprisingly at those prices, the company's executives believe their target audience won't be people who can't afford to buy a home.

"We're really catering to ... renters by choice," said Jeff Kayce, vice president of the company's Bozzuto Development arm.

The site, most recently used as a parking lot, was once industrial. Kayce said Bozzuto is working with the state to clean the site, mainly getting old concrete and rebar out of the ground and capping it.

The project, a joint venture with Cigna and the Pritzker Realty Group, has been a long while in coming. Tom Bozzuto says the company has been in discussions to build there for about a decade and got the land under contract two years ago.

"We have had great success with our properties in Baltimore to date, and we're very excited to be part of what we see as a rejuvenation of Baltimore," he said.

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

December 12, 2011

What it costs to buy 2 bedrooms, 3, 4 and more

What's the cheapest way to buy a home if your aim is as many bedrooms as possible? Aim for attached housing.

In October, townhouses and rowhouses in the Baltimore region sold for substantially less than single-family houses in comparable bedroom categories. In fact, the average three-bedroom townhome or rowhome sold for about $15,000 less than the average house with two bedrooms or fewer.

And the average house with four bedrooms or more sold for nearly twice the average townhome/rowhome with that many bedrooms -- $395,000 vs. $202,000.

Here's the price breakdown from low to high, according to Metropolitan Regional Information Systems' stats arm, RealEstate Business Intelligence:

Townhouse/rowhouse, two bedrooms or fewer: $115,000

Townhouse/rowhouse, three bedrooms: $168,000

Single-family house, two bedrooms or fewer: $183,000

Townhouse/rowhouse, four bedrooms or more: $202,000

Single-family house, three bedrooms: $246,000

Single-family house, four bedrooms or more: $395,000

Homes tend to be cheaper in Baltimore than its suburbs, and Baltimore has a lot of rowhouses. That's undoubtedly one factor keeping the regionwide average for attached homes so much lower than the average for single-family houses.

There are other factors, obviously. Single-family homes are more likely to have bigger yards, driving up the price. Plenty of buyers are willing to pay extra for no attached walls. And since number of bedrooms doesn't necessarily tell you much about the square footage, some of the single-family premium could be about extra interior space. (MRIS doesn't issue statistics tracking sales price by square feet, more's the pity.)

But it's interesting, isn't it, that the average price buyers in October paid for a four-bedroom-plus townhome or rowhome was just $19,000 more than the average price buyers paid for a house with two bedrooms or fewer.

If you're wondering where condos fit into all this, I'm afraid that's not clear. MRIS tracks condos as a whole without breaking them out by number of bedrooms.

Average price for condos in October: $208,000. That's pricier than the averages for each of the categories of townhouse/rowhouse, but less expensive than the single-family categories for three bedrooms and four-plus.

Do you prefer condos, townhouses/rowhouses or single-family houses?

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

December 9, 2011

Cost to demolish Baltimore's vacants: $180 million

Here's a figure to chew on: $180 million -- the city's estimate for how much it would cost to tear down all the abandoned homes in Baltimore.

That comes from a new Government Accountability Office report on vacancy, which looks at the effects in select cities nationwide. (Hat tip to colleague John Fritze for noticing.)

"Officials in Baltimore, Detroit, and Chicago, in particular, stated that the resources required to demolish the large number of long-term vacant properties in those cities exceeds local budgets," the GAO wrote, adding: "Baltimore officials estimated that the city would need approximately $180 million to demolish the inventory of unsafe, unattended properties in the city."

About 16,000 properties in the city have been slapped with vacant building notices, indicating that they are not only empty but also unsafe or uninhabitable. About 22 percent are city-owned, according to Baltimore's housing agency.

Baltimore has long struggled to find a solution to this vexing problem. Martin O'Malley tried acquiring vacants through his Project 5000 effort while he was mayor. Successor Sheila Dixon thought a land bank would help. Mayor Stephanie Rawlings-Blake launched her own program, Vacants to Value, in hopes that targeted code enforcement, buyer incentives and a new attempt at streamlining the process of selling city-owned vacants are the answers.

Trying to find $180 million to just tear everything down hasn't been offered up in any plans I've seen, but readers have certainly talked about the idea.

MrRational suggested last year, "Bundle the titles for entire city blocks. Raze nearly every one of them. Cart off all the debris. Plan rerouting of pipes and streets. Keep 50% (or more) as grassy and parky. Auction off the rest to developer types...carefully and s l o w l y as each successive (and successful) project will make the next auction price higher."

Robert Dashiell wrote, "Baltimore ran a demolition derby during the Schmoke administration, led by then HCD Commissioner, Dan Henson. Then, as now, the better use of available funding would be to use it for renovation. The best chance many inner city resident have to live in decent houses in their neighborhoods and communities, as opposed to relocation, is if existing houses are rehabilitated."

What do you think? (And on a related note, can Baltimore expand by 10,000 families over the next 10 years as Rawlings-Blake hopes?)

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (25)
Categories: Vacancies

December 8, 2011

Question of the day: Do you feel confident about your job?

Lack of confidence that price drops are done is an oft-cited reason for people holding off on buying a home. But the other big one is income -- would-be buyers who aren't earning enough, aren't earning anything (unemployment remains high) or are earning plenty to afford a place but are anxious about the possibility of their job going poof.

Do you feel relatively confident about your job? Is it a positive or a negative in the should-I-buy equation?

While I try to recover from whatever icky virus I have, talk amongst yourselves.

Posted by Jamie Smith Hopkins at 8:00 AM | | Comments (3)
Categories: Question of the day

December 7, 2011

Patterson Park auction: $41,000 per home

The 103 rowhomes in the Patterson Park area that went up for auction together on Tuesday brought a high bid of $4.2 million -- almost $41,000 per property, or $43,000 if you include the buyer's premium. But that's not necessarily the final word.

It was an auction "with reserve," giving owner Grady Management 10 days to accept or reject. In the meantime, Grady could get another offer. Greater Baltimore AHC Inc., a nonprofit affordable housing provider, is interested.

And, of course, no deal is done until it's gone to closing. Auctioneer Sheldon Good & Co. says that generally happens in 30 days.

Check out the full story here.

The small crowd that turned out got to bid on M&T Bank Stadium first -- a tongue-in-cheek practice round.

"Do I have an opening bid of $25 million?" asked auctioneer Jonathan P. Cuticelli. "$25 million, have $25?"

"Let's go, guys," said his father, Sheldon Good CEO John J. Cuticelli Jr., into the short pause that followed. "It's not real money."

Final pretend bid: $100 mil.

"$100 million is always the winning bid," Jonathan Cuticelli said of the practice rounds.

What do you think of the auction results?

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

December 6, 2011

Still a lot of homes for sale, but fewer and fewer choices

Would-be homebuyers in the Baltimore region had more than 15,000 properties to sort through in October, a whole lot considering that the inventory of homes for sale was half as large seven years ago. But new choices are down to unusual lows.

Just over 3,200 homes were newly listed for sale in October, the lowest figure for the month in more than 14 years. (Metropolitan Regional Information Systems began tracking the metro area in late 1997, so anything earlier than that is hazy at best.)

Average for the month: more than 4,100. The next-smallest after this October was October 1997, when about 100 more homes hit the market in the city and five surrounding counties.

The total number of homes listed for sale is also shrinking. That 15,000-unit inventory is the lowest for the month of October since 2005, as boom was just giving way to bust.

Falling numbers of homes newly for sale has been the trend for most of the year. Four of the 10 months with the biggest year-over-year drops in new inventory are in 2011 -- April, July, August and September.

One likely driver is the decline in foreclosures as the robo-signing scandal rocked the mortgage industry. Foreclosure activity appears to be on the brink of an upswing again, so the pool of new homes for sale could swell next year.

Another factor is homeowners who would like to sell but aren't trying, either because they're underwater on their mortgages, unhappy about prices or leery of getting a bigger place in an uncertain economy.

Don't think prospective buyers haven't noticed. One reader commented on an earlier post about falling inventories that choices are more limited than they seem thanks to sharp differences in opinion about what homes are really worth these days.

"We desperately need more space for a growing family in Howard County, and the homes that should be in our price range, are priced at ridiculous prices," wrote Frustrated House Hunter. "People need to wake up and realize that it is not 2006 anymore! I am seeing homes that haven't been updated in ten years that are $400,000 overpriced. While I understand that the sellers NEED to sell at these prices because they have taken second mortgages, etc., the reality is that most of the houses on the market aren't really on the market at all. We don't even bother making offers anymore because the sellers just won't listen and it is a waste of our time."

What are you seeing out there?

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

December 5, 2011

In pricey Howard County, a less precipitous housing-market drop

Howard County -- the priciest housing market in the Baltimore region -- seems to have been buffeted the least by the popping bubble.

The typical home sold there in the middle of this year was 7 percent less expensive than the typical sale in 2007, when prices peaked, according to Metropolitan Regional Information Systems data. Harford, the next closest, saw double the drop.

Median sale prices fell 19 percent in Carroll, 22 percent in Anne Arundel, 26 percent in Baltimore County and about 40 percent in the city, where the picture is complicated by investors buying extremely cheap homes in need of total rehabs.

The number of sales in Howard County is also down less sharply than in most of the region, though the difference isn't so striking (with one exception) -- and the drop is pretty darn big everywhere. Since sales peaked in the region in 2005, Howard's numbers are down 43 percent, compared with 45 percent in Carroll, 49 percent in Anne Arundel, 51 percent in Baltimore County and just over 60 percent in the city. Harford's decline is smallest, at 41 percent.

I've been taking a meandering statistical tour of the jurisdictions this year, looking at figures for the month of June from 1998 onward. It reinforced that the bubble and bust both packed a harder wallop in Baltimore than in the suburbs, while the suburban counties themselves haven't felt the impact evenly.

The reputation of its school system and its location between Baltimore and Washington have worked to Howard County's advantage for years, so it's not a complete shock that it might fare relatively better in rough times. But goodness, prices are still double what they were in 2000. In June, at least, Howard's median sale price was up about half a percent over the year before, which in turn was up over the year before that.

The other notable thing about Howard is that sales didn't rise nearly as much as they did in the rest of the region during the boom years, even as prices soared. The county's home sales were just 7 percent higher in 2005 than they were in 2000, compared with 20 percent in Carroll, close to 40 percent in Anne Arundel, Baltimore County and Harford, and a whopping 80 percent in the city.

Here, have a look at prices and sales in Howard over the years:





Interested in the rest of the tour? See Anne Arundel here, Baltimore City here, Baltimore County here, Carroll County here and Harford County here.

If you're more interested in how prices and monthly payments compare with income, check out this regionwide analysis.

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

December 2, 2011

Santa won't be bringing Fannie, Freddie eviction notices (but some banks are getting sued for the holidays)

Mortgage giants Fannie Mae and Freddie Mac both announced yesterday that they'll put a freeze on foreclosure evictions from Dec. 19 through Jan. 2, a temporary Christmas present of sorts.

The mortgage industry is generally loath to toss people out at the end of the year, whether out of compassion or because images of "Homeless for the Holidays" headlines are dancing in officials' heads. Several large financial companies, including Bank of America and Wells Fargo, told CNNMoney that they would suspend or "avoid" evictions around Christmas.

"The holidays are meant for families to spend time together, especially if they’ve gone through the stress of financial challenges and foreclosure," Terry Edwards, an executive vice president at Fannie Mae, said in a statement. "No family should have to give up their home during this holiday season."

The Fannie and Freddie moratoriums on lockouts apply only to occupied homes.

While we're on the subject of foreclosure: The Massachusetts attorney general yesterday sued five big banks and mortgage-registrar MERS, alleging that they pursued "illegal foreclosures on properties in Massachusetts as well as deceptive loan servicing."

The suit focuses on claims of pervasive robo-signing, foreclosing without actually holding the mortgage, breaking promises about loan modifications and debasing Massachusetts' land recording system by using MERS to avoid recording mortgage ownership (and paying fees) as loans changed hands.

MERS responded that it "has not engaged in or facilitated any violation of the Commonwealth's statutes." Here is the full statement.

"The single most important thing we can do to return to a healthy economy is to address this foreclosure crisis," Massachusetts' attorney general, Martha Coakley, said in a statement. "Our suit alleges that the banks have charted a destructive path by cutting corners and rushing to foreclose on homeowners without following the rule of law."

Other states have also forged their own paths as the multi-state attorneys general inquiry into robo-signing and foreclosure problems drags on. Maryland Attorney General Douglas F. Gansler is still involved in the national effort.

David Paulson, a spokesman for the attorney general, noted that Gansler is not on the executive committee trying to negotiate a settlement but said he is "monitoring the progress."

"There is so far not a proposal on the table ... from the executive committee to look at," Paulson said. "When we get it, we're going to take a long, hard look at it before signing, if signing is warranted, that it protects and promotes the interests of Maryland consumers, Maryland homeowners, with an eye towards preventing foreclosures in the future and helping homeowners who are in trouble."

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (2)
Categories: The foreclosure mess

December 1, 2011

Housing bust worse for younger homeowners

If you bought a home in the Baltimore region after 2003, chances are it's not adding anything to your net worth. It's much more likely subtracting.

Multiply that across the country, and you have one of the explanations for a recent Pew Research Center finding that while older Americans were doing much better financially in 2009 than their counterparts a generation ago, younger Americans were doing much worse. The older you are, the greater your chance of having bought a home well before the housing bubble started, as NPR noted when it reported on the Pew study.

The median net worth of households headed by someone at least 65 years old was about $170,000 in 2009, 42 percent more than seniors in 1984, Pew says. In under-35 households, median net worth was a slim $3,662, 68 percent less than what their same-age counterparts were worth in 1984.

"People generally accumulate wealth as they age, so it is not unusual to find large age-based gaps on this measure. However, the current gap is unprecedented," Pew notes. "In 1984, the age-based wealth gap had been 10:1. By 2009, it had ballooned to 47:1."

Though the rough job and housing markets have helped turn that gap into a chasm, they're not the only factors.

"These age-based gaps widened significantly during the sour economy of recent years, but all key trends are several decades old, indicating that they are also linked to long-term demographic, social and economic changes that have affected different age groups in different ways," Pew says. "These changes include structural changes in the labor and housing markets; delayed marriage; delayed retirement; and the changing racial and ethnic composition of the population."

But the housing market has definitely packed a harder wallop on younger, newer buyers.

"Most of today's older homeowners got into the housing market long ago, at 'pre-bubble' prices — half purchased their present homes before 1986, according to the 2009 American Housing Survey," Pew says. "Along with everyone else, they've been hurt by the housing market collapse of recent years, but over the long haul, most have seen their home equity rise. Moreover, most older homeowners (65%) do not have a mortgage to pay. For young adults who are in the beginning stages of wealth accumulation, there has been no such luck, at least so far. Among those who are homeowners, many bought as the bubble was inflating. When the bubble burst, many were left with negative equity in their homes."

Here's a snapshot of the housing market in the Baltimore region since 1997, as far back as Metropolitan Regional Information Systems has tracked the area:




The figures are for the month of October. Last month's typical sale price for the metro area was $219,000, just under the $221,000 paid in October 2004 and significantly less than the $268,000 paid in October 2007. (You can see why negative equity is common.)

I wish we had comparable numbers for earlier years, but alas, no. Still, the Census Bureau did do a decades-long comparison of home values in Maryland around the time of the 2000 Census, and it gives you an idea of the advantage an earlier purchaser would have over a circa-2005 buyer in terms of net worth:

2000: $146,000

1990: $116,500

1980: $58,300

1970: $18,700

1960: $11,900

Median sales price in Maryland as of October: $222,000.

Some long-term homeowners ate up the advantage they'd built up by doing cash-out refinances during the go-go days, of course. But you can see why a 70-year-old who bought a home in the early '70s might be worth something approaching $200,000, while a 30-year-old who bought four years ago could easily be worth negative dollars.

Where do things stand for you?

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (9)
Categories: Housing stats
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About Jamie Smith Hopkins
Jamie Smith Hopkins, a Baltimore Sun reporter since 1999, writes about the regional economy. Her reporting on the housing market has won national and local awards. Hopkins is a Columbia native and has lived in Maryland all her life, save for 10 months spent covering schools in Ames, Iowa.
She trained to become a wonk by spending large chunks of time as a geek and an insufferable know-it-all.
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