Baltimore shines in housing spotlight

Investors have become comfortable with the notion that city housing will continue to appreciate, economist says


Home sales in Baltimore City are on track to overtake Baltimore County for the first time in years as sales both in the region and nationally close in on a fifth consecutive record.

Through November, 11,486 homes were sold in the city, according to statistics from Metropolitan Regional Information Services, a Rockville company that tracks homes sold through the multiple-listing service. For the same period, sales in Baltimore County totaled 10,971.

Though prices advanced at double-digit rates throughout the area, the city also posted the biggest increases. The average price last month was up more than 33 percent over a year earlier in Baltimore.

Overall, 41,726 homes were sold in Baltimore and the five surrounding counties through November - just 1,008 homes shy of the 2004 year-end total. Monthly sales in the region this year have averaged about 3,600.

And the dollar value of homes sold through November - $12.1 billion-stands 13 percent above the $10.7 billion sold in all of 2004.

"If you shut the whole thing down right now, you'll still get to the record," Al Ingraham, president of the Maryland Association of Realtors and senior vice president with First Horizon, a mortgage lender based in Timonium, said last week. "We're going to have a strong real estate market for several years in Maryland."

Baltimore's emergence as the area's top seller speaks volumes, a local economist said.

"Baltimore City is not known for being able to address the needs of all types of demographics equally well," said Anirban Basu, chief executive officer of Baltimore-based Sage Policy Group Inc.

"The fact that home sales in Baltimore City have surpassed Baltimore County tells us that Baltimore City, while not universally appealing, is very attractive to certain emerging demographic groups," he said.

"Many investors have become quite comfortable with the notion that housing will continue to appreciate in the city, irrespective of trends in other markets," he said. Basu added that the gravitation of Generation Y, immigrants and empty-nesters to urban life should continue to generate demand for city homes. In addition, job growth in the region is also fueling sales, he said.

Available data on sales by jurisdiction dates back only to 1995, but those in the industry say it's been decades since the city outsold Baltimore County.

William Cassidy, manager at Long & Foster in Fells Point, has been in the business for 30 years and says this year is the first time he's seen the Baltimore sales numbers top the county's. When Cassidy got his real estate license in November 1976, he grabbed any Baltimore business that came his way because none of the other agents wanted it. Not only was white flight prevalent, but jobs were flowing out of Baltimore, too, he said.

"Baltimore County had grabbed the lead from Baltimore City in numbers of home sales," he said. That's changed.

"Every day for the last few years, I've seen more of my county agent friends showing more houses in the city and selling more houses in the city," he said. "The action has shifted."

One reason buyers are scooping up city houses is the steep rise in prices, said Tracy Gosson, executive director of Live Baltimore Home Center, a nonprofit that promotes city living.

"Between 2000 and 2005, it's gone up 78 percent," she said. "Who has an investment that's gone up 78 percent in five years?"

Fred Flick, an Alexandria, Va.-based housing consultant who works with the Maryland Association of Realtors, agreed that price is driving city sales.

"I don't think there's a huge secret to this," he said. "The city's just much more affordable. It's roughly $100,000 to $150,000 cheaper to buy in the city."

Extensive investor activity in Baltimore has an upside and downside, according to Charles B. Duff, president of Jubilee Baltimore, a nonprofit real estate developer.

The speculative flurry has helped raise property values in various neighborhoods, enabling people to borrow more money to renovate their homes and bringing new hope into Baltimore where, for decades, an estimated 3,000 apartments and houses have been abandoned each year.

But investors can also be part of the problem, Duff cautions.

"They buy up a lot, because it's cheap," Duff said. "They get stuck, and who knows what they'll do. Sometimes they board it up, sometimes they abandon it, sometimes they go bankrupt. The property can be in the twilight zone, sometimes for years."

The burgeoning investment in Baltimore is too new a phenomenon to fully understand, he said.

"Whether speculators do permanent harm to the city depends on whether the city is strong enough to revive around them," Duff said. "I think there are markets where speculators are too big a presence. When that happens, things can stall out."

Jonas Lee, managing partner of Redbrick Partners LP of New York and Washington, which buys and rents homes, cautions that the double-digit price gains will not continue.

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