Charm City Baltimore Real Estate: Baltimore, Maryland Real Estate & Homes

It’s time for me to take a position on a controversial discussion beginning to take place around our offices, and in Washington.

Congress should act quickly to not just extend the Homebuyer Tax Credit, but it should also be expanded to cover more transactions and move beyond first-time homebuyers. Our marketplace is still very fragile. The real estate market, admittedly, was the starting point of this severe recession and needs to be supported so that the “tender green shoots” of recovery continue to grow and spread into next year. We will have new foreclosures entering the market, new short sales, and continuing economic distress long after the current expiration date of November 30. Its likely, in my opinion, that the housing market will shrink in the new year without this stimulus — which could jeopardize the health of the economy. The reasons for extension are perfectly clear.

The argument for expansion is equally compelling. First, the existing first-time buyer credit has jump started the under $250,000 segment of the marketplace, but in our area it has not had a similar effect on ‘move-up’ homes or ‘downsizing’ condominiums. To begin to spread the wealth, and help struggling homeowners out of economic distress, or the growing family feeling the pinch in a terrible economy, expansion of the tax credit to those segments would have an incredible effect on associated businesses and communities. There’s very little stimulus that would have the same impact for each dollar invested, not only in actual capital investments but also consumer sentiment, arresting the slide of home values and shoring them up against further upheaval.

In order to make the distribution of these monies is equitable, the eligible properties could be defined as those falling under the regionally adjusted FHA loan guidelines. That would effectively exclude investors and the very wealthy whose properties would require non-FHA ‘jumbo’ loans. This is an idea whose time is right now.

Second of three podcasts presenting an overview of the material presented at an in-person buyer seminar. In this episode: searching for the right home and writing the offer to purchase.

For a transcript of this podcast, please email me at .

This is the time of year when people just sit inside during the dog days of a southern summer. High humidity, hot temperatures, and a city where not everything is air-conditioned all combine to slow down real estate activity. Even in good years, beach vacations and summer camps tend to slow down every business, and ours is no exception.

But this year is not so bad. That’s an incredibly good sign, given the market slump we’re coming out of. Federal homebuyer incentives are encouraging traffic through listings, and a wary sense of confidence that things are slowly getting better are having an overdue good effect. Cross your fingers that the fall market, which usually starts about Labor Day, will come roaring back.

I’d write more, but its just too hot.

I don’t usually lift large sections from local media, but this article in the Baltimore Business Journal by Rachel Bernstein, caught my eye:

Baltimore was named one of the top cities for young professionals to work in, based on cost of living, educational opportunities and the city’s nightlife.

The survey was conducted by Madison, Wisc.-based Next Generation Consulting. The report broke down cities into three population categories — Baltimore in the largest city category for those with more than 500,000 people — and evaluated them based on assets the report deemed as important to 20 to 40 year olds.

Among the other cities in Baltimore’s category, San Francisco was named No. 1. Baltimore was named No. 7, beating out Portland, Ore., New York City, Chicago and Los Angeles.

The seven indexes of a top city, or “Next City,” are average earnings, dedication to education, cleanliness of the city, around town, nightlife, cost of lifestyle and safety and diversity of the
population, according to Next Generation Consulting.

Baltimore residents have historically had an inferiority complex about their city compared to their more cosmopolitan neighbors in Philadelphia and Washington. But in the last ten years, the city skyline has grown and spread across acres of what once were parking lots and hinterlands. Neighborhoods have revitalized, and a burgeoning arts and entertainment scene has developed — whether its theatre in Mt. Vernon, fine arts and art galleries in Fells Point and downtown, or live music in Fells Point. Baltimore now has one of the most heavily populated downtown areas among cities its size, with the re-development of old office buildings into modern apartments and condos and the return of grocery stores and even big box retail to the Inner Harbor. And never forget about the added life that the tens of millions of Inner Harbor visitors, sports fans, half-dozen new hotels, and an expanded convention center bring to the city.

Baltimore’s affordable housing certainly provides one of the most important boosts to this type of favorable publicity. People can afford to live here, and live well. That’s a message that really needs to be told, and its studies like this that will tell it better than an ad campaign or promotional gimmicks that the public doesn’t always trust to be accurate. Young, first-time homebuyers have been the rock on which the budding recovery of our housing market is being built — the very buyers that are covered in this survey. The timing couldn’t be better for this type of news.

Baltimore is moving from the classification of “big small city” to “small big city”  and its about time.

Its been awhile, but in many markets in the United States it is once again a no-brainer to own a home. According to a recent article in the Wall Street Journal, the financial advantages of owning had been dwindling over the last few decades. Evaluated nationally, after tax mortgage payments have been averaging over 25% more than rental payments for nearly 26 years, according to a California real estate consultant firm. In 2006 some metro areas saw that grow to as much as 66% more. But, after the last few years of housing meltdown, average montly rent for the largest fifty metro areas was $1,045 while the after tax mortgage payment was $1,300, the narrowest gap (24%) since 2001. Some mortgage professionals have estimated that if mortgage interest rates fall to 4.5%, a number often seen as possible in the next few months, the gap will narrow even further to a 1998-era 14%.

A study by Moody’s Economy.com gives even better news. They have found eight markets around the country where home prices relative to rents are within 5% of historic levels, leading one of their economists to predict, “The bottom is coming into view.”

While we’ve heard that phrase before over the last few years, its nice to have a fresh reason to believe it might be true this time.

January is normally one of the worst months for real estate activity, for good reason. Cold, snow, and other seasonal hangovers do not translate into a busy market. So, its a hopeful sign that there have been some positive news stories in the last few days. First, home inventory levels dropped in December — not as much as in years past, but the fact that they dropped at all in the current climate is good. Fewer homes on the market means a tighter supply and some price stability returning. According to the monthly ZipRealty survey, Baltimore’s inventory level dropped nearly 6%. The other hopeful sign came out just yesterday, when December sales of previously owned homes were released by the National Association of Realtors. According to their data, home sales in December rose a robust 6.5% during the month on a national basis, the biggest monthly jump in nearly seven years.

Many of these sales, no doubt, were sales of low-priced foreclosures, but far from discounting the good news, I think that actually is incredibly positive. First, we need to eliminate the foreclosures from the marketplace before we will see prices begin to stabilize on occupied homes for resale. Second, these sales mean that investors are finally returning to the real estate market, since they are the buyers most likely to purchase a foreclosure for repair and rental purposes. Lastly, clearing the market of foreclosures will stabilize the lending institutions that have taken possession of them, and hopefully begin to unfreeze the credit markets for other qualified buyers.

Will any of this happen in the short term? Of course not. But the latest good news might mean that we’ve taken a few steps down what will definitely be a long road. Its a start.

Its mid-December, the darkest time of the year. Ancient cultures always had a Festival of Lights about this time of year, trying to lift spirits and look forward to the longer days and sunnier dispositions of spring.

So, perhaps it was a glimmer of light that came across the newswires this morning as the ZipRealty housing survey was released for November, showing that housing inventory in many metro areas, including Baltimore, shrank considerably for the month compared to inventory in October. Nationally, the traditional shrinkage of housing inventory from October to November averages just under two percent. But this year the national average was closer to 10%. The Baltimore numbers were just under 4% shrinkage.

Fewer homes on the market should result in some home price stabilization, especially as we move into spring. That, tied in with the pent-up demand I’m seeing in my practics — so many people just waiting… waiting for some kind of good news that will spur them to enter the market to sell, buy, or both — gives me some cautious optimism that once the bad news is all out we will have the beginnings of a recovery. That’s a holiday gift we could really put to use.

I have a shocking, truly shocking, piece of information to give you. You better sit down.

2007 was the fifth best year on record for housing sales.

That’s not just hot air, that’s factual data from the National Association of Realtors. Now, I grant you, as someone who makes his living in the real estate industry, it shocked me to read that. It certainly didn’t “feel” like good times. My accountant will confirm that it certainly wasn’t MY fifth best year.

Regular readers of my blog will know that I have regularly taken issue with the way the media has painted the crisis in the housing industry… which really started as a crisis in the MORTGAGE industry. But the NAR statistics seem to confirm something that has been noted for many years — it is no longer fruitful to treat the US economy as one monolithic entity. We are a collection of regional economies, and whether it was the “rolling recession” in the nineties that seemed to affect only a region or two at a time, or the current housing situation, there is an argument to be made that much of the pain is centered in a handful of regions.

Recent stories in the Wall Street Journal have shown maps showing where the foreclosure rate has spiked, and a story on National Public Radio this morning (4/16) talked about a critical drop of 24% in housing values in Southern California. But there have been relatively few stories about the strength of housing in certain markets like New York City. I’m going to speculate that the housing markets are worse in areas where the economic trouble is deepest. (Not a high risk speculation, to be sure.) The mortgage/financial industry disaster is certainly having a national ripple effect, but the breathless disaster coverage on the 24-hour news networks, loves to paint a national picture where one really doesn’t exist.

The newspapers — normally a bastion of more thoughtful coverage — seem to be trying to compete with the television networks over who can cry the loudest. None of which is in the best interest of the country. Everyone wants to put their own political spin on it as well, whether its a conservative Republican laissez-faire approach (from the mouth of John “Herbert Hoover” McCain) or the more reactionary, desperate Clinton Campaign (Tell the banks when they can and can’t foreclose! Prohibit them from adjusting their mortgage rates on schedule! Shoot ducks! Drink beer!)

I wish we’d all just act like grownups.