Stephen Howell

There's been a pileup in the court room with foreclosures cases glutting local courtrooms in Anne Arundel County, Maryland according to an article published in The Capital. Staff Writer Elisha Sauers states in a November 1, 2009 article, there aren't enough lawyers to go around for all the struggling homeowners - legal aid lawyers, that is, willing to help struggling homeowners at reduced rates or even pro bono.

The article suggests that manditory mediation between lender and borrower might be the solution. And states that Gov. Martin O'Malley introduced legislation last week in Maryland to require mortgage companies to participate in re-negotiations of loan terms before resorting to litigation. This seems like a good idea, move the process out of the courts and into the mediation conference room (do we have enough mediators?).

In reality, in Maryland, especially in Anne Arundel County, we've been relatively immune from foreclosures. With only about 2,300 year-to-date foreclosures - according to the story - we experienced nothing like areas in other parts of the country. Although the foreclosure numbers for our local area might be up and more lawyers might be needed, there's a strong economic base thanks to the Federal government and its contractors keeping area homeowners employed and in their homes!!!

It does seem to make sense for foreclosure mitigation to occur through mediation. But, the process, whether madated by law or voluntarily adopted by mortgage companies, will take time to become established. And by the time a process is worked out, the crisis may have already passed and too many homeowners who deserved to keep their homes may have already lost them.

The bottom line is "you pay you stay, you don't you go" as one of the settlement officers I've worked with liked to say about the foreclosure process detailed within the hundreds of pages buyers sign when they purchase a home. Whether its foreclosure or mediation before foreclosure for the homeowner who is in arrears, its really capitalism at work. Homeowners in trouble with their mortgages need to wake up to their financial situation and make changes and make them fast (for financial stratgies that work see Robert Pagliarini's e-book Plan Z). But in an era where we bail out big banks, forcing them to the mediation table instead of allowing litigation resulting in foreclosure could well be each and every trouble homeowners personal bail out plan.

What's next for the real estate market? Since December last year we've been on a steady climb from the bottom. But, the buyer's market is not where near over. While Months of Inventory has fallen to 8.2 months this August, last year it was 10.6. And, while that represents a 23.0% decline in available inventory in Anne Arundel County, there are still 3,706 active listings - down from 4,601 this time last year. Sold prices are off 3.4% year-over-year in Anne Arundel County, but, have declined 10.2% in Annapolis since last year. While it is optimistic to think that the local area real estate market has stabilized, there is still a long road ahead before there is a shift from buyer's market to seller's market.

The S&P/Case-Shiller Home Price Index for the Washington DC marketplace improved 2.8% in June. The Baltimore Metro Home Price Index for the same period also improved by 1.3%. The Anne Arundel County Index declined very slightly by 0.1%. And, the Annapolis Index declined again by 3.4% in June over May.

The total sales volume for Anne Arundel County was down 5.3% in August over July. The number of units sold was down 7.7% and the number of active listings was down 12.5%. The number of pending sales was up 6.7%. The average sold price was up 2.7% from $354,099 to $363,546. There were 453 units sold in August down from 491 units sold in July.

The total sales volume for Annapolis was down 0.5% in August over July. The number of units sold was down 1.3% and the number of active listings was down 3.7%. The number of pending sales was up 9.3%. The average sold price was up 0.8% from $411,423 to $414,768. There 76 units sold in August down from 77 sold in July.

Sales activity is likely to remain slow this fall while buyers continue to pursue great deals and sellers continue hold out for higher prices.

In Conclusion

If you are thinking about making a change, let us help you take advantage of these trends. So, if you're buying or selling a home or know someone who is, for a confidential, private, professional real estate consultation without any obligation, contact Stephen Howell at 410-923-3217.

It seems that the cash for clunkers program has been a big success. Manufacturers and local dealers were all advertising the program. The program has been so successful that the government added additional funds to keep it running.

The U.S. Government's bucks for first-time home buyers (the $8,000 tax credit) has not been so successful. Although some first-time buyers in the real estate market expect to take advantage of the program, this is a rare group indeed.

While both programs were aimed at stimulating the economy, the cash for clunker program may in the final analysis have done more for the automobile industry than the bucks for first-time buyers program will have done for the real estate industry. There are several ways in which these programs differed that may have made the difference in their respective success and lack thereof.

First, the car companies figured out how to give buyers the incentive at the dealership when the buyer purchased the car. While the real estate companies didn't figure out how to give home buyers the incentive at the settlement table. Getting the incentive at the "table" in a world of instant gratification versus having to wait to file your income tax is a much better solution. Instant versus deferred. Now or at tax time. Draw your own conclusions.

Second, the cash for clunkers rebate - between $3,500 and $4,500 - must be used to purchase a vehicle less than $45,000 - that's a $1 to $10 ratio. Should that same incentive been offered to first-time home buyers, $4,500 would have barely made a dent in the cost of residential real estate - which is what $8,000 barely does. In Baltimore-metro regional area where the average price of a home was $297,948 in July 2009, a $4,500 credit would have been equal to a $1 to $66 ratio. If the credits were leveled, a first-time home buyer might have received $29,795 at the settlement table - that could have easily covered closing costs and down payment with a little left over for new living room furniture!!! Kind of like $4,500 does for a car ... $2,000 down, tax and tags, and maybe a leather interior upgrade!!!

Third, anyone - with the right car - could take advantage of the cash for clunkers program but not so with the bucks for first-time home buyers. It seems like almost anyone might have a car that would meet the clunkers program quidelines, while it seems less likely that someone hasn't owned a home in the last three years in order to secure a $8,000 tax credit incentive for buying a home.

Since the cost of a new car is between $20 and $30 thousand dollars and a home is between $200 and $300 thousand dollars, cars are simply more affordable right now than homes - certainly so with such a large incentive. So the way I read it is that consumers spent their money buying new cars rather than buying new homes. What's it going to take to get buyers off the sidelines and into a new home?

You might have read the online story from Business Week's June 29, 2009 issue titled Where Housing Will Be In 2012.  I was anxious to learn that the Baltimore-Towson metro area has a projected decline of 14.8% and Maryland overall has a project decline of 12.3%.

Metro: Baltimore-Towson
What a Home Will Be Worth in 2012: $214,692
Q4 2008 price: $252,000
Projected price change by MSA: -14.8%
Projected price change by state: -12.3%

Source: BusinessWeek - What Your Home Will Be Worth in 2012

Further drops in home prices would certainly be unwelcome by most homeowners especially those who might need to sell in the next few years.

In Anne Arundel County where the Average Sold Price of a home in July 2009 was $355,099, our local housing market has declined 10.82% from this time last year according to MRIS, our local MLS.

The forecasted decline in home values could mean that the Average Sold Price could drop to $310,545 in Anne Arundel County over the next two years.

If you want to know if the Annapolis, Anne Arundel County and/or Maryland housing market has stablized, see for yourself instantly at www.AnnapolisMarketConditions.com.

Has the local area real estate market stabilized? Now is not the seller's market of we had in 2004 and 2005. The local area real estate market in Anne Arundel County declined slightly in July continuing the buyer's market trend. Sale volume and sales prices were down month-over-month and year-over-year. And, since April, May and June are often the best selling months of the real estate cycle, the dog days of summer lie ahead. Economic stimulus continues to drive sales of the entry level priced homes (those between $0-500K) but hasn't had much effect other price points. Now that August is here the local real estate market may suddenly slump.

The S&P/Case-Shiller Home Price Index for the Washington DC marketplace improved 1.3% in May. The Baltimore Metro Home Price Index for the same period declined 0.2%. The Anne Arundel County Index also declined 0.3%. And, the Annapolis Index declined 4.9% in May over April.

The total sales volume for Anne Arundel County was down 11.6% in July over June. The number of units sold was down 11.8% and the number of active listings was down 10.4%. The number of pending sales was down 7.2%. The average sold price was up slightly 0.2% from $353,284 to $354,120. There were 426 units sold in July down from 483 units sold in June.

The total sales volume for Annapolis was down 9.7% in July over June. The number of units sold was down 4.9% and the number of active listings was down 2.5%. The number of pending sales was down 32.9%. The average sold price was down 5.0% from $433.409 to $411,423. There 77 units sold in July down from 81 sold in June.

Sales activity is likely to slow in August as summer wanes and buyers and sellers alike take end-of-summer vacation. Sellers may see declining prices while buyers will benefit from low prices, low interest rates and plenty of inventory.

In Conclusion

If you are thinking about making a change, let us help you take advantage of these trends. So, if you're buying or selling a home or know someone who is, for a confidential, private, professional real estate consultation without any obligation, contact Stephen Howell at 410-923-3217.