In Baltimore, houses for $10K

BALTIMORE – Andrew Wells is hoping to buy a Baltimore home for around the cost of an old car: Less than $10,000.

Turns out he’s in good company.

One of every 10 city homes sold during the first half of the year – about 275 in all – fell in that price range. Twice as many sold for under $20,000.

Often foreclosures, these properties are usually in bad shape but seem like deals to real estate investors and the occasional hopeful owner-occupier – such as Wells.

“I don’t have to worry about trying to get a loan,” said Wells, 40, a bill-processing technician who works in Annapolis. “That was the purpose of me searching in that price range. I could buy something, pay cash, and I could live in it and renovate at the same time.”

Almost exclusively a city phenomenon – very few homes in Baltimore’s suburbs sold for less than $10,000 – it’s a market that has expanded rapidly. More city homes sold for less than $10,000 between January and June than in all of 2009 and 2010 combined. Dozens of city neighborhoods had at least one such sale this year.

As very cheap homes change hands, average sale prices in Baltimore have plummeted. Seventy city neighborhoods saw average prices drop more than 20 percent versus a year ago, according to a Baltimore Sun analysis of data from Metropolitan Regional Information Systems. That’s half of the neighborhoods with enough sales to allow for comparison.

Fewer than 10 percent of suburban communities around Baltimore experienced an average price decline that large. Prices in the region dropped 6 percent on average.

But with the city’s faster-falling prices have come more buyers. Sales rose in more than half of the city’s neighborhoods compared with the first six months of last year. Sales rose in fewer than 40 percent of suburban communities.

As sales of ultra-cheap homes multiplied this year, the ultra-pricey end of the market was also showing a bit more life. Three homes – all in Annapolis – sold for more than $4 million each in the first half of the year, up from one in the region during all of last year.

But inexpensive is outnumbering expensive by a large margin. For every home that sold for more than $1 million in the region, 22 sold for less than $100,000.

The cheapest sale – a home on Payson Street in Southwest Baltimore – changed hands between real estate investors for just $10 in February. An attorney drafting the land record, realizing the number would look like a mistake, wrote that the amount “is the actual consideration, the property being in bad condition.” The annual ground rent on the property is nearly eight times the purchase price.

John Mitnick, whose Baltimore law firm handled the $10 transaction, noted, “There are lots of property owners in Baltimore City that just want to get rid of properties.”

Count banks in that category. Nearly 40 percent of city home sales in the first seven months of the year were foreclosures, according to a Greater Baltimore Board of Realtors analysis.

Foreclosures aren’t as large a part of the suburban housing market, but they’re not a small part, either. They accounted for about 20 percent of sales in every county around Baltimore except affluent Howard, where they were 10 percent.

And as other homes languish in foreclosure limbo, empty but not yet on the market, they’re causing problems for neighbors.

James Reichlin says the foreclosure directly across the street – with its overgrown grass, broken front window and overall state of disrepair – has not helped him sell his Ellicott City home. To make matters worse, the homes on either side of the foreclosure are also empty and in poor condition.

John Kantorski, a real estate agent with Cummings & Co. Realtors in Lutherville, said homes in the lowest price range usually have one thing in common.

“They’re terrible inside. They need full, full rehab work in one way or another,” he said. “Usually there’s no kitchen – or no walls.”Some have been empty for years. Mold is frequently a problem.

That’s why the buyers are largely real estate investors. Some are just looking to flip to other investors. Some intend to fix the properties up themselves, either as a rental – rents are on the rise – or to sell to people looking for a home ready to move into.