Real Estate Investing: The State of Things in D.C., Baltimore

by Jeff Levin, Specialty Lending Group

R eal estate investors in the Washington, D.C., and Balti- more metro areas may be finding it more challenging to earn a positive return on their investments. But, opportunities still exist- particular- ly for investors willing and able to do their due diligence. D.C. is the nation’s sixth-largest metro area. Its unemployment rate throughout 2019 was below the national average, and average sala- ries in D.C. are some of the highest in the country. The economic picture isn’t as strong in Baltimore, although that metro area benefits from its prox- imity to D.C. Thousands of Balti- more residents commute to work in D.C.. As a result, Baltimore’s unemployment rate is on par with the country’s, yet importantly, workers in the Baltimore metro area tend to earn more than the national average. A strong post-recession econ- omy in both areas is making it more difficult for investors to find good deals. There is both a lack of available properties for sale and in-

creasing home prices.. The arrival of Amazon’s second headquarters, Amazon HQ2, in the D.C. suburb of Arlington, Va., is adding pressure to that area’s ’s real estate market. Redfin estimates that home prices in Arlington County have increased 33 percent because of HQ2. With that said, there are locations in both metros that offer opportu- nities for investors, especially in Baltimore. One way to find good deals is to track foreclosures. These properties can often be bought for less-than-market rates and sold after renovation for a profit. In Q4 2019, Baltimore County was second in the nation in zom- bie foreclosures. One in every 1,645 properties in the county is a foreclosure. The communities with the most foreclosures are Gwynn Oak, Randallstown, Kingsville, and Dundalk. Zeroing in on Baltimore City, one in every 601 properties is a foreclosure. Down the 1-95 corridor in D.C., the ratio of foreclosures is one in every 4,190 properties, but the District’s robust market offers

possibilities for real estate inves- tors, they are just harder to find. In Q4 2019, D.C. had the highest rate of zombie foreclosures in the country. Most foreclosures fall on the District’s eastern side, near Prince George’s County, Md. That county also presents investing opportunities. One in every 776 properties in Prince George’s County is a fore- closure. Demand has pushed home prices in the county higher, but homes are still selling for about $270,000 less than they are across the Potomac River in Arlington County, Va. Real estate investing in the Wash- ington, D.C., and Baltimore metro areas is a double-edged sword. A strong economy makes both markets attractive to investors while also making it more challenging to earn a profit. Foreclosures, though, pres- ent an opportunity for investors. By focusing on specific locations within both metros and staying attuned to their symbiotic relationship, inves- tors can find solid investments for their portfolios. •


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