Additional research by Chelsea Haddaway, Hilary Thomas, and Realtor Jennifer Reynolds.
What to say about home sales in the throes of a deep recession where the perception is that no one's buying? How 'bout this? That, in fact, people are still buying. And there are even some clouds in our local market that sport the proverbial silver lining. "The Baltimore market, while it is depreciating, is doing better than the U.S. overall," says Sam Khater, senior economist with First American CoreLogic, a data and analysis company specializing in housing. Home prices in the Baltimore-Towson metropolitan area declined 5.4 percent over 2008 versus 10.7 percent in the nation. Part of the reason: The Baltimore metro area did not have the fantastic real estate boom seen in other parts of the country and, therefore, does not have as far to fall. The area also has relative job stability: According to the Bureau of Labor statistics, unemployment in Maryland is 5.8 percent compared to 7.6 percent in the U.S., and the Maryland-D.C. region experienced a 1.1 percent over-the-year job gain last year while employment numbers were decreasing throughout most of the country. While being the lesser loser on the national economic spectrum may not be much of a consolation, the good news is that Baltimoreans are still buying and selling homes. We know because we found buyers and sellers and asked firsthand how to survive and thrive in a challenged real estate market. Thinking you might actually take the plunge? Or are you just wondering how your home's value is holding up in this economy? We offer guidance for both questions, point you to 'hoods that hold their value at both ends of the dollar spectrum, and name a few zip codes that may be a good place to gamble on "the next big thing." And check out our exhaustive chart tracking the trends in each of 92 of the region's most in demand neighborhoods. Remember, it's prices that are falling, not the sky.
The First-Time Buyer
Many are calling the current situation in real estate a first-time buyer's paradise. Prices are reduced and interest rates are near an all-time low, as long as you have unimpeachable credit. Jeff Eisen, 28, had wanted to throw off the yoke of renting for years but was kept out of the housing market when prices soared upwards in the boom years. When his lease ended last year, he decided it was time to take advantage of pricing's downward slide—but there was also the lure of a $7,500 tax credit for first-time homebuyers.
Eisen, a single dad of a 6-year-old boy, works in construction. He knew he wanted to stay in Perry Hall in his son's current school district and budgeted between $180,000 and $200,000 for his first home purchase. Four months into his search, he'd found little that met his needs—a conveniently located home with a big yard, where he could play ball with his son—and was about to give up when an Internet search turned up a townhouse within his price range. Eisen immediately called his Realtor and set out to snap up the three-bedroom home with one full and two half baths.
Though he'd been saving for over a year and had good credit, Eisen didn't have a big chunk of cash to put down on the home. He contacted a friend in the mortgage business who helped him navigate the paperwork for an FHA loan designed for first-time buyers. Eisen scraped together the 3 percent downpayment required, and the seller paid all the closing costs.
"Once I got the money for the downpayment, it was pretty smooth sailing," he says of his experience. Eisen closed on the house December 23, 2008, and is currently making cosmetic upgrades to it, including some new appliances. He expects to stay in the house for perhaps 10 years.
"It's an investment," he explains. "Even though I know the economy will get better, the way the 401ks have been recently, you realize there's no safe investment besides real estate."
The Move-Up Buyer
Like generations of young couples before them, Natalie and Erik Bissonnette looked to Rodgers Forge when they started their new family. "We loved Rodgers Forge," says Natalie, 28. "It was a close-knit community with lots of young couples with children starting out."
But when the Bissonnette's second child arrived, the house got cramped. The couple wanted a larger yard for their two sons and guest rooms for out-of-town visitors. They knew it was time to find a detached home that could accommodate a growing family. "It was hard to move because we made so many wonderful friends there," says Natalie. After weighing the options of moving into northern Baltimore County or keeping to the closer-in suburbs, the Bissonnette's settled their search on the Ruxton area.
"In the end, the convenience factor won out," says Natalie. "It is in a great school district and we have a lot of friends who live in this area." In March of 2008, the couple purchased a four-bedroom, two-and-a-half bath home in Ruxton, close to I-83 for the convenience of Erik's commute downtown and within walking distance of Graul's Market and local shops, a fun jaunt for Natalie and the children. Erik, 29, believes that working with a national lender saved them money on the rate and origination fees on their 30-year fixed mortgage.
There was only one problem: The Bissonnettes hadn't yet sold their home in Rodgers Forge.
"I wouldn't have planned it that way," says Erik ruefully. But the couple knew that homes in Ruxton sold quickly and they needed to hop on the opportunity. "It was a large concern at the time, but we were confident in Rodgers Forge and in our agent," says Natalie.
Buying and selling in stable neighborhoods paid off. The Bissonnettes put their Rodgers Forge home on the market in mid-March. They priced the home to sell and crammed back-to-back showings into one week. "We needed to be flexible," says Erik about showing the home. "When there was a call that someone wanted to look at it, it wasn't about what was good for us; if they wanted to be there in 15 minutes, it was okay." The house sold a week later.
"Having an agent who had years of experience definitely helped us," Natalie notes. "I can't imagine trying to sell by owner right now."
When Sherrie and Edward Timmes' son left for NYU, their 5,300-square-foot home on three acres in Clarksville started to feel a little empty. Sherrie, 46, and Edward, 52, decided they had better things to do than take care of the yard and vacuum a lot of unused rooms. The Timmeses wanted an urban, waterfront lifestyle, and were willing to consider other cities to get it. But many of the areas where they looked, such as San Diego, were cost-prohibitive.
"We were always coming into Baltimore City to do things—the symphony, the opera, sports," says Sherrie. "It wasn't that big a stretch to say, 'Maybe we should live in Baltimore.'"
"Baltimore is a sleeper in terms of what it offers and its price versus other waterfront cities," she adds. And the city's central location also allows Edward to commute to his job near BWI.
The couple wanted to move to a property that would hold its value. They chose the Ritz-Carlton Residences and moved in November 2008 into a two-bedroom, two-and-a-half bath condominium. "It's like living in a hotel, but it is also your home," says Sherrie. "It's like being on vacation everyday." At the Ritz Residences, they have amenities like 24-hour concierge service, a gym, and valet parking. The home is a nod toward the Timmeses' older years and the prospect of grandchildren—there are no stairs to deal with and the floor plan is open, not cramped and stacked like a city row house.
But while the Timmeses are living a dream in the city, their Clarksville home for many months was still stuck in the morass of the real estate market—it was listed in April 2008 and did not sell until February, despite more than 70 prospective buyers and some artful professional house-staging.
"We didn't want to give it away," Sherrie explains. "We felt it was in an area that holds its value and that we'd wait out the market." After looking at the numbers, the Timmeses realized they would lose more money if they panicked and dropped the house price $100,000 than if they simply left the house vacant until the market recovered. They were ready to rent it when it finally sold.
"We were nervous about getting another mortgage, but we have good credit and we'd paid off our bills and were able to smoothly get financing," Sherrie explains. Although their old house has fond memories, Sherrie says she was happy when that chapter of their lives was closed. "The endless hours of maintenance are very easy to say goodbye to," she says. "Now I walk Bob, my basset hound, on the promenade, and I watched the Parade of Lighted Boats from my covered deck—it just doesn't get any better than this."
REAL ESTATE TIP: Risky Business
Ah, if only we'd all bought in Canton
10 years ago. But predicting the next big thing in real estate is tricky. If you are a risktaker looking to find a bargain now that might pay off later, Joseph "Jody" Landers, executive vice president of the Greater Baltimore Board of Realtors, recommends that you look for "areas where you see some rehabilitation and investment already taking place." For example, northern Patterson Park.
"There are so many community development initiatives where Butchers Hill meets Patterson Park; the city and the community have a lot riding on things going well around the park," says Realtor James Baldwin of Yerman, Witman, Gaines & Conklin Realty.
"Certainly East Baltimore, with its whole rebirth, has big potential" adds David McIlvaine, the president-elect of the Greater Baltimore Board of Realtors. "Anything around Johns Hopkins is certainly a gamble, but a pretty solid gamble."
Landers points to what he calls "rough gems," including Belair-Edison, Baltimore Highlands, Carroll Park, Poppleton, and Penrose. "These are communities that represent great investment opportunities," he says. "They're really rough right now, but they are situated close to the MARC train line and the red line for the extended Light Rail."
Landers has faith that the Mondawmin area of West Baltimore could brush up its image in the future. "It's adjacent to Druid Hill Park, one of the gems of Baltimore City, you have access to the subway, and the owners of the Mondawmin Mall have put millions into upgrading the mall."
If buying on the edge of—or in—a transitional neighborhood seems a tad too risky, consider using those investment dollars to capitalize on someone else's misfortune.
"With the amount of inventory that's available, for example in Canton, it would be wiser from an investment standpoint to be opportunistic and look for some fire sale on the waterfront, some investor who has to drop a property, than to make a bet on outlying areas," says Andrea G. Griffin of Yerman, Witman, Gaines & Conklin Realty.
Pricey 'Hoods that Hold Their Value
If you can pay a little more in a top-rated neighborhood, you should get some peace of mind
Some neighborhoods are like a black dress, a classic car, George Clooney—they never go out of style. If money is little or no object, and you want to invest in an area that is proven over time to be a good performer with little depreciation and a lot of cache, look to old standbys like Ruxton, Cedarcroft, Roland Park, Homeland, and Guilford, or the historic part of Annapolis.
"They're mystical areas people are naturally drawn to—the building styles, the location, the reputation, the mystique of saying, 'I live in Homeland or Guilford,'" says David McIlvaine, associate broker with Keller Williams Realty and president-elect of the Greater Baltimore Board of Realtors. "Location is very important."
It's little surprise that Columbia makes the list of consistent performers. It appeals to families with its stellar school system and variety of home styles, though the price of homes in Columbia has nudged the area from the moderately priced enclave it once was to a more ritzy status. Also no surprise: "Another premium area is Annapolis," says McIlvaine. "People don't say, 'Show me all of Anne Arundel County.' They say, 'Show me Annapolis.'"
Andrea G. Griffin and James Baldwin, Realtors with Yerman, Witman, Gaines & Conklin Realty, ply their trade from the city to the Greenspring Valley, known for its well-to-do homes. "It has proximity to roads, to a selection of public and private schools, and you can get bigger properties close to the city so buyers can get downtown easily," says Baldwin. "People who have means have primarily gravitated to that area because of the property taxes," adds Griffin. "They just don't feel like paying the city taxes for what they don't perceive as added value."
Downtown, there are stable properties immediately around the harbor. "The values in historic neighborhoods with easy walkability close to restaurants and the Inner Harbor haven't dropped as much as the outlying neighborhoods," says Baldwin, pointing to historic Fells Point, Federal Hill, and Otterbein as examples.
REAL ESTATE TIP: Budget 'Hoods With the Best Value
Let's face it, most people don't have a half million or more to drop on a waterfront condominium or a country estate property. Yet there are plenty of neighborhoods in and around the Baltimore area that offer good value for the money, that are safe, clean, in decent school districts, and close to commuter roads. These are neighborhoods that—barring some tremendous shift in demographics or an act of divinity—are prized for consistently holding their value at relatively moderate prices.
"Where we're seeing strength and places that hold value are Ruxton, Riderwood, Mt. Washington, and Perry Hall," says McIlvaine. Did he say Perry Hall? While it may seem like the most dressed-down 'hood on the list, "Perry Hall has seen a relatively small drop in terms of depreciation." In addition, McIlvaine says both Perry Hall and White Marsh are poised to benefit from the imminent arrival of BRAC (Defense Base Realignment and Closure) personnel. Consistent performance and the chance for further growth can be seen in Bel Air as well.
For those who can't find an affordable home in Columbia, "Parts of Ellicott City are sound, especially areas with lots of townhouses, which are great for first-time buyers," says McIlvaine.
Few neighborhoods can rival Stoneleigh and Rodgers Forge for consistent performance and friendliness to young families (though Stoneleigh's prices have edged up in recent years).
For those who want to rediscover their proletarian roots, there are solid values in working-class neighborhoods, too. "Arbutus, Dundalk, Essex, Fullerton, Halethorpe, Overlea, Parkville, these are great neighborhoods with a wide variety of housing and they hold their value," says Landers.
Locust Point and South Baltimore, with their easy access to I-95 and close proximity to Fort McHenry, are popular with local buyers looking for moderately priced homes and with Washington, D.C., commuters who want to dodge the District's higher prices. Away from the harbor, one can still get a home in Hampden in the low $200,000s and enjoy the dynamic, artistic "Avenue" scene.