America’s real-estate boom has driven up home prices in some of the country’s smartest zip codes, and now it’s arriving in some of American’s meanest neighborhoods.
A case in point is Baltimore, Md.
This historic eastern city, known for its rich ethnic and maritime heritage, has been on a downward spiral for the last half decade, as high crime and low employment has forced out the middle class. But the exodus has recently ebbed, and last year the median home price in the city spiked 20 percent compared with the nationwide home price rise of 8 percent.
The city’s renaissance has lured real-estate investors like Jason Dennis, and hundreds of others, to Baltimore’s auction houses, where they are riding the boom, bidding on rows of row houses in the hopes of flipping them for a fast buck.
“We’ve got to be careful because a lot of investors are coming in and overpaying,” Dennis said recently in a standing room only crowd at Alex Cooper Auctioneers, a Baltimore auction house specializing in residential real estate auctions. “But that’s the game, and we’re going to be in it as long as we can.”
License plates on cars in the auction house’s parking lot are from states such as New York, Pennsylvania and Washington, D.C., an indication of just how popular Baltimore real estate has become. The city is being billed as one of the last great cities where you can still get a good deal in real estate. But that definition is changing fast.
“A lot of these properties are in up-and-coming neighborhoods, excellent locations,” said Paul Cooper, vice president of Alex Cooper Auctioneers. “There is a buying frenzy going on; welcome to the tech boom of 2005.”
But are the properties worth the price? Dickey Gaines, a real-estate investor, thinks so. He bought a property in the auction house for nearly three times the opening bid of $30,000. “Anything under 100 is great,” he said. “Once it's re-habbed it will sell for 200.”
Kelvin York, another investor, is similarly optimistic. He put down $300,000 for a property that needs a lot of work. “Well, hopefully the market will continue to rise, as it has been, and hopefully things will work out well for me,” he said.
Bargains in Baltimore, it seems, aren’t what they used to be.