Are Real Estate Opportunities Booming in Baltimore?

Baltimore is a city on the rise. According to a report by Redfin, it’s the second highest-ranked city for year-over-year home sales growth, experiencing a 40.6% increase over 2016. However, the housing supply in Baltimore is tight and with only so much space, home builders struggle to keep-up with the demand. Here are the major trends impacting opportunities in Baltimore right now.

Home and property prices are steadily increasing month-to-month

Does it seem like every month there is an article about home sales breaking records in Baltimore? That’s because there is! This year has seen a consistent increase in home and property sales at record-breaking rates. According to the Baltimore Sun, in May of 2017 home prices rose 4.4%, over April, and in May and June the number of home sales and home prices continued to climb. These recent figures are all part of a four-year move upward for the market that only seems to be gaining traction.

Is it challenging to build apartments in Baltimore?

A part of the home sales boom could be attributed to the fact that it is challenging to build apartments in Baltimore. While some home markets are threatened by the overall increase in the amount of rentals nationwide, Baltimore is one of the few cities that hasn’t experienced a detrimental impact.

In 2017 the National Apartment Association (NAA) and National Multifamily Housing Council (NMHC) “identified what they see as the hardest and easiest metro areas where new apartment supply can be added,” according to an article by Costar. Baltimore ranked number three, beat only by Honolulu and Boston out of 50 total metropolitan areas.

The impact of Washington, D.C. on Baltimore’s housing boom

Washington, D.C. has emerged as one of America’s most expensive cities. According toTrulia, in 2016 it joined the list of the most 20 most expensive major metro markets in the United States at number 16, ranking higher than Sacramento, Newark, Denver and Portland; and an average home value of $359,510.

With Millennials rushing to D.C.’s political, art and foodie neighborhoods, many are finding that they simply can’t afford to actually own a home there. Baltimore, is conveniently 40 miles away from D.C. and costs about half the price. This is a shift that Baltimoreans are actually promoting.

According to the Washington Post, “Live Baltimore, a nonprofit that promotes the benefits of living in the city,” organized events like “Buying into Baltimore,” targeting prospective homebuyers in D.C.  Given the high local demand for housing, it is not a surprise that Maryland became the market with the fifth highest home flipping rate (8.5%)in the first quarter of 2017 according to ATTOM Data Solutions.

Is the growth of immigrant populations pushing up the housing demand in Baltimore?

According to a new study by the Urban Land Institute, Home in America: Immigrant Housing Demand, Baltimore qualifies as a “Reemerging Gateway” and represents a diverse set of metropolitan areas that include Minneapolis, Baltimore, Denver, Philadelphia, Portland, Seattle, and Tampa. CNBC, in referencing the study, shared that immigrants “are poised to play an increasingly larger role in the real estate and housing industry in the next few decades.” They also shared that, “According to ULI research, over the last two decades, 28 percent of all household growth in the United States, and nearly all the growth in households headed by someone under 45 came from immigrant families.”

Baltimore appears to be perfectly positioned to take advantage of the need for housing near the nation’s capital. Fix and flip investors are already investing in the state and generating profitable projects.  Is Baltimore a market that is your radar as an investor?