Reservoir run dry
July 22, 2008
The Washington Post led its business section today with a front-page story about the foreclosure crisis and how it affects gentrifying urban neighborhoods like Baltimore’s Reservoir Hill. The article centers on a debate in Congress over $4 billion in emergency aid to bail out homeowners such as those in the central Baltimore neighborhood, whose investments presumably would have changed the area for the better.
Baltimore Housing commissioner Paul Graziano is quoted criticizing the current presidential administration, saying, “They don’t understand the market dynamics here at all…We can let the market adjust and see the last seven or eight years of investment go down the tubes. Or we can intervene now to reclaim this inventory and protect these neighborhoods.”
While it’s not really surprising to see a housing commissioner — and in particular, an O’Malley appointee — take such an interventionist stance, it’s interesting to see the focus being put on Reservoir Hill. The Post goes as far as to call the neighborhood “Graziano’s biggest disappointment,” stating that the city aggressive bought up properties in the neighborhood and sold them quite purposefully to developers they knew would rehab them properly, and that this plan resulted in a doubling of average home prices between 2001 and 2006, from $70,900 to $145,000.
It’s interesting particularly because the Post doesn’t cite the source of its numbers, and when you check them against the Live Baltimore Home Center’s neighborhood stats, which are usually the most reliable source of neighborhood home sales info (their numbers come from city tax records, and are sorted by neighborhood by a private research company) you find that Reservoir Hill’s average home prices actually rose quite a bit more dramatically, from $72,500 to $226,567 between 2001 and 2006, and that in 2007, the average price, based on 62 home sales, dropped only 3 percent to $220,278—not quite the crash that the Post article insinuates. City Census Tract 72, a few acres located right smack in the middle of Reservoir Hill, still has an average home value of $257,559, according to Realtytrac, or even higher than the neighborhood average.
The article, does, however, cite some very current and very tangible examples of the area’s fall from city-championed paragon of redevelopment potential to stagnant neighborhood, sinking slowly back into blight and disrepair. Multi-family units that were under renovation have been stalled. Houses have simply stopped moving on certain streets, signaling a domino effect of one abandoned rehab property ruining a whole block, then another, etc., until all the investment there turns out to be for naught. Nonprofit developers intent on building affordable housing have replaced private investors looking to turn vacant properties into a quick profit.
Similar problems have plagued some commercial districts, like the Station North arts district and Tony Cheng’s nearby Chinatown plan, and residential success stories in Belair-Edison, Remington, and Pigtown have certainly been reassessed in the last two years. What other Baltimore neighborhoods have seen their redevelopment efforts derailed by the subprime/foreclosure crisis?
ROBBIE WHELAN, Business Writer
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good catch Whelan. Good reporting.