Why Baltimore house prices are plunging

[rangerrebew]

 
Why Baltimore house prices are plunging

By Steve Goldstein

Published: Aug 4, 2015 3:27 p.m. ET

 

At a time when home prices nationally are, if anything, showing signs of being too strong, the picture in Baltimore is the opposite.

According to CoreLogic, prices in the Baltimore-Columbia-Towson metro area were down 8% in the year ending June, the worst showing of the 100 biggest metro areas. Nationally, prices rose 6.5% in the 12 months ending June, CoreLogic says.

What’s driven that is a huge rise in foreclosure sales. Foreclosures — known in the business as real estate owned — accounted for 13.6% of all transactions in Baltimore in May — more than double the national average of 6.4%, according to Sam Khater, deputy chief economist at CoreLogic.

Maryland, despite being a so-called nonjudicial state where judges do not have to approve foreclosures, had a program that delayed foreclosures to give homeowners more a chance to fight them.

Excluding distressed sales, prices in the Baltimore metro area were up 2% year-over-year. That’s a huge divergence, especially given the gap between prices including and excluding foreclosures and short sales nationally was just 0.1% in June.

The rise in so-called REO activity is more an indicator of stalled foreclosures moving through the system than a sign of newer trouble in the city that was gripped by riots following the Freddie Gray death in April. Foreclosure inventories actually fell year-over-year in May, and job growth has picked up slightly in the Charm City, Khater says.

Notices of default number a few hundred per month — well below the peaks in 2009 and 2010 of around 1,700 per month, he says.

Other metro areas where prices have declined include Boston (-4.4%), Hartford (-0.1%), New Haven, Conn. (-1.8%) and Worcester, Mass. (-7%). Khater said that’s more a reflection of the languid economy in New England.

But 93 of the top 100 metro areas by population saw home price gains. Even with the massive drop in oil prices, the Dallas-Plano-Irving area saw an 8.6% gain and the Houston-The Woodlands-Sugar Land area saw a 7.4% gain.

“It’s very different than the 1980s,” Khater said, speaking of Houston in particular. Not only did oil prices collapse then, but there also was a commercial real estate crisis as well as farmland value drop that preceded the skid in energy prices. This time, the economy is more diverse, and there’s also an acute lack of supply.

http://www.marketwatch.com/story/why-baltimore-house-prices-are-plunging-2015-08-04/print

[flowers]

I guess they call this a fire sale....................

[PzLdr]

I guess they call this a fire sale....................

You forgot the rim shot. VERY funny!

[flowers]

You forgot the rim shot. VERY funny!

[DCPatriot]

"Columbia" skews the statistics because #1....it's not Baltimore.   It's in Howard County, the most desirable area in all of Maryland, because of its coveted schools and infrastructure.

Towson is North Baltimore and is virtually a decaying slum in some sections, while thriving in other neighborhoods.

Let's see the figures for Baltimore CITY....then get back to me.   

edited to add:  Columbia is a planned 'city' development built back in the 70s and 80's.  What's happened there is what's happened in many sections of the country.   It was a thriving community until they unleashed the illegal immigrants and Section 8 renters on them.

People who were there originally checked out, taking advantage of low interest rates....they got of out "Dodge" and moved out.

It's a shadow of what was intended originally.   Obama's work...call it.

[Oceander]

Actually, REO - real estate owned - refers to foreclosed properties that the bank ends up owning because the bank bid its debt in at the sale and no-one bid higher.  It doesn't refer to all foreclosures.

[truth_seeker]

Actually, REO - real estate owned - refers to foreclosed properties that the bank ends up owning because the bank bid its debt in at the sale and no-one bid higher.  It doesn't refer to all foreclosures.

Yes, technically correct. I think each state is different. I also think that at the worst stage of the down cycle, almost all foreclosure situations were for loans higher than fair market value.

Therefore the banks negotiated either at the trustee sale, or separately for lower prices. They did not really want large numbers of REOs to pile up.

I was told that investor groups negotiated directly with banks, to take packages of properties, at attractive prices. Often a blended mix; some good and some bad.

As a broker, I can quote something I once learned "There is nothing wrong with any property, that cannot be solved by price."