REASONS NOT TO INVEST IN BALTIMORE

 REASONS NOT TO INVEST IN BALTIMORE

Top 5 Reasons Not to Invest in Baltimore

Located in the state of Maryland, the city of Baltimore is approximately 40 miles from the U.S. capital. Baltimore's real estate market contrasts two sides of the city. The first is made up of luxury towers and trendy new restaurants attracting wealthy residents. The other is a collection of poor, high-crime neighborhoods with many decrepit and abandoned houses. While the city may at first glance appeal to investors, here are our top 5 reasons not to invest in Baltimore.

Investing in Baltimore

1 – Baltimore: a city struggling to get back on its feet

Like many once-prosperous industrial cities, Baltimore suffered greatly in the second half of the 20th century, with factories closing and tens of thousands of good-paying jobs disappearing. Many people left the city to find work elsewhere or moved to the suburbs, leaving dozens of abandoned homes throughout the city. The foreclosure crisis that began in 2008 added even more empty homes to the toll. Today, Baltimore has about 17,000 vacant homes, a figure that has remained virtually unchanged since the depths of the Great Recession in 2010, according to city housing data provided to The Baltimore Sun.

2 – A declining population

The city lost 7,346 people, or 1.2% of its population, in the 12 months ending July 1, 2018, according to figures from the U.S. Census Bureau. This decline, which puts Baltimore's estimated population at 602,495 as of July 1, 2018, is the largest single-year loss the city has experienced since 2001. It also marks the fourth consecutive year in which the city's population has declined, beginning in 2015. The graph below clearly illustrates this population decline, which is an important factor to consider for those considering investing in Baltimore.

decrease population Baltimore

Read also: The revival of Cleveland's East Side

3- A decrease in household income

The city's woes have caused the median household income to fall to just $46,641 from 2013 to 2017, according to census data. That's 31.6% below the national median of $61,372 for a family of two adults and two children (though well above the poverty line of $25,750). Still, the unemployment rate is decent, standing at 4.6% as of November 2019 (the national average is 3.3%).

4- A high crime rate

As mentioned earlier, there are huge disparities in Baltimore.

In 2018, there were 47 homicides in the Sandtown Winchester neighborhood, according to the Baltimore Sun. Citywide, more than 300 people were murdered in Baltimore last year, a rate of 51 homicides per 100,000 residents. It's one of the city's records. "Neighborhood conditions in Baltimore are the result of racism," said Nneka N'namdi, founder and leader of Fight Blight Bmore, a group that combats the scourge in the city through information and documentation. In the poorer minority communities of East and West Baltimore, she said, there are "a disproportionate number of alcohol-related incidents, concentrations of lead poisoning cases, and bank robberies."

5- A declining real estate market

The average home price in the most affluent communities can be more than 10 times higher than in struggling communities. This is a city, after all, where it's not uncommon for a property to be listed for less than $2,000 in the poorest sections. This has pushed Baltimore's median list price down to $181,550, about 41% below the national median of $310,000 as of April 1, 2019, according to data from realtor.com®. Additionally, the city has more than 17,000 vacant homes. Adding to this is the decline in home sales. Indeed, for example, home sales in Carroll County were down 22%—the largest decline in the state of Maryland—in February 2019 compared to the same period last year. The decline appears to be a continuation of a trend across Maryland. This is the sixth consecutive month for the state and most counties, including Baltimore, to see a decline in real estate closings from 2017 to 2018. The declines range from 0.3% in Wicomico County to 11.1% in Caroline County. Carroll falls in the middle with a 4.2% decline over this period.