A generation ago, ordinary folks showed up at annual real estate auctions that had unpaid taxes and fees, looking for a bargain or perhaps to help keep a neighbor from losing a home.
But that community feel has given way to high-stakes online bidding by groups of deep-pocketed real estate investors who compete for the right to collect property liens.
Three such groups paid a total of more than $8 million to buy up nearly three-quarters of the liens in Baltimore’s 2006 auction.
The tax sales are now dominated by investors who have the capital to invest in dozens if not hundreds of properties, said Michael Sanderson, director for the Maryland Association of Counties.
“These are sophisticated investors,” he said.
For at least 50 years, the state has required annual auctions as a means for local governments to collect back taxes and put abandoned properties back on the tax rolls.
Local governments have considerable leeway in how to run their sales and what types of municipal debts other than taxes they can sell. As recently as 2000, Baltimore City, which conducts the state’s largest such sale, couldn’t sell 44 percent of the liens it put on the block.
But then the Baltimore housing market skyrocketed, and the General Assembly in 2003 eliminated a $400 limit on legal fees on cases that went to court. City officials had buyers for 98 percent of the more than 7,500 liens offered for sale last year.
“As the strength of the [Maryland housing market] has increased, people have realized these properties have value,” said Baltimore Housing Commissioner Paul T. Graziano.
Because properties now are routinely worth tens of thousands of dollars more than the liens on them, Maryland mortgage investors face little risk, experts say.
Homeowners, after all, are often willing to pay an investor whatever is required to avoid foreclosure and keep a roof over their heads.
Maryland law allows each county to set the amount of interest that tax sale investors can charge. Most range from 6-20 percent on the unpaid balance. The law also permits legal, title search and other fees. Investors can sue to seize someone’s house if the bill isn’t paid within six months.
With so many liens being purchased and so much money to be made, some investors have filed lawsuits by the hundreds. In Baltimore City Circuit Court alone, there are 4,820 open tax foreclosure cases.
Janet M. Hostetler, an attorney at the Public Justice Center in Baltimore, said these costs take a toll on the public as well as on homeowners being sued.
“It’s a waste of court resources,” she said. “No one pays for the judge and the clerks except the taxpayers. It’s just common sense that you shouldn’t have to take it to court.”
Local governments throughout the nation move to foreclose on homeowners who don’t pay property taxes, and high mortgage rates and fees are commonplace. But 20 states don’t sell tax liens, while others keep the courts out of the process or limit investors’ payoffs.
Michael Long, president-elect of the National Association of County Treasurers and Finance Officers, said Oregon doesn’t issue tax certificates. Tax collectors sell the properties directly - but only after they are delinquent in taxes for at least four years and often much longer.
“I was elected to represent the people, not take them under,” Long said.
Florida has auctions for liens, but investors there compete by bidding the Florida mortgage rates down, and private attorneys are not involved.
Miami-Dade County’s interim tax collector, Fernando Casamayor, says almost all of the nearly 34,000 certificates sold last year generated only 5 percent interest.
“Our goal is to collect the taxes that are due while still giving the homeowner the most reasonable rate of interest we can,” he said.
SOURCE: Baltimore Sun
Posted by Richard Barber on Mar 27 2007 under Maryland
The Baltimore housing market continued to show improvement and weakness in the last month, with some parts of the region recording strong home price increases even as the average time required to sell a home stretched past three months.
- The average Baltimore-area home sold for about $315,600, up 7.3 percent from February 2006.
- Prices jumped nearly 17 percent in the city and about 13 percent in Anne Arundel County, but they dropped in both Harford and Howard counties - about 3 percent and 1.6 percent, respectively.
- Baltimore County and Carroll prices rose less than 5 percent.
Across the region, properties spend an average of 93 days on market. That’s up sharply from 57 days a year earlier, according to local multiple listing service numbers.
Home sales also declined again last month, as did mortgage rates, after an upturn in January - the first in 16 months.
But the 4 percent drop was significantly less than the double-digit decreases last year. Carroll and Howard counties, meanwhile, both posted increases in homes sold last month.
Another positive sign: The number of homes on the market, which increased rapidly after the housing boom ended in the fall of 2005, has fallen. The active inventory in the metro area dropped below 14,800 last month, down almost 3,000 from the peak in September.
Such conflicting signs, combined with continually low Maryland mortgage rates, make it complicated to predict where the market is headed. But many real estate agents say they’ve seen an improvement in recent weeks.
“I think now we’re just normal - it’s a normal market,” said Katie E. Grove, an agent with Coldwell Banker in Owings Mills.
She attributes the continued appreciation in Baltimore to the lower-than-average prices throughout the metro area - about $190,000 last month. She’s also seeing a stream of buyers from the Washington area.
Sales momentum in the Maryland housing market “appears to be rebounding,” said economist Anirban Basu, CEO of Baltimore-based Sage Policy Group Inc.
January’s increase did come at a time of unseasonably warm weather, but February was snowy and cold, which he believes makes the small drop in sales look pretty good.
After all, low home mortgage rates only go so far when the weather is too bleak for prospective buyers to do some serious house hunting.
But inventory remains high, he warned. Until the number of homes for sale drops significantly, it’s a buyer’s market - and a particular headache for home builders, who have to compete with individual sellers for buyers.
“Nonetheless, the situation has improved markedly in the last six months,” Basu added.
Follow the link to continue reading this article in the Baltimore Sun …
Posted by Richard Barber on Mar 15 2007 under Maryland
Bethany Beach - A local Realtor and mortgage company are teaming up to put a new spin on an old selling strategy.
The slowing real estate market has led many real estate agents to convince homeowners to slash prices to attract buyers. But Layton Associates and Gateway Funding have come up with a different method - cutting mortgage interest rates.
Last week, the two agencies joined together to cut interest rates for the first year on a home in Lewes. The strategy is new to Sussex County.
“We just came up and said, how about if we change it a little, put an interest rate or something that catches someone’s eye,” said Jeff Schude, a loan officer with Gateway Funding in Milton. “If we can show a prospective buyer they’re going to save $400 or $500 a month in the first year, that’s a big deal for them.”
Schude had the idea and then distributed e-mails to local Realtors. One of the recipients, Monte Carey from Layton Associates, called him back.
“The e-mail said, ‘We can sell this house for you,’ ” Carey said. “That kind of caught my eye, you know. I’m always up for anything new.”
The ranch-style home is located in the Oak Crest Farms development in Lewes and is listed at $369,900. The home loan rate for the first year is 4.125 percent and 6.125 percent every year after that. Savings in that first year amounts to $409.35 per month.
“It’s basically a price reduction in a different way,” Carey said, noting that the interest rate reduction might be more attractive for a home buyer than a price reduction. “You can save money in the first year because that’s the hardest time for you to get used to your mortgage payments.”
The most common strategies to sell a home are price reductions and home renovations, but this is one of many unique sales approaches from Maryland housing market Realtors who are anxious to sell property.
“The market is slowing down. Buyers are in the driver’s seat, frankly,” Stephen Lefebvre, executive vice president of the Home Builders Association of Delaware, said in a previous interview. “Prices are competitive and interest rates are still affordable. It’s a buyer’s market.”
SOURCE: The Daily Times
Posted by Jed Moss on Mar 13 2007 under Maryland
The Maryland housing market is becoming more affordable … if buyers have the cash.
January’s Housing Affordability Index released Tuesday by the Maryland Association of Realtors saw an increase of 0.4 percent, indicating housing is becoming more attainable for in-state buyers.
Overall, the Housing Affordability Index stands at 45.7 for January.
“I have sold a lot of homes in the last two months to first-time home buyers,” said Ilene Kessler, president of the Maryland Association of Realtors.
Using a 5 percent down payment in its formula, the MAR estimates that for an individual or a family on an annual income of around $80,000 would need to take out a loan of nearly $253,000 to afford a house valued at around $266,000.
Competitive interest rates are helping to keep housing affordable. In January, the state’s home loan rate was right around 6.92 percent, well below the 7.32 percent it was hovering around in June, the MAR reported.
“Interest rates are not going to go down any further,” said Deborah Ford, an economics and finance professor at the University of Baltimore. “For people who are waiting for interest rates to go down and are afraid prices will go up, I wouldn’t wait any longer.”
The association also indicated the cost of a starter house fell about $14,000 during the last six months, down to about $286,000. This figure is more than the $266,000 house called “affordable” on an $80,000 income, but substantially less than a house in Baltimore City, Baltimore, Carroll, Anne Arundel, Harford or Howard counties.
M&T Bank told The Examiner that an average 30-year Maryland mortgage will run a buyer somewhere in the mid-to-low 6 percent interest range. Dave Skaff, an administrative vice president for M&T, admits that while that interest rate isn’t historically low, it is lower than the current rate projected by MAR. As far as a down payment, he also indicated buyers are putting less cash down.
“Every person’s situation is different,” Skaff said. “You never want to tell them to put down no money, but there are people who can do it.”
SOURCE: The Baltimore Examiner
Posted by Jed Moss on Mar 12 2007 under Maryland
Steve and Debbie Lombel put their four-bedroom Colonial in Odenton on the market in May, figuring it could take maybe four months to sell a house in the mid-$800,000 range.
“We felt pretty confident,” said Debbie Lombel. “It showed well and was a nice house on a nice lot.”
But eight months later, the now-empty house is still sitting on the market. The couple and their children have since relocated to temporary quarters in South Carolina for Steve Lombel’s job. They have borrowed from their anticipated equity and sale to build a new house.
Their agent has held 21 open houses. They’ve cut their asking price three times and now are offering to pay mortgage loan points to help a buyer get lower interest rates.
Such is life after the housing boom. Sales of homes across the Baltimore housing market plunged 19.34 percent last year from 2005, and the average price rose just 6 percent after four straight years of double-digit gains. As listings mount, an unprecedented number of unoccupied homes for sale are piling up, creating unexpected headaches for homeowners.
Some with little or no equity in their homes face a tough choice of accepting a loss or taking a risk that eventually a buyer will meet their price. Others are straining to pay two mortgages or are renting while they try to sell their old home. And some have been forced to pull their homes off the market and find tenants.
The number of vacant homes for sale nationally jumped more than 30 percent in the third quarter from a year earlier, to 1.9 million homes, the latest data available from the U.S. Census Bureau show. That’s about half of all single-family homes on the market, said Michael Carliner, vice president of economics for the National Association of Home Builders.
More than a third of those - 825,000 - are in the southern region of the United States, which includes the area in which people would seek a Maryland mortgage.
“The share of vacant for-sale is unusually high, compared to anytime in history, really,” Carliner said. “Over the past few years, total housing production has been beyond what the underlying fundamentals would indicate.”
Local real estate agents say the surge in unoccupied homes is apparent across all price brackets in the market.
“A lot of people are calling me concerned; they’re carrying two mortgages and that’s not fun,” said Frank Lanham, a Coldwell Banker real estate agent based in Fells Point. Nearly half his listings are unoccupied houses.
The pileup of vacant homes becomes a factor in market dynamics, putting more pressure on prices and, short-term, prolonging the housing slump.
“The longer homes for sale remain vacant, the more desperate on average become the sellers,” said Anirban Basu, an economist who is chairman and chief executive of Sage Policy Group Inc. in Baltimore. “The growing number of vacant homes means more sellers out there are ready to be realistic about the market to drop prices.”
Cycle of desperation
And buyers, sensing weakness, tend to pull back and wait for prices to fall more, he said:
“If buyers are waiting longer, then an increasing number of homes become vacant, which means sellers become desperate and prices fall further. That’s where we are in the cycle.”
Declining home prices could trigger more defaults on mortgage loans if homeowners struggling with two mortgages are unable to cover the cost of the loan by selling the house, said Celia Chen, director of housing economics for Moody’s Economy.com.
However, like bitter medicine, eventually it’s “a good thing,” Chen said: “It improves affordability, and in the long run, it helps prop up the housing market.”
Agents say that vacant homes for sale are often a result of job relocations that force the seller to move before the house can be sold. In some cases, sellers getting corporate relocation help are prohibited from accepting a contingent contract, which can shrink the pool of buyers.
And in other cases, buyers decide to buy before they’ve sold their house to take advantage of a deal but then have trouble selling a then-unoccupied house, agents said.
“I do have one listing now where the buyers have already purchased a home and moved into it, which is happening more often now,” said Lisa Edleman, an agent with Zip Realty. “And I’m showing buying clients more unoccupied homes as well.”
To read the rest of this Baltimore Sun article, click here.
Posted by Jed Moss on Jan 23 2007 under Maryland
In real estate market analyses, of which there are plenty these days as the market is mired in uncertainty, you often hear days on market (DOM) cited as a telling statistic.
This means just what you think it does: the number of days between when a house goes on the market and when the closing takes place - when a seller accepts the buyer’s contract.
The Washingtonian, which features DOM in its recurring Real Estate By the Numbers feature, says that for those looking to buy or sell real estate, DOM is a very important statistic.
In a buyer’s market, the average DOM will be higher because inventory takes longer to sell; conversely, in a seller’s market, the average DOM is lower because homes are snatched up quickly.
This statistics below compare the average DOM in eight Washington-area counties from December 2005 to December 2006. It doesn’t take a genius to see the trend in all eight counties.
The length of time has virtually doubled, which goes to show why Virginia mortgage and Maryland mortgage activity are both down, as are home sales and prices in the areas of both states nearest D.C.
If you are in the market to buy a home, this means you can probably afford to take your time. The days of rapid home price appreciation when buyers put down offers on the spot are long gone. If you are trying to sell, you may have to be patient.
Of course, there are always exceptions. In the greater D.C. housing market, the good locations (read: close in) never seem to go out of style. Here’s a look at eight counties in the area and the DOM change in the past year.
County: Dec. ‘06 / Dec. ‘05
Alexandria: 81 / 35
Arlington : 72 / 36
Fairfax: 97 / 38
Loudoun: 101 / 37
Montgomery: 83 / 38
Prince Georges: 66 / 29
Prince William: 103 / 41
Washington, D.C. 69 36
The housing market on the Lower Eastern Shore of Maryland is showing signs of strength after assessment prices to one-third of property owners went up by no less than an average 53 percent.
That’s compared with the area’s property assessments conducted three years ago. But an article Sunday in The Daily Times of Salisbury, Md., found that assessment prices still have some catching up to do.
Somerset County showed the highest increase, with average values up nearly 80 percent. The average in Worcester was slightly higher than Wicomico’s at 54.1 percent. Dorchester increased by 58.5 percent, according to state Department of Assessment and Taxation data.
That compares with a statewide average of 56.1 percent, as all segments of the Maryland housing market have boomed considerably from 2000-2005.
Area officials say the increases in home valuations can be attributed to both higher home sales in the area and consistently low mortgage rates.
Borrowing costs being low mean greater real estate activity. The conditions are not only encouraging more traditional purchases of houses, but larger home improvement loan investments.
While property owners are glad to see their investments are increasing in value, they’re not so happy to see their taxes rise. Making the monthly payments on the Maryland mortgage is hard enough.
“I don’t like to pay higher property taxes, but the house is worth that,” said D. Michael Stein, who’s Orchard Circle home assessment increased more than $60,000.
Officials say the assessment could have been much higher, but the market has cooled down somewhat in 2006 after five years of record growth.
Posted by Richard Barber on Jan 08 2007 under Maryland
The housing market in Washington, D.C. had another lukewarm performance in November, but one segment of the region appears to be snapping out of its slumber.
Sales volume fell across the region, while median prices dropped in D.C. and Northern Virginia last month, but housing costs were on the way up in Montgomery and Prince George’s counties, according to reports by Metropolitan Regional Information Systems.
Prices rose about 2 percent in Montgomery and nearly 4 percent in Prince George’s due to a smaller stock of homes in Maryland overall, says Kenneth Wenhold, the Washington area’s regional director for research firm Metrostudy.
“[The Maryland mortgage market] is much more supply constrained, and a lot of that is connected to various moratoriums and restrictions on land use,” Wenhold says. “Northern Virginia, on the other hand, saw quite a bit of inventory added in the last year, mostly from investor buyers who have now left the market. The good news is, builders cut back on their activities in response to that, and it has helped tighten supply in Northern Virginia.”
D.C.’s median sales price in November was $410,000, down nearly 7 percent from $440,000 in November 2005.
Prices dropped at least 5 percent across all of Northern Virginia, but the market’s breather shouldn’t be misinterpreted as bust worthy, Wenhold says. It should, however, open up opportunities for borrowers across income levels to consider home mortgages in the sector.
“Our firm tracks 40 markets around the country, and Greater Washington is among the strongest right now,” he says. “Jobs are still coming in, and there’s a demand for housing. We’re in a good place.”
Condominium sales and prices are also starting to level off around Greater Washington. A boom in condo construction and conversion projects in 2005 temporarily flooded the market, but many of those developments have been either canceled or switched to apartment properties.
In D.C., the median condo price in November was $355,000, down slightly from $375,000 in November 2005, according to the Greater Capital Association of Realtors, which represents the District and Montgomery County.
“The market is off in volume, but prices don’t seem to be much different,” says Holly Worthington, president of the Greater Capital Area Association of Realtors. “Some of the market overall is softer, but the rest of it is ticking quite nicely.”
John Small has lived in a two-bedroom apartment in Gaithersburg, Md., for more than half of his life.
But the 81-year-old, who lives on a fixed income of about $4,000 a month and pays $774 in monthly rent, could be losing his home… in the name of progress.
The 41-year-old rental complex where he lives is slated for redevelopment, meaning his home and those of 350 other families could be demolished to make way for townhouses, condos and a new apartment building.
He lives in one of five multi-family home complexes around the city of Gaithersburg — up to 800 units — that could be demolished for higher-end, luxury living over the next few years as revitalization takes hold.
Many low- to moderate-income renters could be pushed out at a time when options for affordable housing are scarce.
According to The Gazette, officials have adopted new laws aimed at curbing the devastating impact of redevelopments for existing renters and requiring a percentage of affordable units be built, but city staff and housing advocates say there will still be a gap.
The situation is the same in a segment of the Maryland housing market where wait lists for public housing exceed 4,800 names, and units set aside for moderate- and middle-income households are dwindling, especially as policy makers support slower growth.
In 2000, about 23 percent of the county’s population sought some form of housing assistance, and the number is likely higher today, with Maryland mortgage costs through the roof.
A shortage could lead to an increase in overcrowding and people living in substandard housing. In many cases, it will also result in tenants scraping together money to pay for housing that they can’t quite afford.
Gaithersburg’s new law, adopted last month, requires a real estate developer of homes and condominiums to set aside 15 percent of new or redeveloped property as affordable units.
Half of that percentage is reserved for moderately priced dwelling units (MPDUs) that can be purchased by those earning 60 percent to 80 percent of the area’s $90,300 median income. For a family of two, that means an annual income of $43,344 to $57,792.
The other 7.5 percent of those set-aside would be deemed workforce housing, aimed at public service employees who earn 80 percent to 120 percent of the median income, or $57,792 to $86,688 for a family of two. The goal is to make home mortgage payments more affordable - but can it be done?
Housing advocates say Gaithersburg’s law is flawed. At the very least, it does not require enough for those with moderate incomes, they say.
The small mandate of city law is especially concerning when the stock of affordable housing in Gaithersburg is expected to decrease significantly over the next 10-50 years, observers say.
City Council members and some residents maintain that it’s time to bolster home ownership opportunities in Olde Towne and lure viable retail and office to Gaithersburg’s aging core.
“We are allowing Olde Towne to become a pocket of poverty, and what we’re becoming in Gaithersburg is a city of haves and have nots,” said Councilman Henry F. Marraffa Jr. “We need to get Olde Towne back up to par. One thing you learn is, you must keep the vitality of your city intact.”
Even though the public has been inundated with dismal news regarding the national housing market downswing, the Lower Eastern Shore is in a unique situation due to an increasing population in need of housing, continued demand for waterfront property and low mortgage rates, experts say.
The local housing market is fueled primarily by people coming into the community, Memo Diriker, a business trend analyst at Salisbury University, said to The Daily Times.
“Nothing is telling us that it is slowing down, but that does not mean it’s not going to,” Diriker said.
While the numbers of housing units sold in Somerset, Wicomico and Worcester counties have dropped since last year, the amount of active inventory has almost doubled, providing buyers with more homes to choose from and creating a sort of equilibrium effect, said Kevin White, Realtor for Long & Foster and president of the Coastal Board of Realtors.
As the inventory has increased, the days on the market have also increased, White said. Single-family homes in Wicomico County stay an average of 88 days on the market with a median of 55 days; homes in Worcester sit an average of 121 days and a median of 102; and Somerset homes sit for 93 days on average with a median of 110 days.
These waiting periods are basically normal, White said. People have to keep in mind that for the past two years the market has not been normal, but incredible. Therefore, the slightly reduced demand for mortgage loans is no reason to panic.
“It’s just the normal supply and demand,” White said. “Buyers can take more time to look around with the inventory being up. In July 2005, property came on the market and then it was gone. Now it’s good news because it’s a good time for the buyer to take a look and find the perfect home for sale at a good price.”
White said that while the time these homes are sitting on the market may sound like a long time, the clock often begins ticking before the builders have broken ground.
The housing market is expected to get better in 2007, after the holidays, White said.
Posted by Jed Moss on Dec 04 2006 under Maryland
