Have you decided where to invest in real estate in 2020? If you are looking for a cheap location with high potential for return on investment, you should consider Baltimore. What makes Charm City so attractive for property investments in the coming year? Let’s have a look at the Baltimore real estate market trends for 2020.
Baltimore Real Estate Market Forecast in 2020
The best way to start out our Baltimore real estate market analysis for the coming year is to look at the numbers. We’ve used Mashvisor’s rental property calculator to compute all the most important figures for the performance of Baltimore investment properties in 2020. Our tool uses nationwide real estate data and rental comps from the local market as well as predictive analytics algorithms to forecast the most important real estate trends expected in Baltimore in 2020:
Baltimore Real Estate Market 2020 Figures
- Median Property Price: $248,500
- Price per Square Foot: $225
- Real Estate Listings: 3,292
- Average Days on Market: 86
- Price to Rent Ratio: 14
- Traditional Rental Listings: 8,589
- Traditional Rental Income: $1,530
- Traditional Cash on Cash Return: 2.8%
- Airbnb Rental Listings: 10,481
- Airbnb Rental Income: $2,000
- Airbnb Cash on Cash Return: 4.1%
- Airbnb Occupancy Rate: 53.0%
- Walk Score: 55
Baltimore Housing Market Trends for 2020
Now that you’ve had a quick overview of the performance of Baltimore investment properties for the coming year, it’s time to dig deeper into these numbers and see what exactly they mean for experienced and new investors. Following are the most important trends expected in the Baltimore market in 2020, based on our own calculations and review of other real estate experts’ forecasts.
1. Affordability Is Driving the Baltimore Housing Market
One of the most important predictions for the overall US housing market 2020 is that the lack of affordability will become a major issue in many major cities. This is especially the case in New York, Los Angeles, San Francisco, Boston, San Diego, and other overpriced markets on the verge of a housing bubble. However, property prices are not going to be a problem in Baltimore. The median price of Baltimore homes for sale is expected to be only 7.6% above the national median home price, which is much below what other cities offer. The low listing prices make Charm City particularly attractive for out of state real estate investors who are used to seeing much higher home values.
2. Appreciation Is Slow
Since the beginning of 2000, real estate appreciation has amounted to 81% in Baltimore, according to NeighborhoodScout. This is considerably below the state level and national level average rise in property prices. Moreover, according to Zillow, the values of Baltimore houses for sale will drop by 0.2% in the next 12 months, while the national median property price is expected to appreciate by 2.8%. This means that long term return on investment in the Baltimore real estate market lags behind compared to other top locations for real estate investing. However, it also means that prices will remain affordable, at least in the next few years.
Moreover, Baltimore real estate investors can look for foreclosures or other below market value properties for sale on which appreciation can be easily forced. When natural appreciation is slow, investors can still take advantage of forced appreciation with cost-efficient improvements on their income properties.
3. Baltimore Will Start 2020 as a Seller’s Market
The Baltimore housing market is and will continue to be a warm – but not hot – seller’s market. The number of property buyers exceeds the number of homes for sale in Baltimore, MD, which means that demand will remain high. Not much real estate development and redevelopment activity is forecast for Baltimore for 2020. Nevertheless, the property price trend indicates that Baltimore might be heading for a balanced market in the next few months.
4. Rental Demand Will Be Strong
More than half (55%) of Baltimore’s residents rent rather than own a home, based on data from NeighborhoodScout. This means that there will be over 331,000 tenants in the Baltimore real estate market in 2020. Thus, investing in a traditional Baltimore rental property is a smart move in the coming year to cater to the needs of some of these renters.
If you prefer to invest in Airbnb rentals, demand will be strong too. Baltimore will welcome more than 26 million visitors in 2020. Charm City is one of the hottest and most popular tourist destinations on the East Coast. Tourism is a leading industry in the city which has the highest concentration of public statues and monuments per capita as well as some of the earliest National Register Historic Districts nationwide. All these factors will lead to a high Baltimore Airbnb occupancy rate in 2020, which is one of the prerequisites for a good rate of return with this rental strategy.
5. Airbnb Baltimore Will Be Legal for Primary Residences Only
Since we’ve talked about Airbnb Baltimore rental properties above, we have to look at the short term rental regulations in the city. The City of Baltimore joined the numerous US major markets which decided to impose strict regulations on vacation rentals within their boundaries. In December 2018, the city introduced new Airbnb laws according to which only primary residences can be rented out on a short term basis. This means that buying an investment property for the sole purpose of renting it out on Airbnb or another home-sharing platform is no longer an option in the Baltimore real estate market. What investors can do instead is to go for house hacking. Those in need of a home can buy a duplex, triplex, or another small multi family home in order to live in one of the housing units and rent out the rest as short term rental properties.
Furthermore, the new Airbnb Baltimore regulations introduced some other requirements. For example, Airbnb hosts need to obtain a license from the city which is to be renewed biannually. Moreover, owners of Baltimore short term rentals have to pay lodging tax both to the city and the state. Certain minimum expectations were also imposed in terms of compliance with the city building, fire, and other codes.
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6. State Landlord-Tenant Legislation Will Favor Tenants
As long term rental properties emerge as the optimal rental strategy in the Baltimore real estate market, it is important to have a look at the trends in this regard. Maryland is and will remain a rather tenant-friendly state. However, this does not mean that the rights of landlords are not protected. It just means that new and out of state real estate investors should study the local legislation in this regard carefully to make sure that they meet all expectations and follow all rules.
7. Maryland Real Estate Taxes Will Be Relatively High
The effective property tax rate in Maryland is 1.10%, which is just above the national average rate of 1.08%. Nonetheless, the income from Baltimore rental properties is high enough compared to property prices and property taxes to bring a good return on investment, for both rental strategies. In order to buy profitable income properties, Baltimore, MD real estate investors should conduct diligent and detailed investment property analysis which takes into consideration all startup costs and recurring expenses including property taxes. This is the only way to ensure investing in positive cash flow properties and good rate of return in terms of both cash on cash return and cap rate.
8. Baltimore Income Properties for Sale Will Yield High Return on Investment
The Baltimore real estate market analysis 2020 performed by Mashvisor’s investment property calculator shows that investing in rental properties in Charm City will be a very profitable strategy. The city average CoC return for traditional and Airbnb properties looks low compared to the recommended good cash on cash return of 8% and above. However, this is only the city average, while the best Baltimore neighborhoods for real estate investments offer a much higher rate of return on a rental property.
In addition, national real estate market analysis reveals that these are some of the highest city-level profits which investors can expect in the US housing market in 2020.
9. Traditional Rentals Will Be the Optimal Rental Strategy
As you’ve seen from the figures above, Airbnb Baltimore rental properties make more money than long term rentals. However, short term rentals cannot function as an independent real estate investing strategy in the Baltimore housing market in 2020. They are not an option for out of state investors or those who already have a home and want to buy a pure investment property.
As long as you conduct careful investment property analysis, you are guaranteed to find a top-performing traditional rental property for sale in Baltimore which matches your budget and other criteria. Just use Mashvisor’s must-have real estate investment tools for 2020.
Top Neighborhoods in Baltimore for Investing in Rental Properties in 2020
As you probably already know, location in real estate goes beyond the city. While the Baltimore real estate market as a whole is one of the best places to invest in real estate in 2020, new investors still need to know which areas to focus on. With nearly 3,300 homes for sale in Baltimore, MD, you need to know where to start; otherwise, you’ll need months to conduct all required analysis and find a profitable income property.
To help out beginner real estate investors, we’ve put together a list of the best Baltimore neighborhoods for buying investment properties in 2020. The computations and forecasts, once again, have been provided by Mashvisor’s rental property calculator. They are based on real estate comps from each area which are used to perform reliable neighborhood analysis.
#1. Bridgeview – Greenlawn
- Median Property Price: $57,000
- Average Price per Square Foot: $47
- Traditional Rental Income: $1,190
- Traditional Cash on Cash Return: 11.3%
- Airbnb Rental Income: $1,840
- Airbnb Cash on Cash Return: 15.6%
- Airbnb Occupancy Rate: 52.0%
- Walk Score: 57
#2. Mill Hill
- Median Property Price: $55,700
- Average Price per Square Foot: $60
- Traditional Rental Income: $960
- Traditional Cash on Cash Return: 10.6%
- Airbnb Rental Income: $2,420
- Airbnb Cash on Cash Return: 37.3%
- Airbnb Occupancy Rate: 42.0%
- Walk Score: 74
#3. Harlem Park
- Median Property Price: $109,800
- Average Price per Square Foot: NA
- Traditional Rental Income: $1,730
- Traditional Cash on Cash Return: 10.0%
- Airbnb Rental Income: $3,400
- Airbnb Cash on Cash Return: 21.5%
- Airbnb Occupancy Rate: 51.0%
- Walk Score: 80
#4. Evergreen Lawn
- Median Property Price: $96,800
- Average Price per Square Foot: $49
- Traditional Rental Income: $1,520
- Traditional Cash on Cash Return: 8.7%
- Airbnb Rental Income: $2,580
- Airbnb Cash on Cash Return: 26.7%
- Airbnb Occupancy Rate: 39.0%
- Walk Score: 72
#5. New Southwest – Mount Clare
- Median Property Price: $61,800
- Average Price per Square Foot: $63
- Traditional Rental Income: $1,100
- Traditional Cash on Cash Return: 5.8%
- Airbnb Rental Income: $2,600
- Airbnb Cash on Cash Return: 26.2%
- Airbnb Occupancy Rate: 50.0%
- Walk Score: 90
#6. Booth – Boyd
- Median Property Price: $135,000
- Average Price per Square Foot: $88
- Traditional Rental Income: $1,400
- Traditional Cash on Cash Return: 7.4%
- Airbnb Rental Income: $2,200
- Airbnb Cash on Cash Return: 14.9%
- Airbnb Occupancy Rate: 51.0%
- Walk Score: 88
#7. Coldstream Homestead Montebello
- Median Property Price: $82,900
- Average Price per Square Foot: $70
- Traditional Rental Income: $970
- Traditional Cash on Cash Return: 6.2%
- Airbnb Rental Income: $1,760
- Airbnb Cash on Cash Return: 14.8%
- Airbnb Occupancy Rate: 51.0%
- Walk Score: 65
#8. Midtown – Edmondson
- Median Property Price: $72,200
- Average Price per Square Foot: $55
- Traditional Rental Income: $980
- Traditional Cash on Cash Return: 5.9%
- Airbnb Rental Income: $2,160
- Airbnb Cash on Cash Return: 16.3%
- Airbnb Occupancy Rate: 50.0%
- Walk Score: 67
#9. Union Square
- Median Property Price: $162,600
- Average Price per Square Foot: $128,
- Traditional Rental Income: $1,310
- Traditional Cash on Cash Return: 5.4%
- Airbnb Rental Income: $3,350
- Airbnb Cash on Cash Return: 21.2%
- Airbnb Occupancy Rate: 50.0%
- Walk Score: 92
#10. Middle Branch – Reedbird Parks
- Median Property Price: $75,000
- Average Price per Square Foot: $83
- Traditional Rental Income: $860
- Traditional Cash on Cash Return: 4.4%
- Airbnb Rental Income: $2,440
- Airbnb Cash on Cash Return: 19.9%
- Airbnb Occupancy Rate: 62.0%
- Walk Score: 67
Now you know the most important Baltimore real estate market trends for 2020. Moreover, you are familiar with the top neighborhoods for investing in rental properties in Charm City. All you need to do now is to sign up for Mashvisor to start analyzing real estate deals right away.