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

Jump To Another Year In The Baltimore Real Estate Market:

The Baltimore real estate market in Maryland was set back in the wake of the pandemic at the beginning of last year. However, in the time that has passed since the Coronavirus was officially declared a pandemic, real estate in Baltimore has made great strides. Unemployment, in particular, has served as the foundation of the latest progress. While still higher than pre-pandemic levels, unemployment in Baltimore has been cut in half from its 2020 peak. With more people working in an economy with nowhere to go but up, demand for housing is rising.

It is worth noting, however, that demand has quickly turned into competition and altered the way real estate investors in Baltimore operate. While Baltimore still awards patient investors the ability to “flip” distressed homes, today’s lower profit margins have led more investors to seek an alternative long-term exit strategy: building a rental property portfolio. Thanks—in large part—to historically low interest rates and home values testing new highs each month, rental properties appear to be the most viable investment strategy in Baltimore.

The following will not only provide insight into the current state of the Baltimore real estate market but it is also intended to offer an in-depth perspective on the area’s most opportunistic investment strategies over the course of 2021.

Baltimore Real Estate Market 2021 Overview

  • Median Home Value (Baltimore County): $302,886

  • Median List Price: $361,800

  • 1-Year Appreciation Rate: +14.1%

  • Median Home Value (1-Year Forecast): +10.4%

  • Weeks Of Supply (Baltimore Metro): 5.2 (-2.0 year over year)

  • New Listings (Baltimore Metro): 915.4 (-17.9% year over year)

  • Active Listings (Baltimore Metro): 5,549 (-29.35% year over year)

  • Homes Sold (Baltimore Metro): 1,115.8 (+1.5% year over year)

  • Median Days On Market (Baltimore Metro): 13.00 (-9.70 year over year)

  • Median Rent (Baltimore-Columbia-Towson): $1,749 (+9.9% year over year)

  • Rental Vacancy Rate: 5.6% (-2.8% year over year)

  • Price-To-Rent Ratio: 14.43

  • Delinquency Rate: 5.8% (-3.4% year over year)

  • Baltimore Unemployment Rate (Baltimore-Columbia-Towson): 5.4% (latest estimate by the Bureau Of Labor Statistics)

  • Baltimore Population (County): 827,370 (latest estimate by the U.S. Census Bureau)

  • Median Household Income (County): $76,866 (latest estimate by the U.S. Census Bureau)

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Baltimore housing market trends

Baltimore Real Estate Investing 2021

The pandemic has impacted real estate entrepreneurs on a national level. In the first quarter of 2020, markets across the country were brought to a standstill in a matter of weeks, and the Baltimore real estate investing community was no exception. Fear and uncertainty caused a bottleneck in the U.S. housing sector, as buyers refused to tour homes and sellers pulled listings off the market. Still, investors persisted. Despite numerous setbacks, real estate entrepreneurs found a way to prosper over the course of the pandemic. Government stimuli and pent-up demand were enough of a catalyst to make selling homes a lucrative business as recently as the first quarter of this year.

According to ATTOM Data Solutions’ latest Home Sales Report, “the typical single-family home and condo sale across the United States during the second quarter of 2021 generated a profit of $94,500. That was up from $90,000 in the first quarter of 2021 and $60,572 in the second quarter of 2020.”

The new marketplace created in the wake of the pandemic was very conducive to real estate investing. Few markets, however, were more generous to real estate investors than Baltimore. As a result, real estate in Baltimore actually generated some of the best profits from sales as recently as the first quarter of this year.

Baltimore’s increase in profit margins was likely due to a higher distribution of distressed home sales year over year. With a 6.6% delinquency rate, the Baltimore real estate market has a relatively high distribution of foreclosures. As a result, investors who could buy in 2020 likely found it easy to make a profit in the first part of this year. If for nothing else, local investors already appear to be taking advantage of the city’s higher foreclosure rate. Only Cleveland, in fact, had more distressed sales than Baltimore in the first quarter.

However, it should be noted that increasing profit margins have made it harder to find real estate to flip. With home values testing new highs each month in 2021, there isn’t enough room in the numbers. As a result, real estate investors in Baltimore have turned to long-term exit strategies like rental properties. The new market created by the pandemic currently favors investors with longer investment windows.

In addition to profit margins growing slimmer, interest rates on traditional financing are historically low. To stimulate activity during the pandemic, the Fed dropped interest rates to their lowest point ever. Today, the average commitment rate on a 30-year fixed-rate mortgage is 2.84%, according to FreddieMac. At that rate, it’s relatively cheap to borrow money. With rates under three percent, the Baltimore real estate investing community may simultaneously offset higher acquisition costs and increase monthly cash flow from rental properties placed in operation.

Last but certainly not least, is the rental demand created by the city’s 14.43 price-to-rent ratio; it’s leaning heavily in favor of landlords. In any other market, a 14.43 price-to-rent ratio would drive people to buy. However, the city’s 5.2 weeks of supply is grossly insufficient; there aren’t enough homes to buy, even for those who can afford to do so. As a result, many highly qualified renters will remain in the renters’ pool. The Baltimore real estate investing community will mitigate the risk of vacancy and perhaps even increase rates because of demand.

2021 Foreclosure Statistics In Baltimore

According to ATTOM Data Solutions’ Midyear 2021 U.S. Foreclosure Market Report, “a total of 65,082 U.S. properties with foreclosure filings — default notices, scheduled auctions or bank repossessions — in the first six months of 2021. That figure is down 61 percent from the same time period a year ago and down 78 percent from the same time period two years ago.” There’s no doubt that foreclosures are down on a national level, and the Baltimore real estate market is no exception.

“The foreclosure moratorium on government-backed loans has virtually stopped foreclosure activity over the past year,” said Rick Sharga, executive vice president of RealtyTrac, an ATTOM Data Solutions company. “But mortgage servicers have been able to begin foreclosure actions on vacant and abandoned properties, which benefits neighborhoods and communities. So it’s likely that these foreclosures are causing the slight uptick we’ve seen over the past few months.”

It may be too soon to tell just how many foreclosure filings to expect in Baltimore, but it’s safe to assume filings will increase. The expiration of moratoriums will likely add more inventory to the Boston real estate market by the end of the year. As a result, the Baltimore real estate investing community should be prepared to help those in need. By lining up financing now, investors may simultaneously help distressed owners and land their next deal.

2021 Median Home Prices In Baltimore

The Baltimore real estate market has a median home value somewhere in the neighborhood of $302,886. At its current level, Baltimore’s median home value is higher than it has ever been and continues to test new highs each month in 2021. Today’s historical prices directly result from the new marketplace created in the wake of the pandemic. In particular, Baltimore currently has about 5.2 weeks of inventory on the books, which is nowhere near enough listings to keep up with today’s demand.

Typically, a balanced market will boast about six months of inventory, which means Baltimore is assuredly a seller’s market. The lack of inventory has led to steady competition, and homeowners have increased prices accordingly. In the last year alone, the median home value in Baltimore County has increased 14.1%. To put things into perspective, median home value in the United States has increased 16.7% over the last year.

Moving forward, the median home value in Baltimore is expected to increase by as much as 10.4%. The increase will most likely be driven by a distinct lack of inventory and improvements in employment indicators. As the economy continues to open up and more people are working, low interest rates will continue to drive up demand. However, building permits are nowhere near where they are needed to be. Since builders sat on the sidelines for the better part of a year, new builds are still a ways out. Until new listings can be brought to the market, demand will continue to drive prices higher in the Baltimore real estate market.

Baltimore Real Estate Market Trends In 2021

The Baltimore housing market has kept pace with the national industry. However, in light of the Coronavirus, markets across the country may start to act independently. While it is too early to tell exactly what real estate in Baltimore will look like for the foreseeable future, it is possible to interpret the pandemic’s impact in a meaningful way. Here is a look at the Baltimore real estate market trends which are most likely going to have a lasting impact:

  • Improvements In Unemployment Will Increase Demand: Over the course of the pandemic, unemployment spiked to historic levels in Baltimore. However, as more Americans get vaccinated, and Baltimore continues to lift restrictions, unemployment will improve. At about 5.4%, Baltimore’s unemployment rate has been cut in half since spiking last year. If trends continue as expected, more buyers may enter the market and increase competition further. As a result, there appears to be a growing correlation between the strengthening economy and higher appreciation rates.

  • New Builds Will Struggle To Help: Building permits continue to leave a lot to be desired. Consequently, inventory levels will remain tight for the foreseeable future. As a result, there’s a good chance appreciation rates will remain in the double digits until new listings can release pressure.

  • Rentals Will Receive An Influx Of Demand: More people will be forced to rent without sufficient inventory levels. In fact, Baltimore’s 14.66 price-to-rent ratio all but ensures the rental market will receive added attention. Home affordability will continue to increase competition over the little inventory available, forcing more people to remain a part of the renter pool (even if they can afford to buy). As a result, rents are expected to increase.

Baltimore Real Estate Investing 2020

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.

That’s not to say flipping wasn’t a viable exit strategy for the local real estate investing community, but rather that new, more attractive investment opportunities starting to emerge. Flipping was a great strategy for investors who could find deals with attractive profit margins. Still, years of appreciation made deals harder to come by, even in an affordable market. As a result, more investors turned to long-term strategies in the wake of the Coronavirus. If for nothing else, the Coronavirus’s presence actually resulted in several indicators that favored buy-and-hold strategies. In particular, three indicators made rental properties more attractive than ever in Baltimore:

  • 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

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

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% at 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%, decreasing 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. As a result, Baltimore’s local employment growth was forecasted to remain strong in 2016 and beyond compared to other markets.

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. Unfortunately, the same couldn’t be said for most 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. The market has stalled a bit, but 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 for everyone from buyers and sellers to investors.

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