No one has been able to comment on Sun blogs the past few days, thanks to a spam attack, which has reminded me how important you all are to this community. It's just not a conversation without you, dagnabbit. So I'd like to take a moment to thank everyone who takes the time to share thoughts here and, while I'm at it, shine a spotlight on one frequent commenter.

Pete from Highlandtown does interior demolition for a living, so he has hands-on experience with the housing industry. He's also a thoughtful, philosophical sort of guy who always has interesting points to make.

What will a housing recovery look like, for instance, and should we want the price of homes to return to where they were before the bust?

"Maybe they are undervalued now. Im sure that some are. But in my opinion, a lot of house values have simply gone down to what they really are," he wrote recently.

Continue reading "Reader appreciation: Pete from Highlandtown" »

Posted by Jamie Smith Hopkins at 6:00 AM | Permalink | Comments (0)
Categories: Quote of the day
        

Some of you took issue with the recent suggestion by several economists that low interest rates, razor-thin down payments and gone-to-lunch lending standards are only to blame for part of the run-up in home prices during the last decade, with John Q. Homebuyer on the hook for some part as well.

Here's part of Wonk reader (and mortgage broker) Josh Dowlut's comment:

From an economic analysis and policy standpoint, it matters not that droves of people full of irrational exuberance were willing to bet it all on housing. It only matters what made those bets possible. In other words, what opened the flood gates, not why did people choose to run through them.

To that answer:

1. The Financial Modernization Act of 1999 and

2. The Commodities Futures Modernization Act of 2000, undid long-standing depression era safeguards and turned the banking industry into a casino (literally, the CFMA 2000 actually referenced state and federal gaming law).

These two bills of which no one is seriously talking about undoing worked together to create a system where the person and company who decided whether or not to make a loan could lay off the longterm risk on another party. That shirking of risk is what created your option ARMs, no down payment loans, and stated income loans which opened the floodgates to allow both fearful ("if I don't buy now I'll be priced out forever) and greedy (I'll leverage a 10% appreciating asset) buyers to run through.

Frank Rizzo wrote a long comment too. Here's a taste: "There is plenty of blame to go around. The financial institution, mortgage broker, real estate agent, and the appraiser all played their part. ... If banks were required to hold the loans themselves in their portfolio, you would have to think the majority of those loans NEVER would have been approved in the first place."

Mr. Raven offered a helping of blame to the Federal Reserve under Alan Greenspan and successor Ben Bernanke: "Someone has to print the money and guaranty the income or debt. These guys thought they had tamed the business cycle and could manage expectations by just printing more money."

"Little Debbie," meanwhile, wrote up a laundry list of everyone you could possibly think of and then some, tongue decidedly in cheek, with this coda: "Here's the answer: whatever ideology I spout (due, most likely to my socioeconomic circumstances) is the culprit."

Here's a question to get beyond blame: Has the system -- everything that affects the housing market -- been changed to the point that we're unlikely to end up with another housing bubble down the road? Or are we as much at risk as we were before? (Or -- gulp -- more so?)

If you could make one structural change, what would it be?

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (16)
Categories: Mortgages, Quote of the day
        

At least half the fun here is reading what you've got to say. You're a bright crowd -- you ask probing questions, share interesting experiences and marshal information to make arguments.

And sometimes you're a quick draw on the quips. A few examples from the last week: 

Josh Dowlut on the Federal Reserve's $1.25 trillion mortgage-backed-security buying spree: "The significance of what the Fed was doing is that it amounted to debt monetization, or paying your bills with a Xerox machine."

Will on the foreclosure mediation bill, recently passed by the Maryland House of Delegates: "They want to see if they can keep the free market from functioning. Next they'll pass a law repealing gravity, and it will do just about as much good."

Darwin Rules, reacting to auctioneer Paul R. Cooper's empathy for people who can't sell because their homes are worth less than their mortgages: "My empathy lies with those who are fiscally responsible, and have been forced to sit on the sidelines while the irresponsible fail bailout after bailout with our tax dollars. ... The politicians cannot keep this war on savers going on forever."

Whether you agree or disagree with the points, it's nice to be entertained.

I love it when you strike up conversations with each other here. It warms my heart to see real discussion and debate (quippy or not) without all the name-calling that infects so many corners of the Web. Thank you all for making this a nice place to stop in for a while.

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (2)
Categories: Quote of the day
        

Photo by Jamie Smith Hopkins

A few of your responses to the "so where should the shoveled snow go?" question:

Beth said, "We're about to head out to shovel our alley street near Patterson Park. I think we're going to put the snow in the alley (the part where the trash truck doesn't go). I know it's not an ideal solution, but we already have five foot high drifts in front of all of the houses on our block just from shoveling a walkway (not the whole sidewalk, just an 18 inch path!)"

From Gina: "We live in a townhome community - very tight when it comes to where to put snow. We ended up filling a wheelbarrow and taking it to one of the few grassy spots in the community and then throwing the snow there."

Kate wrote: "We only shoveled a path on one sidewalk on my narrow street. Snow from the street (shoveled, not plowed...even in regular snowfalls the city plows don't make it here) went on the other sidewalk. The drifts are taller than me."

Posted by Jamie Smith Hopkins at 11:45 AM | Permalink | Comments (1)
Categories: Neighborhood and neighbors, Quote of the day, Weather
        

Reader Josh Dowlut responded with this comment:

Real median hourly wages (adjusted for inflation) peaked in 1971. Household income is up since then, but that is only because of more women in the workforce (more dual earner households). In short, it takes two wage earners to maintain the same standard of living it used to take one wage earner to maintain.

Would someone care to explain why society would even want expensive housing? It is taken as a given that such an outcome is desirable and beneficial and the only debate is how to achieve such outcome. Why would anyone support policy that results in more of your income going to a necessity? That's the real question.

Update: Josh was writing from memory, but he double-checked his stats and reports that inflation-adjusted median hourly wages are about what they were in 1973 for men. (Women's wages are up.) Here's the useful wage-history link he sent my way.

Posted by Jamie Smith Hopkins at 3:11 PM | Permalink | Comments (10)
Categories: Quote of the day
        

We looked for our place for almost a year, and I'd say that on average, 70% of the Baltimore market is WAY overpriced.

In terms of what things are actually selling for in Baltimore right now, I don't think the market has all that much further to fall. But for those people that still have their houses listed at or just a little below 2007 prices - they aren't even close to reality.

A lot of buyers are told not to make low offers, but in many cases that's the only way to get the market moving. We offered 100K LESS than the 300K asking price on our place and eventually closed at just a few thousand dollars above our offer.

Posted by Jamie Smith Hopkins at 1:07 PM | Permalink | Comments (2)
Categories: Housing market experiences, Quote of the day
        

It comes down to the "and" in the legislative language -- that the time-period requirement applies to "an individual (and, if married, such individual's spouse)." Wonk reader Mike is not happy:

This is infuriating to me. It really is typical for our government. Eliminating anyone who's gotten married in the last 5 years. Way to NOT encourage newlyweds (those who are likely to be looking to move into a new house) to move.

And MarkT said on the Consuming Interests blog, "Talk about a marriage penalty...!"

Do you think Congress should have made the "and" an "or"? Or do you agree that, like the first-time home buyer credit, married couples should only get the repeat credit if both qualify?

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (5)
Categories: Quote of the day, Repeat buyer tax credit