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

This well-loved townhouse is conveniently located near Johns Hopkins Bayview, on the eastern edge of Baltimore City. Walk to shopping and Joseph Lee Park, or find yourself on several major public transit routes and near access to several major Interstate highways for commuting. Live in the recently updated two-bedroom Owners Unit, with a downstairs den, and rent out the two-bedroom second floor apartment, or rent both for more income. The shady corner lot is fully fenced and there is off-street parking for two cars behind the house.

Offered at $97,500

This property has a WalkScore ranking of 75 (Very Walkable).
Click here for more information and the location of local resources.

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As we head into spring, there’s some great news brewing in the housing market. But, don’t take my word for it, here’s what other news sources have to say.

First, the RE/MAX National Housing Report for March put it best:  “For the first time in 18 months, home prices in February rose higher… Prices in the 53 cities surveyed by the RE/MAX National Housing Report rose by 1.1% over February 2011. Home sales were even higher, up 8.7% from one year ago. With a positive sales trend of 8 straight months above the previous year, it’s looking like 2012 will witness a very strong home-selling season.”

That should be enough reason to set off some fireworks. But, there’s more. The Huffington Post uploaded an article on the housing market in early April under the headline, “Renting a Home Costs 15 Percent More Than Buying One.” That turns common wisdom on its head, since historically renting a home has been as much as 10 percent cheaper than owning one.

Not anymore. Because of very low vacancy rates — at a ten year low — rental rates have skyrocketed. In fact, a recent report by the National Low Income Housing Coalition found that it would take a minimum wage worker 100 hours of work per week just to afford rent. Even the average American renter, making a little over $14 per hour, needs a 29 percent raise to be able to afford an average apartment and have enough money left over for other expenses. Ready to ask your boss for a 29% raise?

With mortgage rates still very low for qualified buyers, its clearly time to buy. The website rentorbuybaltimore.com recently compared the costs of buying a $200,000 home against renting a $2,000 per month apartment — not uncommon these days in the harbor neighborhoods. The results, according to a New York Times calculator, showed that after just two years buying was better than renting. After five years, buying that home saved nearly $64,000 over renting.

Buyers are returning to the Baltimore area home market in droves this spring. There are even multiple offers coming in on desirable homes. If you were waiting for signs that the housing crash was over, then this is your time.

Recently renovated, this open, contemporary one bedroom/one bathroom home is completely detached and in great condition. Its also in a great location, just one block from the Square, one block from the Dog Park, and two blocks from the waterfront. Close to Canton Crossing, Brewer’s Hill and the Canton Safeway, there’s no better place for independent living! With wood floors, central heat and air conditioning, and a cathedral ceiling, this feels like a big house even though its just over 800 square feet. There’s even a private back yard for ‘container gardening’ or grilling! Put this one on your “must see” list!

Offered at $187,500

This property has a WalkScore ranking of 80 (Very Walkable).
This property has a TransitScore ranking of 57 (Good Transit).
Click here for more information and the location of local resources.

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When architect and interior designer Henry Johnson would work on a high profile, historic
restoration or renovation and it was necessary to remove an original element, it found its way
into this beautiful two bedroom, two bath condominium.

The result is a fully modern residence that has the authentic feel of a place much older and more grand.
Walls are upholstered in fine fabric, wood surfaces are hand painted in matching wood grained finishes,
with antique light fixtures providing just the right glow. Fine French draperies and the top grade carpeting
finish off the decor. Each bedroom has its own suite bath, and the views in three directions are stunning.

Bedrooms: 2
Baths: 2

Price Improved to $249,000!
Antiques and custom made furniture are available as a separate transaction. Please inquire for terms.

This property has a WalkScore ranking of 89 (Very Walkable).
This property has a TransitScore ranking of 81 (Excellent Transit).
Click here for more information and the location of local resources.

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You’ll love entertaining in this spacious three bedroom townhouse in Baltimore’s Fells Point neighborhood. Each of the three bedrooms has its own suite bathroom for convenience and privacy. Go up on the roof for a spectacular 360 degree view of the city and the harbor. Dual zone heating and central air keeps everyone comfortable, and after a hard day you can relax in the Jacuzzi whirlpool tub. On a quiet side street, but near the heart of Baltimore’s urban life, this house has it all for the city dweller!

Bedrooms: 3
Baths: 3.5

Price Improved to $269,900

This property has a WalkScore ranking of 91 (Walker’s Paradise).
This property has a TransitScore ranking of 60 (Good Transit).
Click here for more information and the location of local resources.

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Recent poll results on the attitude of younger Americans toward real estate and home ownership have raised questions as to exactly what the role of real estate is and will be in the future. Is owning your own home an investment and source of wealth, or is it a ‘ball and chain’ that locks you to a locale and saps money that — if invested in stocks — would appreciate faster than real estate?

This question seems to outline the two most common opinions emerging in the generation of potential homeowners now between the ages of 21 and 35, where most of our first-time homebuyers tend to be. Here are the primary arguments laid out on both sides of that question.

Ball and Chain
If you’ve been watching the housing market in the last few years, you certainly can see where someone would come up with this notion. Many people feel locked into their current home, current city, even current state because they can’t sell their home to move to a new job or a better performing region of the country. Some homeowners are paying mortgages that were based on a sale price substantially higher than the house is currently worth. There are even economists who are predicting that with the economy evolving into a digital one, it will be more important than ever for the workforce to remain fluid, easily relocatable, and that buying property that can’t be loaded onto a truck and moved (like a house) doesn’t make sense in the future.

There is no doubt that the effects of the Great Recession are still felt most sharply in the housing sector. Most experts agree that it will take another year or two for the excesses of the housing bubble to work through the system and for the housing market to begin to resemble a “normal” market that responds in the ways that it has in less troubled times. Certainly, these are fresh reminders that there is no such thing as a “safe” investment, and that every one has to learn to live with a certain amount of risk.

Source of Wealth
The data over time gives a great deal of support to the idea that owning a home is one of the greatest sources of wealth, and wealth building, in the United States. The National Association of Realtors did a study on Housing Wealth Effects in 2004, which looked at the difference between household wealth for owners and renters in the period between 1984 and 1999. Since this does not include the period of the housing bubble, its results can be seen as closer to the average return you might expect over normal times. The study concluded that “a typical renter household in 1984 had accumulated $42,000 in net wealth by 1999, but a typical owner household in 1984 had accumulated $167,000 over the same period. Marital status, age, race and ethnicity, initial wealth and household income … accounted for only $20,000 of the net $125,000 accumulated wealth difference.”

That $105,000 difference is, almost without exception, due to home equity from both paying down the balance of the mortgage and the appreciation of the value of the property over time. The Case-Schiller Index of home prices shows that from 1987 to 2009 the price of existing homes increased by an average of 3.4% annually. This period includes the bubble, but also the crash from 2007-2009. Since most bank accounts yield considerably less in annual interest, that figure doesn’t look too bad as a way to grow your money. Yale University’s Robert Shiller has calculated that, in the period from 1950 to 2009, the S&P 500 yielded a real price change of 3.3% annually — surprisingly close to the appreciation in housing.

There’s one more point in housing’s favor: with government-backed mortgage insurance programs, the opportunity to invest in a home is much more open to people of average means. Few bankers are going to lend the average person $100,000 to invest in the stock market. But, average people purchase homes every day by taking out FHA mortgages that require only 3.5% downpayment. These programs open up long term investing through real estate to working and middle-class Americans in ways that don’t exist for the stock market. Its not a get-rich-quick scheme, but studies have proven that it works.

Housing’s Future
This will continue to work for a new generation of homeowners, but only if Congress allows Fannie Mae, Freddie Mac and the Federal Housing Administration to continue to offer the type of government-backed mortgages and mortgage insurance that have made home-buying money available to people of average means with good credit. Without that support, the 3.5% mortgage downpayment programs will surely disappear. Mortgages will most likely be available only to borrowers who have between 10-20% of the purchase price in their savings, because private lenders will be unwilling to take the risk of underwriting 96.5% of the purchase price without government support. By making home ownership less available, a generation of workers will have the greatest avenue of building private wealth cut off from them. What will that America be like?

Ever since the groundhog predicted an early spring, most of us have been eagerly waiting for the little guy to be proven right.  And while the weather makes it a day-to-day affair to know if winter is truly over, from the real estate data coming out lately it seems that spring truly has arrived early.

February 2011 statistics show that in the Baltimore region, home sales were up 7% over February of 2010.  Down in the Washington metro area, which includes nearby Montgomery and Prince George’s Counties, pending home sales in February increased a whopping 33% over the same month a year earlier. The median home price in February 2011 in the DC region was $300,000, down from $309,000 the year before — but Baltimore’s median home price in February 2011 was $205,350, down from February 2010′s by 9.54%.  So, Baltimore metro still remains a much more affordable alternative for Washington-area homebuyers, even with price declines, and a lot of the activity here has come from DC residents looking for less expensive housing, a trend we expect to continue.

All of this is good news, unless you happen to be selling a home right now. From a seller’s perspective, the overriding issue is the number of distressed properties currently flooding the market and driving prices down. Most buyers enter the market eager to snap up a bargain, but not fully informed as to exactly what it means to them to buy a distressed property, or the differences between the types of distressed property currently on the market. So here’s a brief overview to get you up to speed.

The largest category of distressed properties include homes listed for sale that are “under water” — where the owner owes more than the house could currently sell for in the market.

Short sales are where a seller, who is under water, also doesn’t have the money to make up the difference and has to ask the lender to forgive the amount of the shortfall. Short sales get their name from this seller’s shortfall, not from the amount of time they take to settle — which is anything BUT short. Generally, the seller is still in the home and has listed the house as a short sale in consultation with their bank or institutional lender. The mortgage is still in place, as are all the investors who bought into that mortgage once it went to the private equity market. Sometimes there is a second mortgage, and yet another set of investors. Before a property can reach the settlement table and transfer to a new owner, the current seller has to negotiate a contract with a qualified buyer and then start to make the case to the lender(s) that he/she will require financial assistance to sell the property. If the lender(s) accept the fact that the seller is truly in distress, they then have to go to their investors and get them to agree to take the loss. All of this has to take place before the lender can notify the buyer if the contract offer will be acceptable — even if the contract has been signed by the seller.

This process is long and tedious. Buyers and their agents can only wait on the sidelines while the lender(s) and investors  go back and forth with the current owner to satisfy all the paperwork requirements. In today’s market it is not unusual for a short sale to take more than three months to settle, nor is it uncommon for a buyer to wait three months to discover that their offer will not be accepted by the lender at all. Most first-time buyers, who are dealing with a landlord who needs a specific date upon which his rental apartment will be vacant, cannot consider short sales as a viable option.

Foreclosures are where the lender has evicted the previous owner, passed the loss along to the investors who are now out of the picture, and has taken ownership of the property. Foreclosures are usually listed for less than market price, which is why they tend to drive down property values in the area.

Foreclosures present a completely different set of challenges from the buyer’s perspective. With the previous owner and the investors gone, the chain of authority for decision making is much clearer, but the bureaucratic nature of most lenders removes much of the give and take you’d find in a real negotiation. Listing prices are usually set with a businesslike efficiency, and routinely reduced on a four to six week schedule if no qualified buyer has surfaced. In between reductions, there is usually little flexibility on price. Many buyers think the bank will be desperate to negotiate and get rid of the property, only to have their opening low offer rejected in short order because it is too far below the current listing price.

A majority of foreclosures also need some level of renovation before they can be occupied. While this can be a great way to get a newly renovated house at a good price, many first time buyers are not ready to handle the purchase experience and then jump immediately into working with a contractor to complete a four to six week renovation.

If you’re a buyer in this market, do your homework, and you can truly use the current distress to your advantage and end up with equity in your new home from day one. But be realistic about your goals and your abilities, and if you don’t think your life will allow you to deal with the uncertainties of a short sale or the responsibilities of a renovation, stick to conventional non-distressed listings with individual sellers where the timeframe and the purchasing process is much more predictable.

For several years, the answer for many first time buyers was “rent.” That may be changing.

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

There are quite a few good signs that 2011 will be a better year for real estate, and the economy in general, than was 2010. If you’re one of the many potential buyers that are holding back, waiting for some positive signs that the worst is over, then I hope you’ll find what you’re looking for right here.

1. Improving employment picture. While the Baltimore and Maryland economies have fared better than the overall national picture, there have been some very encouraging signs nationally. For the last few weeks of December, initial jobless claims fell to levels not seen for several years, and the January employment report actually dropped the unemployment rate by a tenth of a point. Every prediction from economists has pointed to a slow, steady improvement through this year and these figures would confirm that is actually taking shape.

2. Consumer spending is increasing. The holiday shopping season was better than most retailers expected, and recent figures on the number of new automobiles being sold gives added strength to the fact that Americans are coming back to the marketplace and buying big ticket items. When consumer spending increases, businesses feel more comfortable adding inventory, placing orders, and restocking shelves, which has a positive ripple effect down the supply chain. Jobs result. Even sales of existing housing went up in December, and as an unscientific measure, my colleagues and I saw an increase in the number of people out looking, coming by open houses and setting up appointments with their agents.

3. Interest rates remain near historic lows. The cost of borrowing money is an important factor in determining how many people can afford to be in the housing market in the first place, and for the last few months mortgage interest rates have been cheap. Homeowners can refinance into 15 year mortgages for under 4%, while new 30 year mortgages have remained under 5%. As spring approaches, however, rates always tend to increase, so its not clear that these bargains will be available for much longer.

4. Housing prices have fallen dramatically. Along with the cheap cost of mortgage money, this increases the number of potential buyers who can qualify for a home purchase. With more buyers looking, and home sales beginning to pick up, its most likely that prices will stabilize and not fall much farther.

5. The Washington DC housing market has already stabilized and started to show price increases. Washington was one of only four metro areas in the country to show housing increasing in price in December. In the last decade, more and more homebuyers have been priced out of the DC market and have turned to Baltimore as a potential place to live. In fact, if the 2010 census shows that Baltimore has gained population (which many believe it will), that result can be attributed to the increase in Washington commuter traffic between the two cities.

So, if the DC market has improved and started to rise, can Baltimore be far behind?

This month its time to answer a couple of the questions I’ve been getting from readers.

Q. My brother graduated from college five years ago and got a great loan to buy a house, using 100% financing and settlement assistance programs to pay most of his closing costs. Now I’m graduating in December, have got a sweet job lined up, and I’m being told no one can help me. What’s the deal?

A. Well, you’re a victim of the real estate meltdown. The generous financing programs that fueled the real estate boom of the last decade were one of the first things to go after it all came crashing down. The current market is on a different planet than the market of five years ago: some of the largest lenders in the country then have disappeared today, or been absorbed into bigger companies, and we’re going back to the “good old days” when you had to have some skin in the game.
There is some good news. FHA loan programs still allow you to buy a home with just 3.5% of the purchase price as a downpayment. Also, many of the settlement expense loan programs are still out there for qualified buyers. Try to keep your debts down (including student loans and credit cards) and save some money, and you should be able to purchase a home before you know it.

Q. I bought a house in Baltimore with something called a Ground Rent, but it was one that no one has been collecting. I’ve heard that there was a major change in the law that might allow me to get rid of it altogether, and I’ve also heard that wasn’t happening. I’m confused.

A. Ground rents confuse everyone, so you’re not alone. A ground rent is, literally, a lease payment for the right to use the land your house is on, like the old ‘quitrent’ you might have learned about in medieval history class! In Maryland, they generally are collected by someone, and can be bought out by a homeowner for a small payment and legal fees after which the deed is changed to Fee Simple (where you own the house and the land together). Some Maryland ground rents, you’re correct, are so old that no one is actively collecting them. Also, some were not redeemable at all.
After a small scandal a few years ago where someone actually lost their home for non-payment of the ground rent, the legislature tried to modernize and reform the ground rent system by creating a registry, and setting a deadline by which all ground rents had to be registered by the owner, or else they would become void.
Ground rent holders, however, have challenged that reform in court. So everything is on hold until that case is heard and judgment is rendered.

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