Baltimore has become very popular among investors over the past years primarily because of its booming business and opportunities for entrepreneurs to start and expand their business. The primary reason for its prime location near to key cities like Washington DC and New York and is the largest city in Maryland. Almost everything in Baltimore is in an uptrend, including the real estate market. However, despite these awesome stories about Baltimore’s real estate market, is it a good idea to invest in Baltimore real estate?
In an article written by Marco Santarelli in Norada, he answers the trending question if you should invest in Baltimore real estate market. Read his analysis below to learn more.
Should You Invest In The Baltimore Real Estate Market?
Image Source: Norada Real Estate
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 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.
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. See full post here…
Data shows that the Baltimore real estate market value has gone up by significant numbers in the past 10 years. With the higher price and decreasing population, it is a perfect opportunity for investors to earn money from selling properties to people who are planning to migrate to Baltimore.
A bit of caution to investors though as some relevant question arises such as the question posted by Adam Bednar in his article at The Daily Record: why the strong rental investment despite Baltimore losing population? Read the answers below to learn more.
If Baltimore is Losing Population, Why the Strong Rental Investment?
During my appearance on WBAL 1090 AM Tuesday morning host Bryan Nehman asked why Baltimore attracts strong rental investment if its population is declining.
The answer provided was less than clear and concise. So, let’s try to add clarity on why a firm, such as a subsidiary of Pittsburgh-based real estate investment trust Omicelo LLC, would stake $8 million in an 81-unit rental townhome portfolio in East Baltimore.
The Baltimore metro area is expected to add a significant amount of jobs in 2018, according to commercial real estate services firm Marcus & Millichap’s most recent multifamily market report. Those jobs are anticipated to largely come from the “eds and meds” fields clustered in the city that attract younger, college-educated employees and provide income levels to support rents.
“Employers in Baltimore are expected to hire more than twice as many people this year than they did in 2017, with an emphasis on adding more doctors, nurses and educators to the metro,” according to the report.
That finding is in keeping with expectations from experts like Spencer Levy, a senior economic adviser at CBRE, who believes Baltimore is positioned to benefit from an “eds and meds” job boom. An added benefit of growing in those sectors is their relative immunity to outsourcing and technology disruptors.
“It’s hard to fax in a physical therapy session from China,” Levy said late last year.
Combined with a widening gap between rent and mortgages, driven by steep increase in area home prices, and it’s plain why investors are interested in Baltimore rental properties.
The city is also starting to attract investment, according to Marcus & Millichap, from investors in major metros, such as New York, Los Angeles, and San Francisco. That’s in line with what Brad Byrnes, a former investment banker now with his family’s real estate firm Byrnes & Associates Inc., said earlier this month about interest in Charm City.
“When you have an opportunity to sit down with (investors) and get beyond the initial impressions and tell the whole story, it’s mind-boggling,” Byrnes said.
Investors are being drawn to Baltimore rental properties, according to Marcus & Millichap, because of relatively lower entry costs and higher initial yields.
Units in the Baltimore area trade for $100,000 to $200,000 less than a unit in larger cities, with capital rates (net operating income divided by current market value) 200 basis points higher.
Underscoring the potential in the Baltimore rental market is decreasing vacancies despite a large amount of recently delivered supply. Click here to read the rest of this post…
With the city expected to add more jobs in 2018, which means that there will be a lot of people in Baltimore, some of them are migrants and are living for the first time in Baltimore, starting a career. This is indeed, a perfect opportunity to sell their house or rent it out and become a landlord. With the data presented, investors are being drawn to investing in rental properties.
Than Merrill wrote an article in Fortune Builders the current real estate and market in Baltimore, focusing on investor’s perspective of the market in general.
Baltimore: Real Estate and Market Trends
Image Source: Fortune Builders
It has taken more than five years, but Baltimore has made a steady push towards recovery. The health of the Baltimore real estate market, much like Detroit, has seen dramatic improvements. Whether you’re a seller who sat out the downturn to recoup your investment, or a potential buyer waiting for the right mix of reasonable prices and low interest rates, the time is now. In fact, prices are rising so steadily in the most popular neighborhoods that the pendulum may already be swinging back to a sellers’ market not seen since 2006. Zillow has already projected a 1.2% increase in home prices over the next year.
Appreciation rates have served to drive up home values across the country. Many markets have seen prices rise to pre-recession levels. However, Baltimore has actually experienced a 2.7% decrease in home values over the last year. That is quite surprising, considering the rest of the country has increased by an average of 4.6% during the same period. Despite Baltimore falling behind the national average rate of appreciation, homes in this market are currently worth about $255,600. Prices in Baltimore are comparable to those in Richmond. Subsequently, the national average is $212,267. Gains that have been made in the last three years have served to pull the local market out of the post-recession price weakness.
Experts expect prices to increase at a faster rate than in the previous three years. According to the latest CoreLogic Case-Shiller report, Baltimore has been included in the top 10 major markets expected to see the biggest increases in home prices over the course of a year. As a result, Baltimore rents have increased on a level equal to that of cities like San Diego, San Francisco and New York. In each of these cities, renters are allocating more than the suggested 30% of income to rent.
Expected improvements in the housing sector are due, in large part, to a strengthening labor force. In addition to an expanding U.S. economy, Baltimore’s work force continues to serve as a strong driver for local supply and demand. Unlike other cities, employment in the Baltimore market has held up and is on an upward trend. Despite an unemployment rate of 6.5% (just 0.4% higher than the national average), Baltimore’s situation has improved tremendously relative to the same time last year. Subsequently, the unemployment rate one year ago was 7.4%. In other words, local job growth is stronger than that of other markets. See full post here…
Baltimore’s real estate market is booming despite losing some number when it comes to the number of population and there are some reasons to that noticeable decrease. However, experts forecasted a huge increase in jobs in the city, which could trigger an influx of workers trying to start a career in Charm City.
For investors, this is the perfect opportunity to start property rentals or sell your house fast. We at Dependable Homebuyers can help you sell your house fast and easy, finding the right buyer for your property. Visit our website https://www.dependablehomebuyers.com to get started.
Dependable Homebuyers
1402 Belt St, Baltimore, MD 21230
(443) 266-6247
