2021 Baltimore City Real Estate Market Investing Forecast

Note: Our market forecast includes Baltimore City data and data from its surroundings, including Columbia and Towson, Maryland.

Baltimore is the most populous city in the state of Maryland and one of the nation’s oldest cities.

Since its inception on July 30, 1792, the “city of neighborhoods” (as the locals call it) has been full of “charm.” Fondly nicknamed Charm City for its many beautiful neighborhoods, captivating Inner Harbor, delicious seafood, and proximity to the nation’s capital, Baltimore is a great place for your next investing endeavor.

Many people come to Charm City to visit its harbor, see its historic sites, or watch professional sports (Baltimore is home of the Baltimore Ravens and the Baltimore Orioles), but Baltimore has more to offer than leisure activities. It’s home to the World Trade Center-Baltimore and the world-renowned Johns Hopkins Hospital.

Baltimore has so many charming qualities, and you may find your new real estate investment in the middle of Charm City. Let’s review the state of the local market and also look at some of its most popular neighborhoods to learn why this may be the next place for you to be.

The state of the market

In Baltimore, the COVID-19 pandemic made a long-lasting impact on many sectors of the local economy, while inadvertently enhancing some. A consequence of the COVID-19 pandemic was the boom in the real estate market.

In Baltimore, the real estate market is booming because of record-low interest rates. At present, the real estate market is a top performer. This has not only occurred in Baltimore but in cities all throughout the country.

In addition to low-interest rates as a driving force, many people may be on the hunt for space conducive to the “new normal.” For example:

  • Young professionals may be looking for a space with a home gym, home office, and green space for activities.
  • Families may be looking for homes that can accommodate children who attend school virtually and also offer a private office while the parents work remotely.
  • Older adults may be in the market for a multigenerational home.

Whatever the personal need, the demand for housing has hit Baltimore. Let’s look at some trends that are helping to drive the demand.

1. Rental vacancies are up

The rental vacancy rate in Baltimore is currently at 5.8%. That’s an increase of 0.2% year over year. On a national level, however, the vacancy rate is 6.8%. So, while the vacancy rate may be high for Baltimore, it’s not particularly alarming considering the national average. Still, the rate could fluctuate as the year progresses because of the demand for single-family homes.

2. Housing supply is consistent with the national average

The supply of housing in Baltimore is consistent with the national trend of increased demand for single-family homes. Presently, Baltimore only has one month worth of housing inventory available; this is a decline of 1.45% year over year. So housing is pretty scarce in Baltimore. As we all know, when demand is high and supply is low, prices will be on their way up.

3. Unemployment is high

As of April 2020, the unemployment rate in Baltimore peaked at a high of 9%. Since then, the unemployment rate has dropped to 5.8% as of February 2021. While high rates of unemployment pose some risk for investors, present rates should not cause great concern. The high rate of unemployment over the last year is more than likely attributable to the COVID-19 pandemic and the industries impacted by it.

Baltimore has a large restaurant and hospitality industry, and this was one of the hardest-hit sectors during the peak of the pandemic. This is reflected in the 9% unemployment rate.

As the city moves forward with its vaccination goals, the rate of unemployment will likely drop as the restaurant and hospitality industry recovers. If you’re an investor in this sector, watching industry trends will help to guide your next investment decision.

Baltimore housing demand indicators

Charts courtesy of Housing Tides, an EnergyLogic company.

To help guide you through the decision-making process, we will review some of the most recent data sets out of Baltimore.

Unemployment trends

The unemployment rate in Baltimore held pretty steady until 2020 and then the city saw a significant increase. As previously noted, the spike is attributable to the COVID-19 pandemic. As a result of the pandemic, many local establishments closed their doors, while leaders devised strategies to respond to the public health crisis. As the city moves into a post-vaccination world, the rate of unemployment is on the decline and below the national average of 6.2%.

While the unemployment rate has begun to decline, the rate in other sectors of the economy are on the rise.

Data Source: Housing Tides

Median housing price

The data set reveals that the median price of a home is up by 7.9% year over year. The rise in prices is deeply connected to the pandemic.

In Baltimore, the average price of a home is $315,000, slightly lower than the national average of $353,000. While the average home is slightly cheaper in Baltimore as compared to the national average, there is a 7.9% year-over-year increase in home prices. The dramatic increase is likely due to demand for housing while the city holds a one-month supply of houses.

Data Source: Housing Tides

Median rent price

Consistent with the increase in housing prices, rental prices in Baltimore are slowly increasing across the city. There has been a year-over-year increase in rental prices of 3.2%. As an investor, this may be an important trend to follow — with rental prices on the rise, you may be able to increase your profits at a quicker rate.


Data Source: Housing Tides

Baltimore housing supply indicators

Here is an overview of what the housing supply looks like in Baltimore.

Total housing supply

As previously mentioned, Baltimore’s housing supply is steadily declining. The city currently has one month worth of housing inventory available; this is a decline of 1.45% year over year. With such a small reserve of houses, those investing in the Baltimore market could find themselves involved in bidding wars. For investors, this is not the easiest market to infiltrate. You may find yourself paying above market rate for these properties.


Data Source: Housing Tides

Rental vacancies

The rental property market in Baltimore has been on an up-and-down swing. Baltimore saw an all-time low in rental vacancies in January 2020, with the rate of available vacancies at 4.7%. Just six months after its lowest point, the rate skyrocketed up to 9.6% in July 2020, and by February 2021, the rate dropped back down to 5.8%. The trends suggest that the rate is projected to slightly increase over the next year.

This is something for residential real estate investors to monitor over the next year. If rates stay steady, you may be able to ensure your rentals are always occupied, thereby always having a steady stream of rental income.

Data Source: Housing Tides

Architectural billings

The architectural billings index (ABI) is the leading economic indicator of demand for nonresidential construction activity. The indicator is also used to access the general state of the economy. Consistent with many other market trends, the ABI saw a drastic decline in 2020, with the lowest index rate during 2020 at 31.1. This was a dramatic plummet from an index rate of 52.2 in January 2020. The steep decline can be attributed to the COVID-19 pandemic, but it’s recovered as of March 2021, with an index rate of 55.8.


Data Source: Housing Tides

Construction indicators

Construction costs

Additionally, construction costs rose 7% from the previous year. This is definitely a market trend for investors to closely monitor because increased costs of production will lead to a decrease in revenue for the investor. Most investors incur many expenses when engaging in a construction project, including hiring construction workers.

While no data is available on the percentage of construction jobs available in the city, the national rate of unemployment among construction workers is 9.6%. These rates could lower dramatically if the Biden administration passes the American Jobs Plan. As part of the plan, the administration calls for a large investment in the nation’s infrastructure, and such a plan would lead to a greater demand for construction jobs.

In addition to the president’s plan, as more private citizens seek building permits to develop real estate, more construction jobs will also be available.


Data Source: Housing Tides

Single-family permits

As of March 2021, there were 530 single-family detached housing permits issued in Baltimore, up from 401 permits issued in January 2021. This means a number of privately owned companies have been given the authorization to construct single-family homes in Baltimore. With construction rates improving, there may be a number of new homes available, which would increase the housing stock. This increased housing stock could ultimately put an end to bidding wars in Baltimore.


Data Source: Housing Tides

Multi-unit permits (2-plus units)

As of March 2021, there were 195 multifamily building housing permits issued, down from 275 permits issued in January 2021. While the number of permits has declined from January to March, trends suggest this rate will continue to increase as the year progresses. This is consistent with the data that demand for housing in Baltimore is on the rise.

Data Source: Housing Tides

The Millionacres bottom line

Charm City has stood the test of time. Time and again, the city has proven that this is a place to not only survive, but to thrive, as evidenced by the recent housing market boom. A thriving market in a beautiful city — what more could an investor ask for?

While initial entry into the market may be tough, with the right amount of grit and determination, you could obtain prime real estate in one of the most charming neighborhoods.

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