An article in the May 29th edition of the Baltimore SUN updates local real estate devotees to a danger that I first blogged about nearly two years ago, i.e., that the Baltimore metro area was in line for WAAAAAY too many condo projects to be healthy for this marketplace. The SUN article focuses on two developments in particular as having a large number of cancelled contracts, or difficulty in settling: The ultra-high-end Ritz Carlton on the Inner Harbor and 414 Water Street just a few blocks from the water in downtown.
Fortunately, since my original blog post, several condo projects have been postponed, cancelled, or converted into rental developments with a higher retail component than originally conceived. But we have more on the drawing board, such as the other ultra-high-end Four Seasons slated to go up in Harbor East.
I hate to parrot ‘common wisdom,’ because it usually smells of a lack of imagination, but when it comes to the Baltimore condo market there is a basic truth behind it. Baltimore is not, has never been, and may not be for quite some time… a condo town. Our housing market is *still* the most affordable of any northeastern city. Condominiums will still be attractive to the empty nester market (probably the main draw of the aforementioned ultra-high-end developments) for some time to come. But in other cities one of the main draws to condos is as an entry point to home ownership for younger buyers who can’t afford either a single family detached or townhouse dwelling. Baltimore is one of the few cities I’ve known of where there have been condominiums on the market with asking prices higher than the surrounding housing stock. Talk about being ‘upside down’ in a home… and then paying condo fees on top of it!
Real estate developers sometimes have wacky ideas about what makes sense. This is a prime… or should I say ‘sub-prime’ … example of it. Condo over-developments have done great damage to the health of the housing markets in many cities, and if City Hall doesn’t take some action to cut down on speculative development here, it could delay the recovery of our own.