Baltimore, MD Real Estate Market Trends & Analysis [Updated 2021]

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The Baltimore real estate market in Maryland has struggled to keep up with national trends for the better part of a decade. Dating back to the Great Recession, in fact, real estate in Baltimore didn’t start to show signs of recovery for at least six months after the majority of markets across the country saw home prices rise. Today, the market still faces headwinds (like a high foreclosure rate), but there are a few promising indicators the real estate investing community should be excited about in 2021. Home prices are relatively affordable (compared to the national average), and a promising unemployment rate has kept demand intact. All things considered, the housing market may represent a great place to invest for the foreseeable future. Low prices and plenty of demand should catalyze a busy year.

Baltimore Real Estate Market 2021 Overview

  • Median Home Value: $162,197

  • 1-Year Appreciation Rate: +7.0%

  • Median Home Value (1-Year Forecast): +11.2%

  • Median Rent Price: $1,350

  • Price-To-Rent Ratio: 10.01

  • Baltimore-Towson Unemployment Rate: 6.1% (latest estimate by the Bureau Of Labor Statistics)

  • Baltimore City Population: 593,490 (latest estimate by the U.S. Census Bureau)

  • Median Household Income: $48,840 (latest estimate by the U.S. Census Bureau)

  • Percentage Of Vacant Homes: 19.63%

  • Foreclosure Rate: 1 in every 4,157 (2.4%)

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Baltimore real estate investing

Baltimore Real Estate Investing 2021

Real estate investing in Baltimore has been shaped by nearly a decade-long recovery from the Great Recession. Since the real estate market bottomed out in 2012, in fact, local investors have made a lucrative living off of rehabbing affordable homes (primarily foreclosures). Moving forward, the Baltimore real estate investing community will once again be able to benefit from a relatively high foreclosure rate. The same indicators which facilitated “flips” and rehabs over the last eight years are still intact and will help short-term investors in the coming year. However, it should be noted that 2021 looks to be the year investors start favoring long-term investment opportunities. Thanks, in larger part, to years of historical appreciation, profit margins are growing thinner. In response to today’s relatively high prices, local investors could start to favor rental properties over their short-term counterparts.

That’s not to say rehabbing won’t remain a viable exit strategy moving forward, but rather that Baltimore city real estate looks more conducive to building a rental property portfolio. For starters, it has never been cheaper to borrow institutional money. At 2.65%, the interest rate on a 20-year fixed-rate mortgage is too attractive to pass up; not only that, but the low borrowing cost will simultaneously lower acquisition costs and increase monthly cash flow from active rental properties.

Today’s indicators pave the way for investors to benefit more from rental properties while mitigating risk. In particular, vacancies don’t appear to represent the same level of risk they have in the past. With a price-to-rent ratio of 10.01, it’s unequivocally more affordable to own a home in Baltimore; almost any other year, that statistic would work against landlords. However, with inventory shortages remaining a real concern, there aren’t enough listings to meet demand. Even those who are ready and willing to buy will be relegated to the renter pool in 2021. With listings few and far between, landlords will find the demand for their properties rising throughout the year. With more competition over rental units, landlords will increase asking prices and enjoy peace of mind.

Again, rehabbing remains a great exit strategy for those in the Baltimore real estate investing community who can find deals with good profit margins. However, years of appreciation and newly introduced interest rates will lean heavily in favor of landlords. Investors should strongly consider building a passive income portfolio of their own in 2021.

2020 Baltimore Real Estate Investing

Heading into 2020, the Baltimore real estate market had realized a drop in annual flipping rates. The rate of investors rehabbing homes dropped year-over-year, from 2018 to 2019. In fact, the city realized one of the largest drops in flipping rates over that time span.

“The biggest decrease in annual flipping rates among MSAs with a population of 1 million or more were in Seattle, WA (down 16.9 percent); Indianapolis, IN (down 9.1 percent); Grand Rapids, MI (down 8.0 percent); Rochester, NY (down 5.9 percent) and Baltimore, MD (down 4.8 percent),” according to Attom Data Solutions’ year-end 2019 U.S. Home Flipping Report.

While it’s too soon to tell what the home flipping rate is shaping up to be in 2020, it’s safe to assume it won’t return to historical levels. That’s not to say flipping isn’t a viable exit strategy for the local real estate investing community, but rather that there are new, more attractive investment opportunities starting to emerge. Flipping remains a great strategy for investors who can find deals with attractive profit margins. Still, years of appreciation have made said deals harder to come by, even in a market this affordable. As a result, more investors are turning to long-term strategies in the wake of the Coronavirus. If for nothing else, the Coronavirus’s presence has actually resulted in several indicators that favor buy-and-hold strategies. In particular, rental properties look to be a great investment vehicle with the new market landscape created by the pandemic.

Today, building or adding to a rental property portfolio makes more sense with the new real estate landscape. The real estate industry is certainly different after the arrival of the Coronavirus, but the emergence of three indicators have made buy-and-hold investment strategies more attractive in 2020. These Baltimore real estate market trends should tip the scales in favor of rental property owners:

  • Interest rates on traditional loans are historically low

  • Years of cash flow can easily justify today’s higher acquisition costs

  • The price-to-rent ratio suggests high home prices will increase rental demand

As of June, the average rate on a 30-year fixed-rate loan was 3.16%, according to Freddie Mac. Consequently, June marked the lowest average mortgage rate for an entire month ever, and the Fed just announced it will keep interest rates low for the foreseeable future. As a result, the cost basis is lower than what median home prices suggest. At their current rate, mortgage rates will save today’s buyers thousands of dollars, and real estate investors will be able to pad their bottom line. At the very least, investors will be able to justify the latest bout of appreciation with much lower borrowing costs.

In addition to historically low borrowing costs, the prospect of generating cash flow in today’s market appears too generous to overlook. If for nothing else, investors who can put 20.0% down on a $152,180 home (the median home value) will find the monthly mortgage payments somewhere around $913. Consequently, the median rent price is $1,350. Theoretically, if investors were to buy an average home, they could generate about $437 in cash flow each month, all while paying down the mortgage with someone else’s money. These are, of course, rough estimates, but the profit potential is nonetheless genuine.

However, it is worth noting that it is considerably more affordable to own a home than to rent, at least according to the city’s 9.39 price-to-rent ratio. Typically, a price-to-rent ratio as low as this would hurt rental property owners’ prospects, as more people would be inclined to buy. However, the Baltimore real estate market is suffering from the same lack of inventory as every else. Even those who want to buy are forced to rent because of insufficient inventory levels and competition. As a result, real estate investors will most likely have an easy time filling vacancies, which can’t be under-appreciated. For the foreseeable future, rental property owners should find it easy to keep tenants their properties and cash flowing.

Baltimore real estate market trends in 2020 look slightly different from previous years, but they are nonetheless beneficial to investors. Instead of favoring rehab exit strategies, today’s trends now promote the development of rental property portfolios.

2020 Foreclosure Statistics In Baltimore

Baltimore real estate trends are generally favorable, but foreclosures still remain an issue. With one in every 2,137 homes in some form of distress, the city now has a foreclosure rate of 4.6%. To put things into perspective, the United States currently boasts a foreclosure rate of 0.6%, which is dramatically lower than Baltimore’s.

While the foreclosure rate is certainly skewing the national average higher, the city has improved in recent history. In fact, over the last year, the Baltimore housing market has improved markedly. As recently as May, “the number of properties that received a foreclosure filing in Baltimore, MD was 9% lower than the previous month and 64% lower than the same time last year,” according to RealtyTrac. Nonetheless, the city still has a long way to go.

Year-over-year improvements in the Baltimore real estate market are trailing the national average by about 20.0%. “In May, the number of properties that received a foreclosure filing in the U.S. was 38% lower than the previous month and 84% lower than the same time last year,” according to data provided by RealtyTrac.

Of all the foreclosures, the overwhelming majority haven’t actually gone through the foreclosure process. In fact, 94.7% of the city’s distressed homes are what the industry has coined pre-foreclosures. As their names suggest, pre-foreclosures are owned by homeowners who have neglected to keep up with mortgage obligations. In other words, their owners are behind on payments and have received a notice of foreclosure. Despite their current state, however, these homes represent an opportunity for the Baltimore real estate investing community to lend a helping hand. Instead of falling into foreclosure, delinquent homeowners may sell to investors and avoid bankruptcy.

Distressed homes represent the best opportunity to buy a discounted property, which has many people asking one, simple question: Where should I invest in Baltimore? It makes sense to invest in the neighborhoods with the highest distributions of foreclosures, which include:

  • 21214: 1 in every 808 homes is currently distressed

  • 21206: 1 in every 995 homes is currently distressed

  • 21229: 1 in every 1,274 homes is currently distressed

  • 21239: 1 in every 1,411 homes is currently distressed

  • 21223: 1 in every 1,537 homes is currently distressed

While higher than average, the presence of the Coronavirus is expected to increase foreclosure rates in Baltimore. The Coronavirus will most likely put a significant financial strain on many homeowners, and when forbearance programs run out later in the year an influx of foreclosures will most likely ensue. There is no telling how high foreclosures will rise, but it’s almost certain they will. As a result, those who position themselves well today may be in line to acquire a deal sooner rather than later.

2020 Median Home Prices In Baltimore

The median home price in Baltimore is a relatively affordable $152,180, according to Zillow. However, it is worth noting that while real estate in Baltimore is affordable compared to the national average, local prices have come a long way. No more than a decade ago, when prices bottomed out during the Great Recession (September 2012), the median home value was approximately $117,000. Since then, the city’s median home value has increased significantly, to the tune of 30.0%.

The increases were primarily the result of three specific indicators: improvements in the economy, positive sentiment, and (ironically) a lack of available housing. Of course, the Baltimore housing market wasn’t the sole beneficiary of these indicators. To put things into perspective, the national average increased 53.6% over the same period of time.

The city’s inventory—or lack thereof—was primarily responsible for driving up home values in the past, and the same still holds. According to Long & Foster, “The total number of active inventory this May was 2,163 compared to 3,622 in May 2019. This month’s total of 2,163 is lower than the previous month’s total supply of available inventory of 2,521, a decrease of 14%.”

Inventory levels are dropping, and competition for available housing has driven prices up in the Baltimore real estate market. Years of historic appreciation, in fact, have made these the most expensive neighborhoods in Baltimore (according to NeighborhoodScout):

  • Evergreen

  • Wellwood / Dumbarton

  • Towson U / Towsontown Blvd

  • Boston St / S Lakewood Ave

  • Stoneleigh / Yorktown

  • Maryland Institute College of Art / Bolton St

  • Roland Park / St Mary’s Seminary & U

  • S Charles St / W Pratt St

  • Charlcote Rd / Millbrook Rd

  • Homeland

Years of growth in the housing sector have benefited many local neighborhoods. However, the recent introduction of the Coronavirus has brought a stop to nearly eight consecutive years of year-over-year appreciation in the Baltimore real estate market. Home prices peaked in March, and have declined slightly on the news of “shelter-in-place” orders and inactivity. That said, prices aren’t expected to drop far, or for too long. Over the next 12 months, it’s safe to assume prices will decline a modest 2.7%. If that’s true, it won’t take long for the city’s median home value to regain its historic highs. Due to the lack of inventory, which will only worsen with builders sitting on the sidelines during the pandemic, competition will most likely drive prices back up sooner rather than later. If anything, the temporary drop represents a buying opportunity, which begs the question: Is Baltimore a good real estate market to invest in?

The real estate market in Baltimore is thriving and has something for everyone. While prices have increased dramatically over the last 10 years, they are still below many national counterparts. Additionally, demand remains intact. Despite increasing home values, people still want to buy, which stimulates activity and props the market up for everyone.

Baltimore Real Estate Market: 2018 Summary

  • Median Home Value: $116,200

  • 1-Year Appreciation Rate: 28.3%

  • Median Home Value (1-Year Forecast): 8.4%

  • Median Rent Price: $1,375

  • Number Of Foreclosures: 2,053

  • Homes For Sale: 3,372

Baltimore Real Estate Investing 2018

The Baltimore real estate market was in a class of its own for the better part of 2018. In what started as slow and steady growth for the largest city in Maryland, the Baltimore housing market found itself at the forefront of the national housing market. The city’s appreciation rates more than quadrupled the national average in the previous year. Perhaps even more importantly, demand persisted in the face of increasing prices, which positioned the local real estate market towards the top of investors’ wish lists. For all intents and purposes, real estate was healthier than it was in quite some time in 2018.

The median home value was somewhere in the neighborhood of $116,200, according to Zillow. At that price, home values had increased a lot since the second half of 2017. As recently as August of the previous year, the median home value was $90,600. Comparatively, the national median home value only managed to increase 6.5% in the same time. At the time, forecasts were in favor of the Baltimore housing market over national trends.

The distribution of foreclosures contributed to what may only be described as an investment boom in 2018. If for nothing else, Baltimore had one of the highest flipping rates in the country at the time, according to Attom Data Solutions. With a flipping rate of 9.7%, real estate in Baltimore had the ninth highest flipping rate amongst qualified cities, with Memphis, Tennessee’s 15.1% leading the pack.

Baltimore Real Estate Market: 2016 Summary

  • Median Home Price: $229,200

  • 1-Year Appreciation Rate: 2.7%

  • 3-Year Appreciation Rate: 1.2%

  • Unemployment Rate: 4.9%

  • 1-Year Job Growth Rate: 2.6%

  • Population: 623,696

  • Median Household Income: $71,501

Baltimore Real Estate Investing 2016

Despite minimal appreciation gains, the real estate market continued to thrive in the first quarter of 2016. Home affordability was a bright spot for Charm City, which was below its historical average, according to Baltimore real estate news at the time. Homeowners paid approximately 8.8% of their income to monthly mortgage payments in the first quarter, while the nation paid on average 14.5%. While historically strong, the area was one of the most affordable cities in the nation.

The city’s unemployment rate was slightly lower than the national average in 2016. In the first quarter, employment rates held up with unemployment rates settling at 4.9%, a decrease of last year’s 5.6%. That said, the market saw a one-year job growth rate of 2.6% or a 0.6% increase over the national average at the time. Compared to other markets, Baltimore’s local employment growth was forecasted to remain strong in 2016 and beyond.

Baltimore Real Estate Market: 2015 Summary

  • Median Home Price: $255,600

  • 1-Year Appreciation Rate: -2.7%

  • 3-Year Appreciation Rate: 8.9%

  • Unemployment Rate: 6.5%

  • 1-Year Job Growth Rate: 2.1%

  • Population: 622,104

  • Average Days On Market: 70

  • Percent Of Underwater Homes: 31.4%

  • Median Household Income: $68,455

Baltimore Real Estate Investing 2015

According to RealtyTrac’s 2015 Home Flipping Report, Baltimore was one of the best cities to flip a home, citing an average gross return on investment of 94.1% for single family flips.  That was nearly twenty points higher than the city that came in second place at the time: Daytona Beach.

Reports suggested that the local market was one of the most affordable locales in the country in 2015. Affordability is due largely, in part, to the increasing inventory of “starter” homes. These properties alone helped boost real estate investing, or at least spark larger interest. In fact, it was more affordable to buy a house than it was the previous year. The same couldn’t be said for most of the other markets across the country in 2015. The median sale price dropped about 1.7% in 2014, but sales increased an impressive 26.7%.

Baltimore County Map:

Map of Baltimore neighborhoods

Baltimore Real Estate Market Summary

The Baltimore real estate market had an impressive run over the course of the last recovery. However, “shelter-in-place” orders have hurt Baltimore just as much as its national counterparts. In the midst of a prolific rally, the local market has experienced a temporary setback, but it’s important to remember the Coronavirus is just that: a temporary setback. While the market has stalled a bit, it’s likely things will return to normal sooner rather than later. In fact, the pandemic’s existence seems to be creating pent-up demand, which should stimulate activity.

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