The cardinal rule in investing has always been to buy low, sell high. When dealing with a constantly fluctuating market, remaining aware of this rule proves to be crucial to financial success. It is especially relevant to real estate where investors have to consider a multitude of factors, when quantifying potential profit margins. These factors are important to observe and are subject to trends in housing markets, economic conditions, and availability of properties. Currently, Washington D.C is experiencing record high property sale prices which have created an unattractive market for potential investors. Just roughly 40 miles to the northeast, however, is another metropolitan area that contains the ideal recipe that investors look for. Investing in Baltimore real estate is becoming a favorable option to those looking for a market that fits the criteria needed to make a successful investment.
The Problem with DC Real Estate? High Prices
It is no secret that housing in Washington D.C. is significantly pricier than in surrounding jurisdictions. The median sale price for a home in D.C. currently sits at over $600,000. For investors looking to make a profit off of their venture, this initial expenditure is already too high when paired with the projected increase in value of 2.6% year-over-year. Compare this to Baltimore’s median sale price of $210,000, trending up 3.2% year-over-year and the probability of a successful investment becomes clearer. When it comes to investing in a rental property, Baltimore boasts a strong renters market and a wide diversity of rental options. Rental rates in Baltimore have steadily increased at an average of 5% year-over-year while still providing affordable options for renters and landlords looking to invest.
Baltimore Properties: Low Initial Cost and Increasing Year-Over-Year Value
With a slightly higher year-over-year increase in value, investing in Baltimore real estate begins with a much more affordable price tag. The price range of homes in D.C is $10,000 at its lowest and $20 million at its highest. In Baltimore, the prices are significantly less, with the lowest being only $1,000 and the highest at $6 million. Over the past year, the average cost of Baltimore homes increased by 16.1% and more than 36% over the past 5 years. These consistent trends allow investors to make predictable profits on Baltimore homes while avoiding the overpriced initial risk commonly attached to D.C homes.
Baltimore’s Abundance of Affordable Properties
The D.C area does not possess anywhere near the amount of available real estate as in Baltimore. D.C has only 65 neighborhoods compared to the over 250 in Baltimore. When looking at homes currently for sale the vast difference continues. 2,891 homes are currently for sale in D.C as opposed to 4,066 homes in Baltimore. These numbers expose a vast potential for affordable investment opportunities in Baltimore and showcase the availability and abundance of properties. Baltimore has a 29% lower cost of living while possessing many of the same amenities that are found in D.C.
A bustling waterfront district, several historic areas, acclaimed universities and world-class medical services are all major components that make up the downtown area of Baltimore city. The city boasts a diverse spectrum of available job opportunities with stimulated growth from both state government and property investors. Baltimore also acts as a hub of transportation, conveniently placed just a 90-minute drive from D.C. The affordability of Baltimore housing becomes an attractive and realistic move for higher-income renters who can still easily commute to D.C. With the rise of D.C housing costs showing no sign of slowing down, more and more people will realize that there is a more financially reasonable satellite city in close proximity.
The difference between these two metropolitan areas from a real estate perspective is immense. The situation in the D.C housing market has deterred many would-be investors and will continue to as long as the high prices and limited availability continues. In the meantime, investing in Baltimore is increasingly becoming the better choice. Due to its affordability, a wide range of available properties, and foreseeable increase in value in the long term, Baltimore is the ideal location for your next property investment.
Baltimore is an excellent place to begin your investment journey or expand your portfolio into. Affordable properties offer excellent potential for return on investment. If you want to explore your options, reach out to the team at Ben Frederick Realty, Baltimore’s investment property experts!