Baltimore is a seaport city on the US East Coast, located 40 miles northeast of Washington, D.C. With an estimated population of 612,000 people, Baltimore is the largest city in the state of Maryland. The Baltimore metropolitan area is home to nearly 3 million people, making it the 21st largest metro area in the US. The city’s fairly large population combined with the fact that 54.5% of the residents (according to NeighborhoodScout) live in rental properties is a good indicator for those considering investing in the Baltimore real estate market. This means long-term rental properties can make for a profitable real estate investment in the city.
Baltimore is centrally located among major East Coast cities, with easy access via air, rail, and sea. This makes the city highly attractive to both residents and businesses. The city enjoys a highly diversified economy based on a range of different industries that present further growth opportunities. The education industry is one of the most important contributors to Baltimore’s economy. A total of 12 colleges and universities are located in the city, including the renowned Johns Hopkins University. Baltimore is also a center of medicine and healthcare. Home to two pioneering teaching hospitals, the Johns Hopkins Hospital and the University Hospital at the University of Maryland, the city is regarded as a national headquarters for advanced medical treatment and research. Several federal agencies, including the Federal Social Security Administration, are based in the Baltimore area and are some of the largest employers in the city. The port of Baltimore is the largest port in the Mid-Atlantic and is the closest to major Midwestern markets compared to other major seaports on the East Coast.
Baltimore is also a hot tourist destination on the East Coast, with much of the tourism centered around the city’s Inner Harbor and the National Aquarium, which are the top tourist attractions in Maryland. Other major industries include manufacturing, retail trade, transportation and warehousing, construction, food processing, finance, and technology. The city’s expanding economy and workforce are good indicators for those considering buying an investment property in the Baltimore housing market.
The Baltimore real estate market is one of the most affordable in the country. Investment properties are reasonably priced, which is a good factor for investors who do not have access to large sums of money. The Baltimore real estate market was listed among the most important U.S. Markets to Watch by PWC in its annual Emerging Trends in Real Estate: United States and Canada 2019 report. However, according to the report, there is a shortage in real estate properties in the face of very high demand.
|Facts and Market Trends in Baltimore|
|Homes For Sale1,390|
|Traditional Vacancy rate6.40%|
|Airbnb Occupancy Rate52.09%|
|Median Rent Price$1,452|
|Median Days on Market78|
|Price to Rent Ratio14.3|
|Average Cap Rate|
|Average Rental Income|
|Median Household Income$47,131|
|RENTAL STRATEGY||STUDIOS||1 ROOM||2 ROOMS||3 ROOMS||4 ROOMS|
The median home value in the Baltimore housing market currently stands at $113,100, according to Zillow. Real estate appreciation in the Baltimore real estate market is tangible as value has risen by 78.97% since Q1 of 2000, which is an average annual home appreciation rate of 3.07%, according to NeighborhoodScout.
Zillow reports that Baltimore property values have declined 2.8% over the past year and are predicted to fall 6.1% within the next year. This can be a good sign for beginner real estate investors who usually have less access to cash and who plan on implementing the buy and hold strategy, as historically, this market is known to appreciate over time.
The Baltimore real estate market is currently a very hot seller’s market as there are way more buyers than available houses to buy.
The popularity of short-term rentals has surged in Baltimore in recent years. The city had the highest number of Airbnb guests in the state of Maryland in 2018, at 107,700 individuals, earning hosts a total of $14.9 million. This accounted for about 26% of Maryland’s total Airbnb income.
In December 2018, the city of Baltimore passed a legislation establishing a comprehensive framework to regulate short-term rentals. Airbnb Baltimore hosts can list only their primary residence, meaning that they must be on site during the guests’ visit. Renting out other properties besides a primary home to guests is banned. However, individuals who have been operating a short-term rental prior to December 31, 2018 are allowed to continue to operate one additional short-term rental unit.
There are a few other Airbnb regulations in the city. Airbnb hosts must obtain a license from the city and renew it bi-annually at a fee of $200. They must also register with the State Comptroller for the collection of state taxes. A 9.5% city hotel tax is also imposed on all Airbnb stays. While the Airbnb platform collects the city lodging taxes on behalf of its operators in some Maryland cities, it does not collect them on Baltimore bookings. This means that Airbnb Baltimore hosts are in charge of registering with tax authorities, collecting taxes from guests, and remitting them to the city and state.
There are other operational requirements Baltimore requires of short-term rental hosts. Airbnb hosts must comply with city building, fire, and other codes, keep records of all rentals, designate an emergency contact that lives in the area and provide contact information for this person to guests.
Failure to comply with any of the rules may result in licenses being suspended or revoked, and/or fines up to $500.