Hot market burns those who most need to buy

July 11, 2006|By JEAN MARBELLA

I can pinpoint the moment the moment I realized I'd gone totally real estate mad.

I'd been complaining about the price I got for my house, which I'd sold in April for well below its list price. I practically gave it away, I would wail to anyone who would listen. I wuz robbed, I would cry.

To further indulge myself - self-pity being one of my less attractive traits - I decided to do a little math and see just how meager a profit I had made over what I'd paid for it, how truly victimized I was by the bursting of the housing bubble.

Whoops. It was 155 percent.

That's how crazy the real estate market is around here. As The Sun reported last week, despite the recent slowdown in the housing market - which, of course, is when I put my house on the market - prices in Maryland are still rising faster than in almost any other place in the country. Only in Arizona, Florida, Hawaii, Oregon and Washington, D.C., are prices rising faster.

That's a good thing, right? Not exactly. The flip side of the hot housing market is what you'll find in another recent report, this one from a city task force and called "At Home in Baltimore: A Plan for an Inclusive City of Neighborhoods."

The report notes how, for all the housing development going on in the city - construction cranes seem to have taken up permanent residence in some parts of town - it's skewed to the wealthiest buyers. Meanwhile, the amount of low-priced or even moderately priced housing is shrinking, the task force found.

As the report puts it, "The result is a regional housing market that is increasingly like a car dealership with only Hummers and Cadillacs, and no mid-priced sedan, or a grocery store that only sells filet mignon, but no macaroni and cheese."

You don't have to tell Keith Kobin that. At 35, Kobin is about the age I was when I bought my first house. But he thinks he's "missed the boat" on buying a house in Baltimore. By the time he got a little more serious about buying, in the last year or two, he found he couldn't afford anything, at least in the neighborhoods he wanted (Fells Point or Canton) and in his price range ($220,000, max).

"And even that would be stretching it," says Kobin, who is still paying off grad school loans.

As an architect, Kobin is part of the "creative class" that urban planning guru Richard Florida has convinced countless mayors - including our own - is key to a city's vitality. Kobin rents in Canton and loves being minutes from his office downtown.

He's not looking seriously anymore and in fact is thinking of moving - maybe somewhere adventurous like Hong Kong or Singapore. That's what people who are unfettered by mortgages tend to think, and that's one reason affordable housing is so important. You want wage-earning people to settle down, buy a house, stick around long enough to get invested in a community - all the while paying taxes, of course.

But they can't do that if, as the report says, the median home price in the region went up 99 percent from 2000 to 2004, a time span when wages, by contrast, went up just 19 percent.

"A huge part of the housing affordability problem is related to the fact that a lot of people don't make a living wage," says Barbara Aylesworth, who as executive director of Belair-Edison Neighorhoods Inc. works to encourage homeownership in those Northeast Baltimore communities. "I think anyone working 40 hours a week should be able to partake of affordable housing in the area."

She supports the report's recommendations - to fund and encourage affordable housing - and hopes it will serve as a counterbalance to the current trend toward high-priced developments.

I'll be curious to see what effect the task force has. Its report doesn't have quite the sex appeal of what John Waters called "real estate porn" in an interview with The Sun's Doug Donovan in May. "You know, when people talk about how much their house cost at parties," he said.

Indeed. My husband and I bought a house last year, but my single-girl house remained on the market until this spring, so real estate has pretty much consumed me. It really did get pornographic - I was getting no action on my own house, so I'd watch, enviously and covetously, as the Ritz Carlton Residences under construction just a couple of blocks away sold briskly, with some units going for as much as $7 million.

Even at my end of the market, real estate proved endlessly fascinating. People I barely knew would ask me how much my new house cost or how much, finally, my old house went for. It was all fun and scandalous, up to a certain point.

Then it just became expensive, as vices generally are. When it comes to mortgages, I recommend monogamy.

jean.marbella@baltsun.com

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