September 2019

Metro Baltimore’s housing market conditions are strong and only slightly off the 10-year highs for single-family and multifamily construction. Demand conditions (job growth and sales) are strong while supply conditions (permits and inventory) are only slightly below 2018 levels. Baltimore’s housing affordability improved due to low mortgage rates and slowing home value appreciation.

Job Growth

Strong: Nearly 16K jobs were added from July 2018 to July 2019, a modest 1.1% annual growth rate with a 3.8% unemployment rate.  For your investment, it’s important to understand the type and location of job growth. Baltimore enjoys a diversified employment base and employment growth will occur in specific submarkets and sectors.

Permit Growth

Moderate: Single-family (SF) and multifamily (MF) permits are declining YOY, but activity is strong relative to 2014-2017 period.  Over the last 12 months, 4,931 SF permits were issued, a 9% drop from to same period last year and similar to the five-year average of 4,866 permits. Over the same period, 3,447 MF permits were issued, a huge 25% increase from the previous year’s low number, and slightly higher than the five-year average of 3,049 MF permits.

Employment-to-Permit (E/P) Ratio

Moderate: A 1.5 E/P ratio comes close to the long-term ratio of 1.3 suggesting that housing supply may be matching housing demand and price appreciation may slow.  Of the 8,378 permits issued, 59% are SF while 41% are MF.

Housing Inventory

Weak: Existing home listing inventory remains low at 2.6 months, but higher compared to 2.0 months for July 2018. Low inventory and low housing turnover is a major issue to the housing industry. You will want to understand inventory for your specific submarkets and price band when evaluating your real estate opportunity.

Existing Home Sales and Prices

Strong: Median sales prices increased to a 10-year high of $250K for last 12 months compared to $247K for 2018. Existing home sales volume are near 10-year peak, but dropped slightly to 48K sales over past 12 months compared to 49K sales for the full year 2018.  For your specific investment, it’s important to match up housing supply and demand at the submarket level to better understand market potential.

Home Value Appreciation

Strong: After seeing declining home values in 2014-2015, Metro Baltimore values have increased for 16 quarters. Appreciation peaked at 7.1% annual increase for 1Q 2018 and has slowed to 3.9% annual increase for 2Q 2019.  Baltimore’s trends following a similar national slowdown.