Note: Our market forecast includes Baltimore City data and data from its surroundings, including Columbia and Towson, Maryland.
Baltimore is the most populous city in the state of Maryland and one of the nation’s oldest cities.
Since its inception on July 30, 1792, the “city of neighborhoods” (as the locals call it) has been full of “charm.” Fondly nicknamed Charm City for its many beautiful neighborhoods, captivating Inner Harbor, delicious seafood, and proximity to the nation’s capital, Baltimore is a great place for your next investing endeavor.
Many people come to Charm City to visit its harbor, see its historic sites, or watch professional sports (Baltimore is home of the Baltimore Ravens and the Baltimore Orioles), but Baltimore has more to offer than leisure activities. It’s home to the World Trade Center-Baltimore and the world-renowned Johns Hopkins Hospital.
Baltimore has so many charming qualities, and you may find your new real estate investment in the middle of Charm City. Let’s review the state of the local market and also look at some of its most popular neighborhoods to learn why this may be the next place for you to be.
The state of the market
In Baltimore, the COVID-19 pandemic made a long-lasting impact on many sectors of the local economy, while inadvertently enhancing some. A consequence of the COVID-19 pandemic was the boom in the real estate market.
In Baltimore, the real estate market is booming because of record-low interest rates. At present, the real estate market is a top performer. This has not only occurred in Baltimore, but in cities all throughout the country.
In addition to low interest rates as a driving force, many people may be on the hunt for space conducive to the “new normal.” For example:
- Young professionals may be looking for a space with a home gym, home office, and green space for activities.
- Families may be looking for homes that can accommodate children who attend school virtually and also offer a private office while the parents work remotely.
- Older adults may be in the market for a multigenerational home.
Whatever the personal need, the demand for housing has hit Baltimore. Let’s look at some trends that are helping to drive the demand.
1. Rental vacancies are up
The rental vacancy rate in Baltimore is currently at 5.8%. That’s an increase of 0.2% year over year. On a national level, however, the vacancy rate is 6.8%. So, while the vacancy rate may be high for Baltimore, it’s not particularly alarming considering the national average. Still, the rate could fluctuate as the year progresses because of the demand for single-family homes.
2. Housing supply is consistent with the national average
The supply of housing in Baltimore is consistent with the national trend of increased demand for single-family homes. Presently, Baltimore only has one month worth of housing inventory available; this is a decline of 1.45% year over year. So housing is pretty scarce in Baltimore. As we all know, when demand is high and supply is low, prices will be on their way up.
3. Unemployment is high
As of April 2020, the unemployment rate in Baltimore peaked at a high of 9%. Since then, the unemployment rate has dropped to 5.8% as of February 2021. While high rates of unemployment pose some risk for investors, present rates should not cause great concern. The high rate of unemployment over the last year is more than likely attributable to the COVID-19 pandemic and the industries impacted by it.
Baltimore has a large restaurant and hospitality industry, and this was one of the hardest-hit sectors during the peak of the pandemic. This is reflected in the 9% unemployment rate.
As the city moves forward with its vaccination goals, the rate of unemployment will likely drop as the restaurant and hospitality industry recovers. If you’re an investor in this sector, watching industry trends will help to guide your next investment decision.
Baltimore housing demand indicators
Charts courtesy of Housing Tides, an EnergyLogic company.
To help guide you through the decision-making process, we will review some of the most recent data sets out of Baltimore.
The unemployment rate in Baltimore held pretty steady until 2020 and then the city saw a significant increase. As previously noted, the spike is attributable to the COVID-19 pandemic. As a result of the pandemic, many local establishments closed their doors, while leaders devised strategies to respond to the public health crisis. As the city moves into a post-vaccination world, the rate of unemployment is on the decline and below the national average of 6.2%.
While the unemployment rate has begun to decline, the rate in other sectors of the economy are on the rise.
Originally Appeared Here