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Should You Invest In The Baltimore Real Estate Market?

Baltimore Real Estate Data

Baltimore looms large in American history. First settled in the 1600s, it was one of the largest cities in the U.S. in the colonial era. It is often thought of as a distant suburb of Washington D.C. today, an industrial city on the decline. Yet this city is experiencing a turn around that presents a unique opportunity for real estate investors. The Baltimore real estate market offers a variety of properties for buyers who are looking for a place to call home.

Baltimore is home to around 600,000 people. The Baltimore housing market at first blush would seem like a bad investment, since the city saw a nearly 5% drop in population from 2000 to 2010. This is a continuation of a decades long flight from the city; between 1970 and 2000, the total population declined by almost a third. However, there is significant opportunity in the Baltimore real estate market for investors, and not just because the metropolitan area is home to nearly three million people.

Baltimore real estate market

Baltimore Real Estate – Market Trend And Forecast 2018

Let’s take a look at the Baltimore real estate data. As per Zillow.com, the median home value in Baltimore is $117,100. Baltimore home values have gone up 33.2% over the past year and Zillow predicts they will rise 10.5% within the next year. The median list price per square foot in Baltimore is $141, which is lower than the Baltimore-Columbia-Towson Metro average of $187. The median price of homes currently listed in Baltimore is $165,000 while the median price of homes that sold is $107,300. The median rent price in Baltimore is $1,400, which is lower than the Baltimore-Columbia-Towson Metro median of $1,650.

Baltimore Real Estate Market Forecast

Graph Courtesy – Zillow.com

The percent of delinquent mortgages in Baltimore is 3.5%, which is higher than the national value of 1.6%. With U.S. home values having fallen by more than 20% nationally from their peak in 2007 until their trough in late 2011, many homeowners are now underwater on their mortgages, meaning they owe more than their home is worth. The percent of Baltimore homeowners underwater on their mortgage is 22.3%, which is higher than Baltimore-Columbia-Towson Metro at 13.8%.

Currently, Zillow has 6399 homes for sale and 4574 homes for rent in Baltimore MD.

Baltimore Real Estate Market Trend 2018

As per Trulia.com, the Baltimore real estate market trends indicate an increase of $9,650 (5%) in median home sales over the past year. The average price per square foot for this same period rose to $162, up from $157. The median sales price for homes in Baltimore for May 9 to Aug 8 was $219,650 based on 2,894 home sales.

Baltimore Real Estate Market Trend

Graph Courtesy – Trulia.com

Trulia has 4,911 resale and new homes in Baltimore lined up for you, including open houses, and homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process.

Housing market trends in Baltimore show a 5% year-over-year rise in median sales price and a -2% drop in median rent per month. The median rent per month for apartments in Baltimore for Jul 12 to Aug 12 was $1,450. Average price per square foot for Baltimore was $162, an increase of 3% compared to the same period last year.

Baltimore Real Estate Market Trend 2018

Graph Courtesy – Trulia.com

According to Movoto.com statistics, the median list price in Baltimore is $180,000. The median list price in Baltimore went down 7% from July to August. Baltimore’s home resale inventories is 2,970, which increased 3 percent since July 2018. The median list price per square foot in Baltimore is $168. July 2018 was $171. Distressed properties such as foreclosures and short sales remained the same as a percentage of the total market in August.

Baltimore MD Real Estate Market Trend

Graph Courtesy – Movoto.com

Baltimore Real Estate Listings And Sales Trends

As per Redfin.com, there are currently 3318 homes for sale in Baltimore at a median listing price of $180K. Some of these homes are “Hot Homes,” meaning they’re likely to sell quickly. Most homes for sale in Baltimore stay on the market for 67 days and receive 1 offers. In the past month, 1155 homes have been sold in Baltimore.

In addition to houses in Baltimore, there were also 409 condos, 3612 townhouses, and 15 multi-family units for sale in Baltimore last month. The asking price of homes for sale in Baltimore has increased 16.1% since July last year, while the number of homes for sale has increased 1.4%.

Baltimore MD Real Estate And Homes For Sale

Courtesy – Redfin.com

Northern Baltimore Real Estate Listings And Sales Trends

According to Redfin.com, the asking price of homes for sale in Northern Baltimore has increased 13.8% since July last year, while the number of homes for sale has decreased 6.9%. There are currently 556 homes for sale in Northern Baltimore at a median listing price of $207K. Some of these homes are “Hot Homes,” meaning they’re likely to sell quickly.

Most homes for sale in Northern Baltimore stay on the market for 67 days and receive 1 offers. In the past month, 181 homes have been sold in Northern Baltimore. In addition to houses in Northern Baltimore, there were also 77 condos, 440 townhouses, and 1 multi-family unit for sale in Northern Baltimore last month.

Northern Baltimore Real Estate And Homes for Sale

Courtesy – Redfin.com

Eastern Baltimore Real Estate Listings And Sales Trends

The asking price of homes for sale in Eastern Baltimore has decreased 0.2% since July last year, while the number of homes for sale has decreased 21%. Data from Refin.com shows that there are currently 196 homes for sale in Eastern Baltimore at a median listing price of $44.9K. Some of these homes are “Hot Homes,” meaning they’re likely to sell quickly.

Most homes for sale in Eastern Baltimore stay on the market for 83 days and receive 1 offers. In the past month, 52 homes have been sold in Eastern Baltimore. In addition to houses in Eastern Baltimore, there were also 2 condos, 273 townhouses, and 1 multi-family unit for sale in Eastern Baltimore last month.

Eastern Baltimore Real Estate And Homes for Sale

  Courtesy – Redfin.com

Baltimore Real Estate And Foreclosure Statistics 2018

Foreclosures will be a factor impacting home values in the next several years. As per Zillow.com’s statistics, in Baltimore 3.5 homes are foreclosed (per 10,000). This is greater than the Baltimore-Columbia-Towson Metro value of 1.9 and also greater than the national value of 1.6.

According to Realtytrac.com, there are currently 2,044 properties in Baltimore, MD that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 3,601. In July, the number of properties that received a foreclosure filing in Baltimore, MD was 15% higher than the previous month and 25% lower than the same time last year.

  • Number of Foreclosures in Baltimore = 2,044
  • Number of Homes for Sale in Baltimore = 3,601
  • Recently Sold Homes in Baltimore = 6,975

Home sales for June 2018 were up 4% compared with the previous month, and up 214% compared with a year ago. The median sales price of a non-distressed home was $121,000. The median sales price of a foreclosure home was $0, or 0% higher than non-distressed home sales.

10 Reasons To Invest In The Baltimore Real Estate Market In 2018

Baltimore, Maryland, is one of the oldest cities in the U.S., and it remains one of the largest ports on the Atlantic seaboard. In recent years, it has also recovered from the decline in its housing market. The Baltimore real estate market is promising and shows a new increase of opportunities for both buyers and sellers. Let’s take a look at the number of positive reasons that can motivate investors to buy real estate in the city of Baltimore.

1. Baltimore’s Foreclosure Bounty

Foreclosure has made the news repeatedly for foreclosure abuse and extreme cases that led to the loss of homes. The rules result people periodically losing their home due to hundreds in unpaid utility bills. (A $350 water bill can be enough to start the process with the water authority.) Baltimore also has a low threshold for foreclosing on properties for delinquent property taxes; the city can have a tax sale due to unpaid tax bills as low as $250.

This means there is an unusually large number of significantly discounted foreclosures in the Baltimore real estate market. Furthermore, the low thresholds result in reasonably well kept homes hitting the Baltimore housing market via foreclosure sales after an unexpected budget crisis, not years of neglect by homeowners.

2. The Student Market

If you want to invest in the Baltimore real estate market aimed at students, Baltimore is a rich target. The University of Maryland and John Hopkins University are two large pools of students in the Baltimore area, but they aren’t the only ones. Coppin State University is home to around 4000 students, while Morgan State University houses six thousand.

The University of Baltimore has five thousand students enrolled, though this college is sometimes confused with the University of Maryland Baltimore campus of similar size. Johns Hopkins has around 20,000. If you’re more interested in the metro Baltimore real estate market, Towson University is also home to around 20,000 students.

The Baltimore housing market for students extends well past the neighborhoods immediately around big schools like Notre Dame of Maryland (5000 students) and Loyola (6000 students). You could buy rental properties around the Maryland Institute College of Art, Goucher College or Sojourner-Douglass College. Note that the Baltimore housing market near Johns Hopkins also profits from the hospital of the same name, since that is one of the largest employers in the city.

3. A Huge Population of Working Class Renters

Nationwide, around a third of the population rents. In Baltimore, just over 40% do. Baltimore stands out for its walkability and public transportation network. This helps explain why around two fifths of those who rent don’t own a car, so properties in the Baltimore real estate market close to public transit command a premium. Interestingly, one in eight home owners in Baltimore don’t own a vehicle, so they bid up the price of homes near bus and train stops, too.

4. The Good Return on Investment

The median rent for apartments in Baltimore was around $1500 a month as of August, 2018. Given the large working class population in the city, many of these renters cannot afford homes selling for around $160 a square foot, so they’re guaranteed to rent for the long term. Given the relatively low cost of properties in Baltimore, this creates a surprisingly good return on investment for investors in the Baltimore housing market.

5. Limited Inventory

For those who want to buy a home, the market cannot meet demand. The Baltimore metro area has a low inventory of quality single family homes relative to demand. This is why the median sales price of a Baltimore metro home was up nearly 2% or $4000 over its 2017 price. Sales volume was up half a percent year over year, but active listings were down, a symptom of declining inventories and faster turnaround.

Median days on the market figure was just under 40 days, 8 days less than in 2017. This limited inventory relative demand will keep home prices stable for the foreseeable future. This is partially due to the fact that the Baltimore real estate market is already essentially built up; you have to tear something down to build something new.

6. Affordable Entry for Investors

After setting aside the possibility of snapping up homes by buying tax and utility liens, the Baltimore area remains an affordable metro area to invest in. The ten year average price for homes in the area was around $220,000; the January 2018 metro area median sale price was nearly $240,000. Town homes averaged $170,000 while condos cost an average of just under $200,000. And there is significant variation in price.

For example, homes in Baltimore City had a median sale price of around $90,000. At the other end of the market, the most expensive suburb of Baltimore, Howard County, had a median home sell for roughly $370,000 in January, 2018. This means you can buy luxury homes in Baltimore’s suburbs that cost less than a fixer-upper in many hot markets.

7. A Hidden Luxury Market

Depending which metric you use, many parts of the city have up to a third of residents living at or near the poverty line. Those areas are primarily in downtown. However, there is no such issue in the upscale Inner Harbor or North Baltimore. This market is so strong that new luxury apartments are being built near the harbor.

8. The Job Hotspots

Amazon has set up several fulfillment centers in Baltimore. They’re taking advantage of Baltimore’s harbor, cheap real estate and transportation links to the rest of the Northeast. Every one of these centers provides more than a thousand jobs, and the Baltimore housing market in their vicinity becomes hot because people move to where there is work.

The Baltimore real estate market around the new industrial parks built to cater to Amazon will boom, because we can expect as many jobs from Amazon’s suppliers in those areas as Amazon itself – and those workers will want to live close to work.

9. The Co-working Boom

Baltimore is home to a surprisingly large number of coworking spaces. This can be seen as an extension of digital nomads and college students choosing to work in social spaces instead of in their home office. Affordable Baltimore real estate that can cater to the people working there are well-situated to profit off this trend, and that’s aside from the possibility of setting up co-living spaces.

10. Pockets of Revitalization

Eighteen different neighborhoods in Baltimore were identified for renewal. East Baltimore in particular has been targeted for revitalization, and the money is already flowing in for projects. New infrastructure built by the city includes enhanced bus stops, dedicated bus lanes, rail improvements and road improvements. They’re also tearing down old abandoned industrial buildings to open up large construction sites and giving tax breaks for new construction.

Best Neighborhoods In Baltimore Where You Can Buy Real Estate

We fetched this data from a site called Neigborhoodscouts.com. NeighborhoodScout’s data show that during the latest twelve months, Baltimore’s appreciation rate, at 7.08%, has been at or slightly above the national average. In the latest quarter, Baltimore’s appreciation rate has been 1.65%, which annualizes to a rate of 6.78%.

Relative to Maryland, this data shows that Baltimore’s latest annual appreciation rate is higher than 70% of the other cities and towns in the state of Maryland. Here are the 10 best neighborhoods in Baltimore with the highest appreciation rates since the year 2000.

1. Falls Rd / Chestnut Ave

2. Hampden

3. Woodberry

4. Falls Rd / W 40th St

5. Falls Rd / W 28th St

6. N Charles St / E Lanvale St

7. E Monument St / N Collington Ave

8. E Fayette St / Forrest St

9. W 41st St / Edgehill Ave

10. Towson U / Towsontown Blvd

According to their data, row houses and other attached homes are the single most common housing type in Baltimore, accounting for 52.15% of the city’s housing units. Other types of housing that are prevalent in Baltimore include large apartment complexes or high rise apartments ( 21.78%), single-family detached homes ( 14.24%), and a few duplexes, homes converted to apartments or other small apartment buildings ( 11.66%). This particular housing mix is relatively uncommon and characteristic of cities that are compact and walkable, and which often have a lively downtown.

Tips For Investing In Baltimore, MD Real Estate

The Baltimore real estate market has been in decline for years, but a number of spots offer significant returns. And there are signs that the city is starting to turn around.

If you are a beginner in real estate investment business, it very important to read good books on real estate. You must also learn from successful real estate investors who have retired early on in their lives by investing in some of the best real estate markets like Baltimore, MD.

Another housing market in Alabama to go for diversifying your investments is the Huntsville housing market. Huntsville is a solid market with long term potential, excellent opportunity at the moment, and market niches any investor could take advantage of. The median rent for an apartment in Huntsville is around $1000 a month. When you factor in the premium charged for the privacy and space you get when renting a home, landlords charge much higher monthly rents for detached single family homes.

Similarly, Cincinnati, OH is another great market for investing in real estate for your retirement. Cincinnati real estate market is on the upswing and looking strong for the foreseeable future. It provides a number of opportunities to investors, regardless of the market you want to invest in.

Following the housing market decline in 2007, single family rental properties became favorable options for investors, saving in construction or refurbishment prices. The quick turnaround for an owner to rent out their property means cash flow is almost immediate. Single family rental homes have grown up to 30% within the last three years. Almost all the housing demand in the US in recent years has been filled by single family rental units.


References:

Foreclosures
http://www.baltimoresun.com/news/opinion/editorial/bs-ed-tax-sales-20170604-story.html
http://www.baltimoresun.com/news/opinion/oped/bs-ed-tax-sale-reforms-20141028-story.html

Demographics
http://graphics.wsj.com/baltimore-demographics/

Inventory
http://www.rbintel.com/blog/baltimore-area-housing-market-kicks-2018-lowest-inventories-2005

Luxury market
https://www.bizjournals.com/baltimore/news/2018/06/19/take-a-glimpse-inside-the-modern225-north-calvert.html

Property values
http://www.rbintel.com/blog/baltimore-area-housing-market-kicks-2018-lowest-inventories-2005

Universities
https://en.wikipedia.org/wiki/List_of_colleges_and_universities_in_Baltimore

Rental Pool
http://planning.baltimorecity.gov/sites/default/files/2a_City%20Profile%20-%203.30.16_0.pdf http://www.pewresearch.org/fact-tank/2017/07/19/more-u-s-households-are-renting-than-at-any-point-in-50-years

Rent
https://www.trulia.com/real_estate/Baltimore-Maryland/

Amazon                                                                                                                                    https://wtop.com/business-finance/2017/11/maryland-gets-4th-amazon-fulfillment-center-1500-jobs

Co-working / co-living                                                                                          https://technical.ly/baltimore/2016/06/24/best-coworking-spaces-baltimore

Revitalization            https://www.baltimorecountymd.gov/Agencies/planning/neighborhoodresponse/commrevitalization/ https://foxbaltimore.com/news/local/east-baltimore-neighborhoods-get-30m-grant-for-revitalization

Market Data and Trends                                              https://www.redfin.com/neighborhood/1851/MD/Baltimore/Northern-Baltimore https://www.redfin.com/neighborhood/791/MD/Baltimore/Eastern-Baltimore https://www.trulia.com/real_estate/Baltimore-Maryland                                            https://www.zillow.com/baltimore-md/home-values              https://www.neighborhoodscout.com/md/baltimore/real-estate                              https://www.movoto.com/baltimore-md/market-trends                https://www.realtytrac.com/statsandtrends/md/baltimore-city-county/baltimore

*Remember, caveat emptor still applies when buying a property anywhere. The information contained in this article was pulled from third party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified.


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