Baltimore Real Estate | Judging the Market with an Investor's Approach
Baltimore real estate has long been a barometer for the rest of Maryland. But now, in the recession, the city is behaving out of character. One day things might look promising; the next, not so good. With the rest of the state looking for guidance, it is easy to see how many realtors are concerned. But the truth is the market is trying to work itself out. It is vulnerable to the economy. It is aggressive in its method. And it will not go away. Gently. So, the big question is when and how the market will recover, not if it will recover. Last weekend, investment guru Warren Buffett of Berkshire Hathaway stated that the focus must now shift to the troubled real estate sector. Residents and businesses in the Baltimore area would agree that his concerns are well-founded. With a high percentage of non-performing real estate loans and with bank balance sheets loaded with over-valued mortgages, banks need improvement in the real estate sector to reverse defaults and raise market values. This week, the real estate industry took heart as March construction spending increased 0.3%. More sobering is the reality that construction spending was still 11.1% below March 2008 expenditures. Furthermore, commercial construction activity may be misleading as The Obama administration has launched aggressive infrastructure renovations, which have impacted commercial construction figures. Private residential construction fell 4.1% compared to March 2008. Housing prices have tumbled by 21.8% since market peaks in 2006-2007. According to a U.S. Postal Service and Housing and Urban Development report, 3% of U.S. homes or approximately 4 million residences have been vacant for 90 days or more. Vacant homes and increasing foreclosure activity are driving market values to sharp declines. As property levels shrink below mortgage amounts, “it becomes a vicious cycle,� according to Jennifer Vey of the Brookings Institute. Vacant housing leads to decreasing property values and falling tax revenues. Neighborhoods with vacant properties have troubling social characteristics and tend to deteriorate very quickly, dragging surrounding property values with them. According to the Postal Service report, Franklin County in Ohio has the largest percentage of vacant housing. Baltimore County is the tenth most vacated county in the U.S. So there you have it, the news is not good. But for a savvy investor, now could be the perfect time to secure a deal with a prime piece of real estate.About the Author:
Michael Russell writes about a variety of subjects. This article discusses Baltimore real estate. For more information, visit the Real Estate Book.
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