Baltimore Housing Bubble

Rise and Fall of the USD

2009-08-31T13:54:00.004-04:00

Seems wars and the Fed have destroyed our wealth. Maybe its time to rethink wars and the Fed?

Click here for full sized picture and then click again to zoom in.

What Lenders Look For

2009-08-30T22:57:00.005-04:00

Are you financial ready to buy when the opportunity presents itself? I would like to talk to you about mortgages, debt and preparing to purchase a home.

How to prepare to purchase a home:

1. Reduce your current debt
2. Increase or maintain your credit rating
3. Save cash to make a large down payment

Whether looking at a fixed mortgage, jumbo mortgage, VA mortgage, or a reverse mortgage acquiring financing in these tumultuous times is probably the most intimidating and daunting aspect of purchasing a home. Before exploring the many different mortgage options and mortgage rates available, you need to know just how lenders will review your application and decide whether or not to approve your request for a mortgage loan. There are a couple criteria that lenders look at when they evaluate your mortgage-worthiness. As one would expect, the first thing that they are going to check for is your ability to pay back the mortgage loan. Lenders determine whether or not you can repay your loan based on an assessment of your income stability and your total monthly income versus total monthly debt. Lenders will look at your salary, financial assets, and verifiable income over the past two years. Generally, a monthly income to total debt ratio of 32-36% is desirable. Obviously, the higher your income to debt ratio, the lower your chances are of being approved for a mortgage. It is important to pay down your debt so you can buy a home when it is right for you.

Another factor that lenders assess is your credit rating. Generally, the lower your credit score, the lower your chances are of being approved. If you do manage to get approved despite having a low or bad credit score, you will mostly only qualify for high interest rates and subsequently pay higher points and fees. It is important to monitor your credit and not do anything to negatively impact your rating.

Lenders also look for a low loan-to-value ratio as they like borrowers who are willing to make a large investment on the property via down payment. Lower loan-to-value ratios result from higher down payments. It is recommended that a borrower put down a big down payment as doing so will reduce the overall size of the mortgage as well as start the borrower off with a lot of equity upfront. A borrower putting down a small down payment is considered to be more of a risk and subsequently pays for the higher risk in the form of less attractive mortgage terms and conditions.

Maryland Housing Statistics April 2009

2009-05-17T19:42:00.014-04:00

It has been a few months since I've posted. I wanted to update everyone with the most recent Maryland Housing Statistics as of April 2009. The data is from www.mris.com.

This analysis covers all Maryland Counties including Allegany County, Anne County, Baltimore City, Baltimore County County, Calvert County, Caroline County, Carroll County, Cecil County, Charles County, Dorchester County, Frederick County, Garrett County, Harford County, Howard County, Kent County, Montgomery County, Prince George's County, Queen Anne's County, Somerset County, St. Mary's County, Talbot County, Washington County, Wicomico County and Worcester County. Additionally I have calculated the Baltimore Metro region (city and 5 counties) and the Baltimore Metro region excluding Baltimore City. The analysis was broken down by 5 different metrics:

Housing Sales, page 1 - 9
Median Price, page 10 - 18
Average Price, page 19 - 27
Inventory, page 28 - 36
Months of Supply, page 37 - 45

Many people are wondering if we will see recovery in the coming months. My opinion on housing prices is that it lags any general economic recovery. I also do not believe we are even half way to the bottom. I'm personally targeting 2012 with the understanding that 70-80% of all the correction will be complete while any remaining correction will play out from 2012 - 2020.

The next wave of the housing crisis will be the high end homes since the food chain of move up buyers has been destroyed and many owners of these homes are in interest only loans and/or are currently struggling to make the principle and interest payments.

I'm still not sure where I think prices will fall to, but I believe it to be somewhere between 2000 and 2002 prices. Should prices continue to fall below 2000 prices, then I believe the entire economy will need a reset.

As always please feel free to communicate with me via email at bubblemore@gmail.com

April 2009 Maryland Housing Statistics

New Home Buyer Tax Credit Equals Government Subsidy

2009-01-25T12:00:00.003-05:00

I’d like to comment on the Baltimore Sun's Jamie Smith Hopkins blog post on the new buyer tax credit.

Subsidizing housing now will only make the situation that much worse once the subsidy is removed. The subsidy given the new buyer, the new home buyer now actually pays the same amount of money for the home with or without the subsidy; it is the seller of the home to the new home buyer who receives the benefit from the tax credit. Even though the credit goes to the home buyer, the subsidy would be priced into supply equation.
If a home on the market was not selling, the seller would probably cut the price. The tax credit to the buyer is literally a cut in the price, but the only difference is it merely transfers the liability from the home seller to the government. As a home buyer you may think you are really getting a credit back, but it is like saying your getting free zero % financing on a new car. It is never free, it is priced in somewhere. The same goes for anything that appears free; free shipping, free gift wrapping, free maintenance, etc...

Now back on topic, once the subsidy is removed for the new home buyer, the price of homes will literally be worth less equal to the value of the former subsidy. So the new home buyer who got a credit for buying a home will now be the bag holder for the credit since their home will be worth less without the subsidy.
The same thing can happen with interest rates. Think of low interest rates also as a subsidy. Once the subsidy is removed, the homes will be worth less.

The problem with subsidies is they create artificial demand for a product which causes producers (in this case home builders) to produce more supply than would be needed without the artificial demand. This causes over supply and will cause prices to decline. Does any of this sound familiar in recent history? The last few years we had a housing boom fuel by cheap and easy credit, aka as a subsidy. This created artificial demand and home builders not only built more homes than needed (excess supply), but also in locations that didn't make sense, especially in places where build-able land was restricted.

If you’d like a free simple lesson in economics, might I suggest reading Economics in One Lesson by Henry Hazlitt. You can read it for free online (click here for free online book).

Maryland Housing Statistics November 2008

2008-12-13T16:17:00.003-05:00

I know its been a while since the last posted, but I figured it would be nice to update anybody who still has an RSS feed to my site with the November 2008 Housing Statistics. The most shocking statistics, in my opinion, is the Months of Supply which begins on page 37 of 45. Enjoy and please leave a comment with your thoughts if you read this posting.

Maryland Housing Statistics November 2008

so long and thanks for all the fish

2008-10-24T11:14:00.003-04:00

As Kevin posted yesterday, after some discussion over the last month we have decided it was time to close the blog.

Although I initially wanted to try and keep it going till the end of the year, I think this is the right time for us to wind things down. When I was telling people back in 2006 that this housing run up in Baltimore was going to end badly everyone looked at me like I was a nutball. Well 2 years and trillions in taxpayer funds later and I feel vindicated.

As I told Kevin when I started doing posts I have always looked at this as community service more than anything else. I am glad to see that we did build a pretty large audience and from looking at the google stats a very affluent one at that.

Now that we are probably at the eye of the storm it makes sense to move on as I have other things I now want to focus my energy on.

As for predictions.....this was the biggest run up in history and it will over correct to the downside I guarantee. As I sit here this morning and watch the CNBC talking heads argue about the sell off in stocks due to hedge fund redemption I have to agree with the one sane person of them all Mark Haines. His rant this morning said it best.

"This is not rosy and is not going to be for years and years. Am I the only one willing to say the truth that this horrible? This was lead by housing! Housing takes years to unwind due to the transaction costs. This happened because people got loans they never had any hope of paying back."

For those of you who think that in 5 years we will be back to peak I have a news for you, that is not going to happen. All the growth since 2000 was due to "creative lending". Think about that.....this means no home equity lines of credit and essentially lower consumption. If people want to sell, they are going to have to come to the table with money.
People are going have to....(gasp) SAVE if they want to buy a big ticket item.

Unlike the bubble markets of the west (CA, NV, AZ) and Florida, we are winding down in a more orderly fashion. That being said this will drag out the pain for us. More people who did not speculate are going to get hit by this (baby boomers who bought 20+ yrs ago) than if it quickly imploded like Florida.

We are going to develop a market very similar to Southern California after the late 80's bubble. Homes that were bought at peak will sit as the guy next door sells his for 40% off a couple years later. If you bought in a neighborhood you "settled on" in hope of selling and moving up in a couple years, I would recommend you re-adjust your priorities. Get to know your neighbors, get involved in your community, and make do with what you have.

If you want one good easy button to click and see if it's time to buy click here. You will see we are the most overheated market from a price/income ratio. Hell even Bethesda's market down in DC makes more sense. When we get below 3 on the housing barometer it's time.

One part of this that is overlooked by many in the mainstream press is the effect this crash will have on the young folks coming out of college and are a few years into the workforce. They have never lived through a real recession like the misery from 79-83. To them this is going to change them for the rest of their lives. They will be a lot more thrifty and are not going to speculate on homes.

They will not have access to no money down loans and unlike the generation before they are likely on the hook for 10's of thousands of dollars in Student Loan debt. This is debt that never goes away and will really hurt the purchasing power of the new pipeline of homebuyers. Saving up a 20% downpayment is going to be difficult. Hell even trying to save up 5% for a FHA loan(3% down 2% for transaction costs) is near impossible. If you think housing is expensive now, wait 10 years and your going to be shocked that how the "investment" is actually "consumption".

I would like to share another aspect of this that I have come to terms with over the past 2 months. The 30 year fixed mortgage was great in the economy of the 1960's where people went to work for one company for 30+ years. They were stable and buying a house made sense as they were not going anywhere.

The 21st century economy is not one of long commitments. Companies and workers are now viewing each other as a short term relationship. People who are mobile have a competitive advantage over people who are stuck because they are in a mortgage that is underwater. They cannot take that promotion in another town or take a new job that pays a lot more in a cheaper market because they have a housing noose around them. This new paradigm, as it takes shape over time will make owning less attractive, especially to single folks. This is the starter rung on the property ladder and until they return in large numbers the rest of the market will stay sluggish.

Another aspect is many of the brightest and best went to school to get a finance degree. Today the world of high finance deleveraging to 1/3 the size it was in 2007. That is a hell of a lot of jobs. Think millions of jobs. They are now unprepaired because they are not going to make 100k+ 2 years out of school. Expectations are going to have to be adjusted. Retooling with an engineering degree is recommended. 2 billion people in China and India want your standard of living. They already graduate more engineers than the US. If we do not have the workforce that drives innovation our standard of living will go down over time.

As for Adam's prediction of when we get out of this hole we have dug? I see us as having 2 options.

1. War. Massive world war on the scale of world war II. This is what happens under normal conditions to something like this.

2. Massive investment in the creation of a domestically produced cheap energy infrastucture.

This will only happen if adults are running the show. It will take America experimenting and willing to do it all (clean-coal, natural gas, nuclear, solar, wind, geo-thermal and yes even off shore oil). The growth of the 1990's was not by accident it was from efficiency created by information technology and just in time logistics. To create income growth we need to become the most energy efficent location to do business on the planet.

This is may create another bubble but at least we get something out of it, unlike the housing bubble that gave us nothing but massive debts and pissed off people.

I hope this blog was helpful to those of you looking for information besides what the realtor cheerleaders were telling you. These people are essentually used house salemen(women) they have a vested intrest in you spending more than your means. It's a tranaction based business. As Kevin said we are going to leave this up as a reference for a while.

Good luck and remember the first rule of real estate for the next 5 years. If the house was bought from 2002-2008 and they want more than they paid for it, move on as it is overpriced.

Closing Blog

2008-10-22T22:11:00.003-04:00

I have decided to shut down the blog since most things I spoke of on this blog and in real life regarding housing and economics have come to pass. My goal was to provide a counter balance to the perma bulls and housing shills and to help anybody who would listen not to buy a home or encourage over extended homeowners to sell as soon as possible since things would only get much worse. I spoke of depression over a year ago on this blog back when the media could not even fathom the concept of a mild recession. Now the main stream media admits to a prolonged multi year recession, but they are still underestimating the full extent of the contraction of credit.

I have no intent on kicking people while they are down, but its seems that now the news has turned bearish, any posting only seems to do just that. I do not want to remind people that they might be losing their jobs, losing their homes, be unable to feed and clothe their families, be unable to retire, etc... I hope those of you who read my blog took action just like the dozens of people in real life who heard my rants on housing, economics and the stock market. I also know some people are still in denial and claim Maryland is different, but I can assure you Maryland is not.

I wish you all well and best of luck weathering this storm.

-Kevin

p.s. Adam from time to time might still post his rants.

Fraud in Charm City why paying 300k for a rowhome in idiotic due to fraud

2008-10-11T13:20:00.006-04:00

Ed over at the city paper has been pretty busy lately doing a lot of investigative reporting on the BS going on in Canton, Fells Point, and Federal Hill and why you need to wait till houses come down to 2000 price levels before buying. (Realtors please do not email me crying because the gig is up you are a bunch of hucksters that need to explain to sellers that a 1300sq/ft rehab is only worth 180k, not 300k)

Take a look here at this amazing amount of fraud on Madeira Street. This just sickens me at how much of this bubble was total fraud on the part of the realtors, appraisers, and mortgage brokers.

This was an industry all its own in the downtown area. This is not the only street either. This was extremely common as everyone thought they were going to get rich and keep 100k plus earnings a year but selling each other houses.

But just like all bubbles the ponzi scheme ends and now we have a contraction of 70% of the businesses. In 2 years I bet that we have only 1/3 the amount of realtors left in the downtown area. The mortgage brokers are now gone and the appriasers left are under such a microscope and pressure from the banks to comp down that they are making less than half of what they were before.

I'd recommend anyone thinking of buying now take a look. This will explain why waiting 2 years for the bottom to fall out makes sense. Till then rent for cheaper than it costs to buy.

Here come the state and local tax increases...looks like Marty and Shelia will squeeze blood from the taxpayers

2008-10-10T09:08:00.003-04:00

I'd like to point out that Kevin and I brought this up over 2 years ago that the state and local governments needed to make big time cuts to get spending back to around 2002 levels as tax revenues are going to fall off the cliff without housing bubble injections.

Mayor Dixon warns city may consider layoffs(hat tip Baltimore Sun)

Mayor Sheila Dixon said yesterday that she would consider layoffs as one way to shore up the city's budget, which she said "does not look good." She said that agency heads are reviewing all capital projects to see if any can be postponed so belt-tightening won't "impact people's livelihood." The city expects a dip in revenue from its recordation and transfer taxes because of the slumping housing market and fewer dividends from investments.

Now we find out what Shelia is made of. The cheerleader realtors in the city are going to have to get out the pom poms and offer to wash your car and do your house chores if you think this is not going to crash the city even more. Shelia does not care about those in Canton, Fed Hill, or Fells. Your just supposed to pay your crazy taxes that are double the county and let her and the cronies on the council spend money on social engineering and handout in East and West Baltimore. Those of you in the city deserve what you get.

The council is not going to layoff that many people. Why? They are the biggest voters. So what's next? Let's tax the people that actually make money, the new settlers in the neighborhoods near the waterfront. Hell I would not even be surprised if they pass a realtor tax, a special fee for those who make money as used house salesman(women) in the city.

Expect income, real estate, and fees(think like 50 bucks for a visit to city hall or to call 311 next) to go up dramatically. What's next the introduction of a 50 cent drink tax on all beer and liquor per drink to help make up for the shortfall like Pittsburgh? (This should go over well considering the only reason most people come downtown is to eat dinner and entertainment.)

As more and more people leave the 350k mortgaged rowhomes in Canton that are only really worth 185k (and those above the park forget about it) maybe the city will finally realize that it needs to come up with a real tax plan similar to the way San Francisco and Boston did during the 1970's.

Now for the State; if Mike Miller and Martin O'Malley are not working on cuts now we might be the next state after California asking the Treasury for a bailout.

State weighs cuts in critical needs

Amid a gloomy economy that has severely eroded tax collections, Gov. Martin O'Malley is considering steep cuts to public education and health care programs and might ask state employees to take a six-day unpaid leave.

The spending reductions under consideration total $397 million in a state general fund budget of $14billion, according to a memo obtained yesterday by The Baltimore Sun. Budget Secretary T. Eloise Foster, who compiled the list, said in the memo that the cuts "will certainly impact services and programs," compared with previous budget-cutting that eliminated "non-contentious items."

The governor learned last month that the state faces a $432 million revenue shortfall that could rise to nearly $1 billion in the next fiscal year. It is a dilemma facing many states, as the foreclosure crisis and credit crunch shrinks the U.S. economy and ripples across the globe.

O'Malley needs to cut only about $250 million immediately, because he can tap into a relatively small pool of surplus funds. But he said he might make more trims as the economy continues to slide.

Well if you a school teacher, a state employee, or in public safety I'd say you are going to be lucky to get pay freezes for the next 3 years. Either that are major layoffs. Could be worse I suppose we could be like a lot of cities in California that had to declare bankruptcy

Politicians need to put aside the blame and work this out.

House minority leader Del. Anthony J. O'Donnell said the budget needs to be pared but argued that O'Malley should have predicted and been better prepared for the economic downturn. O'Donnell and other Republicans are calling for a statewide spending freeze.

"Unfortunately, the governor is responsible for creating the problem," said O'Donnell, of St. Mary's and Calvert counties, "through irresponsible spending increases on the heels of historic tax increases at a time when the economy was turning south."

O'Malley spokesman Rick Abbruzzese dismissed the minority leader's criticism. "Did Tony O'Donnell predict the banking crisis? Did he predict Lehman Bros. would file for bankruptcy? Did he predict the federal government would have to step in with a $700 billion bailout for Wall Street … while a Republican president was at the helm of our national government?"

Guys come on grow up and cut the budget. I do not want to pay higher taxes. We have local governments that are going to fall off the cliff and the federal government that is going to let the Bush taxcuts expire. Maybe it's time to look at pay freezes and cut the contractors? How about cut the trips overseas? Maybe it's time for a reorg and figure out who is actually working and who is just sitting around collecting a paycheck?

Here is a list of potential cuts. (Thanks Baltimore Sun)

One thing I do not see here. How about pay cuts for the MD board of regents? Maryland already has the highest tuition of state institutions in the country. One of the reasons is the overpriced fluff and middle management. These guys think they are special and entitled. (Sounds like our Wall Street elite) Sorry the money should go to the programs not these guys. Times are tough and the 200k do nothing jobs are over. The explosion of the credit bubble will prick the education bubble finally I hope and make college affordable again as student loans increase and salaries decrease.

I've cut my budget by 15% over the past year putting the difference into savings. What have the rest of you been doing?

Have a house for sale over 417k? Better get it sold by Dec 31 or your screwed

2008-10-09T14:15:00.005-04:00

As many of you are aware the first housing bailout bill from earlier this year temporary increased the conforming rate of from $417,000. However this ends on Dec 31. With Congress out in re-election land till after the new year expect this to expire, especially since prices have come down in California and Florida.

Check this out from Wells Fargo:

Larger loan amounts for Conforming loans:

* Higher loan limits. In certain metropolitan areas, conforming loan limits may be as high as $729,750 (Typically capped at $417,000)
* Lower interest rates: Lower interest rate than typical jumbo loans
* Opportunity: Buy or refinance a home with fixed and adjustable-rate choices
* Limited Time: Increased conforming loan limits are only available on loans closed through December 31, 2008

Larger loan amounts for FHA loans:

* Higher loan limits. In certain metropolitan areas, FHA loan limits may be as high as $729,750
* Lower interest rates: Lower interest rate than typical jumbo loans
* Opportunity: Buy or refinance a home with fixed and adjustable-rate choices
* Options: Make a low down payment and use gift funds for down payment and/or closing costs
* Limited Time: Increased FHA loan limits are only available on loans with final approval received on or before December 31, 2008

Now here's the kicker. Most of these jumbo loan homes in the past 4 years in Baltimore have been purchased with ARM's. They are getting close to reset. (This would explain the reason why everything on the market is of 2004-2007 vintage).

Check out the current rate for Jumbo's here:

Um...pushing 10%. That sucks. That's like double the interest rate of only 18 months ago.

World of easy credit:

Monthly payment: 30 Years
Interest rate: 5.000%
Loan amount: $ 500,000.00
$ 2,684.11 a month

New Reality of "normal" credit conditions:

Monthly payment: 30 Years
Interest rate: 9.000%
Loan amount: $ 500,000.00
$ 4,023.11 a month

Difference a month: $1339.00

Ouch. Now this is of course without including taxes and insurances or any HOA fee. And I am assuming your going to have 20% for a downpayment.(yeah sure everyone does) If you do not expect to pay PMI and that has sky rocketed since AIG and others have been killed by defaults.

Add in the fact that downpayment assistance is bye bye you either gotta bring money to settlement, plan on hunkering down for a long time, or walk away. That's your choices. The smart people are on the sidelines and will stay on the sidelines till the asset bubble totally deflates. The pretty much anyone who could buy in the past couple years did. The rest are either financially prudent or subprime deadbeats who now have to pay off credit cards and car loans, the hell with a mortgage.

Got to love once in a lifetime bubbles. They make intelligent people drunk and stupid about financial decisions.

As people hunker down, layoffs, stock market crash, bonuses cut, and salaries stagnant who thinks it's really the best time to buy? Maybe waiting 2 years is the better decision, it's not like prices are going to go up in the next 2 years.

Congress passes so-called bailout and Chief Chimp signs..now the "Governator" wants more for California

2008-10-03T19:10:00.009-04:00

So anyone go out looking for a home this week? Anyone trying to sell? Guess what, the only stuff selling are things that are at 2003 levels at this point. See it is 720 credit scores and 20% down central right now and if you think your overpriced crapshack you bought in 2005 with an no money down is not underwater than I'd suggest you take a drive into West Baltimore and pick up some dope and wig out for about a decade, then maybe you'll recover your "investment".

Congress approved the $700 billion bank bailout afternoon with Bush speedly signing(must have had a pen in his hand waiting for the courier that's how quick this thing was signed) a short time later.

Although this is a housing blog I would like to point something really scary out.

Jan 19, 2001 DJIA: 10,587.59 Bush inaguration.

Oct 3, 2008 DJIA: 10325.38 Bailout Bill signed.

Now a stat like that makes me think who the hell feels good about buying anything right now? If anything this has made it worse not better for the people in the market for a home.

Now just so everyone understands this for the past 7 years people have been putting money in housing and ignoring their 401k's. Think about that. We had a negative savings rate in this country for years. Even with that the stock market went up 30% .

Some are you are thinking that your smart right?...... I'm in the money on my house? Yep if you are a baby boomer who bought 20 years ago you are. And guess who your going to screw? Boy are there is going to be some fuming GEN Xers when someone younger than them buys a house for 40%-50% less than they paid.

The money that was in the stock market is back to 2001 levels. This is even worse when you take into account inflation. So what's my point?

The way this has always worked is that when stocks went down suddenly housing would stop going up. It would usually recover 2 years after the stock market.

This time it is totally different. The housing bubble caused the stock market to crash. This has never happened before.

The stock market will bottom before housing. Average bear market is a 30% drop. This 700 billion puts a floor on stocks but does not put a floor on housing.

The stock market will recover as soon as things settle down in the credit market. My guess is that's a year or two away. The stock market will start its run when we are coming out of the tunnel of the obvious recession.

Now for all those talking depression I'd like to say I do not think we are going to enter a depression. This could be worse than the 1980-82 doubledip but we will come back. (I'm all for an alternative energy bubble. I think that's the only way out of our economic and national security mess. We need electify the auto fleet. We need the rail transport system to electrify as well to get the trucks off the road. To do this we need to build a nukes for baseline power and make big investiments in solar and wind. This along with drill baby drill as even if we get off of oil for transportation we need it for so many other things.)

Housing on the other hand? Well when the stock market makes it back it's loss starting in 10/07 and then adds another 20% then should have our housing bottom. Why? That 20% means that incomes are rising in a deveveraged environment.
This means that housing will more than likely come back to around 2001 levels. I know some of you think that's crazy but 2 years ago you all thought stated income loans were a good idea.

The problem with housing though comes down to this: (hat tip maryland policy)

The median wage in Maryland in 2007 grew by 2.5% over 2006. At $18.25 it is only 4.4% above the 1999 level, adjusted for inflation.

Maryland now enjoys the highest median household income among the 50 states, at $68,080. The increase seems to have been driven mostly by income growth among affluent and upper-middle class Marylanders, not middle-class and blue-collar workers. Moreover, Maryland’s high median family income masks great disparities among Maryland’s localities. Maryland includes two of the nation’s wealthiest 10 jurisdictions over 250,000 population (Montgomery and Howard Counties), while Baltimore City has the eighth lowest median income of any jurisdiction over 250,000 population.

The gap between high-and low-earning workers in Maryland remains persistently high, mirroring national trends.

68k at 3x income with 20% down = $204,000-$40,800 = $163200 loan

$163200 with a 30yr fixed at 6.5%(no points) =$1,032 P&I

Add in: Property Taxes (1.1 for Baltimore county)
Insurance (700 yr is average for md this is up big time since 2000)

What the average mortgage across the state should be: $1223 a month

Somehow I think we have a long long way to go. It may even overcorrect as this bubble was big. If incomes go dow and unemployment goes up....well you get the picture.

Housing will move to the back of the line for a while while we muddle our way out of this mess. We have highter costs for everything else that will take precidence over housing.

Now something I find really funny. California, the land where this funny business in housing(not wall street) was cooked up is asking for more.

California may seek Treasury financing

California Gov. Arnold Schwarzenegger, alarmed by the
ongoing national financial crisis, warned Treasury Secretary Henry M. Paulson on
Thursday that the state might need an emergency loan of as much as $7 billion
from the federal government within weeks.
The warning comes as California is close to running out of cash to fund day-to-day government operations and is unable to access routine short-term loans that it typically relies on to remain solvent.

Here is a copy of the Arnold letter to the treasury.

Are you freaking kidding me? I mean this 700 billion is not even close to being enough to cover the loss in housing over the next decade(think 4 trillion in depreciation before bottom folks). Calfornia is probably responsible for close to half this mess with Arizona, Nevada, and Florida another 20%. (Those of us in Baltimore we are basically at the point Calfornia was in 10/07. We all know how that went can't you wait to see 10/09 prices)

California is already in a recession and dragging the rest of us down with it. This is not funny. We are already subsidizing these pothead smoking losers in Orange County with this bill. I think it would be better to let the state go bankrupt. Yes let it fall apart and reorganize. This is the only way to teach these arrogant jerks how to live within there means. This will cause them to really deal with the illegals problem as they cannot afford to subsidize them anymore.

Personally I don't think the treasury will do this. This will setup a crazy precidence. Other states will follow. Maryland alone has a $1billion dollar hole even after sky high tax increases.

So anyone think that paying 400k for a 100 year old home in Canton or Fed Hill was a smart thing to have when everything else is going up? Yeah good luck with that deflated to reality price of 185k house in 2012.

Fleecing of the Taxpayers

2008-09-30T14:04:00.004-04:00

Many readers have wondered why I have been quiet on the matter of the fleecing of taxpayers to bailout Wall Street. I actually have stronger opinions on politics and moral philosophy than I do housing. To write about this fleecing would require one to write about politics and moral philosophy, but alas I only endeavored to write about housing since I’m a renter waiting on the sidelines. To that end I would recommend you read Mish’s blog about how to contact your elected officials and petition against any bailout. I also want to draw your attention to a blog post by Dr. Barry Brownstein who is a local economist whom I hold in high regard. He is a true American by the same standards our founding fathers judged each other.

Behind The Two Doors

No one won today in Congress. Today’s historic vote defeating the bailout bill is just an opening battle in an ongoing war that may last for decades.

Today’s defeat of the bailout may be a pyrrhic victory. The bipartisan, reactionary forces led by Secretary Paulson, Fed Chairman Bernanke, President Bush, House Speaker Pelosi, and Congressman Frank will be back again very shortly. And let’s make no mistake; although those who support the bailout may call themselves Republicans or Democrats, they are reactionaries—reactionaries in the sense that they long for a world where entrenched wealth gets to keep it forever. After they destroy America, those who now are poor or middle class need but stand by and hope for a few handouts.

They want a world of old Europe that our Founding Fathers fled and overthrew. Thanks to our Founding Fathers, there is no nobility in America, or permanent titles of privilege, or permanent grants of wealth. In America, many families have made great fortunes; and then their children and grandchildren have squandered their fortune. Contrary to popular belief, if you look back 100 years, there are great turnovers among those who constitute the wealthiest in America.

Those who are currently on Wall Street and the reactionary politicians who enable them want to take no chances on what the market will reveal next. They desperately want to steal America’s money; they are willing to destroy America; and in the process, they will throw every man, woman, and child overboard in their cowardly attempts to get on the first lifeboats.

Consider for a minute Congressman Barney Frank, who postures as a friend of the little man, and is tirelessly working for this bailout. Guess who is the largest recipient in Congress of campaign money from mortgage bankers? Guess who received over $600,000 of campaign money this year from political action committees—including those representing Wall Street interests. That’s correct—it is Barney Frank.

We are told a free market is to blame for our current mess. Nonsense! It is reactionary politicians like Barney Frank and President Bush. In a free market, many more financial institutions would be bankrupt already; great fortunes among their major shareholders would have been lost and their CEOs disgraced. In a free market, there are no politicians to steal other people’s money so that those who have wealth can keep it. The free market punishes fools and the greedy without remorse.

Yes, this is a bailout and not an investment in America, as some are nonsensically claiming. If this was a good investment, Henry Paulson would be liquidating his own vast wealth in order to get in on the ground floor. Until he does this, don’t let anybody tell you that this is an investment in America.

As I sat at my computer this afternoon and saw the terrible plunge on Wall Street unfolding, I couldn’t help myself. I got up, turned on the TV, and tuned to CNBC. Commentator after commentator was asking breathlessly some form of these questions: “Why is the public against the bailout? Don’t they know that this is for their own good and how much they will suffer if Congress doesn’t pass this?” As I listened, I heard in their voices the belief that the bill will be passed eventually; I heard how they were looking forward to the suffering of the “peasants” who dared to oppose them. Talk about wolves in sheep’s clothing.

They may be right, some form of the bill may pass; but they have overplayed their hand. A populist uprising has begun. A populist uprising is never principle driven; but instead, it is fueled by anger, fear, and class hatred. Down the road, especially as economic conditions worsen, this will not be a good thing. Think of the French Revolution and you will know how badly a revolution driven by populist sentiment can end.

So where do we stand right now. If by some miracle, no bailout is passed, Chairman Bernanke and Secretary Paulson are fired, and in November, the public repudiates every politician who voted for the bailout, then a deflationary depression will begin. That’s the best case scenario. Those financial institutions that have failed will be revealed and liquidated. Many fortunes both large and small will be lost, and the social carnage will be enormous. Yet, out of that, in no more than a year’s time, the rebuilding will begin; and a healthy and sustainable economy will emerge.

If, on the other hand, the reactionary forces prevail, more money will be thrown after bad; foreigners will withdraw from our capital markets; and eventually, a hyperinflation will begin. In that terrible scenario, it is likely that the United States will split apart; and many cities will descend into anarchy. You can see why I prefer the deflationary depression.

The choice behind the two doors—deflationary depression or hyperinflation—is a terrible and tragic one. Don’t trust reactionary forces to make the choice that is best for you.

And if that isn’t enough reading for you then please also check out this article.

Maryland Housing Statistics August 2008

2008-09-21T14:42:00.005-04:00

Sorry for the delay in publishing the statistics for August 2008. Please be careful when analyzing average and median price as unit mix is skewing the data. Months of Supply, inventory and sales are the more important leading indicators on the future of Maryland's housing. The report below is 45 pages (sorry for not breaking it out by metric). Don't forget you can use Scribd's controls to zoom in, download, and print this report. Enjoy!

Maryland Housing Statistics August 2008

Maryand faces HUGE revenue shortfall....didn't we play this game last year?

2008-09-12T12:10:00.005-04:00

On queue.... with the slumping housing market and the topped out consumer not driving around buying stuff they do not need the states treasury has taken a major hit. The story over at the Sun paints a somber picture.

A litany of painful economic news hit home yesterday when Maryland's fiscal leaders learned the state faces a $432 million revenue shortfall that could rise to nearly $1 billion in the next fiscal year.

Slumping tax revenues will mean steep state agency budget cuts in the months ahead, and will require Gov. Martin O'Malley to scale back the spending plan he presents to the General Assembly in January. State leaders have begun meeting to decide where to trim hundreds of millions of dollars, and some have discussed eliminating employee pay raises and shifting teacher pension costs to counties.

The bad news is expected to continue. O'Malley plans to announce today that his administration will delay $1.1 billion in transportation projects over the next six years. The projects are funded through a transportation account distinct from the general budget.

Ok so Maryland raised the income and sales taxes last year. The federal government could let the Bush tax cuts expire next year out of inertia(blame it on them is going be a theme next year for all tough decisions), and the counties are starting to freak out with 30% shortfalls because the great house flipping transfer tax budget padding is gone.

We all need to be involved in this and demand the politicians cut budgets, freeze hiring and likely freeze salaries. This is going to be the new reality. We are heading into a L shaped recession which means L shaped revenue projections. We have a lot of cushy bureaucrats making high salaries that you have to wonder, what exactly are they doing? Why is this person getting cream of the crop health and retirement benefits while the Carpenter who helped build houses these past 10 years is out of work?

One of the things being brought to the front again is slots. Seriously I am tired of the slots as a revenue solution. We all know that the social costs are high and really why is robbing the gullible considered ok but somehow we can't get more affordable college tuition which would be of a better way to drive growth by higher skilled jobs?

The dire forecasts are likely to bolster the call from some quarters for voters to approve the legalization of slot-machine gambling in the state through a November referendum, which would bring a new revenue stream to state coffers. The projections also have stoked a debate over the level of state spending. Lawmakers are required to adopt a balanced budget, and if state revenues fall short of expectations during the year, the Board of Public Works has the authority to roll back spending. Budget Secretary T. Eloise Foster declined to say where possible spending cuts might be made but said: "There will be no sacred cows."

How come the county and state governments did not fill up the rainy day funds with all this revenue when times were good? Why is it that the taxpayers in this state have not yet revolted? Is this the year it finally happens?

And what happens to boy wonder governor, you know the guy who was all going to lower our power bills back down to levels of 20 years ago with artificial caps, but instead of gets in the way new power plant construction? This is not Baltimore City where you just raise taxes because your voters won't stand up and fight city hall. He's going to have to do something he's never had to do yet, cut off the democratic voters on the pubic dole looking for their handout. This is not just some poor joe with an $8 hr make work job, but also the 100k+ salary jobs that need to go. We'll see if he has the leadership to rise above cronyism and do the right things to balance the budget.

H.L. Mencken sums up this bubble best

2008-09-11T07:03:00.001-04:00

Ed over at the city paper has a good explanation of this freddie and fannie mess here.

He has a lot of links so I will not repeat here but he summed up the buyers of the past couple years best by quoting a fellow Baltimorean.

So, everyone who bought a house in the last two or three years was a "fool?": "No one in this world, so far as I know, has ever lost money by underestimating the intelligence of the great masses of the plain people." --H. L. Mencken

Over your head and close to foreclosure? Take a trip down 95 to PG county

2008-09-10T11:54:00.002-04:00

I know some of you think I am heartless but I am just interested in getting the truth out there that the real estate market is not the place to be speculating.

Today I received an email and thought that this would be good to pass on to our readers as a general reference.

I just want to post the disclaimer that this guy appears to be a flack for PMI Group to get the word out that help is out there. The PMI group has a vested interest in getting the banks to refi loans so that the banks do not make an insurance claim to cover the mortgage while it's in foreclosure.

It's one of the reasons the banks are taking the approach that if the home had PMI (private mortgage insurance) attached it can wait as the bank is getting it's money every month while it digs through the 80/20 loans that don't have PMI. A good amount of this is the "shadow inventory" the guys in the know keep talking about.

I'm out of town this weekend but anyone who goes, send us some emails and let us know how it goes.

I am writing to request your help in spreading the word about a special non-profit foreclosure prevention event coming to Upper Marlboro, MD on Saturday. As I’ve seen you reporting frequently on Baltimore Housing Bubble, Home foreclosure has become a major crisis impacting families in the Upper Marlboro area and throughout Maryland, and leading mortgage insurance provider PMI Group (www.homesafepmi.com) is working with the Hope Now Alliance (www.hopenow.com) to fight foreclosure across the country, one community at a time. I hope you will consider sharing this event with your readers via a short blog post.

Please read on for more information about Saturday’s non-profit HOPE NOW “Save the Block Party” (www.savetheblockparty.org) foreclosure prevention workshop. This event will seek to help homeowners in some of Maryland’s fastest-declining real-estate markets and communities with unusually high rates of foreclosure. Homeowners seeking more information on the Fannie May and Freddie Mac reorganization – and how this might affect their individual mortgages – are also encouraged to attend.

The next event in our series of non-profit mortgage workshops, co-sponsored locally by HOPE NOW and The National Community Reinvestment Coalition, will be in Upper Marlboro, MD at Watkins Regional Park on Saturday, September 13. This is a unique opportunity for families and homeowners facing foreclosure or late on mortgage payments to meet in-person with professional financial advisors and representatives from the nation’s major lenders. Full details are as follows:

What: “Save the Block Party” Foreclosure Prevention Workshop

www.savetheblockparty.org

Questions and RSVP requests: 1-800-846-0140

When: Saturday, September 13 2008 – 10:00 a.m. to 6:00 p.m. EST

Where: Watkins Regional Park

301 Watkins Regional Park Drive

Upper Malboro, MD 20774

Lenders: Representatives from most of the nation’s leading lenders

RSVP: First-come, first served – arrive early, space is limited! Suggested early arrival two hours BEFORE the event begins without reservations. PMI Group-insured borrowers may have already received an RSVP invitation – be sure to check if you’ve already received information on the event!

Media: Mark Lindsey, The Abernathy MacGregor Group

(213) 630-6550 / msl@abmac.com

Please contact me to request an interview with one of our real estate or foreclosure experts, as well as on-site spokespersons

Homeowners who need help, but are unable to attend the event, are encouraged to:

· Contact the HOPE NOW Alliance at 1.888.995.HOPE (4673)

· Contact their lender directly

· Access free information about options and alternatives to foreclosure at www.HomeSafePMI.com

Background:

According to a January 2008 study published by Freddie Mac, fewer than 50 percent of homeowners contact their lender prior to entering foreclosure. PMI Group’s non-profit workshops have successfully helped hundreds of families to keep their homes with specialized mortgage workout programs and unique financial arrangements. Most often, individuals entering foreclosure are the unfortunate victims of the poorly regulated lending practices exercised in the early part of the decade, leaving them with a loan arrangement not appropriate to their actual income level.

In a casual, sit-down conference with a lender, homeowners can find solutions to foreclosure they often are unaware may be available to them. Our Risk Index Survey shows the widespread economic impact of the real estate downturn, with several markets in California and Florida at the highest nationwide risk level for severely declining property values by 2010.

If you’d like to explore this topic further, we have local real-estate and foreclosure prevention experts available for interview at your request. Thank you so much for your consideration, and I look forward to your thoughts.

Best,

Mark Lindsey

The Abernathy MacGregor Group, Inc.

Baltimore Economy

2008-09-09T14:51:00.008-04:00

State Cuts Revenue Forecast and according to Mayor O’Malley

“We are preparing to bring hundreds of millions in cuts before the Board of Public Works in the coming weeks to address this challenge.”

This will undoubtedly mean jobs cuts for either the government or contractors.

Also the BBJ reported that bad loans are hurting a quarter of Baltimore Banks,

Suburban Federal Savings Bank lost $3.2 million in the second quarter. The bank is operating under a cease-and-desist order from the federal Office of Thrift Supervision, which required Suburban to stop “unsafe and unsound” real estate lending practices.

There is more in the article about K Bank, Bradford, Advance Bank and Arundel Federal Savings Bank. There are also dozens of new reports all over about the local economy taking a turn for the worse.

What are your local observations for either better or worse? Restaurant volumes, car dealership ghost towns, job cuts, highway diversity (car pooling, mopeds, motercycles), price cuts on O's and Nationals tickets...have you seen these? What else?

*Edit Infinity8Ball in the comments noted about restaurant volumes being down and I figured I would update with my view since I eat out 3 or 4 times per week*

The Ruth Chris in Pikesville has been a ghost town the last two times I've been since May.
Bill Batemans in Parkville was a dead zone two weekends ago.
Last Friday Macaroni Grill in Cockeysville was the slowest I've ever seen and I eat their often!
The Prime Rib was jam packed (uncomfortably so) at the end of July..but I guess that was due to the beginning of restaurant week.
Olive Garden in White Marsh was full but no wait at dinner time two weekends ago (use to be a 45 minute wait).
Bay Cafe has been dead each Wednesday for the past two month.
The Speakeasy Saloon in Canton was totally empty three weeks ago on a Wednesday.
Panera in Hunt Valley use to have lines out the door at lunch time...now maybe 1 or 2 ahead of me in line at peak lunch time.
The Subway I go to for lunch use to have a very long line, now I can walk right up to the counter during peak lunch rush.

Fannie and Freddie Taxpayer Funded Bailout coming monday

2008-09-06T15:37:00.004-04:00

Well we all knew it was coming. We the taxpayers have to bailout the flippers, speculators, and overupgraders. I don't know I guess it's copacetic that I know somewhere in California and Florida there is a beachfront home with travertine floors and granite countertops that I'm helping prop up price wise so that future porn stars can continue to snort blow and keep the rehab workers employed.

More details will leak out today and tomorrow before Tokyo and Hong Kong open, (irony this bailout is not for us as much as it is for them) hat tip to CR on the links.

Stories (some contradictory on the Preferred shares):

Bloomberg: Paulson Plans to Bring Fannie, Freddie Under Government Control

WSJ: U.S. Near Deal on Fannie, Freddie

WaPo: U.S. Nears Rescue Plan For Fannie And Freddie

NY Times: U.S. Rescue Seen at Hand for 2 Mortgage Giants

LA Times: Fannie, Freddie takeover possible

From the WSJ: Frank Confirms Treasury Intervention To Shore Up Fannie Mae, Freddie Mac

The Quickening is coming

2008-09-04T13:16:00.006-04:00

This video, around 9 minutes will explain some of the reasons why buying now makes you nothing more than a knife catcher who will also be underwater.

Now he does explain this from a California perspective but everything he says also applies to Baltimore. The banks are getting ready to DUMP assets. This is the stuff that it needs to have the federal government become the bagholder on.

This inventory will hit the market for first investors to pick clean the cream. They will then do some fix ups in an attempt to create a profit in the spring. Because they already bought low they can now undercut the 2005-2007 vintage buyer who wants to sell to "move up". The problem is that they are going to come on the market at 2004 and below pricing.

Pretty much means that only those who bought more than 5 years ago will have any chance at a "profit" after you factor in the realtor and transaction costs(remember sellers are pretty much stuck paying the buyers closing right now or the sale does not get done.)

After October those who have cash to put down will be the only folks that can realistically buy.

This paradigm shift will have huge effects in this market because the first time buyers are the ones who need 100% financing the most.

The first time buyers....well they are the kids who are 24-32 who more than likely have car, student loan and credit card debt. This means the "payment shopper" is no longer available to buy a home. Why you ask????? Simple they need to SAVE.

Expect a downward spiral in sales till April. Few buy in the cold weather(although deals are possible, most of what is thrown onto the market is the disparate seller with a junky listing.)

This cycle will probably repeat for the next 2-3 years peaking around 2010-11 when hopefully the option arms are mostly washed through the system.

For those who are patient, worked hard and make more than the median income your time is coming. The hordes took your dream and now have the jewels. Fortunately the tide is turning and the folks that were dooped by a Realtor, HGTV, and fake friends who were also on this debt induced orgy that housing in an investment and that it's good to gamble to become an indentured servant is leaving the national psyche. Ironically those in the real estate industry are a lot of the horde. They now have drastically reduced incomes or are out of work all together. They cannot hold on forever. You the buyer however can hold out and SAVE. Just as the car buyers of the spring are finding out now, wait a better deal is coming.

Labor Day Cookout talk - Price declines accelerating

2008-08-28T11:08:00.010-04:00

Well folks as we get ready for the last weekend of summer it gives us an opportunity to discuss with friends and family the favorite topic of those who bought in 2004-2007 housing!!!! See those stupid fools who bought are stuck. They are probably going to be stuck in the house they are in for at least 10 years. I think that we are likely half way there in regards to a bottom in the Baltimore region.

Take a look at the recent weeks ASKING PRICES and sellers are starting to figure out that if you want to sell you gotta be 20% below the dopes who bought in 2006 and are trying to get their money back.

Here are the peak ASKING PRICES in 2006. (hat tip housingtracker.net for the mls numbers for stats in both pictures.)

As you can see we are now 20% off peak.

20%....think about that. Being a bubblesitter, you just saved an equivalent of a downpayment.

The need to show up with your own money vs. just the banks money causes a huge shift in mentality. Now folks care about price and with rising costs of gas, food, and other consumer goods that I did not consider before, we probably have another shoe to drop.

Here is my prediction of where we need to get before prices stabilize:

This will give us a drop of around 40%. If you factor in inflation drops are over 50%, but personally I think deflation in housing is a long term trend at least till 2014 in this state because the costs of everything else are going up highter than the national average.

Now I expect the drop to speed up through end the year. We have 2 major events coming up. First, buyers disappear once football season starts and don't come back till baseball season starts. Second, on October 1st we way bye bye to down payment assistance.

On Monday I had an opportunity to take a look at the MLS database and looking at a sampling of sales in Federal Hill, Towson, Perry Hall, and Ellicott City an interesting trend appears. They days of 10%-20% rebates to the buyer after closing are the rule not the exception.

This I think is partially a Realtor tactic to keep prices appear higher and keep commissions up in a down market. The appraisers are not seeing this because the so called comps they can currently use are the high priced 100% frauds that do not reflect reality.

Here's the scam: The Realtor twists the sellers into settling at x price with a 20k kickback to the buyer. The Realtor says that if you want to sell this is a way to hit your number and the buyer can take the house. They spin it as a win/win for everyone even though it's akeen to robbing the bank(and should be illegal as the IRS successfully argued). The selling agent is also usually the buyers agent on the move up house and explans that they will get the money back on the settlement of the move up house they are trying to buy.

October 1st this round of musical chairs should end and help bring down prices even more.

With the downpayment assistance going away, the tactics will have to change. This will be painful to the current knife catchers but in the end will cause transparency and remove most of the control realtors have been using around here to engineer a slower drop. This will cause the serious sellers to price right and forget about saving face. The skewed hidden numbers to come out in the open of those who bought before 2004 will be able to undercut by another 10-20%.

The shift in mindset that housing is a way to riches is over. Easy financing is gone. Cash is becoming king. Sellers need to keep this in mind that you have no power especially if the banks start to dump the junk to clean the books up.

Right now the banks are holding the junk and only putting the cream on the MLS. This is not confined to the lower income city neighborhoods. We had a lot of subprime buyers in the inner ring burbs like Glen Burnie, Halethorpe, Rosedale, Parkville, and Woodlawn. (Although Owings Mills appears to be our current leader in the county for foreclosures.)

Subprime is a problem in the Federal Hill, Canton, and Fells Point as well, but they are actually more an ALT-A problem due to speculation.

We also had a lot of loans with supposed income of getting over market rent for a tiny bedroom. See 850 bucks a month for a 150 sq ft is not happening. We had a lot of loans written with the idea that you could get TWO roommates to help you out.

The problem however is that after a few months of this the roommate paying rent starts to wonder what the hell are they doing and start looking for a cheaper place. They don't own the property so what do they care. Again being 22 and having 2 roomates is fun. Having to do it at 30 because you overbought....yuk.

This will blow the comps away as appraisers are forced to use these new lower comps.

Have a happy and safe labor day everyone.

WaMu offering 5% 1 year CD's......hmmmmm

2008-08-25T18:50:00.004-04:00

Washington Mutual the king of suprime and ALT-A loans is currently offering a 5% 1 YEAR CD for those of you looking for a place to stash your cash in this ever changing world without credit. If your a prospective home buyer in 2 years after we have reset to 2002 prices and have the cash to put down on a house that the stupid sellers chasing the market down do not (and rightfully will not) ever get for a bloated box of made of sticks this might be something to investigate.

One note is that Indy Mac was offering a similar offer back in June, a couple weeks before the FDIC did a friday closing and reopening as INDYMAC Federal Bank. Deposits are insured up to $100,0000. Again....just saying....

Realtor Ethics - Confessions of a Realtor

2008-08-25T09:53:00.005-04:00

Confession of a Realtor from Patrick.net,

My general approach to life is to observe as objectively as possible then to make adjustments accordingly. After all, as we say in Real Estate, motivated people face reality and take action. That's me. I'm motivated. Ms. Motivation.

I started working as a loan officer three and a half years ago and then transitioned into real estate sales. I really loved this business from the beginning. I love the variety of tasks, learning the laws, the lender guidelines, working with people. So I furthered my education and joined 'the board'. Now I am a full-fledged Realtor. Joy.

Being a loan officer for a while, you figure things out as patterns emerge. You've got a broker shop with an owner who employs their friends and family. You've got a revolving door of loan officers who come and go. And the only people who seem to make the money, consistently, are the owners and the friends and family. Yes, there is a lot wrong with this picture, but I won't go into that here.

"Well", I thought, as one brilliant thought followed another, "I'll transition into real estate sales. It's gotta be better there. The people present much better, That's for sure."

Since I'm relatively intelligent -- well, I guess this depends on who you talk to -- I pick up on things a lot faster now than I used to. You know, the duplicity, the illusion, right? Took me a while to see it in the mortgage world. The view of the world that "we think like this. If you are to be one of us, you will think like us." You get it, right? Collective CYA (Cover Your Ass). Let's start our new real estate careers in fear, shall we?

When you "join the board", which is a requirement to gain access to the MLS (Multiple Listing Service), you must attend "Ethics Training". If you don't, you will be denied access to the MLS, even though you paid your fees. OK, well, ethics training. Great!! Let's have some. Bring it on. I love ethics. I read about it and try to live it.

The trouble is that in all the books I've read and all the seminars I've been to, the National Association of Realtors (NAR) seems to define "Ethics Training" to include a few add-ons. Call me naive, but what do you expect? I thought I'd learn all about how to treat clients, to be honest, even if it's not what others want to hear, above all else, to put clients' interests first. And we did briefly touch on this. Not ethics training -- "nethics" training.

NETHICS (noun): Ethics according to the National Association of Realtors.

First and foremost on this agenda is do not ever, ever, never under any circumstances give the slightest smidgeon of a passing thought that brokers fix commission prices. The first and only video we viewed trained us specifically on the "commission objection", to basically say whatever you want, other than "this is a typical charge for the industry" and certainly NOT "this is what everyone charges". This message from NAR took up the first hour of a four-hour training class on ethics. I was sitting there just shocked.

Secondly, we never ever under any circumstances say anything negative about other Realtors. What? If I have personal knowledge that some agent is a real snake, I can't warn people? That's right folks. Any and all such comments must be sent to the "Ethics Committee" and dealt with behind closed doors. Hmmm. What about the public's best interest? This second message took up another hour of this four-hour seminar.

So there you go. I'm a full-fledged, ethical Realtor. We don't fix prices and we don't talk bad about each other. Would you like to see some property?

It's not that I think these are bad ideas. But why are these two things the very most important "ethical" topics in real estate? Am I missing something here or is something really missing? This just doesn't make sense, unless... hmmm...

NO. THAT couldn't be. Its just not possible that the most important thing to NAR leadership is staying in control and staying in power and covering their asses, even though they are not competent to run the organization. It just COULDN'T be smoke and mirrors. It COULDN'T be that their time has passed, that they need to evolve and adjust to the vastly different new paradigm in which the world now operates. Could someone please tell NAR that the iron-fist approach is just passe?

With so much emphasis and focus placed on CYA, is it any wonder NAR has missed so many opportunities to be a voice for transparency and honesty? That's not even on the radar.

As for me, I continue my pursuit of a more ethical profession. I'm pondering law school. (Just kidding.)

July 2008 Home Inventory

2008-08-23T13:40:00.002-04:00

I've added on the right sidebar links to inventory, average price, median price, months of supply, and sales. Below is inventory.

Baltimore Housing Bubble July 2008 Housing Inventory

July 2008 Home Months of Supply

2008-08-21T19:46:00.002-04:00

Below are the trends for months of supply by Maryland County. Tomorrow I'll post on inventory Don't miss my previous three posts on Home Sales, Average price and Median Price.

Baltimore Housing Bubble July 2008 Home Months of Supply

July 2008 Median Home Price

2008-08-20T23:21:00.002-04:00

Below are the trends for median price by Maryland County. Over the next two days I'll post on Inventory and Months of Supply. Don't miss my previous two posts on Home Sales and Average price.

Baltimore Housing Bubble July 2008 Home Median Price