Banks and investors own, plan to foreclose or auction, thousands of houses in Baltimore. Most are decrepit, but many are valued up to nearly a million dollars. But if you don’t have the cash, do you really think a mortgage company will finance your purchase here?
In one big city after another depressed property prices have been windfalls for slum landlords. They buy hundreds, sometimes a thousand or more houses at huge discounts, then rent them to the poor at a price far above fair value. The game then begins to see if the properties deteriorate by neglect of owner or renter before the investor gets back the purchase price plus profits.
Slum landlords have an advantage. They don’t necessarily apply at the local bank for money. With huge streams of cash from slum properties, investors are quick to back them – happy for double digit returns and blind to the misery of the renters. The money trail goes all the way to Wall Street, where a depressed real estate market can mean big money for another mansion.
There is something called a “foreclosure discount”, which is the difference in sale price between what a house would normally sell for, and what is sells for in foreclosure. In Baltimore this discount is about 57%, which means a $100,000 house that goes to foreclosure will sell for $57,000.
There are now 3,866 properties in Baltimore that have entered some stage of foreclosure – default, auction or bank-owned. There are only 3,887 homes that are for sale through normal channels. You chances of your home selling are 50/50 regular sale or foreclosure.
In the past six months only 6,902 homes have been sold in the city. This interactive map from RealtyTrac and following statistics shows the extent of the current problem by pinpointing homes for sale are facing foreclosure. Baltimore Housing Disaster (Zoom out to see more listings, and for auctions, select from list on top strip.)
In March, the number of properties that received a foreclosure filing in Baltimore, MD was 23% lower than the previous month and 6% higher than the same time last year.
Home sales for February 2015 were down 53% compared with the previous month, and down 52% compared with a year ago. The median sales price of a non-distressed home was $100,000. The median sales price of a foreclosure home was $43,350, or 57% lower than non-distressed home sales.
Unfortunately, the national picture is not much more encouraging, as investors continue to drive down prices, buy cheap and rent high.
There are currently 842,773 properties in U.S. that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 1,182,811.
In March, the number of properties that received a foreclosure filing in U.S. was 20% higher than the previous month and 4% higher than the same time last year.
Home sales for February 2015 were down 31% compared with the previous month, and down 43% compared with a year ago. The median sales price of a non-distressed home was $190,000. The median sales price of a foreclosure home was $123,100, or 35% lower than non-distressed home sales.
While a Republican President might have managed the “Great Recession” worse – by giving even more money to banks from taxpayers – the team assembled by President Barack Obama refused to coerce banks into refinancing homeowners without conditions at lower rates, and in a period of poor-paying jobs, many American families never recovered financially and lost their homes. These same victims now pay high rents to the same Wall Street wannabes who created the mess in the first place.
There are still families paying twice the normal interest rate on their mortgages for houses that have lost half their value. Quite a cause for unrest, not just in Baltimore, but nationally.
The issue may not be race in our country, but our country’s race to the bottom.