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January 31, 2012

Decent income, little savings?

Maryland is a high-income state. But it's also got a big share of defaulted mortgages, delinquent loans of all sorts and outsized credit-card debt, according to a new study by the Corporation for Enterprise Development.

What gives? Some of it is probably housing costs. Two-thirds of states have a smaller percentage of "house poor" homeowners, people spending 30 percent or more of their before-tax income on their mortgage, property taxes and other ownership expenses.

But we could probably do better. Sure, if you're between jobs, it's awfully hard to save. And if you've already locked in a high mortgage payment that strains your budget, your options might seem limited. Still, chances are there's something you can do.

Take the budgeting challenge with me: Figure out what you spent last year and on what -- something you might be able to do down to the item if you generally use plastic rather than cash. Then add up your various forms of savings and see how much bigger, or smaller, the grand total is compared with a year ago.

Some questions to think about when you're done:

Have you managed to save enough for at least six months of expenses -- or (considering how long unemployment can drag on these days) even more? Are you able to also set aside something for your life priorities, whether it's a down payment or a retirement nest egg? (Eileen Ambrose's column today points out that one in five Maryland households has little or no savings.)

Can you cut something out to save more? Or find a way to earn more money? Or both?

Sometimes revenue-raising possibilities are closer to home than you might think. Some homeowners are renting out a room or two in order to save or to help cover their mortgage.

My own trick for saving is to be extremely boring and limit entertainment outside the house to a few movies a year. (Hey, my $50-a-month Internet connection offers more entertainment than I'll ever get to the end of.) I bring leftovers to work for lunch, and I don't drink coffee. Those things add up over time.

What are your savings tricks? Inquiring cheapskates want to know.

If you're trying to save more and don't have a clear idea of where your money is going, here's one example of a budgeting worksheet.

And there are plenty of places for inspiration. The Get Rich Slowly blog has posts on avoiding "lifestyle creep," for instance, and having a baby on a budget. And, possibly of more interest to you if you're a regular, this piece by a schoolteacher who cut her spending 30 percent and saved enough to buy a house.

Oh, and if you're a single person making no more than $25,000 or in a family of two or more with $50,000 or less, remember that you're eligible for free tax preparation help from the Baltimore CASH Campaign.

Here's to more financial security.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (0)
Categories: Savings/downpayment, The foreclosure mess
        

January 30, 2012

More incentives for principal reduction

The Treasury Department is trying to get more mortgage servicers to reduce the principal of struggling borrowers by tripling the incentive it pays for such a move -- and offering to pay financiers Fannie Mae and Freddie Mac, too.

Fannie and Freddie are essentially government-owned. As you can imagine, this new twist strikes some as the equivalent of Uncle Sam tossing money from his left hand to his right.

Of course, calls by Congressional Democrats for more principal reduction have so far had no effect on Fannie and Freddie, never mind their ownership status. Their independent oversight agency insisted shortly before last week's Treasury announcement that "principal reduction never serves the long-term interest of the taxpayer when compared to foreclosure." (The Federal Housing Finance Agency said Friday that it will do another analysis to account for the new payments.)

The deal being offered: For every dollar knocked off a borrower's principal, Treasury will fork over between 18 and 63 cents.

A state task force recently recommended principal reductions in which homeowners, in exchange for no longer being underwater, would agree to share any profits if they sell or refinance during the following nine years. Shortly before Treasury made its announcement, I chatted with a local loan officer who thinks the financial industry will have to move in that direction.

"There has to be some sort of partnership or some type of understanding between homeowner and lender now that 'we have a problem here, so what are we going to do about it?'" said Robert Nusgart, a senior loan officer at the Baltimore office of Mortgage Master, a correspondent lender that makes loans and then sells them to banks. "It's a matter of coming up with some realistic solutions on both sides."

He added, "A lot of people have gotten hurt. They have handcuffs on their hands because they can’t do anything. They can't refi; if they sell, they're going to take big losses. ... If there's something that can be worked out, work it out."

Nusgart -- The Sun's real estate editor from the late '90s until 2002, as it happens, which is before I took over the housing beat -- said another recommendation from the state task force that seemed particularly useful focused on how mortgage servicers should work with homeowners trying to avoid foreclosure.

Rather than make borrowers talk to different representatives every time they call in for an update, to see if paperwork was received or to figure out why they were denied for help, servicers should appoint a specific person (or a very few, at most) to work with each homeowner all the way through, the task force said.

"I get calls all the time from frustrated people -- 'what do I do?'" Nusgart said.

You might get lucky when you call in and just "happen to get somebody who knows what they're doing, knows what they're talking about and gets you on track," he said. But too often homeowners are just bounced around from one staffer to the next, making little progress and getting conflicting information.

He pointed out that people about to purchase a home or refinance aren't passed from one loan officer to the next like a hot potato. That constant switcheroo "is terrible service," he said.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (1)
Categories: Mortgages, The foreclosure mess
        

January 27, 2012

Fast home sales, slow home sales

DecDOM.png

 
Above: The homes that sold in the Baltimore region in December, organized by how quickly -- or slowly -- they went from listed to under contract.

The breakdowns come from Metropolitan Regional Information Systems' stats arm, RealEstate Business Intelligence, which notes that yes, some homes really do come on the multiple-listing service as already sold -- hence the 34 properties in December in the "zero days" category.

But it's rare that someone had to have the house so badly that they snagged it from the owners before they were even thinking of selling. It more likely was for sale but not on the MLS -- a new home, say, or a for-sale-by-owner -- and an agent entered it into the system afterward.

So let's ignore the zeros. If you add up everything from one day to 30, that's almost 400 homes, close to a quarter of all (non-zero-day) sales that month. That's by far the most common period for a home to sell, comparing just 30-day stretches.

To put it into perspective: 415 homes that sold in December -- not that many more than the 30-and-under group -- had been on the market more than six months. (Of those, 15 had been on the market more than two years.)

Newly listed homes are more likely to get attention. But that's not the only reason the sales stats show a sizable chunk of homes selling in the first 30 days. An owner might have been trying to sell for considerably longer but went on and off the market a few times before finally finding a buyer. (On that note: Here's an explanation of the difference between "days on market" and "days on market property," the latter of which does track the total number of days for sale over time.)

The most common selling point in the first 30 days in December: Day 11 through 20, according to RBI.

Buyers, do you find yourself focusing on the new stuff or do you keep an eye on older inventory for price drops?

Sellers, what was/is your pricing strategy at various lengths of time on market?

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (7)
Categories: For sale, Housing stats
        

January 26, 2012

New proposal for ground-rent registry

For those of you with a vested interest in (or just curiosity about) ground rent: The newest twist in the saga is a bill aimed at the registry.

Fourteen state delegates have proposed that owners who don't register their leases with the state can't collect payments on them.

Here's a short piece about the bill, which comes after an appeals court ruling left the registry intact but struck down the penalty for not getting on the state's list by the 2010 deadline -- the ground rent ceased to exist. (That piece of the law was unconstitutional, Maryland's Court of Appeals ruled, and thus the leases popped back to life.) 

Here's the proposal itself.

If you're trying to find out whether a ground rent has been registered on a particular property, go to the state Department of Assessments and Taxation's property look-up site, type in the address and then click on the "ground rent registration" link in the upper right-hand corner. The registry is supposed to provide the owner's name and contact information.

Posted by Jamie Smith Hopkins at 6:30 AM | | Comments (4)
Categories: Ground rent
        

'Stealing Trust' screening event in Baltimore

If you haven't had your recommended daily dose of outrage, here's an upcoming source: The Maryland Consumer Rights Coalition is showing its "Stealing Trust" documentary at the Enoch Pratt Free Library's Central location in downtown Baltimore next Wednesday, Feb. 1.

The group's film focuses on local residents who lost their homes, savings "and even their capacity to trust others" through abusive financial practices. Some fought back.

The free screening, co-sponsored by St. Ambrose Housing Aid Center, the Baltimore Homeownership Preservation Coalition and the Maryland Department of Housing and Community Development, will include new details about foreclosure-prevention efforts and offer homeowners a chance to ask questions about the foreclosure crisis.

The event is scheduled for 6 p.m. The library is at 400 Cathedral St.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (0)
Categories: Mortgage fraud/scams, The foreclosure mess
        

January 24, 2012

What N.Y., Del. and a few other states are doing about mortgage misconduct

State attorneys general gathered in Chicago or by conference call Monday to go over possible terms for a deal with large banks over foreclosure wrongdoing, but several states are pursuing their own courses -- to the cheers of liberal groups and consumers who want bankers to be sued rather than settled with.

Here's a quick rundown:

New York Attorney General Eric T. Schneiderman launched his own mortgage probe. In an opinion piece he wrote with Delaware Attorney General Beau Biden in November, the two men said that what was needed is "a more comprehensive investigation before the financial institutions at the heart of the crisis are granted broad releases from liability." It's not just about foreclosures or the housing market, they said, but also about the way mortgages were securitized.

"Any real effort to repair the damage caused by the collapse of the housing bubble must address the injury in both sectors," they wrote in the Politico piece. "Tens of millions of homeowners and millions of investors — including retirees with money in pension and mutual funds — were devastated by this manmade catastrophe."

Biden, the Delaware AG, had just filed suit against the mortgage registrar MERS when the piece appeared. Here's the press release announcing the lawsuit, and here's the complaint itself. MERS contends there's no merit to the suit, which alleges deceptive practices.

Massachusetts Attorney General Martha Coakley, meanwhile, sued five banks in December for "their roles in allegedly pursuing illegal foreclosures." (Complaint here.)

Also in December, California and Nevada's attorneys general said their offices have teamed up on civil and criminal investigations into mortgage misconduct. California Attorney General Kamala D. Harris recently sued Fannie Mae and Freddie Mac, while Nevada Attorney General Catherine Cortez Masto sued Lender Processing Services.

Maryland's attorney general, Douglas F. Gansler, said through a spokesman Monday that he has neither decided to sign nor decided not to sign the settlement and would be going over the proposed terms carefully.

U.S. Rep. Elijah E. Cummings, a Baltimore Democrat who is focused on foreclosure issues, said he very much wants to see a settlement deal but thinks this is probably not yet the right time for one. He agrees with those who think officials don't have enough information about the full scope of the problems.

“If I was following anybody, I’d probably be looking at what Schneiderman is doing up in N.Y., just really doing as in-depth an investigation I possibly could before coming to an agreement," he said.

Posted by Jamie Smith Hopkins at 8:14 AM | | Comments (2)
Categories: The foreclosure mess
        

January 23, 2012

Youngest homeowners least satisfied with homeownership

homegainsurvey.jpg

If you're a dissatisfied homeowner, chances are you're young.

That's the takeaway from real estate search site HomeGain's latest survey, which asked Americans whether they were happy with homeownership.

Least happy are homeowners in the 18-to-25 crowd. That's the only age group where more than half (55 percent) said they're not satisfied with homeownership. The share of satisfied homeowners goes up from there almost in lockstep with age. (Slightly more 26-to-35-year-olds are satisfied than 36-to-45-year-olds, though it rounds to two-thirds in each case.)

Those most likely to be satisfied are 55-plus, people who are also the most likely to have lived in their homes the longest and -- assuming they didn't pull a lot of equity out during the bubble years -- to owe little or nothing on a mortgage. So it makes sense, just as it's understandable that young homeowners who have seen nothing but depreciation aren't wild about the idea.

But here's something surprising:

Setting aside age and just looking at the length of time someone has owned their home, the group with the highest share of satisfaction isn't the one with the longest-term owners. It's the shortest.

Eighty-four percent of people who bought in the last one to two years say they're satisfied with homeownership. That easily beats the No. 2 group -- people who bought 12 or more years ago, 79 percent of whom are satisfied. (How is it that most recent buyers are happy but less than half the 18-to-25-year-olds are, you might ask? My best guess is they represent a small portion of the total -- the prime buying years come later.)

Not at all surprising is that people who bought five to eight years ago, between 2004 and 2007, are the least likely to be satisfied, with 59 percent giving homeownership a thumbs up and the rest blowing a raspberry (metaphorically speaking). They bought at or near the height of the bubble and are almost certainly underwater on their mortgages unless they made big downpayments.

Loss of value wasn't cited as the main reason for everyone who wasn't satisfied with homeownership, but it's the common thread -- and it's especially typical for younger folks. Two-thirds of dissatisfied 18-to-25-year-olds said price depreciation is the primary reason.

Homeowners who are 65 or older were most likely to give other reasons, such as concerns about maintenance. Still, nearly six in 10 of dissatisfied homeowners in that age group pointed to price depreciation first.

The survey includes some of the surveyed homeowners' comments about why they like or dislike homeownership. What are your reasons, homeowners? If you're a renter, are you satisfied or dissatisfied with the arrangement?

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

January 20, 2012

How home prices in the Baltimore area stack up

Home prices in the Baltimore area fell about 4 percent last year, which is either bad or good, depending on your perspective.

If you take the position that it's bad, chin up -- dozens of metro areas had bigger drops.

But even more regions had smaller losses or actual increases.

That's according to a new report prepared for the U.S. Conference of Mayors and the Council for the New American City, which looked at a variety of vital signs -- including home prices -- in metro areas across the country.

Ninety of the 363 metro areas saw the typical price for resold homes rise between the end of 2010 and the end of last year, with a few others holding steady. Almost 130 additional metro areas recorded drops that were smaller than the Baltimore area's.

Just over 140 regions, meanwhile, had even bigger price declines. Top of the loss list: Merced, Calif., down 20 percent (about $20,000).

The Baltimore area's loss worked out to a $9,000 drop over the year. None of the gaining areas had an increase that large, but several topped $5,000.

The biggest gainers on a percentage basis:

1. Danville, Va., up 9 percent to $94,000

2. Elmira, N.Y., up 7 percent to $106,000

3. Joplin, Mo., up 6.3 percent to $89,000

4. Bismarck, N.D., up 5.1 percent to $150,000

5. Casper, Wyo., up 4.7 percent to $155,000

What they all have in common: Their typical home price is lower than the Baltimore metro area's, which was $226,000 at the end of last year. But the areas with the biggest losses are also on the relatively low side, with typical prices under $125,000.

Here, for your amusement and edification, is a ranking of the 30 metro areas with the highest median prices:

Metro areaMedian home price%
Honolulu, HI $589,279-1.4
San Jose-Sunnyvale-Santa Clara, CA $477,890-3.4
San Francisco-Oakland-Fremont, CA $404,392-5.7
Santa Cruz-Watsonville, CA $393,415-7.6
Bridgeport-Stamford-Norwalk, CT $382,276-2.8
New York-Northern New Jersey-Long Island, NY-NJ-PA $381,391-5.0
Los Angeles-Long Beach-Santa Ana, CA $361,243-5.1
Washington-Arlington-Alexandria, DC-VA-MD-WV $324,585-1.8
San Diego-Carlsbad-San Marcos, CA $320,449-7.3
Santa Barbara-Santa Maria-Goleta, CA $320,328-10.7
Boulder, CO $308,4270.6
Boston-Cambridge-Quincy, MA-NH $304,316-3.2
Oxnard-Thousand Oaks-Ventura, CA $304,045-9.8
Barnstable Town, MA $290,426-4.1
San Luis Obispo-Paso Robles, CA $277,660-9.4
Santa Rosa-Petaluma, CA $274,233-10.4
Seattle-Tacoma-Bellevue, WA $272,050-7.5
Napa, CA $271,059-10.8
Ocean City, NJ $262,474-8.6
Salinas, CA $248,043-12.9
Bellingham, WA $247,655-5.8
Santa Fe, NM $240,474-4.6
Trenton-Ewing, NJ $239,294-5.8
Anchorage, AK $238,8981.1
Corvallis, OR $237,342-1.5
Poughkeepsie-Newburgh-Middletown, NY $234,859-5.7
Portland-Vancouver-Hillsboro, OR-WA $226,847-4.2
Baltimore-Towson, MD $226,176-3.8
Denver-Aurora-Broomfield, CO $223,372-1.5
New Haven-Milford, CT $220,371-2.6

Reminder: The Baltimore metro area includes the five counties around Baltimore, so the typical price reflects a mix of urban, suburban and rural communities.

Baltimore is actually higher in the ranking if you compare it only to the most populous places. Some not-quite-so-large regions, like Honolulu, are also not at all cheap.

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

January 19, 2012

Principal reduction among suggestions by state task force

Recommendations from the state's newest foreclosure task force include a form of principal reduction, an expansion to foreclosure mediation and tax incentives for foreclosure purchasers -- among many other suggestions.

Here's the report, and here's my story on the subject. The bottom line is that some of the suggestions are for new laws, but most aren't -- they're "best practice" recommendations that the state hopes to encourage mortgage servicers to follow. (The Maryland Bankers Association, which sat on the task force, says members are interested in giving the ideas a try.)

The task force suggested an option for court-supervised mediation before a foreclosure case is filed — if both the homeowner and servicer agree — because the further behind a borrower gets, the harder it is to work out a loan modification or other foreclosure alternative. Currently, homeowners can require their servicer to show up for mediation, but only after foreclosure proceedings begin.

A "Neighborhood Conservation Tax Credit" recommended by the task force would try to counteract vacancy problems by offering an incentive for people to buy a foreclosure and move in. The task force suggests state legislation that would give local governments the ability to create property tax credits for use in communities that need the assistance.

The principal-reduction idea is on the "best practices" side of the scale, something that wouldn't be mandated by law. The task force suggests reducing mortgage principal for borrowers whose home values have dropped below the amount they owe, but not in a one-fell-swoop way. Here's the suggestion:

The task force calls it the "shared equity model" and lays it out like this. The mortgage holder modifies the principal balance so it is 5 percent below the actual market value, putting the sliced-off amount into what amounts to a "silent" second loan -- no interest accrues, no monthly payments are due.

Every three years, one-third of the second loan is forgiven. So it's all gone after nine years.

If you sell or refinance during those nine years, "the investor shares in the equity above the total first and second lien payoff," the task force suggests. The percentage of equity-sharing would decrease every three years "and would be capped at some percentage of the total amount."

This is basically what Ocwen Financial is trying. Maryland regulators say Ocwen hasn't yet launched the program here, but they're eager for that to happen -- for other servicers to give it a go, too.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (0)
Categories: The foreclosure mess
        

January 18, 2012

Report: Rents increased 5% in Baltimore region in 2011

The typical rent for a two-bedroom rental in the Baltimore region rose 5 percent last year, according to real estate search site HotPads.com.

The company, which compared advertised rents for apartments and homes at the beginning and end of 2011, said that's the fifth-biggest increase among the 20 largest metro areas in the country. Collectively, rents for two-bedroom properties rose 3.75 percent, HotPads said.

Typical rent on a two-bedroom in the Baltimore metro area: $1,285.

Another view of the market comes from real estate data firm Delta Associates, which tallies only the upper-end apartment complexes for its rent measure but drills deeper into those numbers. (To get at the actual amount renters are shelling out, Delta accounts for "one month free!" and other specials.)

The company says average effective rent was $1,491 in the Baltimore region at the end of last year, up 2.2 percent from a year earlier.

The increases vary a lot within the metro area, from just 0.2 percent in Baltimore's northern suburbs -- basically flat -- to more than 8 percent in the city.

Because Delta focuses on so-called "Class A" apartment complexes, the area they're looking at in the city is basically just in and near downtown. Average effective rent there: $1,700 a month. Annapolis, at about $1,600, is the next priciest submarket in the region, with Harford County the cheapest at about $1,150, according to Delta.

Back to HotPads, which tracked all types of two-bedroom rentals: The company says the Baltimore metro area's rents were ninth-highest among the largest regions last year.

Highest (no shock): the New York metro area, at $2,653. That works out to nearly $32,000 a year in rent.

HotPads, which also tracks homes listed for sale, says the Baltimore region had the sixth-highest asking price for two-bedroom properties among the largest metro areas. (San Francisco topped that list.)

The company also looked at the change in advertised rents by number of bedrooms, but only among the 20 largest metro areas collectively. HotPads says studio rentals saw the biggest jump in rents last year -- more than 7 percent -- while asking rents for three-bedroom properties actually dropped slightly. 

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (0)
Categories: Renting
        

January 17, 2012

Clear Capital: Baltimore-area home prices dropped 6% in 2011

Real estate data firm Clear Capital puts the Baltimore region's price drop last year at 6.2 percent, a figure calculated from repeat sales of homes to try to capture the true gain or loss over time.

The average drop in home prices last year, by contrast, was about 4 percent in the region -- considering everything that sold in 2011 vs. everything that sold in 2010.

It's not unusual for price stats to differ, especially if they're measuring the market differently. That's one of the reasons it can be helpful to look at a variety. Triangulation, if you will.

Clear Capital says Baltimore's price loss in 2011 was 12th largest among big markets, with Atlanta No. 1 for its 18 percent decline.

At the other extreme of its 50-region ranking were metro areas that have seen big declines already and posted gains last year, including Dayton, Ohio (up more than 11 percent), Orlando (up almost 7 percent) and Miami (up 5.6 percent).

Clear Capital also weighed in with a forecast, because everyone has 'em.

The company predicts that home prices will fall 4.9 percent in the Baltimore region in 2012, not as substantial as its measurement for last year but significant among big markets. It expects that only seven of the other 49 metro areas will see larger price drops.

The place Clear Capital predicts will have the third largest gain this year? The Washington metro area. The company forecasts a 9.3 percent gain in prices for our neighbor to the south, following a 3.5 percent gain in 2011.

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

January 13, 2012

2012 resolutions

I'm still sick, so I don't have energy for much except asking a few questions.

What are you hoping to accomplish this year? Pay down debt? Save a down payment? Find an apartment that suits you better? Earn more? Worry less?

Is your home helping you get where you want to be in 2012 or keeping you from getting there? Or is it simply a nice place to spend your free time?

Is the state of the housing market pushing you to do, or not do, something this year? Does it have any bearing on your life?

OK, those are actually a lot of questions. Even when I'm sick, I'm curious.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (4)
Categories: Question of the day
        

January 12, 2012

When will home prices return to bubble-era levels?

Moody's Analytics is predicting that home prices in the Baltimore region will climb back to previous peaks in five or six years. Do you think that's likely? What's your own personal prediction?

It's easier, of course, to take a stab at what will happen within the current year. But you'll find plenty of varying forecasts. 

Forty-five percent of the nearly 200 readers who took last week's poll think home values near them will fall in the next six months, 41 percent think values will be unchanged and 14 percent think values will rise. Pretty similar to the results of a HomeGain poll of Maryland homeowners, as it happens.

And that's it for me today -- lousy cold. Hope you're feeling well, and feel free to talk amongst yourselves.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (8)
Categories: Housing forecasts, Survey says ...
        

January 11, 2012

Baltimore-area housing market in 2011

Here's the early look at the 2011 housing market in the Baltimore area:

AreaAverage priceChange in priceChange in sales
Arundel$348,600-1%-1%
Balt. City$128,100-11%-6%
Balt. Co.$243,900-7%-2%
Carroll$280,700-4%1%
Harford$251,400-6%-9%
Howard$401,5000%-9%
Region$262,500-4%-4%

Carroll, as you can see, was the only jurisdiction to eke out a sales gain in 2011 compared with 2010. Howard managed basically flat prices (the numbers are rounded) but had one of the largest sales drops in the region.

More about 2011 in this story, which also includes the Moody's Analytics forecast for this year and next.

Celia Chen, a housing economist for Moody’s Analytics, said Tuesday that homes prices in the Baltimore region are down about 22 percent from their peak in the middle of the last decade. She doesn't expect home prices will get back to that high-water point until 2017 or 2018. Nationwide, she thinks a return to peak isn't due for nine or 10 years -- the hole is bigger nationally because some of the largest markets were also the hardest hit.

Much depends on two hard-to-predict forces: unemployment and foreclosures. So we'll just have to wait and see.

December, in any case, was interesting. It wasn't the same month everywhere in the region, so to speak. New contract activity dropped vs. a year earlier in half the region and rose in the rest. Prices fell generally but increased -- on average, at least -- in two jurisdictions. Ditto for sales.

The "winner" of December was Baltimore County, which saw prices rise 1 percent, sales increase 4 percent and the number of newly signed contracts jump 17 percent. (Overall in 2011, the county posted a 2 percent drop in sales -- less than average -- and a 7 percent drop in average prices, more than average.)

I calculated the 2011 figures from Metropolitan Regional Information Systems' monthly reports. MRIS expects to have an official tally for the year in February, which will include sales that real estate agents entered too late into the system for the monthly statistics.

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

January 10, 2012

Stokes tries again on property taxes, the Tremont tries again with apartments

City Councilman Carl Stokes' proposal last year to cut the city's property-tax rate in half didn't get anywhere, but he's trying again now. And he said he'll likely launch a signature drive to get the measure on the ballot in November if the rest of the City Council remains opposed to the idea.

Scott Calvert has more in this story, the crux of which is that Stokes wants a charter amendment voted up or down by city residents -- whether the council puts it on the ballot or citizens do. He said he would need 10,000 signatures by May 31 if he goes the petition route.

Like last year, Stokes is pairing the plan to reduce the city's rate from 2.268 percent to 1.1 percent with a proposal to temporarily raise the cap on homeowners' annual increases in property assessments.

The Homestead Property Tax Credit now limits increases on city homeowners to 4 percent a year. Stokes would increase that ceiling to 6 percent, then 8 percent and finally the state maximum of 10 percent, holding it there for five years before dropping it back down to 4 percent. (More on that in a bit.)

Also like last year, Mayor Stephanie Rawlings-Blake's administration is saying this change would not be a good idea. The major sticking point is whether a dramatic drop in the city's rate would bring in enough new residents and businesses to avoid cataclysmic cuts to services. You could see why this possibility might keep officials up at night. (The city's finance department said last year that Baltimore would need more than 500,000 new residents to make up for the revenue loss of a 1.1 percent rate, though some lower-rate proponents contended that this overstated things.)

And in the same category of everything old is new again, the owners of the Tremont Plaza Hotel in Baltimore are planning to bring it mostly full circle. William C. Smith + Co. converted the building from apartments to a hotel in the early 1980s and is now proposing to use it as apartments and long-term-stay suites.

It hasn't been a great few years for hotels, but it's a fabulous time to be an apartment-building owner. The city's "Class A" apartments -- newer, nicer complexes that are largely in and near downtown -- saw rent increases of more than 8 percent last year as vacancies continued to drop, according to real estate research firm Delta Associates.

"Concessions, or 'specials,' … are very low as well," said Grant Montgomery, a vice president at Delta Associates. "They’re down to 2.1 percent of your monthly rent. So [because] 8.3 percent would be the equivalent of a month off on a year lease, that’s a week off, a free week, or the equivalent thereof on a year-long lease. I think that speaks to the strength of the market too and how tight it is.”

It's harder to track the rest of the rental universe, particularly the individual homes with tenants. But in general the rental market appears to be much stronger for owners than the for-sale market.

OK, back to property taxes: Stokes is firmly in the camp that believes a substantial cut in the rate would ultimately expand the city's tax base, but his proposal to temporarily raise the homestead cap is intended to help the city bridge the gap between "build it" and "they will come."

When he first proposed this last year, I noted that anyone not getting a break (or much of one) from the homestead program -- newer residents and landlords -- would make out the best. People with significant homestead credits would also see reductions, just not as substantial. I calculated that a hypothetical homeowner paying on just $100,000 of her $200,000 assessment, thanks to the homestead credit, would under Stokes' plan have a bill 7 percent lower in 2020 than it is now but a lot less than it would otherwise be under the current system.

I wondered how someone with a really huge credit would do. And Stokes, as it happens, is one of those people -- his homestead credit covers 84 percent of his bill this tax year. So I did the math on his taxes, and yes: He too would fare better under his plan, despite the raised homestead cap, than if things continued on as is.

If the property tax rate drops by at least 15 cents annually before notching to $1.10 per $100 of assessed value by Year Four, the minimum drops specified, Stokes' bill would be lower in each of those years than under the current setup. His first-year drop would be 5 percent, then 8 percent, then 10 percent and -- as the full rate cut kicked in -- 43 percent.

The reductions would moderate for the next few years with the homestead cap at 10 percent, so his 2020 bill would be 32 percent less than he'd pay under the current system.

So Stokes' plan wouldn't appear to raise taxes on long-term owners, despite the temporarily higher homestead cap. The big question is whether it would work out revenue-wise for the city.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (2)
Categories: Property taxes, Renting
        

January 9, 2012

Baltimore's biggest property-tax bills

The typical owner in Baltimore paid a bit over $1,800 in property taxes for the current tax year. Get 190 of them in one room, and together their tab just equals Tom Clancy's.

That's by way of putting the bestselling author's nearly $350,000 bill into perspective, which is of course on a not-at-all-typical property. He owns about 17,000 square feet at the Ritz-Carlton Residences alongside the Inner Harbor.

You can see all 10 of the homes with the biggest bills -- and the top 10 commercial properties as well -- in this photo gallery, if you didn't already check it out over the weekend. (Thanks to editors Liz Pillow and Justine Maki and photographers Kim Hairston and Barbara Haddock Taylor for their work on this time-consuming effort.)

Here's the story that Scott Calvert and I wrote, which includes an interesting discussion with the trustees for the No. 2 home. (We've got a separate gallery just for that expansive place -- thanks once again to Liz, not to mention photographer Amy Davis.)

And the Sun's Adam Marton put together two interactive maps: one for the homes and another for the commercial properties. It's interesting to see how closely most of them are clustered. (Click on the icons for details about each property.)

Our analysis ranked individual properties rather than property owners. It would be pretty interesting to know who has the biggest collective tax bill, accounting for multiple properties, but that's tricky to get at for the same reason that it's not easy to say which private owners have the most vacant homes. A single person or firm might hold a dozen properties in a dozen separate limited liability companies.

Because we stuck to individual properties, we disqualified one owned by HarborView Properties Development Co. from the top 10 list of homes once we discovered the single tax record was actually six separate HarborView condos, separately used.

"They're rented out, waiting for the market to change," said Frank Wise, vice president of HarborView Properties.

So why does "Unit A" have multiple units? "When the developer originally developed the building, all the units were at one time in Unit A and they were broken out as they were sold," he said. "So we probably don't really belong [on the top 10 list], but we do pay a lot of taxes anyway."

Clancy is sort of the opposite case -- he bought separate condos to put together. He first purchased three penthouse units as one in 2009 and later bought three more adjoining units. We tallied up all the bills for his grand total there (he hasn't requested the city combine them into a single bill), but even if he'd stopped with the first purchase, he'd still be No. 1.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (1)
Categories: Property taxes, Unusual homes
        

January 6, 2012

What would-be sellers are asking vs. what buyers are paying

Here's what the people trying to sell homes in the Baltimore region were asking in the month of November the past few years, and how that compared with what buyers paid for the homes that actually changed hands:

 

Ask%20vs%20sales.png

Sources: Department of Numbers, Metropolitan Regional Information Systems' RealEstate Business Intelligence

 

It's interesting to see how different the median asking price and median selling price were in 2006 and how the gap has shrunk since then.

Incidentally, the asking price of the typical home for sale vs. the price of the typical home sold isn't the same as what a typical seller gets compared what he or she asked for. That is decidedly not closer together now than it was in 2006.

RBI tracks the average original list price of homes that ultimately sell. The discount was 5 percent in November 2006 and 11 percent this past November, RBI says. 

What gives? Two things, probably.

The asking prices on the graph above -- for homes actively for sale -- are a snapshot at the time rather than whatever those homes on the market were originally listed at.

And perhaps more importantly, would-be sellers and buyers nowadays have had years to get accustomed to the idea that it's a down market and set their expectations accordingly. In late 2006, that was still a new thought. Sales activity was dropping but prices weren't; they just weren't rising at the fast clip of a year or two earlier.

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

January 5, 2012

Survey: Md. homeowners split on where values will go in 6 months

Forty-three percent of Maryland homeowners surveyed by a real estate search site think home values will drop in the next six months, about the same as the number who believe values will remain the same -- which leaves 15 percent who think (hope?) that values will rise.

That's according to HomeGain, which surveys homeowners and real estate agents every quarter to see what they think.

Maryland agents were less optimistic, with 53 percent predicting value drops in the next six months.

HomeGain said it surveyed 2,000 homeowners and more than 400 people in the real estate biz nationwide, so the Maryland sample was considerably smaller than that.

So: What's your prediction?

Answer order is randomized, in case you're wondering.

Regardless of what you think will happen, what are you hoping to see? Some of you, I know, are rooting for prices to fall and thus be more affordable. Others are hoping prices will rise to the point that their mortgages aren't underwater.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (3)
Categories: Survey says ...
        

January 4, 2012

In defense of the homestead credit

A reader named Erich wrote in the other day to defend the Homestead Property Tax Credit, which acts as a cap on spiraling property-tax bills for homeowners but as a side effect leaves neighbors in similar homes with very different bills to pay.

A former Baltimore resident, Erich bought in Pasadena in 2007 and homes values have only fallen since. So he says he isn't a big homestead recipient -- he isn't getting a break from the credit at all. But he likes the idea that his bill will be capped if assessed values ever do go up beyond Anne Arundel County's 2 percent-a-year limit.

Here's what he wrote:

I completely disagree with the argument that there is something wrong with the Homestead credit simply because two neighbors with similar houses pay extremely different tax amounts. So what? When you purchase a house your taxes are listed on the settlement statement, it's not something the state/city surprises you with. The Homestead credit is there to protect homeowners from drastic changes in their tax bills based on the revolving property tax assessments that happen every 3 years. ... So owners that buy at a certain time and lock in the credit should be able to get that smooth curve in their tax bills. ...

In the 'robbing peter to pay paul' example, it's not transferring tax burden from one house to another because the newer neighbor also gets the tax credit, it just happens to be on a higher assessed value. ... As far as 'double dippers' and landlords getting the credit, go after them, they are breaking the law.

The homestead credit is statewide, but the cap on the amount of increased assessed value you can be taxed on in any given year varies from jurisdiction to jurisdiction. It's 4 percent in Baltimore and Baltimore County, for instance, and 5 percent in Carroll and Harford. Anne Arundel's 2 percent cap is one of the lowest in the state.

I mentioned to Erich that his email sums up one of the arguments made in favor of the homestead program as it is now -- that everyone qualifies for the cap in property-tax increases on their principal residence. (The other main argument is that the cap helps tamp down on the problem of homeowners with spiraling values being taxed out of town.)

But what about the consistent opinion the Maryland attorney general's office has taken on the program -- that it violates the state's constitution because it doesn't allow "uniform" taxation among homeowners?

"Actually, I believe there is a huge argument that it meets 'uniform' taxation: the rate is the same for the entire jurisdiction," Erich responded. "The same way that income tax is the same for two people making the same salary, and for one reason or another, one of them has more deductions then the other, the realized rate will be different."

He added, "I have some of the highest taxes in my community. But I bought in 2007 whereas many of my neighbors have been there since the 70's and 80's, so when the market dropped I was proactive about getting my house reassessed and my bill dropped while many of [theirs] kept going up (slowly). So I think the credit works exactly the way it should."

What are your feelings on the homestead credit? Good as is, in need of tweaks or due for an overhaul of some sort?

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

January 3, 2012

Identifying the big vacant-property owners

We know there are thousands of vacant homes in Baltimore, 16,000 by some definitions and more by others. But who owns them -- besides the city -- is much less well-known.

Baltimore software developer Mike Subelsky decided to gather together public data to shed more light on the subject, and perhaps help the Baltimore Slumlord Watch blog find candidates to "feature." The list he compiled -- by scraping state and city websites for vacancy and ownership data -- includes the city (of course) as well as limited liability companies, landlords and nonprofits.

The datasets have limitations -- multiple LLCs obscuring both who owns and whether they own multiple homes, for instance -- but it's an interesting effort. Subelsky says it took a few weeks, mostly to clean up the results of the scraping.

He did a quick Q&A with me to explain the why and the what-next:

Q. What prompted you to invest the time?

A. It was one of several things proposed for my "free software project." I really care about the city and want to make it a nicer place for everyone to live and work, and I've always been involved in some type of public service, so I naturally gravitated to the idea of using my software skills for a public good.

I'm also in search of hard, interesting problems to solve with software that I could turn into a business. The only way I'm going to get good ideas is to start tackling problems. Even though this project doesn't have immediately obvious commercial applications, I learned a lot of interesting things while working on it, and it's created some new entrepreneurial opportunities.

Q. What other ways do you think residents can use city data to shine light on problems or help point to solutions?

A. I'm contemplating two ideas right now:

(1) If we can get access to lists of stolen property from the police, I bet someone could build a tool to identify the thieves trying to sell it on Craigslist or eBay. If I know a gold Rolex watch was stolen on Monday, and I see a similar watch posted to Craigslist on Tuesday, it's probably the same watch. I bet the police would love to get an email every day with leads like that.

(2) The slumlord watch blog says the city's vacant building database is not accurate. It's probably really difficult to keep the list up-to-date anyway, and the city may have a strict legal definition of "vacant" that lags behind conditions on the ground. I think we could use a few different crowdsourcing technologies to create a really up-to-date list, similar to what Baltimore Green Space did last year using volunteers with smartphones to identify all of the community gardens in Baltimore (beyond the officially documented spaces).

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