I went and checked out some open houses this last Sunday to try to get some perspective on the Baltimore housing market. I explored my current neighborhood — a place called Locust Point (where Fort McHenry is… you know, War of 1812… France Scott Key… Star Spangled Banner??? No? Well, me neither before I moved here!). Anyway, like much of the country, Baltimore’s housing jumped leaps and bounds over the last five years. Some of that is correcting itself as prices drop and inventory increases. Here’s an example of a place where the owner is getting caught in the cross fire.

A little history. Baltimore is full of old row homes, not uncommonly 100 years old. Many people made fortunes during the housing boom by buying up these old row homes, fixing them up, and selling them at a handsome profit. One unique feature due to the old age of row homes is the fact that they are usually only about 14 ft wide! If you haven’t seen one before, this might sound ridiculous. And it kinda is! But 100 years ago, that’s how things were (my Dad — an architect — thinks that was probably the standard length of wood lumber back then, hence is became the standard). And while rehabbing a home can make it beautiful inside, you can never widen the home unless you buy the adjacent property and start from scratch. With that in mind…

One owner bought this house at the end of ‘05 for $230k. She proceeded to rehab the home for about $200k (according to her). She thought the home would easily be worth $550k now. Unfortunately for her, the bubble is bursting, and she’s now listed the place for $380k. Note, this is already $50k under the money she’s put in it! But the house has been on the market for a good year now, and according to her, she’s only gotten a few low ball offers.

Instead of telling you I think $380k is over-priced, let me show you what everyone else looking for homes in Locust Point is seeing. Just up the street, welcome to beautiful Harbour Pointe! Here’s a brand new community of town homes starting at $400k. For $20k more than the Lowman St property, you get the following:

  • 20 ft wide home instead of 14 ft wide: As someone very familiar with town homes and row homes, this difference is HUGE. The rooms feel like rooms, and not shoe boxes! Not only will the square footage be much higher, but the aspect ratios of the rooms are better too.
  • 2 car garage: We’re talking about city living here, people. Parking is huge. Two spots is even bigger. Two covered spots with extra storage is…! You get the picture.
  • Brand New: Did I mention it’s brand new? While the Lowman home is a full rehab, you never quite know what’s still 100 years old in your “full” rehab!

I will concede that the Lowman property was redone absolutely beautifully. The material and design is more luxurious than Harbour Pointe. However, I question if anyone wants to spend that much money on that nice a place and live in 11 ft wide rooms (14 ft is outside the walls). And finally, the owner is not a real flipper. She had every intention to live in this place, but her job changed. This effectively makes her situation the same as that of a flipper, though unintentionally so.

So what is our owner to do? She’s losing $6k a month in payments, but every dollar she drops that price from $380k is another dollar lost on top of $50k already. Tough situation. Anyway, looking for a home myself, I’ll keep my eyes open to see what happens.