Monday, November 5, 2007

What Does the Mortgage Crisis Hold for Baltimore?

The United States has dug itself into a big hole. Buying overpriced and inflated homes they can't afford. From 2002-2005 the prices of homes have sky rocketed due in no small part to record low interest rates and new shaky interest only mortgages. Buyers now more than ever have to depend on the assumption that their homes value will increase. Well guess what happens when you assume. Now that home prices aren't going up and since so many people (nearly 1/3 of all new mortgages are interest only) they haven't paid down the actual price of their home.

Baltimore is no different. During the years in question 2002-2005 many Baltimore neighborhoods gave gentrified. Canton, Pigtown, Reservoir Hill, and Patterson Park have now seen an alarming number of foreclosures. New development, whether here or in neighboring communities have also played a part in the inflation and therefore the foreclosures. In the not so distant past, land and the homes that sit on them were dirt cheap, no pun intended. The practice of flipping one or homes has become common practice. Flippers have often lost it all because they need to get rid of the house or houses to save their skin. Baltimore's up and comers are now in Jeopardy for the time being.
Charles Village for one has scaled back numerous development plans including turning $700,000 condos into rentals. The Westport development may have to go on the back burner for a while too.Now don't fret too much, it's not all bad. Baltimore still has a pent up demand for new quality afdordable housing.Baltimore can and already has started to look else where. This is a great oppurtunity to show case neighborhoods that have, for too long gone under the radar. Some such neighborhoods and developments include: Athena Square in Greektown, The new Uplands, Orchard Ridge (Freedom Village/Claremont), Station North, The new O'Donnell Heights, The new Park Heights, Penn North, McElderry Park, and Middle East. All of these neighborhoods either are or will be offering new housing at relatively affordable prices. New housing is just the tip of the iceberg when it comes to affordable housing. Neighborhoods around the harbor owe their sucess almost exclusively to homesteading. The option of homesteading can make or break an older neighborhood trying to rebound.
More good news, when the housing market turns around again, development in Baltimore's glitzy neighborhoods will continue where it left off while at the same time other neighborhoods have turned during the mortgage crisis. In the long term it's a win win for Baltimore, it may be hard to picture but just think of the year 2010, it will have panned out just like I said.

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